Locako rides dietary trends as keto foods capture stomach share

Locako rides dietary trends as keto foods capture stomach share

Locako founder Ally Mellor.

Ally Mellor founded Locako five years ago hoping to become Australia’s most prominent supplier of keto-friendly and collagen foods, and is on track towards her goal after recently securing major distribution deals with Chemist Warehouse and Woolworths Group (ASX: WOW) in addition to a growing export footprint.

The business itself was inspired by Mellor’s travels to the United States, where the popularity of keto has exploded in recent years.

The keto diet aims to promote general health and weight loss by kicking the body into ketosis, a state where fats and proteins are burned as primary sources of energy, rather than carbohydrates and sugars.

“The US are way ahead of Australia in this space,” says Mellor, who was a finalist in the 2022 Sydney Young Entrepreneur Awards.

“They have keto friendly cereals, pastas, breads - they just think outside of the box and in every health food shop there is hundreds of options.

"Whereas in Australia, a normal snack that is marketed as ‘healthy’ can still contain about 60 grams, several tablespoons, of sugar.”

Mellor knew the market in Australia was ripe for Locako as the popularity of the keto diet grew further off the back of American influencers.

As a subscriber to the keto lifestyle herself, she also recognised the benefits of adding collagen as a key ingredient as it’s the human body’s most abundant naturally occurring protein.

Locako originally launched out of Brisbane with a handful of products, including a range of American-inspired keto collagen coffee creamers, before moving to Sydney in early 2020.

The business has since achieved a consistent year-on-year growth of up to 400 per cent and has focused on bringing more trending products like protein powders, electrolyte drinks and supplements into the fold, leveraging SEO analysis in product ideation and development. Star products driving growth include anything with the word 'keto' on the label, as well as Locako's snacking range. 

"Keto has that SEO search value, and the fact that it's on the packet makes people stop and pick it," she said.

With this winning formula, Mellor says the next step into Woolworths and Chemist Warehouse required a fearless and somewhat uncompromising approach.

“It can be very challenging to stay on the shelves, and we have had some products that didn’t perform,” Mellor explains.

“When we launched in Woolworths, their team asked us for a keto and vegan snack. It’s what they thought would do well.”

Mellor caved to pressure to create a series of plant-based balls, even though vegan foods weren’t a niche that Locako was originally intent on exploring given its collagen traditionally came from animal sources.

She soon learned a valuable lesson that it pays more to stick to one’s guns, even when contending with persuasion by a giant.

“Recently we did a review of our range with Woolworths and we presented them a really cool DIY-mix, and the first question they asked was whether it could be made vegan,” says Mellor.

“This time I pushed back. We weren’t going to make it vegan. Our products have collagen in them and it’s all about staying true to us," she says.

The entrepreneur is sceptical of the term 'vegan collagen' given by its definition the product has to come from animal ligaments and joints. 

"Vegan is not our audience. We launched a keto vegan product and it didn't perform. We've just created this great value around collagen," she says. 

“My best advice to stay relevant is to remain true to your brand and what you do, while being unique and different - make sure that you can be the better choice on the shelf.”

This steadfast approach has resulted in phenomenal growth across all Locako’s channels including Woolworths and a newly established partnership with Chemist Warehouse.

Locako’s sales through Chemist Warehouse alone now account for more than 40 per cent of the company’s revenue.

Mellor has also established distribution networks around the world including in the United Kingdom, New Zealand and the Middle East, with overseas markets now accounting for roughly one fifth of sales. 

She says that when it comes to expansion, the best results are only achieved by entrepreneurs who are prepared to hand over control to distributors who know their markets inside and out.

“In the early days it felt like every new country was just another huge tick of the box, and international expansion became very easy once we found the right distributors,” says Mellor.

“When we first launched in the UK though it was a mess because we started doing everything ourselves. We didn't know what to do. We didn't know where to go. We were just completely uneducated.

“So when I found another distributor, they said they would take 100 per cent control of the company in the UK and that turned out to be the best solution for us. At first we thought it was best to manage ourselves, but we learned it was better to hand it over.”

Of course, Mellor clarifies that protecting the interests of the business will always remain critical.

“Make sure the contract is really, really locked down and make sure that you know it's beneficial for both parties.”

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