I went to a farmer’s market yesterday and there were two stands that stood out:
Pecan butter - a jar of pecan butter for $10
Juice stand - a large cup of fresh squeezed juice for $8
The pecan butter stand also sold pecan flour and other pecan products, locally grown in Austin. We walked up, there wasn’t a line.
The juice stand had a line wrapped around the corner with at least 30 people waiting.
Pecan butter just seems like a far worse business.
Quantity - If a couple walks up to a juice stand, they might order 2 juices. Most won’t order 2 jars of pecan butter.
Frequency - Someone might get a juice every week if they go to the farmer’s market. Pecan butter is probably at best a once a month purchase.
Price - Pecans are expensive ($7/lb)?. Fruit isn’t cheap, but surely the margin on an $8 juice is better
Demand - People want juice already. They already think it’s healthy.
Marketing - Everyone already knows what it is, different fruits are colorful, bright, and lead to beautiful imagery.
The experience made me reflect on how half the battle is probably just choosing the right game to play.
Great example. I heard a related idea from Garry Keller yesterday - Make your money going in - Knowing your market and your opportunity well enough to know you are making money on a deal as you enter the deal. You'd rather know you are going to come out ahead when you eventually exit a deal than pin your gains on hoping something happens that you don't have control over while you are in the deal.