In the cutthroat world of entrepreneurship, the recipe for success is often thus: a great product plus a great story plus a great storyteller.
This year’s winners of NBJ’s 2012 Outstanding Growth Awards have them all. From a charismatic Frenchwoman who set out to share the country’s healthy aging secrets, to a dad seeking healthier food for his daughters, to a young entrepreneur who maxed out five credit cards to launch a new sports nutrition category, they all thought outside the box and stuck it out through tough economic times. Now, their persistence (and in a few cases, a shout-out from Dr. Oz) is paying off.
Here’s a look, from large to small.
With full-time jobs, two daughters ages 1 and 4, and a dearth of healthy store-bought options to pack in their lunch boxes, Neil Grimmer and his wife Tana spent many a frenzied morning packing up fresh baked squash, pureed fruits and homemade mac ‘n’ cheese to-go. Even then, they’d open the girls’ lunchboxes at day’s end to find the contents half-eaten.
“We saw a real opportunity,” says Grimmer, 41, who co-founded Nest Collective (the parent company that would become Plum Inc.) in 2007. “We wanted to develop high-quality food that was uber-convenient and that kids actually got excited about eating.”
Six years later, Plum boasts 115 culinarily-inspired offerings for kids, including a wildly popular line of squeeze-pack baby food which many credit with revolutionizing a stagnant category that had been shrinking by 3% annually. In 2012, the company brought in an estimated $80 million, more than doubling its 2011 revenues. It also landed a #63 spot on the Inc. 500 list of the nation’s fastest growing companies. Over the past three years, its sales have soared 4,056%.
“They clearly have a great team of people and their packaging was brilliant,” says food and beverage consultant Steve Allen, a former executive for Nestlé.
The brainchild of Grimmer and former Clif Bar CEO Sheryl O’Loughlin, the company launched with a line of snack-size sandwiches called Jammy Sammies, and organic fruit purees called Mashups—all targeted to school-agers. While the contents of Mashups were tasty (blueberries, carrots, mangos, etc.) it was their squeezable pouch that caught the eye of parents, and soon they were feeding them to their toddlers, and even babies.
To Grimmer, a veteran product designer, it was “a no-brainer” to extend the squeeze-pack idea to the younger set. The company bought up organic baby food maker Plum Organic, and in cooperation with retail giant Babies R Us (who got a brief exclusive), it rolled out the nation’s first spouted baby food pouches in 2009.
“There was a conventional wisdom that parents are not willing to experiment with new things in something as core as baby food,” says Grimmer, referring to the decades-old mainstay of smelly, overcooked, jarred vegetables. He took a chance anyway. In the first three months, revenues eclipsed those of the entire previous year. “It was a seminal moment in the company," he says.
Plum Inc. products can now be found in 11,000 retailers across mass, natural and specialty channels. Yet the company has retained a Wonka-esque obsession with innovation, with one-sixth of its 65-person staff dedicated to developing new recipes, designs and packaging.
In 2012 Plum rolled out 40 new offerings, and 2013 will bring a line of single vegetables in a spouted pouch (complete with herbs and spices) and beverage-boxes made with an edible straw.
“We as parents come up with all these creative ways, like the airplane in the hangar game, to get kids to opt into food,” says Grimmer. “Why not just create fun food that tastes amazing so they opt in themselves?”
Born on an organic, biodynamic farm in Switzerland, Reserveage founder Naomi Whittel seemed destined for the natural products industry from the start. But it wasn’t until a 2008 trip to the south of France to visit family that she found her true calling.
“We were enjoying all the typical attributes of the French lifestyle: the heavy double cream brie cheeses, the butter, the wine …” recalls Whittel. But when she looked around, she realized that everyone looked remarkably healthy. How could that be?
Whittel’s question led her to the so-called French Paradox, the perplexing epidemiological observation that—despite a diet rich in saturated fat—the French tend to have a lower incidence of coronary artery disease. While research is mixed, many scientists suspect polyphenols found in red wine are at least partially to credit, and some studies suggest one specific one—resveratrol—may actually light up so-called “longevity genes.” Whittel was intrigued: “I thought it would be amazing to share some of that south of France experience with American individuals wanting the best quality of life possible.”
In 2009, amid the worst economic recession in a half-century, she launched Reserveage, the first company to provide organic resveratrol supplements made with the skins, stems and seeds of red grapes from the French countryside. To preserve the age-fighting nutrients, it would be processed fresh, via a patented process, at an extraction facility 10 minutes away. “For most companies, resveratrol was an ingredient add-on for their portfolio,” says Whittel. “For us, it was our core.”
Today, its resveretrol-based healthy aging line, Reserveage, remains the company’s core brand, comprising roughly 15% of its sales, and much of its research focus. But the company has also expanded to include an array of novel ingredients and spin-off brands (ReBody for weight loss; Fembody for women’s health; and Resvitale, for GNC stores). It has 100 SKUs sold everywhere from infomercials to natural product stores and big box retailers. In 2011, Reserveage grew 100%. In 2012, it grew 150%, says Whittel. NBJ estimates place these sales in excess of $70 million.
“The company has successfully diversified across channels without diluting the brand or image,” says Janica Lane, a partner with San Francisco-based Partnership Capital Growth Advisors (PCGA). “At the same time, it still has significant running room.”
On January 3, 2012, the company got a big break, when Dr. Mehmet Oz featured its safflower-oil-based SafSlim supplement (part of its ReBody line) as a “cutting-edge belly blaster.” Roughly 40% of its sales now come from weight management products, but Whittel remains cautious as she wades into the fickle category. She says she is well aware that sales could decline as the Oz glow wears off, and she stresses that Reserveage only uses raspberry ketones (a somewhat controversial ingredient) as a side ingredient.
