INTRODUCTION
Nabati Food Global Inc. is a family-founded food tech company that provides healthy
food with natural, plant-based ingredients. They offer signature product lines that are dairy-free
cheesecake, cheese alternatives, and plant-based meat. Their main markets are both Canada and
the United States.
1. THE COMPANY’S BUSINESS MODEL
There are six important factors which are channels, partners, revenue stream, customer
relationship, value proposition, and cost structure.
In terms of distribution channels and partners, Nabati has its own websites to sell products
online. However, they are focusing on selling through retailers and distributors. For example, Tree
of Life, GFS, Sysco, and KeHe are the main partners to distribute Nabati products. Nabati is
cooperating with many famous retailers such as Save on Foods, Safeway, Jobeys, metro, and so
on. Recently, Nabati’s new partner is Costco which is critical in Nabati’s development.
Thus, it is obvious that Nabati continues to diversify its revenue stream across multiple
distribution channels (Eat Beyond Global Holding Inc., 2021). However, Nabati not only
completely depends on channels and partners to approach its consumers, but they also create many
marketing campaigns to develop the relationship between Nabati and consumers. They are doing
social media ad campaigns and store flyers ads. Moreover, Nabati also is being a sponsor of
participation at regional and national Festivals/ Expos where heath is the top priority to reach
targeting consumers.
Nabati has been focusing on the value propositions that play a significant role in its
development strategy. Nabati offers whole-natural plant-based products for health-conscious
individuals
looking
to
indulge
in
healthier
food
without
sacrificing
tastes
(Invest.nabatifoods.com). Its products are free from several major allergens, so Nabati is attractive
to some market segments.
In the cost structure aspect, Nabati seems like go more with value-driven model. They tend
to be focused on value creation. Nabati may spend a huge amount of money on technology to find
new ways to replace real meat with natural ingredients like plants, fruit, vegetable while keeping
good tastes for healthy foods. However, its price is very affordable. According to Nabati.ca (n.d.),
price ranges are from $5.99 CAD to $9.99 CAD. Nabati wants to increase health consciousness
around the world.
2. KEY CUSTOMER SEGMENTS
Nabati’s products are used by whole real fruit, nuts, and vegetables. According to
invest.nabatifoods.com (n.d.), Nabati is the first Canadian company to develop a plant-based egg
alternative liquid state which can be cooked to make scrambled eggs or omelets. Based on these,
we can realize that Nabati is focusing on veterinarians who would be the key customer segment.
Consumers may be veterinarians to follow their regions or people eat veterinary diets because they
have diseases such as diabetes, fat, and so on. Some people do not eat meat because they love
animals and are concerned about environmental problems. Most importantly, some of the
consumers are becoming more health-conscious, so they tend to eat more vegetable-based
products. In the nutshell, those kinds of veterinarians are highly concerned about their health and
healthy products. However, a general problem for all veterinarians is that many plant-based
products do not have good tastes like meat products. It is very challenging for consumers to follow
their veterinary diets. Therefore, the key customers are looking for plant-based products which not
only solve health problems but also in terms of good quality of tases.
3. VALUE PROPOSITIONS
Nabati builds its value proposition through healthy ingredients that are 100% natural to
attract its health-conscious consumers. Their products are egg-free, dairy-free, gluten-free, and
soy-free. With those benefits of products, they can adapt to all kinds of veterinarians no matter
they have the disease, food allergies, or not. Moreover, consumers demand good tastes in healthy
products, but healthy foods usually do not have good tases rather than junk foods. Nabati invests
in technology to make healthy food with good tastes.
4. TWO WEAKNESSES OF THE BUSINESS MODEL
As we mentioned above, Nabati owns various distributions and retailers such as Costco,
Save on Food, Safeway, and so on. However, dependence on retailers is also one of the weaknesses
of Nabati’s business model. Nabati does not concentrate to create its own sales system and
customer base. Nabati has marketing campaigns and its own websites to sell to online consumers
by themselves, and there are a few independent stores. However, it is not a solution for long-term
development because Nabati’s revenue mostly comes from retailers. One day, if Nabati cannot
cooperate with those retailers anymore, this will be a true disaster for them.
