One to watch: The film director whose coconut-water start-up is growing at 250% a year

Discover how Jonathan Newman’s start-up Chi is cracking this uber-trendy market

Three reasons you should be watching Chi

  • The founder is film director Jonathan Newman, who made is first feature film at 25: Being Considered, starring James Dreyfus and David Tennant. Other films include: Foster and TheAdventurer: The Curse of the Midas Box, Teeth, Swinging with the Finkels, and Foster and a forthcoming biopic of Roald Dahl.
  • It’s had 250% year-on-year growth since launching in 2011 and is on course to turnover £6.3m this financial year.
  • Its coconut water is sold in 30 countries including Scandinavia, Malta, Poland, Kuwait, Dubai, Russia.

CHI’S VITAL STATISTICS

What it does: Chi makes healthy food and drinks
Founded: 2011 in London
Founder: Jonathan Newman
Size of team: 5
Your name and role: Jonathan Newman, MD

250% year-on-year growth since launch, on course to turn over £6.3m this financial year.

What problem are you trying to solve?

There is a disconnect between health and food and here at Chi we are trying to solve this. The main problem with the food industry in the UK is that much of what consumers are offered in the snacking sector is highly processed. Health foods do exist, but often this just means they are low-fat, when in fact there is growing evidence that the main culprit in the obesity crisis is not fat but sugar. At Chi we are aiming to provide unprocessed natural foods and drinks, with nothing added and nothing taken away. Real health food that nourishes your body and tastes fantastic. 

How big is the market – and how much of it do you think you can own?

In the UK, Chi’s range goes across coconut water, milk and oil. The entire UK market is worth around £50m and I’m hoping we can own 40%.

How do you make money?

To make money you have to buy goods at a low price and sell them at a higher price! But you also have to have an appreciation of the importance of cashflow. Small start-ups often manufacture more than they sell which can cause cash flow problems and this must be factored into the equation. What is also important is to keep looking at ways to innovate and create exciting new products that consumers will love.

Who’s on your team that makes you think you can do this?

I have a small but great team here at Chi. In the beginning it was just me but as time has gone by the company has expanded and I have a fantastic team working to help the business grow. The operational team is the hub of the business, the central nervous system playing a vital role. We have a complex supply chain that needs to be handled intelligently and with care – and I can trust my ops team to keep this chain running smoothly and efficiently. 

Chi health foods team

The Chi team (and dogs)

Who’s bankrolling you?

We are lucky as we have an exclusive arrangement with a big ingredients’ supplier which means we don’t have to worry about getting investment from banks and other parties. We have a symbiotic relationship with the supplier – we are able to access product without paying up front, and we in turn offer reliability and prompt payment.

What advice would you give other entrepreneurs trying to secure that kind of finance?

Our relationship with our supplier is a creative one – we had to think outside of the box and we came up with a unique way of working that has transformed our business. I’d recommend people try to think laterally about their supply chains, and try to build up goodwill and trust with their contacts. 

What do you believe the key to growing this business is?

The more you expand, the more you need capital. Finance is crucial and having the ability to have cash flow to meet the demands of production is absolutely vital. You need to look ahead and put systems in place – like our agreement with our supplier – that allow you to grow. Innovation in the category is very important too. We have seen lots of copycat brands flood the market so we have to think ahead and adapt so we can maintain the very best offering for the consumer. For example, our about-to-launch new coconut water Chi Raw is the first organic raw coconut water on the market. From grade A Nam Hong coconuts (the sturgeon of the coconut world) this is simply the sweetest tasting coconut water there is.  

What metrics do you look at every day?

I look at every aspect of the business every day! I do my own bookkeeping to keep on top of the finance, and I check in to all other areas regularly. I’m a great believer in the importance of dealing straightaway with any issues that may crop up, and I see potential problems as positives – they educate and inspire us to move forward in more successful ways.

What’s been the most unexpectedly valuable lesson you’ve learnt so far?

In our infancy we had a bad debt – an overseas distributor in Australia owed us £80k and they didn’t pay. They then copied our brand and told all of our other customers there that we had rebranded. The business almost folded and it was a very steep learning curve. I vowed never to let this happen again and we took out credit insurance, which means all of our distributors must be approved before credit arrangements can be agreed. If they don’t get approval, we need payment upfront. So the most valuable lesson is that: where big sums of money are involved, trust is just not enough.

What’s been your biggest mistake so far?

Doing business without credit insurance in place – not only did the business almost fail, but we had to litigate and spent £250k on legal costs. The only winners were the lawyers. With hindsight the situation could have been avoided with more stringent vetting of distributors.

What do you think is on the horizon for your industry in the year ahead?

I believe there will be continued growth in the coconut products sector, with more mainstream players getting involved. Also there will be innovation towards organic, raw and fresh products.

Which London start-ups are you watching, and why?

I am interested in high quality products that offer innovation, not just variations on a theme that can lead to market saturation. The dairy-free category is of interest, and one start-up that has caught my eye is The Pressery, which produces raw almond milk that’s absolutely delicious – I am a huge fan. It’s a product that’s scalable too, something that always excites me.

I’m also excited by Chi’s sister company Giving Tree, due to launch in May. Giving Tree is a snacking range of freeze-dried fruit and veg. Although this is a flourishing category in the US, it doesn’t exist here and the Giving Tree range will introduce a new super healthy snacking option to the UK consumer. Freeze-drying means that the nutrients and taste of the foods are preserved, and the snacks will provide one of your five a day.

www.chilondon.com

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Readers' comments (1)

  • I love coconut water it works wonders on me, my favorite is this one http://www.tiana-coconut.com/products/coconut-water/ Before I used to buy the vitacoco because it was easy to find it anywhere and also the cocofina but I started paying attention to the sugar levels and other aspects because it's important if you are buying the water for the heath benefits. The TIANA's is raw, nothing added. The Chi one I didn't know it but will try it :)

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