Armed with an MBA from Columbia University, a great contacts book, and a keen understanding of the CPG market after a two-year stint working at Unilever, Noha Waibsnaider was probably better equipped than most to face the challenges ahead when she launched her healthy snacks business in 2005.
But no amount of time in business school can really prepare you for running your own show, acknowledges the founder of New York-based Peeled Snacks, ranked #13 in Inc magazine’s 2013 list of the fastest-growing US food & beverage companies with 594% growth between 2009 and 2012
“In business school you think that if you don’t have a $10m idea that will be an overnight success then it’s not worth doing. The talk was all about getting in quick, then selling up in three to five years,” says Waibsnaider, a high-achiever who admits to being “very impatient”.
I’d be looking for a healthy snack at the airport and was just horrified by my options
The products she had in mind were fairly simple: dried organic fruits - mangoes, figs, grapes, pineapples - with no added sugars, no preservatives, and no artificial colors or flavors. Initially they were combined with nuts, but as the fruit imparted moisture to the nuts, curtailing the shelf life, she decided to focus exclusively on fruits instead.
“I grew up in Israel where everyone eats dried fruits as snacks," Waibsnaider told FoodNavigator-USA. "But 10 years ago, dried fruits in the US were still basically limited to raisins, cranberries and prunes and they were loaded with sugar and preservatives. I’d be looking for a healthy snack at the airport when I was traveling and was just horrified by my options.
“Through my contacts at Unilever, I found a designer to work on the branding and packaging, I knew some food scientists, and I put together a business plan that said I’ll sell to this many stores every day and this is where I’ll be in three years and so on.
“But I significantly miscalculated the amount of time and money it would take. I also misjudged how long it would take the marketplace to get to a place where our products really made sense. And here I am 10 years later finally at the place I want to be.”
The market has totally changed in the past couple of years
Indeed, it’s really only been in the past couple of years that many mainstream grocery retailers have really woken up to the healthy snacking opportunity, says Waibsnaider, who has just struck a deal with Target to go nationwide.
“Today major retailers like Walmart and Costco are making space for organics and healthy snacks. The market has totally changed in the past couple of years. We used to be focused on natural and specialty and premium channels, as the more traditional retailers just didn’t have the right space for us. We’d sometimes try in these stores and fail.
“But now things have shifted significantly. We launched at Target, and it went really well, and now there is so much opportunity for us to pick up new distribution in mainstream grocery. We’re still concentrated on the east and west coast, and there is so much room to grow in-between.”
The turning point: Starbucks
Today Peeled Snacks products are also stocked in Whole Foods, Wegmans, Stop & Shop, Giant, Sprouts, Hudson News, Duane Reade, REI, Amazon.com, and CVS among others, and several new products are in the pipeline including a new mix of nuts, dried fruits and dark chocolate.
The turning point probably came in 2009/10 when her snacks were rolled out nationwide at Starbucks in the US and Canada, which suddenly opened up a lot of doors, says Waibsnaider.
“From very early on Starbucks had been telling us that they would eventually move to private label, so we don’t supply them in the US anymore. But we were with them for four years and it was great for brand awareness and driving trial and really helped us get into the grocery channel.”
I spent so much of my time trying to raise money
So what’s been the toughest part of the journey so far?
Procurement is an ongoing challenge, she says. “Buying organic fruit is not like buying corn or something that’s just available all year around. It’s hard to project what we’ll need when we’re contracting for the next 12 months, especially when you are a growing company. Supply and demand never quite match up.”
But funding has easily been the biggest headache, says Waibsnaider, who started out by tapping friends, family and credit cards for cash; moved onto angel investors - and then the crowd-sourcing platform CircleUp; and then finally - just in the past couple of weeks - secured VC funding from Avondale Strategic Partners and TFIC.
“I spent so much of my time trying to raise money,” she says. “There is real lack of strategic investment in this space for companies starting out. It’s not like a tech company where they will invest in you at the start. Until you’ve already got revenues of $10-15m, a lot of the VC people just won’t look at you.”
There have been so many times when I’ve thought, we’re three months away from bankruptcy
So were there times when she thought she’d made a huge mistake, and bitten off more than she could chew?
“Every day,” says Waibsnaider, who has two young children.
“My husband, who also works in the business, has been so supportive. He’s my secret weapon. But there have been so many times when I’ve thought, we’re three months away from bankruptcy. We’re just not going to have enough cash to keep going.
“But you just have to be patient, resilient and optimistic, and remember that tomorrow is always another day.”
So what’s the plan for the future?
“My plan has always been to sell the business as coming from Unilever you see the resourcing network and the marketing dollars they have and think what that could mean for the brand. The timing will depend on when the right offer comes in.”