Berlin-based KoRo, a better-for-you snacking brand, has lofty ambitions that are being backed by an array of investors.
KoRo’s product range extends from bars, nut butters and dried fruit, to clean-label snacks and functional foods. Having started online, it now supplies major retailers in its home market and in neighbouring countries.
The company recently completed an oversubscribed €35m ($36.7m) Series C funding round and has recruited Oatly’s former CEO as an advisor.
Dr. Daniel Kundt joined the management team as CFO in 2022. He talks to Just Food’s Andy Coyne about the company’s next steps.
Andy Coyne (AC): You’re up to €115.2m in funding now by my calculations. Given the latest round was oversubscribed, what do you look for in investors?
Daniel Kundt (DK): We have tried to recruit complementary investors. HV [Capital} wants to build billion-dollar companies and is agnostic in terms of the field it is in. Five Seasons [Ventures] is an expert in the food space and how to build a food brand. Another investor, Partech, is French and can help us outside Germany. [New York-based] Coefficient Capital, [which led the latest funding round] has expertise in the retail space but is also very international. It knows how to take companies to the US. Not that I’m saying that’s a short-term goal.
So, we have always taken money with some background expertise that can be brought to the table. It’s never been a purely financial investment. It’s asking whether they can help us with something or make an introduction. Or do they have a portfolio company where we can learn from what they have done?
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By GlobalDataAC: What will you do with the newly-invested €35m?
DK: It can fund our international expansion. We need to invest in foreign countries, we need to spend more on marketing and logistics. We are shipping everything from Germany. We will use the funds to accelerate growth in core markets: France, Italy and the Benelux countries. We also want to invest in our supply chain. With importing products such as mango, there is a huge cost involved. It’s also good for companies to have a financial buffer these days. For one-and-a-half years, there has been concern in the market about how financially stable start-ups are.
AC: Tell me about your omni-channel approach.
DK: We started as a purely online player. The transition in the last few years has been to also being available in retail. We want to provide competition everywhere you can buy a chocolate bar.
AC: Has being online before being in stores helped?
DK: We have got a lot of information on prices, taste preferences etc. from being online and can bring that knowledge of our products to retailers in a way that can work for their customers.
AC: You have won listings in more than 13,000 points of sale across major European supermarket chains such as Edeka, Rewe, and Albert Heijn. What was it about KoRo’s products that appealed to them when you approached them back in 2022?
DK: We started in retail quite late. We were already doing €60m online. We could tell them that people know us and we can bring you the customers you want – young people, early adopters. They said they would give us a chance but, in the end, the customer decides and, if successful, they could expand the number of SKUs. We are not at 100% distribution in Germany [in terms of big retailers]. That’s still ongoing.
AC: Were supermarket groups outside of Germany harder to convince?
DK: People would say to us that you have to prove it here in France or Italy. This is not Germany.
AC: You have quite a broad product range: energy balls, dark chocolate bites and nut butters but also nuts and dried fruit. What’s the thinking there?
DK: It’s in the company’s roots. It started as a trader for nuts and dried fruits and developed an expertise based on that, putting nut butter into bars etc., to become a better-for-you snacking brand. We developed a broad assortment on the online side but within the brand boundaries. We would never have meat jerky, for example. We didn’t have super crazy margins so we needed enough of an offering to allow people to fill their baskets.
AC: And has that broad-brush approach continued into retail?
DK: When we went offline we wanted products that represented us best in the shop window.
AC: What lessons have you learned from your move into bricks-and-mortar retail?
DK: The beauty of a start-up is that you just get on and do it. What can go wrong? But then you realise how much goes into it. You need to improve your carrier, warehousing. You have one-hour delivery slots and you need to improve your quality management and financial processes. It’s tough to fix all those issues but thankfully the retailers beared with us.
Toni Petersson’s a great storyteller and that’s what we were missing
AC: Koro recently recruited former Oatly CEO Toni Petersson to its advisory board. What does he bring to the table?
DK: He describes us as a food company run by engineers. We are very data-focused. It’s almost a scientific approach. We want to offer niche products but we are very German, which means very humble, so we don’t always tell a great story. Whereas Tony did this very well with Oatly, a quirky brand that raised a lot of money. He’s a great storyteller and that’s what we were missing. We will evolve our tone of voice as a brand, without starting a fight.
AC: You talk about a 50% year-on-year growth rate while operating at break-even, but presumably, like everyone else, you have been buffeted by economic headwinds in recent times?
DK: Inflation really hit in 2022. It’s still there today in certain areas.
AC: Have you had to increase prices?
DK: We explain prices to customers. When the market goes down we have lower prices. We look to have price transparency. Having that trust with customers allows you to increase prices when necessary. The benefit we have is that customers are more prepared to buy at a premium price than they would if it was a chocolate bar. But we want to be available to a broad part of society. We don’t want to charge high prices.
AC: Where does your main competition come from?
DK: A little bit from everywhere. There is competition from supermarkets because they are increasing the private-label offering and they want to be independent of food brands. It is important to us to be innovative because at some point they copy our products. The main competition is from big food companies. But we want the consumers to know there is an alternative out there with better nutritional value.
AC: Aside from expanding in the markets where you already have a presence, where do your future export ambitions lie?
DK: This is always something we discuss every year when we are in our budgeting phase. When is the right time for the UK and, at some point, the US. I believe we will do it in the future but not in the short term. For now, it’s good to focus on where we are.
