Exo cricket bar founder: ‘It’s been a constant game of not running out of product’

By Maggie Hennessy

- Last updated on GMT

Cacao nut is Exo's most popular flavor
Cacao nut is Exo's most popular flavor

Related tags: Nutrition

Food technology startup Exo has closed a $1.2 million seed funding round, which will help the cricket-fueled protein bar maker expand its product line and dramatically boost production to keep up with the “surprising” level of demand, its co-CEO says.

Exo was created in 2012 by recent Brown University graduates Gabi Lewis and Greg Sewitz with the dual aim of normalizing insect consumption and introducing a sustainable protein source to the market. After a successful Kickstarter campaign in the summer of 2013 raised about $50,000, Exo completed its first large-scale production run in March 2014, and has effectively been playing catch-up ever since, Lewis told FoodNavigator-USA.

“Since March, it’s basically been a constant game of trying not to run out of product,”​ he said. “We went through that first run of 50,000 units in about three weeks, and that happened three more times until June. Because of that, we haven’t been able to step on the gas.”

The bars, which retail for $2.99, are formulated with whole roasted crickets that are then milled into a fine flour and combined with almond butter, dates, coconut flour, shredded coconut, raw cacao, raw honey and sea salt. Available varieties include cacao nut, peanut butter and jelly, blueberry vanilla and apple cinnamon. Each 2-ounce Exo bar contains about 25 crickets and clocks in at 10 grams protein.

Direct to consumer lets us directly target the right customer

Exo hasn’t been targeting traditional supermarkets or natural food stores, where it becomes harder to differentiate in a “sea of protein bars,”​ Lewis said. Instead, the Brooklyn, NY-based manufacturer largely sells direct to consumers via its website. In recent months, it has also secured distribution in gyms skewed toward functional fitness and cross fit; along with coffee shops, cafes and independent New York City retailers such as FreshDirect and Fairway.

“Our direct-to-consumer strategy enables us to maintain far higher margins than if we were going through a broker or distributor when pursuing traditional retail,” ​Lewis said. “Plus, we can effectively target the type of person we’ve identified as an early adopter. There are all sorts of people walking by in a traditional store, and only a fraction are interested in our product.”

Still, running out of inventory so frequently has also made it difficult to derive meaning from numbers, such as 100,000—which is how many bars Exo has sold online since March. Thus, the latest funding round—with such investors as Collaborative Fund, Start Fund and Silicon Valley bigwig Tim Ferriss—will primarily go toward large production runs to better capitalize on demand, “which continues to surprise us,”​ he added.

Exo isn’t the only game in town. Fellow cricket protein bar manufacturer Chapul​—which launched just over two years ago—made its first push into the national market earlier this year and is now in more than 200 stores. Six Foods has a line of baked chips made with cricket flour in the works; and Bitty Foods sells powdered crickets as part of a baking blend with gluten-free starches, as well as cookies made with the flour. Exo is also developing a powdered cricket “protein source”​ that Lewis said can be used to fortify anything with protein—from pasta to shakes, cookies and chips.

All these companies have taken the tack of roasting and grinding the crickets into a meal as opposed to incorporating them whole, for a gentler introduction.

A reliable cricket supply

Exo Joint team
Left to right: Exo co-CEOs Gabi Lewis and Greg Sewitz

The growing market for insect-fortified foods is predicated on the unique efficiency of crickets as a protein source—the insects convert grain and grass to edible protein as much as 10 times more efficiently than cows and pigs, requiring a fraction of the water needed to irrigate farms for commercialized meat production.

Though crickets require a fraction of the real estate, food and water of mechanized agriculture and can be reared quickly (they have a six-week lifecycle), a big challenge for this budding market is building up a reliable supply of food-grade crickets where none previously existed.

“When Pat (Crowley) started Chapul, there was no supply chain whatsoever,”​ Lewis said with a laugh. “When Exo started, we spent the first few months doing nothing else but trying to raise sustainable, non-GMO, organically fed crickets for human consumption. We didn’t make our first product run until March largely because we spent those seven months since our Kickstart campaign getting our supply chain up and running.”

Now Exo works with a handful of farmers and processors—all of which are domestic except one producer and processor near Toronto.

Novelty doesn’t lead to repeat purchases

Despite all the buzz—err, chirping?—surrounding the benefits of insect consumption (the Food and Agricultural Organization issued a report last year​ touting insects’ environmental, health and economic benefits), Lewis doesn’t talk about Exo as an insect or cricket bar; rather a healthy, nutritious, sustainable protein bar that happens to contain an innovative protein source.

“Crickets aren’t the selling point,”​ he said. “Maybe that’s why someone buys our bars for the first time, but novelty doesn’t make for repeat purchases.”

Nor, unfortunately, do the environmental benefits of consuming insect protein, he added. “People buy food products because they taste great and are nutritious and affordable. While the goodwill part is a wonderful after effect, I don’t believe that’s the primary driver for repeat purchases. If that was only argument, we’d all be in trouble.”

Related topics: Snacks, Manufacturers, Proteins

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