On the other hand, like other value-driven businesses, Nabati may have to face a problem
which is how to balance its values and its costs to make profits. Although the values and messages
of Nabati make great contributions to change the bad eating habits of many people, they need to
pay attention in terms of managing costs. Some sustainable and social businesses are too focused
on social contributions, and they forget that they need profit to maintain the company. According
to csimarket.com(n.d.), the average gross profit margin of the food industry is 18.84% in 2021. In
fact, the gross margin of the food industry is not very high compared to other industries. This is
the reason why food companies usually go with a cost-driven model because they must carefully
manage costs to maximize profit. Particularly, Nabati is not only a food company but also should
be considered a tech company because they invest in technology to create food. Therefore, Nabati’s
expenses may be higher than other companies that are without high tech applications.
5. SOLUTIONS FOR BUSINESS MODEL
To reduce dependence on distributors and retailers, Nabati should invest to establish a sales
ecosystem. For the first time, Nabati should increase sales through its other e-commerce such as
Amazon, eBay, and so on. After that, they cooperate with the delivery company, and they may do
marketing, and offer appealing deals to encourage consumers to make purchases on their own
websites. Although Nabati has some physical stores, Nabati’s revenue still largely comes from its
retailer’s partners. In the long development, Nabati has to focus to build independent stores that
would become the main places that the consumers should go there to make purchases instead of
retailers. Retailers should be the only second choice of consumers when they would like to buy
Nabati’s products. In the further future, Nabati should also invest in logistic distributions to reduce
dependence on distributors and solve many other problems in terms of cost reduction and optimum
use of resources.
The company has two ways to deal with the low-profit margin. The first direction is that
they can change to the cost-driven business model. Nabati does not need to create products with
excellent quality, but its products are good enough quality in terms of health and average tastes to
sell products at reasonable prices to increase the sale volume. The second direction is that Nabati
can position themselves as high-end products with high-tech food technology. Its price should
increase, and its segment customers are health conscious with high-income. Although sales volume
will decrease because of increasing prices, Nabati can gain a high-profit margin.
6. ENVIRONMENTAL SCAN (CREST)
The regulatory factor should be the first concern of any business. Managers should have a
wide knowledge of the legal practices of both US and Canada the nature of their business to avoid
losses and repercussions. In the case of Nabati, they are working in the food industry, and its target
consumers are health conscious. Therefore, health and safety regulations are critical in Nabati’s
operation. Nabati’s markets are US and Canada, so they must follow both Canadian and US food
safety regulations. Nabati should establish a quality team management that understands food
regulations to avoid legal issues and increase the company’s image.
In terms of the economic environment, there are many influences on Nabati with the current
economy. One of the external factors is the Covid-19 pandemic which may largely affect on
suppliers, distribution, and export activities of Nabati. However, Covid-19 pandemic is warning
for humans about health concerns. Covid-19 is challenging, but it is also an opportunity for Nabati
when human starts to increase their health consciousness. Moreover, we are currently facing a very
high inflation rate that 5.1% in Canada (StatsCan. gc.ca, 2022), and 7.5% in the US (CBC, 2022).
The manager team of Nabati has to be careful to make decisions about price changes.
References
https://www.newswire.ca/news-releases/eat-beyond-portfolio-company-nabati-now-supplyingplant-based-cheeze-to-mucho-burrito-809151512.html
https://csimarket.com/Industry/industry_Profitability_Ratios.php?s=1000
https://www150.statcan.gc.ca/n1/daily-quotidien/220216/dq220216a-eng.htm
https://www.cbc.ca/news/business/us-inflation-january-1.6346282#:~:text=Business,U.S.%20inflation%20rate%20soars%20to%20another%2040%2Dyear%20high%20of,its%20hi
ghest%20level%20since%201982.
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