food4fans | Overview

The German soccer Bundesliga is booming! Each year, German Bundesliga clubs sell a growing number of merchandising articles, as the 17. Fanartikel Barometer (memorabilia barometer) confirms. The clubs' merchandising business is experiencing steady growth, and the Bundesliga clubs surpassed total revenues of €250m for the first time in the season of 2013/2014. food4fans is aware of this development, and in November 2012, the company started a business model that is so simple that it makes people wonder why nobody has thought of it before.

As early as in 2014, food4fans posted revenues of €300,000. The company's success story began with a very simple question put to the former president of the Bundesliga soccer club Hamburger SV (HSV): "You are selling various HSV memorabilia, such as pacifiers or singing toasters, using your brand. Why don't you sell any groceries, for example snacks?" "That's a good question. I can't tell you myself, but why don't you talk to our merchandising department" was the president's important response that eventually led to the foundation of our company.

Part of the food4fans Product Range

food4fans has developed an innovative business model that enables clubs to better market their club colors and logos through a range of branded snacks. The food4fans approach is based primarily on the idea that the range of snacks is sold not only via the limited number of fan shops and via the online stores of the clubs, but also via established store chains such as Edeka, Rewe, Kaiser's, Coop, the Metro Group, and other sales channels, for instance beverage stores, kiosks, gas stations, drug stores, hardware stores, etc.

This business model is lucrative not just for food4fans, but also for the clubs, who have a vital interest in attracting more attention from their fans in the grocery sector.

Soccer is emotional, and food has an emotional component too; most importantly, demand for a team's products is constantly increasing. Merchandising revenues in the 1st German Bundesliga division increased by 278 % over the last 10 years (source: 17. Fanartikel Barometer) and surpassed €250m for all 3 Bundesliga divisions combined in 2014. And these figures are still on the rise! However, the clubs' product ranges used to lack products that could be consumed and bought again very fast. In other words, they lacked snacks! 

Snacks by food4fans on a shelf at Metro

Within only a few months, 8 Bundesliga clubs signed agreements with food4fans, and by now, this number has increased to 13.

These partner clubs include FC Bayern Munich, Borussia Dortmund, Hamburger SV, VfB Stuttgart, 1. FC Köln, and teams from the 2nd Bundesliga division, for instance FC St. Pauli. Clubs from abroad, such as Champions League participant NK Maribor from Slovenia, purchase products direct from food4fans and do not require food4fans to purchase a license first. Moreover, we are currently negotiating with clubs from Turkey, the Netherlands, and Denmark.

Clubs Supplied by food4fans

food4fans enables clubs to access the grocery retail sector. By now, our products have been added to the product ranges of Kaufland, Kaiser's, Rewe, Edeka, Metro, Selgros, and other major chains. In addition, we are currently negotiating with service areas and gas stations as well as with drug store chains, furniture stores, and hardware stores. 

Sales Partners of food4fans

Our simple business model provides us with an unlimited number of growth opportunities. While we were focusing on the sale of our over 130 different products, we received inquiries from various sectors, for instance from the music industry.

Nowadays, people who order Rammstein products online receive a giveaway designed and produced by food4fans: wine gums shaped like the band's logo. We also plan to introduce another Rammstein product. 

Sample Projects Related to Artists

The small, grey wine gum Ottifant made for German comedian Otto Waalkes, on the other hand, is already being developed, and a marketing concept for the small Tabaluga dragon (created by German rock singer Peter Maffay) within the grocery retail sector is currently being negotiated.

Timeline Showing the Planned Addition of New Product Groups from 2013-2016

Step by step, food4fans will access new business segments and will thus try to serve a huge merchandising market. 

Food4fans offers snacks with the brands of Bundesliga clubs for sale. A unique feature of our products is that the club colors appear not only on the packaging, but also in some of the products themselves, for instance in the case of lollipops, chocolate beans, and Hamburger Speck (a local specialty similar to marshmallows).

At the moment, our product range consists of 11 snack products whose shelf life ranges from 6 months to unlimited. This range includes both sweet and salty products that are considered classics within their product categories. More specifically, our product range includes:

Some Products from Our Product Range

Our products have several different benefits. First, the products enable fans to buy their favorite snacks in their favorite team's colors. Second, our products enable clubs to significantly strengthen their own brand and to reach their fans through the grocery retail sector as well. Finally, retail chains may add new snacks to their product range in order to reach a larger target group, and these chains may become brand ambassadors at the same time.

Our business model is based on an exclusive licensing agreement that includes all rights concerning the marketing of products in the area of snacks on behalf of the licensor. For these rights, food4fans pays a licensing fee and, in return, receives the marketing rights for its own sales channels and sales support by the licensor through the licensor's sales channels (fan shops, web store, promotion in stadiums). The sales support food4fans receives depends on the individual club and ranges from advertising in stadium magazines and the joint acquisition of partners from the grocery retail sector to the production of commercials. Moreover, there are joint appearances at trade shows. 

