Greg Fleishman has never been a fan of the word “disruption” since he co-founded Foodstirs with Galit Laibow and actress Sarah Michelle Gellar in 2014.
The company’s baking mix products, made with non-GMO, organic and ethically sourced ingredients, was created to awaken the U.S. baking aisle which had seen stagnant growth for years primarily due to artificial chemicals and lack of innovation.
Since entering the market, Foodstirs has been flying off the shelves from premium positioned retailers, including Whole Foods and The Fresh Market, to more mass audience-oriented channels, such as Target and Costco. Its triple-digit year-over-year revenue growth also pushes the brand to expand its national footprint to Walmart later this summer.
In 2019, Foodstirs embarked on a new journey with a range of ready-to-eat sweet baked goods, challenging the long-time dominant player in the space – Hostess. With its re-branded logo ‘Junk-Free Bakery,’ the company notes: “We have modernized a childhood classic to fit today’s sweet tooth.”
Its recently launched mini donuts, muffins and bites, which will be debuted at the Summer Fancy Food Show in New York, contain around eight grams of sugar per serving, significantly lower compared with competitors on the market.
These products have so far been rolled out in Whole Foods and Kroger stores across the U.S. and will be available in more retailers next year.
Laibow said in a statement sent to me: “For us, this re-brand and extension into ready-to-eat products is a significant move on our journey to clean up fresh snacking.
“Investor partners, like Cambridge SPG add incredible value that enable this growth through their understanding of the space and alignment on our vision.”
Gellar added that: “As parents, we are driven by the need to provide products consumers can feel good about from parents to kids. Our evolution that lowers sugar while maintaining an incredible eating experience is the upgrade that we have been working the better part of a year on.”
Other emerging CPG companies have also put a healthy twist on traditional food items.
Chris Mears-led Little Secrets, which is backed by private equity firm Sunrise Strategic Partners, earlier developed a premium version of KitKat and M&M’s candies.
“I’ve always loved chocolate like Reese’s, but I saw a really big white space opportunity in the natural premium chocolate category where it was mostly chocolate tablets and bars,” Mears told me earlier.
Risks of trends-based marketing
Foodstirs’ success can be attributed to anything except following popular consumer trends, such as plant-based, keto and high protein. That’s because, in Fleishman’s own view, being “transformational” is more important than being disruptive when it comes to building a long-lasting brand.
“We are not trying to chase after trends; we are trying to create legacies,” he said. “We started this family brand because we want our next generation, our kids, to inherit something beautiful,” noting that Foodstirs has been deeply engaged in agricultural aspect of the food industry, such as soil health, and it is one of the first U.S. consumer products to become Glyphosate Residue-free certified.
The company also built its supply chain to directly source ingredients such as single origin, identity preserved flour out of Montana and fairly traded organic cocoa from Peru.
Fleishman warned that sticking to prominent trends can put brands constantly in a “reactionary mode,” and will eventually make them less competitive.
“Many brands are waiting for trends to build out and trying to insulate themselves from competition … but fundamentally, that is not what an entrepreneurial brand should be operating,” he said. Instead, “they counter to being a pioneer, innovator and inventor.”
A smarter way to lure more consumer interest is to avoid using marketing buzz words, according to Fleishman, citing that Foodstirs is not explicitly labelled as plant-based, though its ingredients are essentially vegan.
Other start-ups have also adopted similar strategy for their brands to be inclusive to all consumers.
Egg white protein-based food company Quevos, backed by Kraft Heinz’s Springboard incubator, said its snacks work for the growing number of keto dieters.
However, co-founder Zack Schreier told me earlier: “We have been careful not to label ourselves as a keto brand. [Just in case] the dietary trend goes away, there is still a place for us in the market.”
Consumer goods M&A not slowing down
Foodstirs’ strong traction coupled with Fleishman’s previous experience in facilitating Kashi’s takeover by Kellogg makes one wonder if the baking mix brand is ripe for an acquisition anytime soon.
“It’s too early to tell right now, as we want to build an iconic brand that will be around for generations,” Fleishman told me, adding that the goal is to ensure junk-free sweet snacks are in every shopper’s hands.
“We’ll scale [our business] for as long as we can, but sometimes it makes sense to bring up [new] partners to continue our vision and mission.”
Cambridge Companies SPG, a California-based investment firm that led Foodstirs’ series A funding back in 2016, said it will continue to support Fleishman and his partners’ entrepreneurial journey.
The company has invested 25 consumer brands with 12 of them exclusively playing in the food space, including Asian-inspired ready-to-drink soup company Nona Lim, Julie Podolec-led frozen snacks maker Modern Pop and kids food brand co-founded by actress Jennifer Garner – Once Upon a Farm.
On its website, Cambridge Companies SPG said its investment strategy includes focusing on companies that “have broken down the barriers of entry into the market, established infrastructure to scale nationally and have a clear pathway to liquidity via M&A sale to a strategic or private equity buyer or IPO.”
COO and general partner Filipp Chebotarev said during a phone interview that Foodstirs’ biggest advantage is that it “didn’t face an excessive amount of new competition coming to the [baking mix] category,” adding that being able to fill a white space in certain categories is a high priority for his team when choosing investment targets.
“We are seeing an abundance of white space in the broad consumer food and beverage market,” he said. “[We are seeking] out innovative companies that can uniquely solve common consumer pain points across categories.”
Meanwhile, Chebotarev believes continued M&A in the consumer goods sector will bring additional liquidity to Cambridge Companies SPG.
“[M&A] remains very active as consumer products make up 20% of our GDP,” Chebotarev said. “I’m not concerned about quarterly fluctuations [of deal activities]. That’s natural since the stock market also fluctuates quarter after quarter.
“For large CPG companies, many of their legacy brands aren’t seeing growth … and the most capital-efficient way to reverse that trajectory is to acquire new consumers through M&A,” he added.