The products – four meals and two breakfast products ($4.99) – will also be available at Target.com for in-store or curbside pickup or in partnership with Shipt, said Raised Real, which was founded in 2016, attracted a sizeable investment from frozen food giant Schwan’s a year later, and has since built a loyal following for its pre-portioned, flash-frozen meals in finger food form.
Retail was always in the plan for the brand (strapline: ‘the best baby food isn’t baby food’) at some point, said co-founder Santiago Merea, who has been tracking attempts to build a chilled baby food category at retail via dedicated fridges or new segments in the dairy aisle next to kids’ yogurts, but says the economics of frozen are more appealing.
“Fresh is incredibly expensive," he told FoodNavigator-USA. "Not only because it’s expensive to produce and keep fresh and the supply chain is expensive, but retail will also discount your product based on the expiration date. If you hope to have any good margins in fresh, forget about it.”
On a consumer level, he said, attitudes are also changing about frozen food, which has been a big winner during the pandemic. The fact that Gerber has just started testing toddler food in the frozen aisle is also an encouraging sign that he's not the only one that thinks there's some mileage here, said Merea, although he says their respective product offerings are quite different.
“Millennials think about frozen as fresh, and frozen has been growing at an incredible pace during the pandemic.”
Raised Real products - which use 32% post consumer recycled plastic - will sit next to other frozen food products targeting younger children, said Merea: “Bringing us in with six SKUs is a pretty big deal, so we’re very excited about this; it’s an incremental product and Target over-indexes on kids meals. A lot of families shop at Super Target so it makes sense to start there.”
'Schwan's is a key strategic partner for us'
So is Schwan’s involved in the frozen retail launch?
“Not directly,” said Merea, “But they are a key strategic partner for us, so you can imagine in the future if we are in retail in a very significant way, they have a strong distribution platform.
“But for our direct to consumer business they're incredibly helpful because they have the ability to distribute our product through 10 distribution centers around the country so we guarantee everybody one or two day shipping, which is why we have such healthy unit economics.”
'CPMs for Facebook, Instagram, they're still pretty high...'
While the cost of CPMs (ads bought per 1,000 impressions) skyrocketed last year as more brands piled into the direct-to-consumer space, Raised Real had a very strong 2020, attracting higher average orders (in part because its new breakfast products were a big incremental hit) and wooing more customers, said Merea.
“We did wonder, are these people joining just for the short term, or are they going to become members for a long time? But we’ve actually seen the same retention rates.”
That said, online advertising is changing, he said. “I think things will be more intentional, versus just retargeting and driving people nuts with ads until they click on them. That will go away, because it's becoming too expensive.
“CPMs for Facebook, Instagram, they're still pretty high and I think a lot of these new companies are having a scary time. It’s not like you put a website up and people just come; after you exhaust your email audience, you have to go and search for new eyeballs, and that's tough.”