Hamburger SV Midfielder Dennis Diekmeier Searching for Marshmallows

So far, we have made licensing agreements with 13 clubs from the 1st and 2nd Bundesliga divisions, and other clubs have already shown considerable interest in our merchandising products. In this context, we are currently negotiating with representatives of Galatasaray Istanbul among others. Because of this club's huge fan community in Germany (which consists of 3 million people in Germany alone according to Galatasaray), the negotiations seem promising. Moreover, we have already supplied Champions League participant NK Maribor with a first batch of lollipops and chewing gum. Ajax Amsterdam and other clubs from abroad have also contacted us.

Food4fans is currently offering 11 different branded products (sweet and salty snacks) with an average gross profit of approx. 41 %.

Depending on the individual product and on the purchasing terms, this value varies between 36 % and 49 %. In the future, we plan to achieve higher margins through better terms related to our increasing purchasing volumes and through changes to our own logistics processes.

In addition, we will deliver an increasing number of goods in their original boxes rather than in expensive displays to customers such as Metro, and we believe that this will also lead to economies of scale.

Apart from licensing agreements with clubs, product placement within the grocery retail industry is our greatest challenge. This so-called listing process is time-consuming and requires various resources, depending on the retail chain. Because of our long experience in the food sector and our very good contacts, we have been successful in this respect and have been listed by several major retail chains. This corresponds to a competitive edge of up to 2 years over potential competitors.

We provide retail chains with two alternative ways of placing the food4fans products in their branches. First, we offer them a stand-up display that consists of 4-5 levels and is filled with our products; in this case, customers may choose between displays containing a single club's products and displays containing several clubs' products.

In many cases, it makes sense to offer the local club's products together with those of Bayern Munich and Borussia Dortmund. Since our products tend to be slightly more expensive than similar products without a club's logo and colors, it is very important to us that, for example, our potato chips are not placed next to other potato chip brands but in separate displays. The disadvantage of this approach is that retailers discard the displays once all products have been sold and that they do not necessarily reorder the displays afterwards.

Different Types of Displays

Second, we offer delivery of our products in boxes for shelves. If possible, our products should be offered together on the same shelf, which Metro is already doing. This type of product placement does not make our products look like special offers, but it makes the products a permanent part of a store's product range.

Small soccer clubs and other sports clubs that order products from us form a separate customer group. In this case, we deliver a fixed amount of items without a licensing agreement, and the club bears the risk of selling these items or giving them away to fans. 

Furthermore, we intend to increase the online sale of our products in the future. In fact, we recently launched our own web shop www.mein-fankiosk.de. 

Website

To date, there are no comparable products on the German market. Why is that? We asked ourselves this question many times, for the product range fits very well into the merchandising product range of the clubs.

Why does no club produce the snacks itself?

• In order for production to be profitable, clubs would need to produce a certain minimum amount that they cannot reach on their own.

Still, why has no major producer focused on this area yet? There are two main reasons:

• Major producers are not interested in making products without their own brand.
• No company offers such a complete product range.

But we are not completely on our own. Indeed, one company produces seasonal items (for Christmas and Easter) for us, and another one produces a small candy tin and a small bag of soccer ball wine gums.

Thus far, we have made agreements with 13 Bundesliga clubs. Our partners include FC Bayern Munich, Borussia Dortmund, Hamburger SV, FC St. Pauli, and 1. FC Köln among others. 

Our Partner Clubs

Moreover, we collaborate with Rammstein, German comedian Otto Waalkes, and German musician Peter Maffay.  

Peter Maffay and Matthias Graf Lambsdorff at the "Goldenes Schlitzohr" Award Ceremony

Our business partners, i.e., the producers of our products, are from various regions. For instance, our lollipops are made in Germany, our chocolate beans in the Netherlands, our toffees in Poland, our wine gums in southern Germany, our marshmallows in Hamburg, our potato chips and trail mix in the German region of Lower Saxony, and our pretzel sticks in Alsace (France). We have not yet decided on our peanut supplier.

All of our suppliers are constantly supervised by food inspectors and possess the certificates required by retailers.

We closely collaborate with the Bremen-based logistics company TM-Logistik. Indeed, this company managed by Tarkan Tiral has been Matthias Graf Lambsdorff’s partner for 15 years (i.e., even longer than food4fans has existed), and it both stores and packs our products for shipping. One of our requirements was a daily transfer between Hamburg and Bremen, and TM has not had any difficulties meeting this requirement.

Another one of our partners – Suris GmbH – is headquartered in Oststeinbeck. This company run by Stefan Beitz packages our products on our behalf and stores them. Thus, we save time and are able to better react to demand. These two important aspects also have a positive effect in terms of our finances.

Our customer base can be described as follows:

Our customers are grocery retailers and retail chains that purchase our products. These products are available or will soon be available in all major grocery retailers' stores (with the exception of discount stores). We believe that in addition to grocery retailers, furniture stores, hardware stores, gas stations, beverage stores, and other sectors may also become our future partners.

The conventional wisdom is that soccer has 80 million fans in Germany. However, this is only true during world cups.

