Chilau Foods turns to crowdfunding to expand distribution, cracks lid on packaging innovation

By Ryan Daily

- Last updated on GMT

Image Credit: Chilau Foods
Image Credit: Chilau Foods

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Southern-inspired stew and flavor-base company Chilau Foods launched Wefunder crowdfunding campaign to fuel its retail expansion, as the company leverages packaging innovation to create a more accessible product, company founder Michael Anderson told FoodNavigator-USA.

With the help of a previous crowdfunding campaign, Anderson was able to launch Chilau in 2016 direct-to-consumer (DTC) to pay homage to his grandmother’s crab shalla recipe, a spicy crab and shrimp boil similar to New Orleans-styled gumbo, that also tapped into the blending of cultures and cuisines that he found in Tampa, Fla. 

“What you'll see with Chilau and the types of food we cook and really our positioning on the Southern flavor profile, it's that ... colliding of cultures. So, the type of dynamic that you get in a New Orleans where you have Native American, Spanish, and French culture, or South Carolina or Charleston, where you get the African Geechee culture. It's a similar dynamic [that] happened in Tampa between Cuban Spanish, Italian Sicilian, [and] African American cultures that really led to a cooking style that really resonated with me when I was creating the brand.”

Since its launch, Chilau went from two SKUs to a portfolio of flavor-bases and seasoning, which now includes Original Southern Style, Low Country Citrus, Creole Trinity and stew bases; a Crab and Shrimp Boil base; and seasonings, including Garlic Pepper, Red Jerk Fusion, and Original (chili peppers, garlic, cayenne and other spices) blends.

Currently, Chilau is available at Winn-Dixie, Market Street, Albertsons, and other retailers located primarily in the Southeast and Texas, as the brand plans to add eight more retailers by the end of the year with the help of a crowdfunding campaign.

Wefunder campaign tees up retail expansion, turns to crowdfunding again

Chilau is turning to crowdfunding again to fuel its retail expansion, this time with a Wefunder campaign​ that launched this week. As of publication time, the company ​has raised approximately $85,000 with 156 investors against a $4m valuation.  

“I believe crowdfunding is probably ... the No. 1 way to prove that you have something that's worth growing and something that's worth going after. You can say it has meat on the bones,” Anderson said. “It's something that can be profitable, and it's useful. It solves a problem. To me, crowdfunding is the No. 1 way to find that out without having to invest thousdands or millions of dollars in a concept before you put it in front of someone and say, ‘Hey, is this a good idea? Does it solve your problem?’”

Numerous food and beverage companies have resorted to crowdfunding efforts in the past, but some haven't managed to raise the money​ needed to accomplish their outlined business objective. 

Despite its track record, Anderson noted crowdfunding can be a tool to circumvent some of the capital barriers facing food and beverage startups, allowing brands to communicate directly with their consumers on the best direction forward. 

“If you're not hitting a certain number, you pretty much [are] told no a lot, and definitely from banks. It's all about the P&L and the balance sheet, and if it doesn't look right, they're not going to give you a shot,” Anderson said. “What I found is that institutional investors and banks, they only look at the numbers to assess if something's going to be successful, and crowdfunding, the folks that are backing you are looking at ... the founder’s story. Do they believe in the founder’s grit and ability to continue to learn and grow that product, and do they believe in the product itself?” 

Making the cooking experience more convenient, more accessible with EEASY Lid

Chilau is boosting product accessibility with the EEASY Lid​ from Consumer Convenience Technologies, which features a button to make opening a jar easier to open, he explained. 

“When I met the EEASY Lid team, it was a no-brainer, and learning ... it's been 75 years since a new innovation has happened with the jar lid, and EEASY Lid makes it 50% easier to open. It was something that I said, “You know what, this works for Chilau’ because our whole mantra is make the cooking process easier so that the home cook can try more interesting and delicious recipes, which is going to bring the family together.” 

Chilau products also makes the cooking process easier by cutting the time it would take to make these dishes from several hours down to 30-45 minutes, and consumers won’t need as many ingredients to create a restaurant-quality dish, he added. 

"When you're making these types of recipes, ... there [are] 57 ingredients that you need to go purchase, and having an all-inclusive solution to provide a flavor profile or a style of seasoning, without having to tweak it yourself is another aspect that I started learning from customers."

Startup struggle: Maintaining inventory, waiting until the money comes

Like many food and beverage startups, Chilau is also facing several challenges being a smaller company from ensuring adequate stock to anticipating the “next ask from the distributor or the chain,” Anderson said.

“The stage that I'm at, the No. 1 challenge is inventory and being able to have enough inventory on hand to meet the current demand, but also that gap of time from when you ship the product into when you actually get money back,” Anderson said. “Working with the big distributors and supporting the 370 locations we have now [and ] breaking into those chains sometimes requires a slotting fee, where you give two cases free or one case free fill, and when those cases hit the store that's not necessarily revenue that you're getting back.”

When it comes to driving velocities, capital becomes even more important because it is used to support marketing activities, he added.

“Now that I have this product on the shelf, what types of marketing and promotions am I going to do to let customers know what's on the shelf and to drive that velocity off the shelf? That's where the capital comes in. It's bridging that gap between I'm going to do a full batch of product [and] ... fulfill these POs to fill the shelves, [and] now, I need the capital to do marketing, social media campaigns to drive that.”

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