“Bouillon was a stale category with big goliath brands that had dominated for decades, but there weren’t really better for you options,” said Jakobi, a Brit who attended college in the US and worked with Barclays Capital in New York before launching his own snacks company in London in 2009.
A year later, he teamed up with Julian Metcalfe, founder of the Pret A Manger sandwich chain, to develop a series of products under the itsu brand, and a wildly successful gourmet popcorn line called Metcalfe's Skinny, which was spun off in 2015, and sold to Snyder’s Lance in 2016.
Looking for a fresh challenge, Jakobi headed back to the Big Apple and turned his attention to bouillon cubes.
“We wanted to offer a better for you, gluten-free version with no artificial ingredients, 30% less sodium than the leading brands, no added MSG, and lots of flavor,” said Jakobi, who packaged his chicken, vegetable, and beef, stock cubes in a jar, pitched them to Whole Foods in June 2017 with a promise to deliver incremental growth by bringing more Millennials into the category, and hit stores nationwide just four months later.
6,500+ stores in two years
“In June 2017, we were able to get a meeting with their global buyer of soups in Austin, and he really liked what we were doing with the cubes, but also some other products we had in the pipeline such as gravy cubes [which launched in November 2017], and we got a national listing in October,” said Jakobi, who was inspired by Sir Kensington’s success in the condiments category.
“We made a big push online, we worked with a lot of chefs to educate consumers about how to use our products – especially people that don’t know how to cook, and we also did a lot of in-store sampling and promotions. From Q4 2017 to Q4 2018, our cubes experienced 205% growth year on year.
“I think we were lucky because we met the buyer just before the Amazon acquisition; if we’d met later it probably would have been much harder to just get into all the stores, just like that.
“That definitely helped us pick up other accounts and after two years we’re now in more than 6,500 stores from Kroger and Wegmans to Safeway Albertsons, and we’re about to go into Walmart.”
BOU Soup cups
Buoyed by his success in bouillon and gravy cubes [a novel concept], Jakobi targeted a related category that promised to deliver faster turns: instant soup/noodles.
BOU soup cups – which launched in September 2018 – are packaged in a microwaveable recyclable cup with a custom see-through lid, spoon, a BOU cube and a sachet of freeze-dried veggies with a grain (quinoa, brown rice, red rice). Consumers can add boiling water or add cold water and microwave for an instant meal on the go, said Jakobi, who is targeting schools, colleges, offices and other foodservice markets as well as grocery retail.
“They’re already available nationally in Whole Foods, they’re in some Safeway Albertsons stores, they’re in Wegmans, and they will be in Kroger and Walmart shortly, And then on the foodservice side, we’ve launched in some high-profile offices such as Facebook, and we’re doing a trial in September with Canteen [owned by Compass] in universities.
“But it’s [servicing the foodservice market] very labor intensive, so you have to be very strategic about who you launch with and what you go after.”
Revenues on course to at least double in 2019
BOU notched up revenues of just over $2m in 2018 and is “at a minimum expecting to double and potentially even triple this year,” said Jakobi, who raised a convertible note of $800k just prior to launching the brand in spring 2017; closed a $2m series A round in December 2017/January 2018; and raised a further $4.76m in December 2018.
“We’ve got four product ranges – bouillon cubes, gravy cubes, miso cubes, and soup cups – but our ultimate goal is to become a household name, to get into everyone’s pantry in the US. We want people to use BOU products when they are pretty much cooking anything, as our brand is all about flavor and convenience.
“We have some very interesting products in the pipeline. Our plan is to launch a new range sometime next year so we’re very excited about what the future holds.”
How defensible is the BOU brand?
But how defensible is the BOU brand?
“Metcalfe’s Skinny became the leading brand in gourmet healthy popcorn [in the UK],” said Jakobi. “But I struggled over the years with the fact that it was such an easy product to replicate. We were the first to market when we launched, but there were 10 other brands competing with us very quickly and it was very hard to differentiate on product, so then it became more about branding and packaging.
“So when I moved back to the US, I said that if I were to go back to the food industry again, it had to be with products that were harder to replicate. But we have a unique manufacturing process with BOU and a unique relationship with the manufacturer that makes our cubes, so it is not going to be easy for anyone to copy what we're doing."
The food startup scene in the US vs the UK
So how does the US food startup scene compare with that in the UK?
“The skillset [blood, sweat, tears] to build a success consumer brand is the same whether you are in the UK or the US,” observed Jakobi. “But the supply chain in the US is more fragmented. In the US, it’s often a requirement for a small brand to work with brokers, whereas in the UK we were working directly with the leading supermarket chains.
“It’s also far more expensive to launch a brand over here and a lot of brands don’t get past year one, although if you do have something that takes off, you can scale very aggressively. The other thing is that valuations are far more attractive over here for sellers.
“You’re seeing companies that are very hot in the category, very innovative and different, can trade at five, six times revenue multiples, which you would never see in the UK."