Clive Sher is MD and co-founder of Australia-based Every Bite Counts, a company set up in the mid-2000s that initially focused on organic food, made a foray into allergen-free food and, in 2011, launched the brand on which the business is now centred: Little Bellies organic children’s foods.
Sher and his brother Steven – both fathers – have built a business that is now among the largest baby food suppliers in Australia and one that’s carved out a foothold in North America – and is growing.
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Just Food caught up with Sher via Zoom to discuss Little Bellies’ plans to expand further in North America and parents’ becoming savvier about the product claims food brands make.
Dean Best (DB): What do you feel you learnt from the earlier iterations of the business that has helped Little Bellies?
Clive Sher (CS): There’s a different priority tree for people of different ages. Originally, we felt that there was a way to introduce organic into mainstream and we did that in a number of areas. We also realised that an organic claim on its own was not enough to sustain product in mainstream. As an example, we launched a range of organic herbs and spices but the reality is unless they were on special and at the same price as traditional, they never really sold. You needed to appeal to more than the 2% committed organic foodies to be relevant.
When it came to children, we quickly realised how much more committed parents were to purchasing organic products for children, particularly for younger children.
DB: What has driven the success you then have had with Little Bellies?
CS: The success has been a commitment to a certain level of quality. I know that might seem like what every brand says but I can walk you through the baby food aisle and point out a plethora of what we call ‘pseudo confectionery’, products better suited in confectionery than baby food and products that focus on product opportunity first over brand integrity.
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By GlobalDataWe’ve even had the largest retailers approach us and ask us to do certain types of products but then we look at the product and we go: ‘Appreciate the opportunity but it doesn’t meet our brand guidelines.’
We’ve built up incredible trust and loyalty among consumers because we have very strict brand guidelines. We argue about these brand guidelines all the time, don’t get me wrong but we will always err on the side of being conservative. For example, none of our baby products have added sugar or added salt. When we get to toddler, we may add a little bit but it’s always on the lower end. We never add cane sugar, we may use a bit of juice concentrate but never syrups or added cane sugar. We never add any flavours.
We won’t even add a natural flavour. When a young child has come off rice cereal and formula and breast milk, they have an extremely sensitive palate. If you expose them to a lot of sugar, salt and flavour, that becomes the baseline and what they expect.
It’s all about simplifying parents’ lives, putting baby first ahead of product opportunity with everything that we do, which then feeds into people can trust the brand.
DB: Busy parents can find it hard to interrogate products as much as we perhaps should. Are you finding more parents are becoming savvier about foods like baby snacks?
CS: We definitely are. When we look at the latest US data, certain brands that don’t have a strong ethos around better-for-you health are struggling. There’s definitely been a huge increase, not just from consumers, but from retailers being more cognisant of what [some brands] put in. Convenience is a huge factor. If you can find convenience with a brand you trust so that you don’t have to turn every package over to read the ingredients because you know that brand has consistently done the right thing, that’s where loyalty comes in.
DB: What’s the growth trajectory for the business in Australia and New Zealand when you’ve already got such significant market share?
CS: We’re currently growing in our core category, which is baby snacking, at around 10% a year, which is still pretty good, it’s better than most and certainly better than the competitors that are of a similar size or larger than us. We’re the largest baby and toddler snacking brand. We’re third largest in total baby food. We’re also expanding beyond baby snacking. We’ve just entered the baby food segment, doing purées and pouches and finding ways in which we can do them better. We’ve launched products in Australia outside of baby for older children
DB: You’re in your fifth year in North America and it seems like you’ve enjoyed some solid growth, particularly in recent months.
CS: It’s been steady growth. We started in September 2019 with a couple of regional retailers in North America. We then launched in Walmart in March 2020, which is not a great time to launch a product as Covid hits the market. We forecast certain amounts which we weren’t anywhere near and we just assumed that Walmart would look at us and go ‘You’re not working’ but Walmart have actually been a fantastic partner and, as other retailers did as well, didn’t pressure us given the situation and into our second year, the brand, as people started moving back into store, started really showing what it could do.
We’re in our fifth year, the brand has steadily increased year on year. We are the sixth-largest brand in total market by value, the fourth by volume. We are the fastest growing brand, so we’ve added more both value and volume to the category than any other brand over virtually any time period that you look at within the last year.
I think the real key reason is we’re doing things very differently than what’s traditionally been done. When we started the business back in 2011, the US was actually one of the leaders in innovation in the space. You had brands like Happy Baby and Plum that were driving innovation. I remember looking at these brands going ‘Wow. Imagine if I could be like them.’ They both got taken over by multinationals and, when we started really looking at the US market in 2018, I was gobsmacked to see very little difference in what had been done on shelf.
