True Foods Inc.'s explosive success shows healthy foods can lead to healthy profits

By Elizabeth Crawford

- Last updated on GMT

Source: E. Crawford
Source: E. Crawford

Related tags Tomato sauce High-fructose corn syrup Sauce

True Foods Inc. wants to make everyday foods “healthier, more delicious and better for our world” by packing them with more vegetables and less added sugar – an ambitious mission to which consumers are responding enthusiastically judging by the startup’s explosive growth in the last two years. 

From the moment True Foods Inc. launched in early 2015, consumers who want to increase their veggie intake and reduce their sugar consumption without sacrificing taste have snapped up the company’s unique ketchup, barbecue sauce and hot sauce, which are made with pureed butternut squash, carrots and spinach.

The natural sweetness of the root vegetables allowed the company to halve the amount of sugar in their sauce to about 8 grams per serving compared to about 16 grams per serving in many mainstream competing products, many of which use high fructose corn syrup – one of the most demonized forms of sugar currently used in packaged foods.

In addition to cutting the total sugar, which has become public enemy No. 1 in the fight against obesity in the US, the hidden vegetables add “amazing vitamins and nutrients, like B6, iron and potassium,”​ and drastically reduce the calories to 25 per serving compared to 70 calories per serving in most competitors’ products, Abraham Kamarck, co-founder of True Foods Inc., told potential investors at Rabobank North America Wholesales’ FoodBytes!​ pitch-slam in Brooklyn, NY, March 3. At the event, the young company won the hearts of attendees and impressed potential investors -- scooping up the People’s Choice Award. 

The condiments’ short ingredient list also appeals to modern shoppers, who want ingredients they can recognize and more often than not list on two hands.

The better-for-you profile also appeals to millennial parents, many of whom try to feed their children the healthiest foods possible and are the target demographic of the True Made Foods brand.

“There are 10.8 million millennial households with children, 52% of them closely monitor their kids’ diets and read labels,”​ said Kamarck. In addition, he said, “82% think it is important to include vegetables in every meal and every snack” -- ​a lofty goal with which True Foods Inc. can help.

An uncompromised flavor

The sauces not only are healthier than many of their traditional counterparts, but they taste just as good – as proven by co-founder Kevin Powell’s love for them despite his deep rooted hate of all vegetables. Powell jokes that he cringes at the thought of Brussels sprouts and kale and traditionally would have refused to spear an asparagus even if his life depended on it, which eventually it did.

When Powell left the army his love of cheeseburgers and bad eating habits caught up with him, leading to weight gain and health problems. This prompted his wife to start hiding vegetables in his food “as if he was a 3-year-old,”​ Kamarck said. This eventually led to the creation of True Made Foods’ veggie-packed ketchup.

“The first time I had her ketchup, I loved it. And I thought, if I will eat this – anyone will,”​ Powell told FoodNavigator-USA.

And he was right, judging by the product's sales.

Explosive growth

In the first year of launching, the trio of condiments flew off shelves, driving up the startup’s revenue to $40,000. In the first two months of 2016, the company has already more than doubled the first year’s sales and is on track to sell $600,000. Based on this growth, and the quickly increasing distribution, True Foods Inc. projects revenues will reach $2 million in 2017.

“We have hit something big. People are taking notice and we’ve moved pretty fast and are growing at a breakneck rate,”​ Kamarck said.

Building sales through traditional and new channels

He noted the company is adding several major grocery chains, including Super Target, which will test the product in 2,050 stores. It also is pitching Harris Teeter and Wegmans for late 2016-2017 growth.

The co-founders also are looking to new retail avenues, such as the increasingly popular meal kits, as a way to sample its sauces and build brand awareness among consumers.

"We are the sole provider of barbecue sauce to Blue Apron. In January, we shipped 1,400 gallons of barbecue sauce for the New Jersey Blue Apron distribution center and we’re going to the national level with them in June,”​ Kamarck said.

Scaling smart

While the company is excited about the exponential growth, it is taking care to scale smart – focusing mainly on the South Carolina to Boston region, with a few stores in other parts of the country. This strategy will allow it to build out its production to sufficiently meet supply. It is adding a new copacker in Kentucky soon, and keeping on its production in upstate New York to serve the local market.

The company’s measured approach to expansion also will allow it to focus on marketing and PR in each new region to guarantee consumer recognition and product velocity before adding new stores in new regions, Kamarck said.

He added that as the company grows, it will build enough volume that its production costs and suggested retail price will come down from its original $5.99 to a more competitive $3.99 in Target stores. In addition, the higher volume also will boost the company’s margins from a “very tight”​ 20% now to about 35% by the end of the year, Kamarck projects.

Reflecting on the numbers, Kamarck said the first year of a CPG is always the hardest because of the tight margins, but he is confident that this hard part is behind True Made Foods and that the company not only will survive the competitive landscape, but it will thrive.

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