Espresso: How Innocent Won a Tesco Listing - Negotiation Tactics from a Master "Be Flexible in the Moment and know when to say "yes""

0:00I think probably some of the most intense stuff was our first trying to get our first listing in Tesco So we've got listings up from Waitrose and Sainsbury's. They were really pro the brand. The brand did really well there. But Tesco was still holdouts, not really believing in the brand or the category, actually, because they'd had a slightly bad experience with the previous brand and it hadn't worked that well. And they didn't really believe Innocent was going to change things that much. But they were critical. It's 80 % of the market. They're critical to getting the business to really work. and I remember them being very very fixed on okay if the only way we're going to do this is by you promising to do a half price promotion around launch time and we'd never done anything like that we couldn't make money at half price it was it was like no way that's not the way we do it's devaluing the brand all this sort of thing and and that's just to set the context how big was the business at this size?

1:01So we were probably about 10 million turnover. So we were decent scale. Yeah. But we hadn't gone everywhere and we were still mostly little bottles rather than the cartons. The cartons, as they were there. And I think it was interesting because we were like, no, we're not doing that. We're really principled. We're not going to do the half price. We're not going to do this. And Tesco were very like, no, well, you're not getting the listing. then sort of thing and uh it was trying to work out whether there was a way through that or whether we had to take what they were saying and try and turn it into a positive and i think actually that was the realization that actually they may be right that really the way to get noticed was to do those half price promotions but at the same if we were going to do that we then needed to make sure that we were building brand at the same time so actually we needed to be advertising at the same time and we looked at what other sort of fmgg brands had done and i think um actamel had done very similar sort of strategies we looked at what the known did and that was half price promotions with tv and you know this is going back 20 years so it might not be relevant now but um but we were like well okay maybe maybe we can go you know accept their demands on that if we do the tv and build the brand at the same time and and actually that strategy then completely worked and we rolled that out through other people.

2:23And by changing our ingoing thought based on what they were demanding, actually, it made it better. We ended up, that was the strategy that really grew the business for the next three or four years by getting noticed on price, but also getting the brand story out there. And, you know, that was pretty intense because, you know, we went from a position where it's like, God, we're not going to get this listing, it's not going to happen, through to actually, yeah, we've got a deal that we're not sure is going to work and then when it actually started working it's like oh god this strategy is working it's great um and so it was it was definitely it was definitely a journey that we went on and how do you for people who are going into negotiations with either retailers or investors what would you say is some of the kind of with every negotiation you've sat in what are some of the one to three principles um that you you think could really help people listening to this so i I think you need to be very clear about what you're trying to achieve.

3:23And in that example previously, we sort of had to change what we were trying to achieve from the new information that came in that actually the promotional strategy was the right way to go. But be very clear, because I think it's quite easy to go into things without that clarity. Be very clear what you're prepared to trade away. So there's plenty of courses on how you negotiate. And that was one of the key things that we did at Innocent was taught everyone negotiation. um techniques and i think um so do your preparation um i think that that's key be flexible in in the moment because sometimes there's a deal to be done at the time and rather than going away and kind of analyzing or actually say yes um that can be that can be hugely useful um it just just sort of seize the day um but also uh the flip side is like be prepared be prepared to walk away and you know say you know what this isn't going to happen because sometimes you know things will things change on the other side and they'll come back to you so it's it's that reading reading the room quick one guys Espresso's got a brand new sponsor Unleashed Unleashed is inventory management software that talks directly to your finance and econ software we use Unleashed daily islands I I bloody love it.

4:40We've got our admin time in half, saving approximately 30k a year. Why use it? Save money, save headaches, save stress. Get granular clarity on your margins. Know where your stock is. Don't miss availability. Look, your favorite brands literally use Unleashed as their backbone. Candy Kittens, Tiny Rebel, Trip, all use it religiously. Look, there's a link in the show notes. Please feel free to book a call with Josh. He's a wonderful sales team at Unleashed. They're amazing. Even nothing comes of it. and even better news you'll get your first month free if you reference hungry thank you you said there about the flexibility of the being able to actually accept a deal versus is there an example where you've where you've i suppose tesco is the example yeah but i suppose the of maybe the other side of that is when you've had to walk away because so one of the things i i write right about my newsletters is founders get early stage founders get blinded by the listing lights yeah whereby they're like, oh my God, the deal may not work.

5:39They're like, I just want the 320 Holland Barrett stores or Tesco stores. And then suddenly they've done a deal. They're not making money when they promote. Absolutely. It's just a nightmare. And then suddenly if you've said yes to that, trying to unpick it, it's just a nightmare. I completely agree. I guess more businesses get sunk on getting listings with the wrong terms or the wrong people or the wrong distribution than they do because they haven't got the listings. Yes. So it is. And because for all those reasons you say, it's exciting. I've got a startup business. I'm getting a huge listing.

