“We are very, very unconventional in all that we do” – from how we pitched our salad dressing to Whole Foods six years ago to our ingredients and to our willingness to sacrifice profits and efficiency for quality, said CEO Greg Vetter.
He explained that Tessemae’s prefers the unconventional approach to business because it makes unconventional products – refrigerated salad dressings and condiments that are vegan, made with olive oil and fresh ingredients and are free from sugar, gluten, GMOs and any ingredient that the average person cannot pronounce, including the seemingly ubiquitous salad dressing ingredient xanthan gum.
It also targets unconventional shoppers – those who never use store bought salad dressings or condiments because they prefer to make their own so they can control the ingredients and maximize flavor without artificial additives, said Vetter, who did not eat store bought salad dressings growing up.
“If I gave everyone one of our recipes … they could make it at home” because all the ingredients are natural and fresh and there are no “funky” thickeners or additives, he said.
A new marketing approach
As with other elements of Tessemae’s business, it relies on unconventional marketing to reach people who do not typically consider mass-made salad dressings, Vetter said. He relies on word-of-mouth, food bloggers, in-store demos and sharing among the clean-eating, paleo- and vegan-communities.
He added that being one of the few salad dressings in the refrigerated section also helped reach consumers who would not traditionally buy salad dressing because it was conveniently stocked next to the produce in many stores. It also physically positioned the company well to take advantage of consumers’ interest in fresh foods and avoidance of the center of the grocery store where many shelf-stable salad dressings are stocked.
As a result, “we have doubled or tripled the salad dressing category as a whole for many retailers that carry us because we are not taking people away from existing salad dressings, rather we are bringing people into the salad dressing category who would historically never buy it,” Vetter said.
Choosing the right path
Vetter also took the unconventional approach to business with Tessemae’s because when he tried the conventional one before launching the company, it did not suit him.
“When I graduated from college, I went the traditional route of taking the first job that would accept me. So, I went from sales in the mortgage industry to new construction to employee benefits – all of which felt like selling my soul for the poverty line, and I though, this can’t be how people live!” Vetter recalled. “So, when we had this opportunity to take advantage of this Tessemae’s situation,” I decided to do it my way, which is “full of piss and vinegar and white flame passion.”
His way included going straight for Whole Foods rather than doing what most other companies do, which is start out small and create a product line to sell first at farmers’ markets and local stores before seeking a deal with a large retailer. In fact, Vetter didn’t even have a bottler, supplier or even a brand name before he approached Whole Foods – all he had was a Tupperware of salad dressed in his mom’s homemade lemon-garlic dressing.
Despite Vetter’s ostensibly backwards approach to pitching a product and business before they were created, Whole Foods took a chance and Tessemae’s was born. Six years later the company is thriving with more than 20 flavors of salad dressing, two all-natural mayonnaises, barbecue sauce and several other condiments.
In six short years, the firm has grown to a multi-million dollar business with sales expected to reach $35 million this year. “We usually do our previous year’s sales in the first quarter of each new year, which is astronomical growth,” added Vetter.
The company also has nationwide distribution and is available at retailers beyond Whole Foods including Safeway, Costco and Kroger.
Quality over profits
Vetter, who quickly expanded Tessemae’s into a family affair by bringing on his two brothers and relying on his mother as the primary taste-tester and father as “director of good karma,” consistently places creating a high quality product over generating profits or being efficient.
For example, the company opted to buy its own manufacturing facility, even though it is not the most cost-efficient approach for a young company, Vetter said. He explained Tessemae’s could not find a contract manufacturer willing to use only fresh ingredients because it slows down the production process.
“If we came at our dressings and sauces from an efficiency or profit standpoint, the products wouldn't be as good as they are and I don’t think people would buy as much of it. So it is sort of a chicken-and-egg situation,” but hopefully Tessemae’s can maintain the velocity needed to justify they higher expense of making its own sauces, he added. “It appears to be working as we speak.”
Tessemae’s unwillingness to compromise its core values of freshness and promoting healthy eating, has cost the company investment deals, but it also has helped it secure funding, Vetter said.
He explained in the early years Tessemae’s “bootstrapped it” by opening 25 credit cards, cashing in 401ks and leveraging homes, but it was able to find investors who liked its products and its dedication. But not every investor is a good fit, and while it can be scary to turn away someone with money, doing so is sometimes the better choice for the morale and long-term health of a company, Vetter said.
Vetter recalls walking away from an investor at a time when the company was struggling to make payroll because the investor tried to poke holes in the business and pressure it to make changes that did agree with the company’s ultimate goals. He acknowledged that the decision was scary but says it would be worse to bring on an investor or private equity company that wanted to change the company.
“We are doing something that hasn’t been done before and we have taken an unconventional and untraditional route to get where we are and it has worked … and allowed us to grow the way we want to grow,” Vetter said. “The last thing I want is to have to justify my craziness to a group of people who have followed every rule in the history of the world as I have broken every one of them.”