Justin's founder: We had a lot of suitors, but Hormel ticked all the right boxes

By Elaine Watson contact

- Last updated on GMT

Justin Gold: 'I'm not going anywhere.'
Justin Gold: 'I'm not going anywhere.'
While going from zero to a forecasted $100m in revenues in fiscal 2017 largely under your own steam (it sold a minority stake to VMG Partners in 2013) is no mean feat, tying the knot with Hormel will propel Justin’s nut butter into CPG’s major league, says its founder Justin Gold.

Speaking to FoodNavigator-USA after striking a $286m deal ​to sell his Boulder-based business to Hormel 14 years after he first started experimenting in his kitchen with nuts and a food processor, Gold said Justin’s had built a solid presence in natural and conventional grocery.

However, it had barely scratched the surface when it came to capitalizing on opportunities in club, foodservice, convenience stores and international markets, he said.

There are a whole lot of channels - and countries - that Hormel could certainly help us navigate through,

While he had not been actively seeking a sale, several potential suitors had wooed him over the years, revealed Gold: “The time just felt right, for this company to continue to grow the way it has been we needed additional resources, for everything really, from creating safe high quality reliable products, to sourcing raw materials, expanding our distribution, and learning best in class strategies in marketing and HR.

It was fun for me to be in a position to be able to pick the one ​[suitor] that was the best suited for our company.”

Hormel was the best fit for three reasons, said Gold, who quizzed executives at several companies Hormel has acquired over the years including Applegate and CytoSport to see if Hormel had kept its promise to run them at arm’s length, and had been encouraged by their feedback.

Number one: They get nut butter and that’s our core competency; number two: They believe in our mission and they want Justin’s to continue being Justin’s, and number three: They want us to have our independence and with Applegate and CytoSport they have done what they said they were going to do.”

Justin's CEO Peter Burns: "There are a whole lot of channels - and countries - that Hormel can help us navigate through, so this is incredibly exciting for us."

Our #1 product is in fewer than 40% of grocery stores

Peter Burns, who was hired by Gold in 2014 as Justin's new president and CEO, added: “There are more places where we aren’t than where we are. Our #1 product is in fewer than 40% of grocery stores and we have limited distribution in club, we have no real international business ​[Justin’s sells peanut butter cups in Starbucks in Canada but is not yet in major grocery retailers there], no convenience stores business, limited foodservice…

“There are a whole lot of channels - and countries - that Hormel could certainly help us navigate through, so this is incredibly exciting for us. We’ll be in Canada in conventional grocery in three to six months.”

justins almond butter

Justin's classic almond butter is made from dry roasted almonds and palm fruit oil. The latter was chosen because it has less saturated fat than coconut oil or palm kernel oil, and because it "minimizes oil separation, which many consumers prefer,"​ says the Boulder-based company.

Strong double-digit growth

As for sales growth, added Burns, Justin’s is still growing very fast, despite the fact it is no longer a new player on the nut butter scene: “We are generating strong double digit growth.

"It’s coming mostly from retailers taking more of our products, so adding cups and snack packs as well as spreads and squeeze packs, but we are also entering new channels, we are in airports, and there are some preliminary things going on in club stores too.”

squeeze pack
Justin Gold's big breakthrough came when he put his nut butters into portion-controlled squeeze packs, and sales went through the roof.

As for new products and packaging formats, Gold had a ton of ideas in the pipeline, said Burns, who was formerly president of Celestial Seasonings, “But there is so much we can do with our core business first. The three categories in which we compete represent about $40bn of business and we are just getting our feet wet in some of them. Justin is not short of ideas, but those will come [to market] as we fill out the core business portfolio.”

Hormel buys a lot more peanuts than we do

While Hormel doesn’t have a presence in the almond butter category, as the owner of the Skippy peanut butter brand, its buying power would help Justin’s secure a better price on peanuts for its classic and honey peanut butter lines, said Burns. “We’ll obviously get some assistance there as they buy a lot more peanuts than we do!”

So how much has the nut butter category changed since Justin's arrived on the scene in 2004?

A lot, said Gold, whose big breakthrough came when he put his nut butters into portion-controlled squeeze packs, and sales went through the roof.

“Retailers are dedicating more space to nut butter over sugary spreads, there’s a lot more regional brands, a lot of fortification, and now a lot of other brands delivering on the go nut butters. I feel like we opened the door to a lot of younger smaller brands and I’m very proud of that.”

We’re going to stay in Boulder

justins-snack-packs
The latest innovation from Justin's is the snack pack, featuring a portion of pretzels and its signature nut butters

As for the inevitable questions about selling out to ‘big food’, Gold said that acquisitive large CPG brands such as Hormel now recognize that their best bet is to be leave their sexier bedfellows well alone, but give them the resources they need to carry on doing what they are doing more rapidly, rather than swallowing them under the corporate umbrella.

And while some die-hard fans expressed their displeasure about the deal on twitter and facebook, the overwhelming reaction has been positive, said Gold, who announced the sale to followers via a video on social media as the announcement was hitting the wires.

The overall reaction has been incredibly positive. We’re going to stay in Boulder, I’m not going anywhere, and the resources we get from Hormel will only make things better for us.”

Snee_Jim

"We know that it ​[Justin's] attracts a younger, more health conscious on-the-go millennial consumer... Justin’s enhances our scale in the nut butter category complementing our Skippy brand positioning very nicely. The Justin’s brand gives us a great platform in natural and organic specialty nut butter spreads, the fastest growing portion of the nut butter category."

Jim Snee, president and chief operating officer, Hormel Foods

Read more about the deal HERE​.

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