Strategic advice for the food and beverage industry

A Swedish role model for succesful science commercialisation

BioGaia chartIf you are aiming to commercialise nutrition science or some new health ingredient, BioGaia, a science-based business based in southern Sweden, is one of the best case studies that you can use. If you do not follow the BioGaia model you’d better have a very good reason, for such examples of a steel-plated success strategy are few and far between.

So what can we learn?

Lesson 1: Be patient and have a long-term plan

In the business of commercialising nutrition science, getting to profitability inside 10 years is very rare. BioGaia’s CEO and co-founder, Peter Rothschild, made 10 years to break-even a clear goal in the company’s 1994 business plan. Their investors backed them – and ten years later the company hit its target.

Lesson 2: dietary supplements may be where the biggest opportunities lie

After quickly learning that food and beverage is a complex and challenging market, BioGaia switched its focus to the supplements market. The challenges of taste, regulation, delivering an effective dose and consumer acceptance are much less. Today BioGaia supplements can be found in 60 countries.

Lesson 3: become experts in the market and go direct to the consumer where you can

Science companies who want to succeed also need to be experts in marketing. That’s because you need to understand where your ingedient will “fit” in the market. Investors and scientists naturally recoil from also setting up a branding and marketing company, seeing it as more risky than a science company. This is a mistake. Science is much more risky than marketing. Nor can you leave marketing to a partner who buys and uses your ingredient in their food, beverage or supplement. That’s because too many marketers are highly risk-averse – and they will usually see your new science not as an opportunity but as a risk.

BioGaia is one of the best examples of how a science company can also become a successful branding and marketing company, selling under its own brand or co-branded with partners in more than 60 countries.

Brands, says BioGaia’s annual report “build value” and give a company “less dependence on distributors and patents.” The reward for BioGaia’s strategy is shown in the chart above – a 25% operating profit on $48 million of sales.

Once it was patents that created value. Today, your patent will be worthless without a way to market. For that reason alone you need to learn how to be a scientists and a marketer.

Posted in Editorial, Mainsite

Comments are currently closed.