OHi’s rapid expansion underscores consumer demand for refrigerated bars, ‘perimeter snacking’

By Elizabeth Crawford contact

- Last updated on GMT

OHi’s rapid expansion underscores consumer demand for refrigerated bars, ‘perimeter snacking’
When the founder of the refrigerated bar brand OHi decided 18 months ago to expand her business from Hawaii to the mainland she thought it might take some time to educate retailers and shoppers about the category she was helping to build, but she was confident in the brand’s unique position to tap into the emerging consumer preferences for ‘freshness’ and ‘perimeter snacking.’

But what Dawn Anderson says she wasn’t prepared for was the speed with which demand would spread across the country for perimeter snacks and refrigerated bars in general, and OHi’s products in particular.

Since expanding from Hawaii to the mainland in January 2018, OHi’s retailer distribution has increased four times to more than 1,000 stores, according to the company, which notes this mirrors the overall speed with which the refrigerated bar category is growing.

In the past five years, the refrigerated bar category has grown 56% year over year to reach more than $50 million, according to OHi. In addition, the company notes, sales of ‘perimeter snacking,’ which is the ideal facing for refrigerated bars, has grown 2.7 times faster than the rest of the store.

“When people tried to tell me what to expect, I was like, ‘Oh yeah, I got this,’​” Anderson told FoodNavigator-USA. “But,”​ she added, “now I have a much better understanding about [what expanding to the mainland] means – it is like jumping off a cliff.”

But while Anderson was surprised at the speed with which the brand and category took off, she also said she is “super excited”​ to take the next plunge, which is national distribution of her top four SKUs at Sprout’s Farmers Market this month.

While the company has distributed through a handful of stores at other retailers, including Whole Foods Market, which gave it first crack at the mainland in its Southern California region, Anderson said the Sprout’s deal “is really our first national opportunity.”

The partnership also helped OHi strike a deal with KeHE Distributors and “opened up four additional distribution centers for us – so it really has expanded our reach and our opportunity.”

A multi-prong approach to sales

Better prepared this time for what the expansion will mean, Anderson said OHi will “hyper focus”​ on supporting its launch into Sprouts with a multi-prong campaign that she says she hopes will drive velocity and brand awareness.

The first prong will focus on in-store demos, which will not only push sales but allow the brand to tackle its top two challenges: consumer education and ensuring proper in-store placement.

“We are not just another bar, which some consumers might think when they look at us. But we have found when someone tries are bar, we are able to gain them as a consumer because they realize the taste is so much fresher,”​ she said.

She also explained that demos allow her team to educate consumers about why the bars are in the refrigerated section so as to use “Mother Nature’s natural preservation of cold”​ rather than unfamiliar sounding preservatives that consumers are trying to avoid.

The brand will reinforce its consumer sampling program by providing store employees, buyers and other team members with samples as well, so that they can understand the bar and become brand champions, Anderson said.

Ideally, in-store sampling also happens next to where the bars are stocked – allowing the team to show consumers where to find them – a challenge that continues to hamper ongoing sales, Anderson said. She explained that she often hears from consumers that they weren’t able to find the product in stores because they were looking in the shelf-stable bar set, rather than by the yogurts, produce or in the chilled grab-and-go set, the last of which Anderson says is her ideal placement.

Another prong in Anderson’s plan is a national coupon campaign that will directly target the zip codes surrounding Sprouts’ stores so as to drive more traffic to each location.

And finally, she said, the company is rolling out a campaign that focuses on mothers and children, who are target consumers of the bars.

It takes money to make money

Because it takes money to make money, OHi currently is raising funds – half of which will cover the cost of the expansion, including the demos and marketing as well as building up supply to support velocity, Anderson said.

The other half will go towards building supply for “some larger distribution in Q1 and Q2 of next year,”​ Anderson added, but wouldn’t provide additional detail.

Her goal for the current raise is between $2 million and $2.5 million, which she says may not seem big compared to some of the funds raised by other food and beverage players, but it is a lot for OHi.

“A lot of growth can happen with that money – we are a lean team and when we spend money it is to support velocity so that we can build the brand, support our partners and reinvest in the company,”​ she said.

This will be the company’s second notable raise, the first included support from Boulder Food Group and District Ventures, which went to expanding from Hawaii to the mainland, Anderson said, adding both groups have been “incredibly supportive.”

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