The L.A-based firm (which now boasts paid members in the “mid-hundreds of thousands” who pay an annual fee of $59.95), originally focused on a delivering a curated selection of top-selling shelf-stable natural and organic brands at 25-50% below traditional retail prices, but has been steadily building its own brand over the past two years, offering everything from Thrive Market coffee to coconut oil.
The new Thrive Market frozen meat and seafood boxes - from the ‘Meat Lovers Pork & Beef Combo’ to the ‘Pastured Pork and Sustainable Seafood Box’ – are a logical extension of this program, and something customers have been requesting for some time, co-founder Gunnar Lovelace told FoodNavigator-USA.
"All of our core metrics are improving dramatically, and this year alone we’ve had periods of time where we’ve had to stop marketing because the business was growing so fast we couldn’t handle the scale. This year alone we’ll grow well over 50%.
“The desire to launch meat comes from our core mission to add value to our community and be a force for good, because the way we do factory farming of meat at scale right now is probably a top five problem for the planet,” claimed Lovelace, who co-founded Thrive Market in late 2013 with Nick Green and Sasha Siddhartha and launched the platform a year later.
We have some incredible partnerships
The new products – which Lovelace said he hoped would help drive scale in the emerging regenerative agriculture movement (which places more emphasis on soil health and animal welfare) – will be shipped from three new wind-powered frozen distribution centers on the west coast, east coast and the middle of the country, in 100% post-consumer recycled packaging with recycled denim insulation.
“We have some incredible partnerships. On the beef side we’re sourcing from a low density amazing farm in Patagonia where cattle can be grass-fed all year around. On the chicken side, we’re working with certified humane farmers in a co-op within 50 miles of the processing plant, and on the fish side we’ve got sustainably farm-raised antibiotic free products. On the pork side, we’re got this amazing program using regenerative animal husbandry practices, where they rotate the pigs around and build top soil.”
Whole Foods products at wholesale prices, delivered to your door? It sounds almost too good to be true, and at the beginning, that’s certainly how many potential investors viewed Thrive Market. But with hundreds of thousands of paid members signed up, a lot of people are now taking the Los Angeles-based natural and organic online membership club considerably more seriously.
The annual fee is $59.95 and shipping is free on orders over $49 with shelf-stable goods shipped from fulfilment centers in Reno Nevada and Batesville Indiana and frozen meat and seafood delivered from distribution centers on the west coast, east coast and the middle of the country.
Cutting out the middlemen
But does the new range - billed as “the highest quality most ethical meat program that’s ever existed” – come with an equally aspirational pricetag?
No, claims Lovelace (prices start at $4.32/serving). “For every product we ask can we save our members time and money, get great quality, and do good in the world in tangible ways, and in the case of meat, we can disintermediate all these traditional players that make these products so expensive.
“So you’ve got the farmer, the processor, the megabrands like Tyson, the brokers, the distributors, the retailers and all the pay to play game games you play to buy shelf space and get product placement. We can afford to pay a farmer 10-20% more and use our supply chain capability to ship direct to consumers and cut out all these middlemen.”
So how scalable is this?
It’s early days, said Lovelace, “But we think we’re going to drive tremendous demand, so one of the things we’re also done is identify investors interested in regenerative and grass fed ethical programs.
“We’ve identified over $250million dollars worth of capital from aligned investors that want to consider investing in supply chains that we are driving a lot of demand for. They see us as a way of de-risking their investment because we’re driving predictable, intense demand.”
The most valuable thing we have as a company is trust
"One of our superpowers as a business is content marketing. We're an incredible partner for small brands and we build beautiful lifestyle content connecting members to who is behind the brand, where it comes from, why it matters, how you can use it, what are the values of the business. We have blogs and videos and millions of people on our newsletter.
“We really believe that the success of brands in the 21st century will be driven by organizations that build positive externalities into their business and are good at telling those stories through omni-channel communication strategies that build community and awareness... and consumers will reward them for that behavior.
“That’s how we compete against more commodified players that don’t have the same trust and credibility. The Amazon shopping app on IOS has 17,000 three-star reviews. We have 17,000 five-star reviews. The most valuable thing we have as a company is trust. Consumers trust us to offer products that take a stand on the issues that they care about. It’s the right thing to do, but also the smart thing to from a business perspective.”
Gunnar Lovelace, co-founder, Thrive Market
Private label accounts for 17-18% of sales
Overall, private label “is a core part of our strategy and it’s accretive, so it doesn’t cannibalize sales of the brands we offer,” he claimed.
“We’ve released more than 350 [private label] products in the last 12-24 months and they now account for around 17-18% of sales, whereas at Whole Foods, private label accounts for less than 10% and it’s taken them 20 years.
“It’s a very fast area of growth for us and when we launch a product in a category, almost overnight that category grows by 25-50% and we will become the number one selling product in that category in the first 3-6 months.”
Typically, the team will look at a category and see if it can offer a top quality third party brand at a price that aligns with Thrive Market’s brand promise and if not, explores whether it can deliver this using its own brand, he said.
“Take coffee. We looked around but we couldn’t sell organic fair trade third party coffee at the right price that the unit economics would work for us. So we developed our own.”