Small business Q&A
Phoebe Yao and Neil Lan, founders of the country’s latest confectionery company, tell Aimee Shaw about investing $150,000 to create a caffeinated chew product and managing the manufacturing process
What does your business do?
Littos makes chewable caffeine tablets and each pack is equivalent to a cup of coffee. Our chews come in a pack of 25 chews, they look like mints but are instead edible coffee. We started working on the project in September last year when Phoebe was pregnant, and began distributing our product in March. We plan to release three or four new flavours early next year. Our chews are sold in over 24 supermarkets, 200 convenience stores and 50 liquor stores.
What was the motivation for starting it?
Yao: My husband and I have always loved drinking coffee, and now more than ever, since we’ve had our first baby, life is only getting busier. Making our coffee at home or even stopping off at a cafe is now a lot more challenging, so we wanted to create coffee chews to make a quick caffeine pick-me-up more accessible for busy Kiwis.
How big is your team?
Our team includes myself, my husband, a technology officer, a creative manager, and a social media expert, who are contractors and also good friends. Our parents act as business advisers; they sell and export large containers of frozen foods to China from New Zealand. To expand our market coverage, we also engage with professional distributors.
What are your long-term plans?
We have always wanted to expand our brand. Some long-term plans we have include introducing new flavours of coffee chews, and new products. We also have aspirations to collaborate with local coffee roasters to bring limited-edition “local” coffee chews. We would also like to export to Australia and Asian markets.
What did the manufacturing look like when creating recipes for the chews?
We initially did a lot of research on New Zealanders’ favourite coffee flavours — this meant we drank a lot of coffee. Our ingredients are quite simple, but we found reaching a good balance of ingredients challenging and required a lot of testing. We tried a number of combinations of different recipes. Fortunately, we have a good friend who has worked in the coffee industry for almost 20 years and now owns a coffee roaster. He helped us to test the flavours and provided feedback. The whole process took over two months to decide on the final flavour.
What’s your background?
We previously owned a company that assisted in building e-commerce platforms and inventory systems for online shopping stores. Soon after, we entered the import-export business,
which my family had been doing for many years. We then felt it was time for us to start our brand so we created Yonutz, in 2016, creating bite-sized yoghurt balls that came in a variety of different fruit flavours. The products were an instant hit online. We sold over 20,000 pouches each month. However, due to the high costs for production and low margins, it became incredibly difficult to land the product to offline retailers.
What challenges have you faced in your business until now?
The coffee market is huge, and different people have different preferences, which means that not only are we facing pressure from distribution, but we also need to put a lot of effort into manufacturing more flavours that will satisfy different customer needs. Littos’ chews are a unique product and is a very new concept in the market. Despite receiving good market feedback, we still need to put lots of effort into educating the market. We only sell our chews at the checkout counter, which is dominated by a number of large international companies, so it’s very challenging as a start-up company to compete with those big players. Despite all the challenges, we believe that anything that will make people’s lives easier will succeed.
What advice do you give to others thinking about starting their own business?
Lan: Identify a problem in the market and figure out solutions. Executing the solution is the hardest part as you may also have competitors that have answers, too. Beyond that, you should be incredibly passionate about the market you wish to enter as then you are more likely to put in 110 per cent effort. Make sure that a gap exists in the market for your product or service.