A craving for a childhood favorite gave birth to a startup taking the refrigerator aisle by storm.
Siggi Hilmarsson ’04 first visited New York City for his Columbia Business School interview in 2002. He instantly fell in love with the city, but as a student he would later find that he missed the products of his native Iceland, in particular, yogurt. American yogurt options were laden with artificial flavors and sweeteners and differed greatly from skyr (pronounced “skeer”), the thick, low-sugar, high-protein dairy product to which he was accustomed. It started as a simple DIY experiment — using a recipe from his mother, Hilmarsson began creating small batches of skyr in his Tribeca kitchen and soon found that his friends enjoyed the subtle flavors and nutritional offering.
Within a year of graduating, Hilmarsson had quit his corporate job and rented space in upstate New York to produce larger batches, which he began selling at the local farmer’s market to enthusiastic consumers. “During the week we would hit a lot of obstacles, so it was great to come to the market to see the positive reception, and that would be fuel for the next week to come,” Hilmarsson says. Murray’s Cheese in Greenwich Village was the first retailer to carry the product. “Even when we were small and our sales were slow, several retailers saw that there was a space for us,” Hilmarsson says. “They recognized that this was something unique that they could offer to their consumers.”
Siggi’s was different from mainstream yogurt in two simple, but significant ways: it had the shortest ingredient list and the least amount of sugar without using artificial sweeteners. Furthermore, the product stood at the forefront of what would become a food revolution to reduce sugar in consumers’ diets. “The product was unique because we were selling Icelandic yogurt, but broader than that, we were selling the idea of a minimalistic product. It had much fewer ingredients and a lot less sugar. We had a new point of view in the yogurt market, and we wanted to sell that point,” Hilmarsson recounts.
New York City was an ideal setting to offer – what was at the time — an unorthodox yogurt product to early consumers. “In general, the NYC population is an adventurous population that is willing to try new things,” Hilmarsson explains. “Plus many people visit NYC, try something they like, and then return home and ask their local grocery stores to stock the product. We hear from a lot of grocers with customers who first tried our product in New York,” Hilmarsson adds. Furthermore, while they were not marketing to culinary professionals, many high-end restaurants, including Per Se, were early adopters of Siggi’s and incorporated the product into their menus.
In addition to leveraging the benefits of launching Siggi’s in New York City, Hilmarsson drew support from his early days at Columbia Business School. Hilmarsson’s business partner and first investor was a Columbia professor, and he credits his education with broadening his skillset and expanding his understanding of supply chain and operations. “The mentality of thinking in operational and supply chain management terms has been invaluable to me,” Hilmarsson recounts. “Yogurt is a very complex supply chain. You need to make it every day and think about your inventories very rigorously. To this day, we are still using some of the simple algorithms I learned for ordering, productions, and deliveries – even though we are 200 times bigger.
Today, Siggi’s is the fastest-growing national yogurt brand in the U.S., with distribution in 17,000 stores across all fifty states. They have expanded their product line to include drinkable yogurt and grab-and-go squeezable tubes for kids, and they continue to offer innovative flavor profiles while staying true to the original goal that motivated Hilmarsson in his NYC kitchen: simple ingredients, not a lot of sugar.
Siggi’s Tips for Early-Stage Food and Beverage Ventures
- Be very clear to yourself about identifying your aspirations for the size of your business from the beginning; this determines a lot of the early decisions about product attributes, and just as importantly, the infrastructure and manufacturing you need to build out. An artisanal handmade product scales in a different way than a product intended for a larger audience.
- If you are aiming for mainstream distribution, you have to think about how your business will scale fast and build your infrastructure to meet that plan. Invest in your growth, assume your plan will work, and be ready for the volume when it comes.
- Focus your marketing efforts around areas where you have gained distribution. (Marketing to people who cannot buy the product is pointless.) Try to get a good geographical concentration on your product, and then market heavily in that area, or better yet, in those stores. Offer discounts or demos in a store right where people can grab it – anything that is close to where customers can buy your product. Or let’s say you are selling a health product in several stores in the West Village – you want to get people living in that area to sample the product, so perhaps try promoting it in the nearby yoga studios or gyms. If you are in a bunch of wine stores in Boston, get your wine into the bars in the area around them. This is obviously different for products that can be sold online; yogurt is a bit tricky online.
- In terms of the message of the product, keep it simple. For most customers, one or two attributes that are different from a mainstream product is enough differentiation. If you have six key attributes, not only does it cost more to make and market, but it is hard for people to know what you stand for. Once your brand becomes known, you can gradually branch out and add more attributes or side products with different features.
Read the original piece on Columbia Business School’s Ideas and Insights blog.
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