Billionaire's School: it's hard to be the first


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The founders of Smeat share why it is impossible to blindly copy Western business ideas.

Can you copy a business idea from the west and implement it in another country? Of course, you can. Most of the newly emerging projects follow exactly this path, inspired by the example of Oscar Hartmann. His main ideology is copying projects from Western markets. Often, the fabulous brilliance of successful entrepreneurs overshadows the vision of the young and daring. As a result, rushing to newfangled phrases - "lean start up", "agile" and so on - ignoring such commonplace things as market analysis and hypothesis testing. And Smeat founders stepped on these rakes. In addition, their ambitious enterprise unexpectedly faced the total hegemony of "His Majesty - Marketing".

The founders saw the idea in the US, where in the early 2000s the market for jerky (dried and dried meat), amounting to $2 billion, stagnated. Four manufacturers, not any different in their marketing efforts, controlled a share of 85% and fully covered the Americans' needs for the product - a developed, serious market with an established culture of consumption. It seemed that enough passive players could interfere with the dimensional existence. And then, in 2011, a young company appeared - Krave Jerky, who managed to differentiate from competitors due to a combination of three main advantages:

  1. The company positioned jerky snacks as healthy and useful. Running marathons in the US at that time were at the peak of their popularity, and Krave Jerky skillfully used this trend. For example, the main brand ambassador of the company was the winner of the Boston Marathon and the silver medalist of the Olympic Games.

  2. The company emphasized the use of 100% natural ingredients and high-quality raw materials instead of chemical additives and low-grade meat.

  3. The third advantage was the range. Instead of a boring set of flavors, salt/pepper or "with smoke," the company has released a whole line of various flavors, such as chili-lime or sweet chipotle. As a result, for several years the company increased its revenue to $ 35 million and was sold for $ 250 million to the confectionery giant Hershey.

Inspired by such a stunning success and enchanting M&A deal, founders of Smeat fell in love with the idea of creating a similar company in Russia. Of course, having read many reports of respected consulting agencies, they collected some data on the market: volumes, growth rates, key players and so on. Time has shown that the investment banking approach of "top-down" analysis does not quite work for entrepreneurs. When creating the Smeat brand, they did not take into account some important features of both the Russian market in general and the specific category of snacks from meat.

At the very beginning of the journey, by analogy with Krave Jerky, they decided to promote the product as an ideal snack for athletes. And although Smeat, thanks to the high protein content and natural ingredients, could be so positioned, the audience absolutely did not take the product. The fact is that dried or jerky has a strong reputation for snacks for beer. As a result, the consumer has a dissonance - how can you call it useful that everyone is used to drinking beer? They did not take into account this cultural specificity.

The next omission is connected to their competitors - large meat-processing enterprises that produce different types of dried/dried meat exclusively for "assortment" or to provide a higher capacity load. Few of them conduct active marketing campaigns or participate in brand promotion in any way. As a result - a fairly low turnover in comparison with other goods in a similar category. Because of this, this group of meat was not taken seriously, adding it to "the assortment." Sales of Smeat to one SKU are several times higher than those of competitors, however, they had to constantly struggle with low interest, proving to partners that it is possible to earn good money on the product.

A consequence of the previous problem is the relative underdevelopment of the Russian market of meat snacks, because of this retailers do not separately distinguish this category in their product matrix. "And where should I put you?" - the first question that they heard from representatives of outlets. There are groups of crackers, potato chips and fish snacks for beer (squid and stuff). Naturally, they did not want to get up in any of these categories for two reasons: association with beer and price competition is not in they favor - Smeat is more expensive than any product from these groups. At first, they were positioned in places they wanted the least, however, as a mentor on the Forbes billionaire School project, Vladimir Gurdus said - "What's the difference, where and why do they buy?" The main thing is to buy! ".

Such is the "market heritage", but because of  all complexities you get a deep understanding of the industry. This knowledge allows to correctly build a competitive advantage for any company. Probably, Krave Jerky also faced various difficulties - we see only the tip of the iceberg, colorfully described in the media. And by the way, Oscar Hartmann always says that any copied business models need to be adapted to the national peculiarities of the market. Experienced entrepreneurs do this in advance, and young and bold - by trial and error.

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