How Alex Houseman from Over The Moo created the next big thing
He’s walked away from a deal on Shark Tank to grow a million dollar business selling non-dairy ice cream. For Alex Houseman, Founder and Managing Director of Over The Moo, it’s a long way from what began three years ago as a serious bout of ice cream envy.
Over The Moo grew 400 per cent in the last year and is the first independent non-dairy ice cream product to crack Australian mainstream supermarket retail (in a category dominated by giants like Bulla and Unilever). In just two years the company grew its distribution to about 1000 stores nationally, 500 of which were Woolworths and rest independents. According to Euromonitor Inernational, Australia is the world’s most innovative market vegan ice cream, driven largely by demand for free-from and organic products, millennials and growth in adoption of plant-based diets.
“It’s been pretty white knuckle, to the extent I haven’t even taken a minute to reflect,” he said having just won the prestigious Telstra New Business of the Year award with his small crew.
The appearance on Shark Tank in July was another incredible breakthrough.
“For us Shark Tank really delivered the exposure in spades. For a business of our size to access a mainstream audience to the magnitude Shark Tank could offer is almost completely impossible. The ratings for that night alone were roughly 600,000; straight off the back of that, sales for July were 2.5 times the normal rate.
In the end Alex said didn’t accept the Hark Tank deal, saying the valuation was too low as it didn’t consider the pipeline from the brand’s recent expansion into 500 Woolworths stores, which ultimately tripled the business. “There was also a few issues with my pitch; at the time I didn’t control all of my IP [sharing the recipes with his manufacturer].”
But success stories have to start somewhere and for Houseman it was sitting on his third-hand blue couch with his girlfriend while she single handedly dug into a tub of ice cream.
“I couldn’t have any because I’m lactose intolerant. I had a serious case of FOMO and jealousy; what a better way to motivate yourself,” he said.
At the time business information analysts at IBISWorld predicted milk alternatives (soy and almond milk), to grow by more than 4 per cent annually to reach more than $182 million by 2019-20.
“To a certain extent this is a mature category. There’s been a revival of sorts in the last few years due to some innovation in almond milk. You could see there was huge traction and uptake in dairy alternative milk. People with lactose intolerance had established needs but at the same time there had been no innovation in ice cream. People who are lactose intolerant don’t just disappear at dessert time.”
With an analytical background in management consulting for food and agribusiness, and a later stint as a brand manager for large importer and distributor, his FMCG background and experience managing accounts in the major supermarkets served him well. “It was there I developed the passion for this kind of business for myself.”
After coming up with the initial receive inn his kitchen, Houseman found a manufacturer in Melbourne was willing “to have a go”, ultimately refining and commercialising his recipes. “I pitched them the product as a way of strengthening their business. They could see the total value of ice cream was stagnant in Australia or falling, there had been little innovation and people we’re leaving the category. I went to them and said, ‘Here is a way to grow your business without competing with your existing products to create a hero that sits in its own category.”
Over The Moo innovated within the non-dairy category, creating a new and unique alternative to dairy milk ice cream. At the time, there were other brands offering dairy-free ice cream but Houseman said the favours fell short and/or the price was too high. “If it’s going be that price [$15 for half a litre] you want it to absolutely deliver on the indulgence promise. When you want to sit on the couch and have that real indulgent experience, there was nothing available. I was finding myself eating an apple or something that just didn’t hit the spot.”
Clear market positioning and channel strategy
Closely tied to product innovation, Alex is unwavering in his commitment to delivering “dairy free indulgence” to the mainstream consumer (already buying alternative milks), rather than a product that is “the pinnacle of health”. This influenced everything from product development to distribution. “Health brands were being hamstrung by health promises they were making versus the channels they wanted to sell in. They try to sell their health credentials at the expense of their own positioning,” he says. “You need indulgence as part of any balanced lifestyle; to create true indulgence, we matched all of the macros as a normal ice-cream.”
“I remember feeling in the early days we’d cop a lot of criticism. People wouldn’t be happy about the amount of sugar or the type of sugar. When you’re smaller you can get pushed around by that feedback and start to adopt some of it, but ultimately you can’t take it all on and reach everyone because then suddenly you’re not talking to a mainstream audience shopping in mainstream channels anymore. Ultimately the question [of channels] is one every business has to answer. Do you want to play in Woolworths and provide to the mainstream or not? That was my background and I understood it best. I don’t want to get too romantic about it – if you want to be a grocery product in Australia, and you’re not going to play in Coles, Woolworths, Aldi and Costco, you’re limiting the size of your business. You’re always going to to be fighting up against it and there will be no economies of scale.”
A strong and consistent brand
The quirky and fun Over the Moo brand is consistently executed across all media from packaging through to social media. “I can honestly say without the brand, I’m not sure we would have the same traction.” Alex was hands-on in creating the brand from packaging to setting the tone and crafting the copy. (“I used to moonlight as a copywriter through uni. I loved writing anything to do with food.”)
Owning the hustle
The resilience and grit to take the product to the street day in, day out in his signature ice cream van was critical to creating a successful track record for Over The Moo and helped “de-risk” the decision-making process for those that would ultimately help determine the brand’s success. “I got the first batch loaded up my trailer and drove store to store for about year, knocking on doors…door after door, after door from Sydney to Canberra and then Melbourne. I was managing about 200 accounts of my phone on the road. Using technology like Xero meant I could issue accounts and invoices on the road. I was doing the work, chasing up orders, and only with that proven track record was I able to get Woolworths and then hand the individual accounts over to a distributor.
One big learning in this process was I went with mid-tier distributor first and saw sales fall because they weren’t managing the logistics well, they weren’t hustling and creating new accounts. But to get a top-tier distributor with an amazing sales team with feet on the ground, efficient processes to manage accounts and keep customers happy, I had de-risk the decision for them to take the brand. Approaching Woolworths was the same; the buyers have very strict KPIs on every inch of shelf space so you have to make the decision [to range the brand] easy for them.”
“They don’t say its what makes the world go around for no reason, but as I’ve learnt the hard way it keeps everything going,” Alex said. While he still maintains complete ownership of the company, Alex has recently taken on private finance. “It’s important to take the emotion out of borrowing and just see it as an instrument to make more money in a delayed period of time.”
Images courtesy of Over The Moo