According to a survey by Germany's oldest opinion research institute, the Institut für Demoskopie Allensbach (IfD), 55 % of men and 16 % of women are soccer fans. These two percentages combined correspond to roughly 30 million fans and potential consumers of food4fans' products.

As the study shows, FC Bayern is at the top of the table (with a share of 23 %), followed by Borussia Dortmund.

As we do not sell our products direct but via retail chains, the number of these chains' branches is also relevant to us. Grocery retailers and gas stations combined have slightly more than 100,000 branches in Germany.

Let us take, for instance, Hannover 96 as an example and look at the relevant markets. Edeka has a total of 1,590 branches located within the region relevant to this club. From these branches, we selected 99 branches suitable for Hannover 96. If we assume that each branch sells one item per snack and week on average and if we include REWE, Kaufland, Rossmann, and the fan shops in our calculation, potential annual revenues for Hannover 96 amount to €230,000. In a purely theoretical scenario, potential annual revenues for 13 clubs (not taking into account any differences in revenues for each club) would thus amount to €6.5m.

Matthias Graf Lambsdorff – Managing Director

Matthias Graf Lambsdorff is an experienced and successful entrepreneur and the key figure of food4fans. During the start-up phase, he took care of almost all company departments, ranging from communication with sports clubs, customer acquisition, and support of the purchasing and sales departments to business and product development.

Since the early 90s, he has owned an agency of Jacques Wein-Depot (a German chain of wine stores). A few years later, he founded a gourmet product trading company together with a French business partner, and this company has been profitable ever since. As is obvious, he focused on food in many of his projects.

Dr. Matthias Graeper – Finances, Controlling

At food4fans, Dr. Matthias Graeper is in charge of the company's finances. He is mainly responsible for the company's financing, for reporting and controlling tasks, for communication with banks and investors, and for negotiations concerning the company's legal agreements.

From 1987 onward, Dr. Matthias Graeper worked for several private equity funds and financed a large number of transactions in the context of management buyouts, particularly those concerning German SMEs. The companies on which I focused in this work came from sectors such as retail, women's wear, mechanical engineering, and facility management and services.

Jörg-Michael Umbach - Sales Director

He knows everyone, and everyone knows him. For many years, he has been collaborating with the purchasing departments of all major grocery store chains. At food4fans, he uses his expertise with great enthusiasm because he believes in the opportunities for merchandising articles in grocery retail.

Frederik Meyer – Purchasing

Frederik has internalized the saying that money is made in the purchasing department, and he has achieved many things ever since he joined food4fans. He enjoys searching for new purchasing sources and getting better prices. In addition, he supports the sales department and supervises a few minor projects.

Last year, food4fans generated €300,000 in revenue. In the first two months of 2015, the company developed as planned, and the last in-house fair at Rewe was successful too because 78 displays were ordered. Moreover, Lekkerland will very likely add our products to its product range. Lekkerland supplies approx. 60,000 B2B customers with its products.

Four new products for Duty free specialist Heinemann are in the final stage of development. In early April, three of these products (Salt&Pepper, Honeyset, Berlin Curry) will be delivered, whereas the fourth product (a Bayern Munich cookie tin) will be available in early May.

We are also working very hard on finishing the design of the FC St. Pauli products.

Overview of Future Products

For more than a year, the Aral gas station chain (which operates 2,500 gas stations in Germany) has been running tests with the food4fans products in Hamburg, Dortmund, Cologne, and Munich. While tests in Hamburg have been less successful because of the HSV's position at the bottom of the Bundesliga table, test results in Dortmund and particularly in Munich have been positive.

A few weeks ago, food4fans signed agreements with two sales agencies. One agency deals with the western German region of North Rhine-Westphalia, whereas the other focuses on northern Germany. Through these agreements with the two agencies, we want to ensure shelf maintenance in supermarkets and local support for every single customer, i.e., for every single store. Our search for agencies in the south of Germany and in Hessen will certainly also be successful soon, for in the south in particular, good shelf maintenance and customer care is highly necessary.

In addition to the expansion of our existing business, we will focus increasingly on small clubs and customers.

Nevertheless, we will also work on our product range. Indeed, there will be peanuts and, for most clubs, wine gums shaped like the club's logo or mascot. We will shortly publish some additional projects on which we are working.

We plan to use the capital raised primarily to

• hire additional personnel: We will at least hire an additional employee for sales, one for projects, and one for the shop and for social media. In order to expand and keep to our plan, we need this additional capital as soon as possible (within the next 12 months at the latest).

• finance the working capital, for rapid revenue growth also causes receivables and inventories to increase.

• make advance payments for licenses to Bundesliga clubs.

food4fans GmbH & Co. KG

Headquarters: Prinzenholzweg 9, 23701 Eutin, Germany

Mailing Address, Administration, Warehouse: Boschstr. 15k, 22761 Hamburg, Germany

Phone: +49-40-897207770 Fax: +49-40-897207779

info@food4fans.eu, www.food4fans.eu