The very first thing we introduced into the US were single-serve bags of product that offer different flavours so that a child could experience what a sweetcorn, pumpkin blueberry, apple tastes like and it gives them the ability to try a raft of different flavours and different shapes. Our approach was completely unique to the US. Our price points were much lower because we weren’t using excessive packaging and it just resonated very well for something that was that was unique.
DB: What’s next for you in North America? Building more distribution, building repeat rates?
CS: The biggest thing for us in the first few years was getting that proof of concept and proving to the market we were relevant and we’ve done that now. We’ve had some more progressive retailers lean to us and they’re fuelling that growth but we’re now finding more conservative retailers coming to the party and joining us on the journey.
Effectively, from July or August, we should be in about 9,000 retail doors, significantly up from about 6,000 a year ago. Beyond there, we’re now expanding beyond our traditional extruded snacks assortment. We’ve just introduced a bar range in Walmart.
DB: Where are your products made?
CS: Across our ecosystem, we’ve got about eight contract manufacturers. Traditionally, they have all been made in Europe. They have the strictest regulations around baby food, so we get the best quality out of Europe around heavy metals, around quality, a really good organic supply chain and innovative dynamic suppliers who can adapt to what we need.
We’re now working with a Canadian manufacturer as well and shipping into the US and most recently, this week, we’re actually launching an assortment in the frozen aisle in about 380 Target stores. We have a first-to-market range not just for us but for the US market of a frozen range.
CS: It’s like a smoothie cube, like a purée, a mix of grain, fruit and vegetable, some single fruits and then we’ve got some blends. It allows someone to have a pre-made cube in the freezer at home. Organic, no added sugar, no added fillers and accessible at a very good price point. It’s very exciting for us but it is a new area for us we haven’t explored before.
DB: What percentage of Little Bellies’ annual sales are outside of your home market now?
CS: Well, it’s interesting. The US run rate is now higher than Australia. The US and Canada will this next 12 months be about the same as Australia and New Zealand combined and we expect over the next two, three years that North America will exceed the Australasian business.
DB: In your last financial year, what were your annual sales and profits?
CS: As a private company, we tend not to disclose that.
DB: Is the business profitable?
CS: Yes, it is profitable. We are privately funded, self-funded, we have no debt, we’re profitable and we have been profitable for a number of years. [That’s] not to say that we’ve been profitable in the US since the day we started. We recognise when we have to invest ahead of the curve but every pricing model we do is based on profitability at a point in time. The US market has been profitable for a couple of years now. Australia’s been profitable for quite a while and the Canadian market is pretty much there at the moment, I would think. If it’s not profitable, it will be very shortly.
DB: Are there other export markets you’re in presently?
CS: We do a small amount of business into Asia, specifically in Malaysia and Hong Kong but we made a decision a few years ago – and I get weekly, if not almost daily, requests from international companies to consider them as distributors in their home market – that we will consider occasionally other markets but we don’t want to be distracted. The same way we chose to trade out of brands that weren’t a priority for us, being focused, making sure that we’re steering in the right direction and not being distracted is a key to us making sure we make the most of the opportunities we have.
We’ve only got at present around 2.5% market share in the US compared to 33% at home. I don’t expect we will have 33% in the near future but obviously it means that there’s lots of opportunity for us to double or triple the business while still not having an overly significant share in the scheme of the market.
DB: What do you think could shape the category throughout the rest of the 2020s?
CS: I think there’s just an ever increasing awareness of parents of what’s in product. I think the days of just assuming that a product in the baby aisle is safe and acceptable are gone. Those days have changed. I think there is a lot of distrust [of] a lot of major brands and so that’s why I think a lot of the challenger brands are finding good feet because parents have given up on some of those larger brands and what they address. So, I think awareness on health claims is a big part of it, convenience, brands that can talk authentically and improve parents lives with making products easier to navigate is huge.
DB: Do you and your brother still both own 50%?
CS: Correct.
DB: Have you ever taken on external investment?
CS: We’ve had this debate numerous times. We’ve had numerous approaches. Once you have partners, you have additional voices you need to listen to and be respectful of. It also means you have to be constantly reporting. We don’t have a need. For us, a true partner [is] someone that doesn’t just provide money. We don’t need the money. We’re profitable. We’re self-funded. We’re debt-free.
A true partnership for us would only come in if we scaled so quickly we needed financial investment [but] we believe it’s not hard to find money with a profitable business. It’s more if someone came that could add true value to the business outside of any financial investment. That’s something that we would possibly entertain but we’re very conservative in taking on partners. It comes back to the distraction value. It’s really about making sure that we’re making the most of the opportunities and pulling in the right direction.
DB: So, entering your third decade with the business, you aren’t interested in exiting just yet?
CS: We love the business. This business hasn’t been built with a purpose of selling and selling only. I can’t say that would never happen but, at the same time, we love what we do every day. We see a huge runway to continue adding value to the business. It gives us a purpose with what we do every day with our lives and we’re not desperate for the financial side of it. Never say never but it’s not something we’re actively seeking.
