“Neither of us has a background in food,” Kahn told FoodNavigator-USA.
“I was working in the public sector in education and David has a background in finance, then switched to medicine, and it was in his pre-med program that he saw these 20-something year old women in class eating squeeze packs.
“He asked what they were eating and it turned out to be baby food, which might seem odd, but it's convenient, portion controlled, healthy, full of fruits and veggies and they could just throw it in their bags in the morning and go.
“David told me about this and we were joking around thinking it might be some weird LA thing, but then we started thinking if there is a food that meets all this criteria, but actually tastes good and is appropriate for all ages, maybe there is an opportunity here?”
We switched from pudding cups to squeeze packs and sales just shot up
And pretty soon, it became clear that they had indeed stumbled on some white space in the ultra-competitive snacks category, said Kahn, who knocked up some prototypes with Czinn in their grandmother’s kitchen in summer 2012 and started test-marketing them in April 2013 at the local farmer’s market in pudding cups.
“We saw people picking them up after exercise classes, kids eating them, and we were getting returning customers, and we realized that we had something.
“Next we tried using squeeze packs, and sales just shot up, so we started working with boutique retailers in southern California, and the Santa Monica Malibu school district.”
Starting small at the farmer’s market really helped us as we got so much consumer feedback at an early stage
But the big break came in March 2014 when they exhibited at the Natural Products Expo West trade show in Anaheim and attracted the attention of Meijer and Kroger (QFC), which they could leverage in discussions with co-packers to get their product produced on a commercial scale, said Kahn.
"We hit the shelves of Meijer in November 2014 and QFC in December. We’ve also done deals with KeHE and UNFI and we have some pretty exciting news that hopefully we’ll be able to share soon about other retailers we’re working with. We're currently in 250 stores but we are on our way to 800 by Q2. Our goal is to be in 2,000 stores by the end of 2015."
As for refining the product, he said, “I think starting small at the farmer’s market really helped us as we got so much consumer feedback at an early stage that we were able to refine the product before we showed it to big retailers.”
Our goal is to be in 2,000 stores by the end of 2015
So what’s actually in Fruigees? Do consumers wonder why they see organic fruit juice concentrates, tapioca starch, carob bean gum, citric acid and ascorbic acid on the ingredients list instead of just, well, plain fruit?
Consumers are happy with the ingredients, said Kahn, who continued to work in the public education sector during their first year in business (Czinn ditched the pre-med program and worked on it full-time), but would work on Fruigees "after hours and most weekends".
He added: “We were testing our products on farmer’s market LA moms, and you don’t get a more demanding set of consumers than that, and they didn’t have an issue with tapioca starch or carob bean gum. The only thing we changed - right at the beginning - was switching from carrageenan to a different gum as some people had an issue with that; we also stopped adding stevia.”
We wanted to get a really creamy consistency
The other thing to bear in mind when comparing ingredients decks, observed Kahn, is that Fruigees are creamy fruit snacks, not fruit purees.
“Each pack has half a cup of organic fruit and veggie juices, no added sugar, 70-80 calories, a smooth consistency and really vibrant flavors you can only get with juices - not apple sauce or puree. But we were also trying to get something that had a creamy consistency a bit like Jello, so that’s why we added the tapioca starch and carob bean gum.
“Pretty much every other squeeze pack out there is apple sauce or puree, and we didn’t want to replicate that. The citric acid brings out the flavors and gives you the stability and adding a bit of ascorbic acid is there for the vitamin C and helps maintain the bright colors.”
So who is the target audience?
"We’re positioned as a fun family food," said Kahn. "We saw at the farmer’s market that kids loved it, but also a lot of adults, who were eating them on the way to work, or cyclists, or yoga enthusiasts, it’s something that complements their lifestyle. It’s not another protein bar, it’s fruity and refreshing and different."
They know that if they charge us $80,000 in slotting fees it’s not going to work
Dealing with large retailers at such an early stage in the business’s development was daunting, he said, but has been a really positive experience. “It’s all about buy-in. They see we have something different, and they know that if they charge us $80,000 in slotting fees it’s not going to work, so they had realistic expectations. It’s been such an unbelievable experience.”
As for where to position Fruigees, QFC (Kroger) puts them by its fruit cups and squeeze pack apple sauces, while Meijer puts them by things like Annie’s Homegrown fruit snacks, but it varies by retailer, said Kahn.
On the financing front, they started out with their own savings, then went through a friends and family round, but will have to do a new capital raise pretty soon, said Czinn.
“People see that retailers the size of Kroger and Meijer have given us a chance and that we’re in talks with other retailers such as Whole Foods and Sprouts and that’s opened a lot of doors for us. But raising money is not the difficult thing; it’s more about finding the right partner.”
The biggest challenge right now is keeping up, and learning when to say no, said Czinn, who said they are averaging 4-5 hours sleep a night and in the process of expanding the team to bring in people with sales and operational expertise.
“We’re not getting much sleep but we are so excited about all the opportunities that are coming our way. It’s hard work but it’s the best thing we’ve ever done.”