Microwave popcorn is a convenience food consisting of unpopped popcorn in an enhanced, sealed paper bag intended to be heated in a microwave oven.
With microwave popcorn people pay for the convenience. It is already in a bag ready to pop with seasoning and all. But we know that popcorn kernels are cheap, a dedicated low-cost provider manufacturing and selling at scale should be able to easily undercut current providers and be profitable.
In South Africa there are a few existing brands as well as some house brands. There is an opportunity for a low-cost brand aimed at the informal market and smaller supermarkets. Based on the quantity that is in microwave popcorn and the wholesale pricing of kernels we know that the price can be brought down significantly. At the moment retail is around R15/100g. But we know that all existing players outsource not only production but packaging as well. In the case of Ster Kinekor that is just their packaging over Hungarian popcorn.
We know that kernels are cheap and if bought in bulk it will be even cheaper. We have previously seen the entry of a really cheap microwave brand in smaller supermarkets coming in at <R10 (it might have been R7 or even as low as R5). But I found the packaging (or rather the popping bag) not to be optimal. Could the same price-point be reached with proper packaging, it might be possible if you can achieve some kind of scale by focusing on bringing the cost down.
I would solely focus on building a low-cost microwave brand and pushing down the price as far as possible. We have seen some go with fancy pop-up box packaging, I would look at a no-frills brand that has proper packaging (based on patent details I would research “susceptor popcorn bag” – I have seen printed bags with susceptor film inside). Sure you can probably use just a brown paper bag but that is not the best way.
Now you could certainly try a differential strategy, we know from our last discussion that popcorn comes in different types and there are some, such as those used in gourmet popcorn that are better for coating with chocolate or caramel, could this be done with microwave popcorn, maybe as there are recipes out there and the product as well. I think it might require quite some expertise that might not be worth going this route (it might be too niche). There might be some safety issues regarding the way it is heated in the bag that might produce byproducts. Like I said I would look deeper at a low-cost strategy. I mean R15 for 100g of popcorn is a luxury in modern South Africa.
Popcorn is one of those things where the raw materials are cheap and is widely available. We have looked at it in the past before: Buy & Sell Popcorn Kernels, Make & Sell Gourmet Popcorn as well as the business of Hiring out Popcorn, Candy floss and Slush Machines. Hell, we even explored the use of popcorn as building insulation.