It was 2012 when One Degree Organic Foods, still in its nascency, attended Natural Products Expo West with little more than samples of its new product, a line of sprouted breads.
“It was kind of our coming out as a brand,” remembers Danny Houghton vice president of the Abbotsford, Canada-based food company. “When I plopped our first line of sprouted grain breads onto the table, we didn’t have any distribution, we didn’t have any clients, we hadn’t written an order, nothing.”
But the company embraced a concept of transparency that was--and continues to be--at the leading edge of the industry. One Degree directly sources each ingredient used in its flour, bread, seed and cereal products and profiles each of the farmers who produce those ingredients. Customers can see and read about the producers behind each product via a QR code on the package.
Such a unique commitment to transparency and traceability stood out to New Hope Natural Media’s trendspotters, and they honored the company with the NEXTY Editors’ Choice Award.
“What impressed us most about One Degree Organic Foods is that they’re taking the idea of responsible food production to the next level,” New Hope editor Caren Baginski said.
In the two years since the company received the NEXTY Award, the One Degree team has greatly expanded its product line and secured distribution in stores across the United States and Canada. Houghton and his media team have traveled the world to document more than 40 ingredients, from spelt flour to vitamin E to cinnamon. Fueled by increasing consumer demand for transparency, the company’s sales have more than doubled over the past year, and they’re expected to double again by the end of 2014, Houghton said.
Considering the company's meteoric growth, New Hope asked Houghton to take stock of the company's achievements, and gleaned seven takeaways from this rising star in the industry.
1. It takes a completely different model to directly source and trace every ingredient. "You don’t have the benefit of going through a broker who is an aggregator and has eight different farmers who grow wheat and can supply it whenever you need it. Instead, I have to sit down and ask myself, what farmers do I know who grow these ingredients? How much do they have? Is that adequate to meet demand or do I need multiple farmers? When can I go document them and how long will it take me to finish that documentary process? You also have to store (the ingredient). If I need that supply, I need to hedge and manage it and calculate the volume I need to be able to handle if (a certain product or ingredient) is successful."
2. It takes dedicated resources to trace and document every ingredient. "The reality is that we have a complete television production and media team. We have a staff photographer, a staff writer and a full-time producer. So there’s that cost. There’s also the cost of traveling to these locations which is a huge expense."
3. New technology can communicate a product’s sourcing story. "The QR code has proved to be the most efficient method and delivery vehicle that we’ve been able to find. Pretty much everyone has a smartphone today and a QR reader is a free download, so it’s not hard."
4. Creating a directly sourced, traceable supply model requires lots of planning. "Make sure you can manage scale. We’ve planned for significant growth and we’ve seen that happen, but you’re always worried, can I document enough farmers fast enough to meet the demand?"
5. Traceability and conscious sourcing have beneficial ripple effects. "Transparency melts away all sorts of questions about whether or not there are quality ingredients being used, and then consumers can make a judgment call for themselves. It’s also a victory for the smaller organic farmers we work with because we’re able to share some of the value with them and support the way that they grow their food. As a result of (our company’s success), our prices have gone up a little bit because demand is higher. But that’s O.K. because that’s part of our core ethos as a company, to bring more value, both through recognition but also through financial support, to the North American farmer."
6. The early decisions matter for entrepreneurs. "There were a couple of key decisions we made right up front that have proved to be very, very beneficial. One was selecting the right broker/partner and the right sales team who understand the market, who would buy into our concept and gave us access to the people we needed to talk to. It's also very important to do your homework and review the data, and be numbers-driven in your decision-making. Make sure you have a very good picture of the product line you’re working in, your competition and what they’re doing, and also the market trends in a broader sense."
7. The market is getting more crowded. "It’s a much more competitive marketplace for the organic ingredients that we’re all buying. And prices have increased because of that demand. Some of that is driven by the fact that the conventional marketplace is waking up to the value of organic foods, so things tend to be a little bit more competitive these days."