In addition to deciding to run our business full-time and hiring great people, one of the most important decisions we made early on in our startup business was to develop a global vision and related marketing strategy for our products. The challenge was, as a small startup, how to do this quickly and within our budget?
In Igor Ansoff's 1957 paper, "Strategies for Diversification" (Harvard Business Review, 35, 5, 113-124), he outlines four main strategies that companies can use to grow: Market Penetration, Market Development, Product Development, and Diversification. Market Penetration focuses on developing existing markets. Market Development looks at extending market reach through new target market segments, new channels of distribution and so on. Product Development means anything from developing incremental variants of current products to developing radically-new products. Diversification offers a new perspective for companies looking to grow through a combination of both new markets and new products.
In 2003, we were still hard at work on the Market Penetration front, for Ice Cider in Canada. That said, we had also started to examine the potential for further Market Development and Product Development.
Our vision, at that point in our business circa 2003, was to become the #1 producer of Ice Cider in the world. This vision pointed the way forward for us. To be the top producer globally, we naturally needed to pursue a Market Development strategy. Hand-in-hand with this, we also knew that international markets would also likely be interested in variants of Ice Cider that would appeal to their local knowledge base and tastes. As such, we were going to need to take a global market expansion approach in combination with Product Development.
So, where to start? While we had the vision to enact these Market Development and Product Development strategies, we were still incredibly small! How could we ramp up operations to be able to grow globally very quickly and with limited resources? We started to consider options for how to finance and develop a network for such global growth.
Product Development
There were two key issues we needed to address to be able to grow. First, we needed to invest in new equipment to make our overall production process more efficient, specifically by upgrading our bottling line equipment. We also needed to buy more tanks to increase our storage capacity. In other words, we needed to scale up our operations to handle the potential for growing our market size. Second, we looked at developing a new product – a Sparkling Ice Cider. In order to make such a product, we would need a dedicated new bottling line and equipment which would enable the processes required. Achieving these objectives would enable creating a product line extension based on the brand we had already spent the last couple of years developing. It would also be the first of its kind in the world.
As such, to grow through investment in both scaling up the inventory and also through new product development, we needed to find partners to help us finance this. We had our first external non-bank financing through a loan in 2002 from an angel investor. Following quickly after this, at the end of 2002, the company secured an additional loan from a locally-based Venture Capital organization, specializing in agri-food investments. These injections of funds into the business gave us the necessary means to start building out our Ice Cider product line by adding additional capacity and products.
Market Development
There are many different options for going global which range from exportation to strategic alliances through to foreign direct investment. We felt that, as very small players, it would take too long to grow global markets on our own, organically, through a pure export model of business. At the other end of the spectrum, direct investment in any other market was way out of reach for us. What we needed was a partner who already had deep distribution and marketing experience in the alcoholic beverages industry. So, we started to open up to this idea and look for such a partner. Through this, we established a strategic alliance with Camus ‘La Grande Marque’, a family-owned French Cognac company, founded in 1863, with extensive industry experience. The decision to secure key partnerships and relationships opened up global-scale product and branding opportunities. It also eventually helped us in terms of the ability to achieve and leverage economies of scale through distribution – reaching now over 60 countries globally. We had only operated in Canada for a few years before moving onto the international stage. The Canadian market for Ice Cider at that time was still relatively unpenetrated, but Charlie and I both realized that there was value in gaining an early toehold in foreign markets, and to do so as early as possible. Also, we believed that the new Sparkling Ice Cider we had in development offered a product with strong potential to do particularly well in Europe and Asia.
As a small company, we were missing resources and experience. The main ingredients which helped move us along the path to realizing our vision were the facilitation of Product Development and Market Development through access to strong strategic alliance partnerships.
