Startup lessons at a glance
- A successful product isn’t always a scalable business – manufacturing, logistics, distribution and seasonality can derail even the strongest food innovation
- Founders should validate customer demand before perfecting formulations because commercial success depends on solving real consumer problems, not just creating technically impressive products
- Knowing when to pivot can be just as important as knowing how to formulate, particularly when the business model no longer supports sustainable growth
The functional latte blends that have become the cornerstone of Suraj Meharwade’s business weren’t his first idea.
When the food scientist founded California-based FIHI Nutrition (pronounced fee-high) in 2022, he launched with a range of premium chocolates infused with ingredients such as turmeric, lion’s mane, maca and ashwagandha. The concept reflected growing consumer interest in functional foods and wellness ingredients, but it also exposed a reality that many food startups only discover after investing significant time and money: a product can be scientifically robust, commercially appealing and still prove almost impossible to scale.
Summer temperatures melted the chocolates, shipping costs spiralled, cocoa prices climbed and the economics of the business became increasingly difficult to justify. Rather than trying to force the concept to work, Meharwade made the difficult decision to close the chocolate line and pivot the business towards the functional latte blends that have since become FIHI’s flagship products.
His experience is far from unique.
Functional foods continue to attract entrepreneurs eager to combine science with consumer demand but bringing those products to market means navigating manufacturing realities, volatile ingredient costs, distribution challenges and consumers whose buying decisions are often driven as much by convenience, taste and price as they are by health claims.
Looking back, Meharwade believes many of the biggest lessons had little to do with food science itself. They centred on knowing when to pivot, understanding what consumers genuinely value and recognising that commercial viability has to sit alongside innovation if a startup is going to survive.
1. Consumers can love your product but it can still fail
One of the biggest misconceptions in food startups is believing that positive customer feedback automatically points towards a scalable business. Meharwade found exactly the opposite. Customers liked the chocolates, but every stage after production became harder to justify commercially.
“Chocolates are heat sensitive and moisture sensitive,” he explains. “Typically, the chocolate industry sees its highest sales during the holiday season, from November to January. As a small business it was challenging to scale efficiently without an established distribution network.”
His challenges didn’t stop there.
Selling directly to consumers meant every shipment required cold packs, while customers were reluctant to pay for the faster delivery needed to keep the products in good condition. At the same time, the product itself became expensive to manufacture because each box contained nine variants.
“Our primary D2C business model isn’t suitable for chocolate products because they require cold packs during shipping, and consumers dislike paying for 1-2 day shipping options. Our chocolate innovation also was complex since we had nine unique experiences (nut, seed, and berry) in each box. This required significant labour, which drove the unit cost higher.”
It wasn’t one catastrophic mistake that ended the chocolate venture. It was the cumulative weight of multiple commercial pressures, each chipping away at the viability of the business until the case for continuing no longer stacked up.
2. Sometimes the format is the problem, not the recipe
Food scientists are trained to solve technical problems, so when something goes wrong the instinct is often to improve the formulation. Meharwade admits he fell into exactly that trap before realising he was trying to fix the wrong thing.
“Our biggest setback was realising that a product customers enjoyed was not necessarily commercially scalable. Summer heat created quality and shipping challenges for our chocolates, while margins and repeat purchases were inconsistent. Organic cocoa butter and nibs have also been increasing in price over the past few years, reaching an all-time high a year ago.”
His first response was to continue refining the product. “Initially, I kept trying to improve the formulation and process. Eventually, I recognised that the product format itself was the limitation.”
That moment proved pivotal.
Rather than pouring more resources into a product that faced structural commercial barriers, FIHI closed the chocolate line altogether. “We closed the chocolate line and redirected our resources toward functional latte blends that could be manufactured and sold more consistently throughout the year.”
Founders often see pivots as admissions of failure. In reality, however, recognising when a format no longer makes commercial sense may be one of the smartest decisions an early-stage business can make.
3. Stop building products for yourself
Developers inevitably spend months refining formulations, but shoppers don’t stand in front of a shelf thinking about ingredient technology. They’re asking a much more basic question: why should I buy this?
“There is a big difference between creating products that you want to see in the market and what your customer wants to see in the market,” says Meharwade. “It’s best to run extensive product surveys and collect at least 1,000 responses before investing in launching your functional food line.”
That advice reflects the increasingly crowded nature of the functional food sector. Almost every health benefit now has multiple competing products claiming to deliver it, leaving startups with little room for innovation that exists purely for innovation’s sake.
“Every market is saturated, so it’s best to differentiate your products while keeping your innovation incremental. Consumers are also reading labels and searching for functional products with measurable outcomes.”
Incremental may not sound exciting, but it often has a much higher chance of commercial success than attempting to reinvent an entire category.
4. Know what you’re willing to compromise on
Launching a functional product almost always involves compromise. Premium ingredients are expensive, functional dosages can squeeze margins and pressure inevitably builds to simplify formulations or reduce costs.
Meharwade says every founder should decide early where those compromises end.
“I am willing to adjust sweetness, flavour profile, product base and preparation experience based on consumer feedback,” he admits. “However, I don’t compromise on ingredient identity, safety, transparency or scientifically relevant functional dosages. If a science-backed ingredient is central to the product’s purpose, its amount should be clearly disclosed and meaningful.”
That philosophy also influences how he approaches formulation. “I would rather create a simple formulation with a few purposeful ingredients than a complicated formula filled with 50+ trendy ingredients at insignificant levels.”
Consumers have become increasingly sceptical of long ingredient lists packed with fashionable botanicals that appear in quantities too small to deliver meaningful benefits. Startups hoping to build long-term credibility may find that simplicity carries more weight than complexity.
5. Science alone won’t persuade consumers to buy
Perhaps the most surprising lesson that Meharwade learned wasn’t about formulation at all. It was about how consumers actually make purchasing decisions.
“We learned that science builds credibility but rarely builds trust for an initial purchase.”
Instead, he says shoppers begin with far simpler questions. “Consumers usually begin with simpler questions like, how will this help me? Does it taste good? How do I use it? Are others buying this product? Do I get a refund if I don’t like it? and many more.”
Sampling products in person fundamentally changed how FIHI told its story.
“Through farmers’ market sampling and consumer feedback, I learned to begin with the outcome and the daily ritual, then explain the science supporting it. Consumers want credible science and outcome-based products, but they also want products that are convenient, tasty, high quality, and offered at the lowest price that aligns with our offerings.”
Looking back, Meharwade says the company’s journey reinforced several principles that now shape every decision he makes.
“Listen to your customers’ problems and find solutions they are willing to pay for. Every product has a market, but ensure your market is niche and growing. But also understand your business deeply. If a business model is unsustainable, pivot early until you find a hero product that you can scale globally.”
Functional foods continue to attract investment and entrepreneurial talent because consumer interest shows little sign of fading.
Yet the startups most likely to survive may not be those with the most sophisticated formulations. They’re likely to be the businesses willing to test assumptions, challenge their own ideas and accept that sometimes the hardest decisions have nothing to do with the science at all.
