The move will allow BTTR to focus on sales and marketing and allow Nature’s Path – North America’s largest organic breakfast company – to handle the operational side of the cereals business, said Arora, who noted that BTTR would continue to operate its gardening kits independently.
“We’ve looked up to Nature’s Path ever since we started this business, and to collaborate with a partner that is best in class – that makes its own cereals and has a huge distribution network and supply chain - will allow us to have more impact,” he told FoodNavigator-USA.
“We’ve built so much momentum in our cereal business and after the case study in New York public schools [see below] we’ve got more school districts asking for our products and it’s tough for a small brand to scale up the supply chain and take on that capital risk; we’d have to raise tons of money. Nature’s Path is massive in retail, but not really in schools districts, and both of us have a mission to democratize organics and bring organics to every household, so it’s a perfect fit.”
He added: “We own the brand and do all the marketing and new product development and sales, but Nature’s Path’s sales team will also represent us, as they are out there knocking on doors every day.”
Asked how the deal would impact BTTR’s current farmer partners, he said they were excited about the deal because for those not already working with Nature’s Path, it could provide an entry point to a company with significantly larger volumes. “Hopefully it will mean more business for them and growth.”
It’s a massive shift in a foodservice market that has been engaged in a race to the bottom
Back to the Roots cereals - made in the USA with four or fewer identity-preserved ingredients and 100% stoneground whole grains – are sold in stores such as Whole Foods, Kroger and Sprouts, but the biggest opportunity right now is in schools, said Arora, who hit the headlines last year after BTTR displaced Kellogg’s in the New York City public school system to become the first organic cereal offered in US public schools after outperforming category giants in blind taste tests.
“It’s been super-exciting to see this brand grow at retail, we’re the #3 driver of category growth in Whole Foods and we also expect to do more with Amazon as a result of this deal,” said Arora.
“But we’re putting our major resource into expanding school districts because there is just so much potential here. One of the groups we’re working with – the Urban School Alliance – represents some of the largest school districts in the country, and they are super excited to expand us into Dallas and L.A now and the other big districts.”
Asked how schools could afford to buy more premium organic products on a tight budget, he said: “There’s been a real change in the marketplace and people are putting a bit more of their budget towards paying a premium for organic. It’s a massive shift in a foodservice market that has been engaged in a bit of a race to the bottom.”
Founded in 2009 in Oakland by Alejandro Velez and Nikhil Arora after discovering how to grow gourmet mushrooms on recycled coffee grounds, Back to the Roots has since expanded into organic cereals, self-cleaning fish tanks that grows fresh herbs and edible plants, and a range of indoor organic gardening kits as part of a mission to ‘Undo Food’ and reconnect families with where food comes from.
Founded in 1985 in British Columbia, Nature’s Path is a privately held, family-owned company, producing USDA, Canadian and UK Soil Association Certified Organic and Non-GMO Project Verified breakfast and snack foods sold in grocery and natural food stores in 50+ countries.
There’s this perception that kids will only eat cereal that’s loaded with sugar
But it’s not just about organic, Arora stressed, noting that the BTTR cereals – made with 100% organic stoneground whole wheat from California and North Dakota, and 100% organic, Non-GMO purple corn from Minnesota – are also significantly lower in sugar than most kids’ breakfast cereals, but still perform better on blind taste tests with children.
“I think there’s this perception that kids will only eat cereal that’s loaded with sugar and sold in a bright yellow or pink box, but it's not true. If you take the labels off, all the stereotypes about what kids should and would eat start to fall apart,” Arora told FoodNavigator-USA
“We’ve got about a third of the sugar of the other cereal options for kids, and when we did blind taste tests they chose 1-3 g sugar, not 7g, they picked 100% stoneground wholegrain cereal, when we’re always told kids don’t like the grittiness of whole grains.”
Cereals are a great opportunity to make good simple food accessible
The success of Back to the Roots’ cereals – which don’t contain sprinklings of on-trend ‘superfoods’ – and have a very short and simple ingredients list (wholegrain wheat or purple corn plus sugar/spice/salt) also shows that simplicity sells, he said.
“Some of the cereals you see on shelf are basically unhealthy but will promote super grains on the front of pack and ancient grains and so on. But you don’t have to do this. Cereals are a great opportunity to make good simple food accessible.”
I feel like we’ve trained kids to say food should taste a certain way
The trend to develop separate – often more sugary and additive-laden – products for kids packaged in colorful boxes, while health conscious adults eat lower sugar products in green and brown boxes, has also done America’s children few favors, he claimed.
“I feel like we’ve trained kids to say food should taste a certain way with all these flavors and sugar. Most kids think that cinnamon is super sweet, when in fact it’s a spice. And the way they think a blueberry should taste is based on all the bars they eat.
“They don’t know what some foods look like [in their unprocessed forms]. They eat peanuts and peanut butter every day, but they don’t know what peanuts actually look like [in the field, in their shells].”
Back to the Roots’ indoor gardening business is flourishing as more Millennials – and their children – embrace urban gardening, whether it’s growing herbs and mushrooms on their windowsills or working in community gardens, he said.
“It feels like the market is catching up with us now. Some of the largest retailers – Home Depot, Lowes, Target – are realizing that indoor gardening is a billion dollar market, and we see a huge opportunity to be the category captain in that space.”
Interested in what kids eat outside the home?
Day three of the FoodNavigator-USA FOOD FOR KIDS summit will explore what kids are eating outside the home, whether we need a 'kids' menu' in restaurants, and how firms are developing healthier foods that meet tight budgets and evolving nutrition standards for schools and quick service restaurants.