“We believe in the early research on it, but it is not an ingredient we would use as a stand-alone because the science does not support that yet,” she says. “Weight management is clearly a fast growing part of our industry and not one we want to ignore, but that is not our focus. We are a wellness company.”
This year, she intends to collaborate with universities to extend research on resveratrol, high linoleic safflower oil, and other novel ingredients. She also aims to help bolster the presence of women in the nutrition market, via her new organization, Developing and Advancing Women in Naturals (DAWN.)
“Women typically spend 85 cents of every dollar, yet studies show women feel very misunderstood by health-related marketing,” she says. “If we as an industry can help to advance women leaders, we will grow even faster and provide a higher quality relationship with our customers.”
For Vega ( formerly Sequel Naturals) founder Charles Chang, the road to the natural products industry was more circuitous.
“I was actually in the corrugated box business,” says Chang, 42, with a slight chuckle. While calling on customers—many of them manufacturers of dietary supplements—from his home in Vancouver, BC in 2000, he began to think he was in the wrong business. So, he quit his job and launched his first brand, Sequel Colostrum.
“In less than six months, I had used up my entire life savings, had a second mortgage on my house and five maxed out credit cards, and had to sell my truck,” says Chang, noting that his pregnant wife, a school teacher, would pack up orders for him in the basement while he was on the road. “It was bare-bones grassroots.”
As he added products, including maca and chlorella to his line, the business slowly grew. Then in 2004 he got a call from a vegan Ironman triathlete named Brendan Brazier with an idea for a cleaner, plant-based line of sports supplements. Vega Sport was born. “Eighteen out of 20 of my best customers said ‘don’t do it, there aren’t enough vegans out there,’ ” recalls Chang. “We had to take a leap of faith.”
Propelled by charismatic front-man Brazier and fueled by a growing awareness of the downsides of sports nutrition staples like whey, soy and maltodextrin, Vega saw revenues approach $47 million in 2012, up 73% from 2011. The company is now housed in a 14,000-square-foot office in Vancouver, and boasts 120 fulltime employees. According to SPINS, it ranks third in the natural channel meal replacement and protein powder category, behind long-time players Nature’s Plus and Garden of Life, and when it comes to multi-source, soy-free protein powders, it dominates the category it created. Thanks to a new partnership with private equity firm VMG (investors in Kind, Natural Balance, and Pretzel Crisps), it is poised to do great things in 2013, say industry observers.
“VMG has shown success across its entire portfolio with their ability to bring marketing expertise and focus to various product lines. And Vega is the most forward thinking brand in sports nutrition right now,” says Eric Schiller, a principal with PCGA. “It's a very strong combination.”
Chang says that, of Vega’s $50 million in revenue in 2012, roughly $30 million came from Canada, where Vega graces the shelves of both natural food and mass market retailers.
With the company’s soy, gluten and dairy-free protein shakes, workout and recovery products, and snacks gaining popularity among non-vegans looking for cleaner options, he envisions them taking a place on the shelves of American supermarkets within two years. "There is an unmet need out there," says Chang.
With a 245% spike in 2012 revenue—following a glowing mention of its patented ingredient, Relora, on Dr. Oz—Salinas, California–based Next Pharmaceuticals is finally enjoying the breakout growth it has been working toward since its inception 15 years ago. But in many ways, the $4.3 million, under-the-radar ingredient company has always acted like a big fish.
“They are a small business that acts like a big business,” says American Herbal Products Association president Michael McGuffin, pointing to Next’s insistence on doing good science, and protecting its intellectual property from the start. “They are doing things that so many companies learn how to do only after they have achieved a certain sales size.”
The company was founded in 1997 by the late pharmacist Bob Garrison and venture capitalist Charles Kosmont with the express mission to create novel, patent-protected, scientifically-based ingredients.
“At the time, the industry was focused on commodities. Something would hit the press and everyone would jump on board and sell the same ingredient, only with different marketing,” says CEO Regan Miles. “We wanted to bring differentiation.”
In 2003, after scouring botanical literature and working with university researchers, the Next team launched Relora, a patented blend of magnolia and phellodendron extracts shown in animal studies to reduce stress and anxiety. In subsequent years it rolled out five more patented ingredients, including phellodendron-based Flavoxine for cardiovascular health; Chromulin, a chromium histidine supplement; and Seditol, a magnolia-based sleep aid.
But after the death of its hands-on leader Garrison in 2007, the company seemed to hit a lull, with growth stalling out in the single digits. “The board of directors made a conscious decision two years ago to bring on additional management and focus on growing the company,” says Miles, who joined the team in 2011.
Key to that effort was an investment in marketing, and Next hit the jackpot in February of 2012, when Dr. Oz named Relora one of his top “belly blasting supplements” (based on the theory that the less stressed we are, the fewer cravings we have). Oz showered the ingredient with praise again a few months later by listing it among his “Top 20 supplements.”
“The store shelves were empty within two days,” says Miles.
He stresses that Next has steered away from marketing Relora specifically for weight loss thus far. “We market it for what we have science on, and at this point, that is the stress and anxiety connection,” he says. Meanwhile, Next has human clinical trials in the works for a new, patented, joint health ingredient, and is working with “a significant retail partner” on a Relora-based calming drink.
“We are making a very concerted effort to continue to drive our growth,” long after the Oz phenomenon has run its course, Miles says. “The secret is to get out and tell our story.”