Hillary Graves: Healthy profits from food for toddlers

Love changed American internet executive Hillary Graves' life more than most. In 2000 she was sent to Britain to help American mothering website, iVillage.com, establish itself in Britain. "The plan was I'd come over, get the business started then go back home." But while here she fell for one of the site's private-equity backers.

The pair married in 2003 and Graves found herself looking for a new job. First she worked with Yahoo in London, then she became a consultant. It was then that she came across an idea for a new business.

"I was brought in to help a frozen baby-food maker and I realised there was massive potential in good food for toddlers too." Graves, 42, believed she'd spotted a gap in the market. "After breastfeeding, a lot of mothers give their toddlers jars of pure or feed them what the rest of the family is eating. No one was making fresh, healthy food for toddlers." Another consultant working on the project felt the same.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

In 2005 John Stapleton, who'd successfully co-founded the New Covent Garden Soup company, agreed to partner Graves and the pair drew up a business plan for Little Dish.

"We wanted to make our food completely salt and sugar free." But while that might be healthy, they weren't sure if the result would also be tasty. "We knew we had to get the food just right. We tested recipes with children of friends and family. When they said they liked it we paid for some more market research." They also raised £450,000 in seed capital from friends and relatives.

"People believed in the idea. Also it helped that John had done this before." They spent some of the money on a marketing agency. "Coming up with the right packaging was important. Parents aren't used to looking for healthy food for children in the chiller section next to the ready meals." The money also helped them find a food supplier and knock up the first batch.

"Right from the start we decided not to sell to independent retailers but aim for the supermarkets." After several meetings they managed to persuade Waitrose to trial their food.

Aware this could be their only shot at a wide market they went on a marketing blitz. "We focused on communities around each store, visiting private nurseries to offer promotions." By 2006 Little Dish was selling 2,000 meals a week, so Waitrose decided to offer the range in more stores, which "made speaking to other supermarkets easier". Tesco and Sainsbury's also came on board.

Graves got an unexpected boost when new advertising regulations stopped the marketing of junk food to children. So many firms fell foul of the strict salt and sugar limits that child-focused TV channels found themselves seeking new advertisers. In 2009 children's TV channel Nickelodeon contacted Graves to see if Little Dish would advertise.

"We were still a small firm and there was no way we could afford a nationwide campaign...they gave us two years advertising time up front that we could pay back later."

The publicity boosted sales and convinced supermarkets to stock the product in more stores. In the last year Little Dish has sold £8.6m worth of food (around 100,000 meals a week). Graves, 42, is expanding the range to include "school gate snacks" in a bid to cater for older children too.