Gourmet meat pie company proves a winner after adopting a 'virtual model' to conserve risk and limited capital

By Andrew Patterson

Starting a successful FMCG business with just $3,000 in capital might seem a bit far-fetched, particularly in the middle of a recession, but that didn’t stop two Auckland women from at least having a go.

Five years on they’ve been rewarded with annual sales growth of more than 250% and hopes of entering this year’s Deloitte Fast 50 rankings for the first time.

Chancing their luck in 2008, former ex-pats Jessie Stanley and Maree Glading were casting around for something to do after returning from their OE.

Following a few bad pie experiences they quickly decided one of New Zealand’s most iconic food categories was ripe for disruption which lead to the creation of The Lovely Little Food Company and the I Love Pies brand was born; ironically on Valentine’s Day.

“We had both spent time living overseas working for large multi-national food companies and one of the first things we noticed when we got back was how disappointed we were with the standard of some of the pies we tasted. The quality just wasn’t up to scratch.”

“That lead to our decision to create a pie that people would absolutely love so we set about making some for our friends and family and their response was really positive and encouraged us to pursue the idea further.”

New Zealand’s love affair with pies is well known. We boast the highest rate of pie consumption per head of population in the world chomping our way through around 60 million meat pies a year. That’s an average of 15 pies per person per annum.

It didn’t take the pair long before they realised that baking pies in their own kitchens wasn’t going to be a practical option to sustain the business long term. So they approached a local bakery to get involved with the production side of the business.

“Initially we started taking our pies to the local farmers markets in Clevedon and Matakana and after selling more than 100 pies in just under an hour we knew we were on to something.”

“It was one of those a-ha moments, and when we thought about it we realised there hadn’t really been any disruption to the pie category for some time and it continued to be dominated by product offerings from large FMCGs.”

“Our time overseas had given us the understanding and experience of working within these FMCG companies with huge budgets and learning all about their processes and procedures so we had gained a lot of inside knowledge about the food business that we were able to draw on.”

Business Model

What makes The Lovely Little Food Company somewhat unique in the food category is its business model.

With all aspects of the business outsourced including production, sales and distribution, it operates on something of a “virtual” model where capital requirements are limited and business risk is contained.

Jessie Stanley says the model is much more common overseas than it is here.

“When we were living in the UK we came across lots of small companies using this idea of a virtual model where you can effectively outsource a lot of your processes leaving us to focus on what we do best which is the innovation and marketing side of the business.”

Quality Control

Maintaining quality control is obviously critical for any food business and the two co-founders put a lot of emphasis on this aspect of the business.

“We have really tight processes in place. We hand select every single ingredient that goes into our pies and we regularly carry out audits of our product to ensure consistency. We also maintain a very close relationship with the bakery to ensure quality is being maintained.

No two pies look the same and carry their own individual appearances reflecting the ‘home made’ nature of the production process.

“The farmers markets have become a very effective point of contact for us where we can directly engage with our customers gaining feedback both in terms of quality and insights, but also it allows us to experiment with new ideas.”

“We also vet our suppliers very carefully. For instance, we go out and check on our poultry supplier to make sure the chickens are happy and free range.”

“Also, our pastry is made with sour cream and butter because we realise the pastry in a pie is as important as the filling.”

Pricing

Many people would argue paying almost $20 for a pie is a bit over the top, but as Maree Glading points out, it also reflects the premium nature of the product and the ingredients.

“We have very expensive ingredients and to an extent that dictated the price point. But we found the farmers markets really helpful with determining the price we should be charging and in the end we opted to keep the retail price at just under $20.”

“However, you also have to think of it as a full category meal and when you consider it in those terms you would generally struggle to put a meal on the table for four people at under $5 per head.”

“We also point out that our pies contain a full kilogram of meat and our pricing reflects that.”

Sales & Marketing

The company’s products are sold through supermarkets and high end retail food outlets which have provided the business with an effective sales channel that matches the product offering with the appropriate target market.

“The farmers markets have been really effective at helping us to demonstrate to retailers that our pies are in high demand. We’ve also been lucky that premium food stores such as Farrows and Nosh started out around the same time as we launched the business so to an extent we’ve grown up together.”

With no above the line advertising spend, every spare dollar available for marketing is directed towards point of sale promotions.

“We say that if you’re able to try our pies then you’ll end up buying them so all of our marketing spend goes into funding in-store demonstrations.”

While you’d expect pies to be a seasonal product it seems demand is fairly consistent throughout the year.

“We actually thought they’d be a drop off in sales during the summer months and while sales do dip slightly, there is a year round demand for readymade meal options. In fact, over the summer months there is a strong demand for quick and easy meals, particularly when people are on holiday.

Future plans

Exporting to Australia remains a possibility in the future for The Lovely Little Food Company.

“We’re actually off to Australia in a couple of weeks’ time to begin to investigate the option of exporting across the Tasman, so watch this space.”

“We’re also keen to look at other brand extensions that fit our business model beyond our tomato sauce and party pie offerings that we have in addition to our main pie business.”

As Jesse Stanley likes to say: “The pies the limit!”