Grainger says the growth of the gluten-free category has been like a "wave" that has pushed the company along.
"We've grown just quickly enough to take advantage of the opportunities we've encountered as they've become available. We were there to get into supermarkets at the point they were starting to see the opportunity, and this helped us build a strong brand and reputation," says Grainger.
"Then we were developing new products and recipes as the food service industry caught on a few years later. We started with pizza bases, and this is still one of our biggest products."
Venerdi now supplies some of the major pizza chains in New Zealand and Australia, as well as other quick-service restaurants, and has more than 65 staff. About 30 percent of its revenue also comes from offshore.
In 2010, Jeremy Bennett and his wife Megan May founded Little Bird Organics, which makes raw, organic packaged food products that are free from gluten, dairy, soy, refined cane sugar, and are also vegan. The firm also has three cafes in its stable, serving fresh food along the same lines.
"The business really grew out of my wife Megan's love of food, and her research into the benefits of a raw, organic diet on the health of our bodies - which has been fundamentally ignored for a long time," says Jeremy Bennett. "We weren't hoping or expecting a massive market - more a niche market of those who were interested in making healthier choices. I think the allergy market - people allergic to gluten, dairy and so on - had previously been pretty underserved in terms of the quality of offerings available, so we expected to access this market too."
Bennett says it was when they opened their first cafe in August 2012 that they saw strong growth kick in, and Little Bird now has 75 staff.
Word of mouth has been the company's main marketing strategy for reaching customers in the niche sector of the food market in which they operate, he says.
"That was our entire marketing strategy - make something so good that your customers do your marketing for you. It means a bit of a slow burn as word spreads, but this was fine for us as a new company, but then the growth can go exponential, as we've discovered."
Virginia Clark is the owner of Love Cake, which produces food products that exclude the five most common allergenic foods - nuts, eggs, dairy, gluten and soy; as such, its primary customers are people with food allergies, intolerances and coeliac disease.
Clark says word of mouth, including through online forums dedicated to people with food allergies and intolerances, is an important means for reaching potential customers in the niche sector, as is social media.
"We also work closely with Coeliac New Zealand and Allergy New Zealand, supporting them in ways we can, like donating products for giveaways or functions," she says. "The Gluten Free Food and Allergy Show has also been a great platform for us to showcase things like new products because these shows are a real destination for people wanting information on all things allergen-free."
Many of those interviewed also talked about how crucial it was in such niche sectors to tap into customer feedback to improve existing products and develop new ones.
"One of our core competencies is innovation so we'd be lost if we didn't keep changing. The real value for us is in looking to the market to see not only where it's going, but when its evolution will align with our values," says Tim Grainger of Venerdi.
"People said gluten free was a fad, then they overlooked the prevalence of dairy free, and now they say paleo is a fad. Thirteen years on I'm convinced of one thing: eating healthy is not a fad, but our ideas around what this is will continue to evolve."
Tim Grainger, Venerdi
Tim Grainger founded Venerdi, a gluten-free bread products company, in 2002. The firm now has more than 65 staff, and about 30 per cent of its revenue comes from offshore.
Why and how did you start a business with a gluten-free focus?
We got into this sector through some converging forces. Firstly, the opportunity arose to buy into a company making organic spelt products. The organic nature suited our family's health beliefs and experiences.
Spelt, while not wheat free, was a little allergy friendly but with my sister being a coeliac since birth the writing really was on the wall for us to be making gluten-free bread in our future.
It was when a big drought hit Australia, where our spelt came from, that we kick started development of gluten-free products to keep the shelves full and we've been developing them ever since.
Also, it took me five years of working in the food intolerance market to realise I was acutely lactose intolerant myself and then another two years to realise that the stiffness in my body was more likely caused by gluten, than playing rugby. So now as well as having a gluten-free business, it's also a lifestyle for me and one that suits my body.
The gluten-free category is one that's experienced huge growth in recent years. How has that affected your business?
It's been like a wave that has pushed us along, and we thank God it did because this is such a hard business and we've needed all the help we could get. We've grown just quickly enough to take advantage of the opportunities we've encountered as they've become available. We were there to get into supermarkets at the point they were starting to see the opportunity, and this helped us build a strong brand and reputation.
Then we were developing new products and recipes as the food service industry caught on a few years later. We started with pizza bases, and this is still one of our biggest products.
We now supply Hell Pizza in New Zealand; Domino's Pizza and Crust Gourmet Pizza Bar in New Zealand and Australia; and Pizza Capers in Australia, as well as a few chains like Burger Fuel, Burger Wisconsin, and most recently Pita Pit.
Has that demand increased competition in the gluten-free space?
The growth in the market didn't go unnoticed, with both George Weston Foods and Goodman Fielder entering brands into the supermarkets. At one stage there were seven brands of gluten-free bread in the supermarket servicing a category that made up less than 5 per cent of total bread sales, which made for a very competitive environment.
Our beginnings were in certified organic gluten-free toast bread, but after Vogel's launched we realised we needed a sandwich option as well. We created a new brand for our sandwich bread, which took three months to get into stores, but it wasn't until a reformulation and a rebrand a year later that it really hit its straps.
Our two brands now make us the second biggest gluten-free bread supplier in New Zealand - and that only accounts for half our business.
What's worked well for the company in terms of reaching its target customers in this niche area?
We love everyday low prices and honestly we put a lot of effort into making products that sell themselves - that's nearly all the marketing we do. However we do do a number of food shows with our target niche audiences. These are a great way to see a whole bunch of people all at once that want our products.
We love to work with other brands acknowledging their strengths and abilities to supply the market through different channels. For example, the majority of our business-to-business sales rely on the strength of QSR brands; that Domino's alone has more than 520 stores in Australasia really shows the strength of these channels.
Also, people love that we answer their questions on Facebook as soon as possible and that we tell them what's going on. Listening to them is really important for developing our existing and new products.
What are some of the future trends you're seeing in this area, and how are you looking to tap into those?
One of our core competencies is innovation so we'd be lost if we didn't keep changing. The real value for us is in looking to the market to see not only where it's going, but when its evolution will align with our values.
Paleo is a really good example of this. For starters it's a grain-free diet, which means its gluten free, but mostly the trend is toward more natural, less processed food. Paleo in the strictest terms could mean no bread, but for us it means developing a new range of loaves that could be described as a combination of cakes, muesli bars, bread and nut mixes. Some are in health food stores now and some are still in development.
People said gluten free was a fad, then they overlooked the prevalence of dairy free, and now they say paleo is a fad. Thirteen years on I'm convinced of one thing: eating healthy is not a fad, but our ideas around what this is will continue to evolve.
Venerdi is a bakery, but in time I think we could do raw food too. We want to play big but act small; we want to have fun and be in a strong enough position to move with the market and take Venerdi to the next level.
Coming up in Your Business: Building networks is important to keep connected, get exposed to new thinking, and get leads for new business. Who are some of the great small business networkers out there, what networks do they tap into and how have they made the most of them? If you've got a story to share, drop me a note: nzhsmallbusiness@gmail.com
