“But when I go to shows now and pull up my deck and they see that our products taste incredible and we’ve got five ingredients, they want to talk,” added Dyer, who caught up with FoodNavigator-USA after General Mills' venture arm 301 INC announced it was leading a multistage investment of up to $20m in his company (in partnership with other investors), its first overseas deal.
On paper at least, Dyer - who makes individually-packaged desserts from chocolate fudge lava cake, to salted caramel & chocolate pot de crème in signature ceramic pots - has been doing something right: Pots & Co - which launched in 2012 - notched up sales of $2.8m in 2014, and by 2020, it clocked up a cool $19.5m.
But what’s so special about chocolate pudding? There are brands that use ‘restaurant quality’ as a marketing strapline, and then there’s actual restaurant quality, adds Dyer, who is pretty serious about food.
“Put it this way. I have a two-star Michelin pastry chef who's been with me for eight years [Pots & Co director of innovation and pastry chef Fraser Thomson, who previously worked at celebrated London restaurant The Square].
“He would have left by now if we were serving a load of rubbish.”
‘I thought Oh God, I’ve got so much to learn’
While Dyer is less than charitable about some of the single-serve desserts he’s bought from US supermarkets – “Jello and chocolate puddings that to me are kind of chocolate slop” – he’s under no illusions about the commercial and logistical challenges of breaking into the huge – but notoriously complex and fragmented - US market, however enthusiastic buyers have been about the quality of his puddings.
Which explains why teaming up with General Mills made a lot of sense as Dyer seeks to crack the US market, which he first entered in 2018 after a chance meeting with Costco at a trade show.
“We have a completely different system in the UK compared to the US, where you have to go through distributors, the KeHEs of this world,” noted Dyer.
“So when I first showed up at trade shows, I didn’t know this and people would pick up the products and say, ‘Who are you with?’ and I’d say ‘What do you mean?’ and they’d put them back down again, and I thought Oh God, I’ve got so much to learn.”
‘When she said ‘containers’ I nearly fainted’
Costco, however, dealt with him directly: “We got talking to a lady who said, I’m the buyer for the Bay Area and I’d be interested to take this further… maybe you could bring some containers over? When she said ‘containers’ I nearly fainted.
“So they took our products in ceramic cups, which we put together in a four pack; we found a warehouse in Oakland and on the East Coast; and that's how we started bringing product in. We had astronomical figures in the Bay Area and on the back of that, we got into other Costco regions. Before we knew it, we were sending 60-70 containers a year over to Costco, without distributors.”
General Mills: ‘The market for indulgent products will continue to grow…’
“Our strategy has remained consistent. We look for remarkable products, purpose-driven brands and authentic founders. We think there are exciting food business around the globe and through our global scouting, we saw what Pots & Co was doing in the UK. We got involved when we heard more of their expansion plans in the US and believe our investment will help propel Pots’ growth here.
“We believe the market for indulgent products will continue to grow. We are excited about the Pots & Co brand given its founding by chef Julian Dyer and his vision of bringing restaurant-quality desserts home. The ceramic pots further reinforce the handmade intentionality of Pots products and have become a signature element of the brand.
“Beyond financial capital, 301 INC strives to be an indispensable partner to our portfolio brands, providing cross-functional support across a number of areas, including marketing, sales, R&D, and operations.”
John Haugen, founder and managing director, 301 INC
‘I’d say to anyone who's currently in the UK and thinking of getting into the US market, just learn your stuff’
Pots & Co’s success in Costco, coupled with the fact it had proved itself in other markets certainly helped open doors with other US customers, said Dyer, but having people on the team who understand the market has been critical.
“I’d say to anyone who's currently in the UK and thinking of getting into the US market, just learn your stuff. Find a partner or hire an employee that really knows how it works, because once you start taking out 5% here and 10% there [as everyone in the supply chain takes a cut], you can end up with very little.
“You also need to understand that tastes in each region are so different. So stuff that will sell in New York might not work in Florida, so we’ve been learning as we go.”
In future, you won’t be able to use plastic’
One of the most distinctive aspects of Pots & Co is the packaging for selected products: ceramic pots made in Valencia, Spain, which consumers re-use for everything from growing herbs to serving their own desserts, said Dyer.
While fans buying Pots & Co desserts every week might struggle to find uses for all the ceramic pots (whereas its glass pots can be easily recycled) there are practical as well as aesthetic reasons for the choice, he said.
“We’re baking the lava cakes with a molten center and salted caramel pot de crème in the container, which is what makes them taste so amazing [they absorb and maintain heat well], but the lemon posset doesn’t need to be in ceramics so that will probably go in glass down the line."
He added: “We do some products in glass over in the UK, which is reusable and recyclable, and this is where things are going. In future, you won’t be able to use plastic. We have these smaller 50g chocolate pots [that have historically been packaged in plastic], and we’re now designing a lightweight pulp-based pot, so we’ll probably get rid of all of our plastics. You can do the non-permeable barrier inside with sugar syrup now rather than plastics.”
‘I started to think this could be a massive market’
The partnership with General Mills came about serendipitously, explained Dyer: “We were doing a four-pack of a single serve premium dessert for under $5 at Costco, we were doing really well, and then we started to talk to Sprouts, Albertsons, Whole Foods, Walmart, and I started to think this could be a massive market.
“We were growing at a rate of knots and everyone wanted to invest, but I kept saying no because I thought, I’ve got to learn a bit more. And then we were at Expo West in 2019 and we were approached by a scout who was asking lots of questions, and he said he was from General Mills. They tried the products and they were blown away.”
‘The longer-term plan is to manufacture here [in the US]’
And given the firm’s relative inexperience in the US market, teaming up with General Mills 301 INC - which can provide support in marketing, sales, R&D, and operations as well as capital - was a no brainer, he said.
“The longer-term plan is to manufacture here [right now Pots & Co is shipping frozen product from its factory in the UK to the US, a costly, but short-term strategy], and this is where it really made sense to talk to General Mills. I had other offers, but I wasn’t interested.
“I’ve looked at co-packers over the years in the UK and the US and it would be a case of, I’ve signed an NDA, given you the recipes and you’ve made me that? I can quite honestly say it was [various expletives follow] inedible… which is why we’re still doing it ourselves, up to 400,000 pots a week in small batches.”
It’s too early to say how General Mills might assist on the manufacturing front, said Dyer, but “It could be a range of things, so maybe they could help us find a site run by a third party and then we would go in and be able to work alongside that third party; or they might find a site [where Pots & Co could run its own standalone site]; or it could be with the help of General Mills [in-house manufacturing network].”
‘The chiller is where we need to be’
So what’s Dyer’s sense of the broader market opportunity for his pots at US grocery retailers, which have a strong selection of frozen cheesecakes, pies, novelties, and premium ice cream brands, but do not have a very established market for chilled premium single-serve packaged desserts?
“At first, we were put in the freezer, which is not where I really want to be,” he said. “The chiller is where we need to be. Single serve premium desserts should not be hidden away in the back of a freezer. But things are changing. So in Kroger, we’ve just launched in both the freezer and the chiller.
“Right now, we’re mainly in the west coast and then we’ll expand gradually, but I don’t want to spread myself too thin on the ground and ruin things because we don’t have the resources. This is a slow race but we will get there… we’re not going to rush.”