6:18I'm going to go to all these stores. It's like you just sort of end up not not analyzing whether it's really the right thing to do. and you can easily get carried away with yourself and say, yeah, I'll make it work. Because actually you can't make it work. And it's the wrong thing to go to too many stores sometimes. We'll get on to what you think are the requirements for kind of building an anti-fragile brand in grocery as well. But first, you guys went into 10 Waitrose stores. Yeah, two Waitrose stores at the very beginning, actually. This is the other thing. I don't understand why retailers put brands in way too many stores.

6:52I always say it's like analogous to throwing a toddler into a deep end without swimming bands. They need to go in slowly. A challenge of brands, a toddler needs to learn how to put the armbands on, like give them 10 stores. Like, why do you think, how did you get 10 stores? Or was that because that wasn't really a challenge of brands then? I mean, it was a different, it was definitely a different retail environment. So I think they're probably tougher these days. But I think it was, we did literally direct to store distribution for two Waitrose stores because they couldn't really believe whether it was going to, they were like, they sort of thought this might work, but didn't really believe it would.

7:27So weren't prepared to give us the listing. But we were like, well, look, we really believe it will work. So we'll show you and we'll go to all the hassle of doing direct store distribution for those two stores. And it flew, you know, the Richmond store, I think it was just absolutely, you know, there was a whole end and it was just like stacked and the manager loved it. He was like, no, honestly, this is flying. This is flying. And, of course, that then builds the confidence to get the 50-store listing. And then we had to work hard to make that listing work. And then it was like then you roll out to 100 stores.

7:56And it was very, very incremental. We never – it was hugely helpful in a way that we had a short shelf life because it was completely obvious you can't go to too many stores because if you've got a short shelf life and you're too many stores, you're a waste. So it was just a function of our – it was completely the right strategy, irrespective of whether you've got a long shelf life or a short shelf life, to go to the right number of stores and support them and then move to the next long. It's far too easy to try and roll out to 1 ,000 stores and then not be able to get the rate of sale, the rotation.

8:26Our short shelf life meant we didn't really have an option. It wasn't us being particularly smart. It was like it would have been evident madness to go into 1 ,000 stores. Not that we'd have got that listing at the beginning. But it's so important. What really matters is whether you're selling fast, your rate of sale, and whether you're adding to the category. if you're doing those two things, the supermarket's going to be happy, right? Yeah. And so you just, and just a bit of patience to make sure that each step of the distribution is working really well is key. And that's what we look for in the brands we work with at Jam Jar.

9:02It's what we did at Innocent. And I just think it's the way you build a brand. It's only the big multinationals who've already got huge established relationships can go, right, let's bang it out to every store, see what happens. And if it doesn't work, we'll launch something else. Yeah, it's kind of, yeah, putting too many brands in too many stores too early, as I say, it's like throwing a toddler in it. It's the death knell of too many brands, or it makes life so much harder than it would otherwise be. You said something that really kind of set my curiosity going, Adam, in terms of more brands kind of sync, I think was the word you used, with listings that are going with...

9:39Too wide than... Yeah, well, sorry, the wrong terms. Yes, the wrong terms. What are the absolute right terms in terms of, like, to build an anti-fragile brand in grocery specifically? Like, what are the one to three things that... Look, there's one thing. Fundamentally, you've got to be able to make money. You know, there's no point in doing a deal where you look at it and once you've got all your costs in, including your promotional costs, your support costs, you know, all the logistics bits, you're just not making enough money. and it's there's no point in doing it frankly um unless you're very clear that this is this is a loss leading listing because this will get me all the other things i can do those those deals in a different way then you a listing that's fundamentally loss making is pointless and it's too easy to say yes to because it oh things will change things will be different in the next one but often and people go, well, I want the same terms, I need the same terms, and you end up doing the same thing.

10:36And that's, yeah, if you've got a good product and you believe in it, make sure the price you charge is the price that allows you to have a sustainable business. It's, you know, both the price, to make sure the profit's there, but also in cash terms. You know, these days there's less room for negotiation on cash terms. you end up you know uh doing whatever the supermarkets say we we pushed very hard at the very beginning to get very short terms and that was hugely helpful in terms of allowing the business to to self-fund um thank you so much for listening to that espresso i hope you enjoyed your morning coffee and are ready for the day let's be having your boy and please do subscribe follow the podcast share this espresso on whatsapp if you liked it and also there's a link to our newsletter in the show description.

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