“Adding superfoods to nut butters is a key differentiator for us [YumButter adds cranberries, coconut, chia, turmeric, hemp seeds and goji berries to its almond, peanut and sunflower butters], but the YumButter GO pouches are what’s really making us stand out in the market because no one else is doing this at any significant scale,” he told FoodNavigator-USA.
“Retailers and consumers also love the fact we have a social mission with [our] Buy one Feed one [initiative] and our B Corp status, which allows us to generate deeper loyalty,” added Reif, who met YumButter co-owner Matt D’Amour at a food incubator in Wisconsin in 2010 while he was selling his nut butters at farmers' markets and D’Amour was building a business called Food Your Body Likes.
As for angel investors – who Reif is currently wooing – great products and a social mission are important, he said, “But we have to show that we can generate really strong gross margins and strong velocity, and we are starting to capture that in the data now, so it’s a really exciting time.
“We see a unique opportunity because our potions, our packaging and our purpose set us apart from other players in the industry and I believe will allow us to catapult to one of the top three brands within the category within the next three years.”
It’s a really exciting time to be in nut butters
While getting a new brand on shelf at major distributors and retailers is a costly and sobering experience for any early-stage company, the good news is that all the leading grocery retailers are devoting more space to natural and organic foods, and nut butters in particular, added Reif.
“The category is exploding. The [US] natural nut butter category is around $600m forecast to get to $1bn in 2018, and nut butters are one of the fastest growing categories in specialty foods according to the Specialty Food Association (click HERE.)
“Target, for example, is increasing nut butter [shelf space] by 30% and cutting back on jellies and jams because it really sees the potential.”
YumButter GO has been a great vehicle to get a foot in the door with retail buyers, meanwhile, in part because it stands out on shelf, but also because it promises to bring faster turns and incremental growth to the category, he said: “People buy a tub for eating at home, but they might also buy two or three YumButter GO pouches for eating on the go, taking to the gym or classroom or the office, or on the trail, on bike rides and so on.
“The great thing about the pouches is that they are multi-serve and re-sealable, so when you’ve had some, you can just put it back in your bag or on your desk.”
Knead and squeeze …
The biggest challenge with YumButter GO, however, has been educating consumers that they need to “knead and squeeze” the pouches before use as the oils can separate if they have been sitting around for a while, he said. “It’s a natural product and we don’t use emulsifiers [such as mono and diglycerides which stop the oils from separating out].
“We’ve been trying to educate people about this, and our next round of packaging will do a better job of calling this out. For new stores we go into we’ve also created a tag that goes around the neck of the pouch and tells people that they need to knead and squeeze.”
As for sourcing, all of YumButter’s ingredients are USDA certified organic except almonds, as organic ones are so expensive that coupling these with some of the other ingredients YumButter uses such as chia and hempseeds would make its finished almond-based products prohibitively expensive, he said.
“If we used them, which we'd love to, our almond butter would be out of reach to many of our fans.”
While the focus now is on driving the curent SKUs, Reif and D’Amour have been experimenting with a bunch of other nuts from cashews to Brazil nuts, pumpkin seeds and other things which could make the line-up in future he said. Some work well, some are “new to the American palate” and some are just too expensive to do at scale, he said.
Some distributors don’t pay you for 60-90 days after your first order
Right now, YumButter is in around 600 stores, and expects to be in close to 3,000 by the end of next year. However, quality not quantity is the key, he said.
“It’s about diving deep and showing we can build velocity through existing accounts, then going broad. Early on it was a case of let’s just put this out there and see who wants us.
“But once we got into some bigger natural grocery stores [Whole Foods, PCC Markets etc] we realized we needed to anchor down, and start developing really good traction through these stores before we start trying to get into these cross over stores – more conventional grocery stores that have a strong natural and organic section like Wegmans.”
Unsurprisingly, Reif says managing cash flow and financing the business has probably been the most stressful part of running the business, despite their success.
“Some distributors don’t pay you for 60-90 days after your first order and as soon as cash comes in the door it goes straight out again.”
As for raising capital, he said, “It’s a chicken and egg situation. People tell you that you need to raise enough money so you don’t run out of cash, especially early on, but if you do try and raise a lot of money early on, they say you need to be selling way more food for us to invest in you, so you don’t lose the majority of your company to investors.”