Bethlehem's Factory turns former steel mill into CPG innovation centerBethlehem's Factory turns former steel mill into CPG innovation center
Instead of turning iron ore into steel beams and wires, this Pennsylvania facility gives small natural and organic brands a cornerstone on which to build.
August 10, 2023
The New York beverage brand Roar Organic enjoyed crisp progress through 2019. But the team felt it needed help to shepherd it to the next level, said Roar Organic President Bill Lange. The following year Factory, a Bethlehem, Pennsylvania, investment organization that fixes on natural and organic consumer packaged goods, made its first stake in Roar.
"And frankly, the momentum since that point has been impressive," said Lange, who joined the company in 2022. "When you find people who are great on the brand side and partner with the Factory side, great things can happen. Factory helps make brands successful."
Factory co-founder and advisor Richard Thompson, who successfully launched, grew and sold different CPGs before starting Factory, aims to help turn Bethlehem, a former thriving steel town that today is experiencing a post-industrial renaissance, into "the Boulder or Austin of the East Coast" he said. In other words, he envisions Bethlehem as a hub for brand innovation and leadership within the natural and organic products industry.
To do that, Factory is offering much more than capital infusions and oversight for brands. Instead, brands that get selected must spend significant time in the grand facility—a former steel facility—that Factory turned into an engine for brand invigoration. From marketing to product development to supply chain assistance, e-commerce, distribution and more, Factory serves as a sort of boot camp for teams.
"Being an entrepreneur my whole life, I know there's about 30 things you need to do. But most entrepreneurs can do one, two or maybe three of them, then they hire their relatives and friends to do the rest," Thompson said. "We help you understand what you are good at, and what you need help with."
He added that joining Factory "is like getting a scholarship to a university. You have to go to the university. If you take money from us, you have to come here."
The minimum commitment for working from Factory's campus is six months, before teams head back to their headquarters. Some of them, however, end up remaining in Bethlehem. Housing is affordable, it's easy to get to both New York City and Philadelphia and "the lifestyle is good," Thompson said.
'It's a one-stop shop' for beverage maker
Roar Organic is based in Southern California. After the team spent time in Bethlehem, they returned to the Golden State. But Lange said he still spends at least a week every month back in Bethlehem, working with Thompson and the rest of Factory's professionals and resources to help Roar continue to gain market advantages.
"Our full-time team is heavily skewed toward sales and marketing, because most of the back-end work relies on the Factory," Lange said. Among other things, Factory assists extensively with logistics, accounting, distribution, sourcing and product development.
Roar, for example, takes advantage of Factory's on-site flavor laboratory, staffed with a food science pro who helps brands develop taste and texture with their products.
"Normally, you would be doing that product development stuff over emails, and then I'd have to fly out to taste," Lange said. "With Factory, you walk in, start mixing stuff on the bench, tasting and iterating. It's a one-stop shop."
To date, Factory has made close to a dozen investments in companies that had revenues of between $5 million and $20 million when they joined. It's not geared toward startups. Rather, Thompson sees Factory as an "innovation center"—not an incubator—that helps established brands make some of the most consequential steps in their life cycle. The brand may start out in a home kitchen, then start selling products at farmers market, and eventually make it into local shops and regional chains. But going from a regional stage to a national spotlight with a reasonable path toward profitability and commercial endurance requires different skills and strategies, as well as fresh capital.
The COVID-19 pandemic struck soon after the Factory launched and interfered with short-term progress. But this year, Factory brands should make about $150 million in sales, Thompson said.
Getting on the Factory floor
In addition to Roar Organic, other Factory brands include Honey Stinger, Stuffed Puffs, Pipcorn and Mikey's.
Thompson said competition to get involved with Factory is intense. The team reviewed hundreds of companies, for example, to invest in just six. What does a brand need to join the Factory family? The process involves plenty of intricate business questions regarding things like scalability, access to raw materials and more. But it's also straightforward.
"People and taste," said Thompson. "You've got to have great people, and something that will fly off the shelf because people want to put it in their mouths. It's also got to have IP around it. With the next granola or jerky, tell me why everybody else can't do what you do?"
Thompson thinks the Northeast has the potential to transform into a national hub for innovation within the natural and organic products industry. He referenced New Jersey's blueberry fields, the abundance of farms growing an enormous variety of vegetables (a horizon of soybeans, corn and wheat, the Northeast is not), the density of busy farmers markets and the proliferation of people from Maine to Maryland turning the bounty into great products.
"There's a lot of good people and a lot of great ideas that get incubated here on the East Coast," he said. And he is eager to attend Natural Products Expo East in Philadelphia in September, an annual trade show that he doesn't miss.
"We find the Expos very valuable," he said. "The camaraderie. Meeting people again that we've seen over the years, discovering new innovations. There's a lot of excitement around those events."
Natural Products Expo East LogoNatural Products Expo East begins Sept. 20 at the Pennsylvania Convention Center in Philadelphia. In addition to education sessions and the trade show, New Hope debuts its Innovation Experience this year. Learn more about Expo East's agenda, exhibitors, retail buyers and registration.
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