The Eureka moment for Alex Cree (who met Loren Heinold several years ago while working in investment banking in Beijing) came at a hotel buffet in Guangdong in early 2016, Heinold told FoodNavigator-USA.
“Alex literally took the toppings off a pizza in the buffet, cut open a bao that was also in the buffet, and stuffed them inside. He sent me a message on [Chinese messaging app] WeChat and I just thought, it’s brilliant.”
Cree, who had moved back to the US in 2014, decided to head back to Beijing to see if his fusion food concept had legs, and teamed up with Heinold, who already knew a thing or two about setting up a food business in China (he co-founded a Mexican restaurant chain in Beijing in 2014), to launch Baozza.
“The plan was to do a summer of pop-up events to get the product out there,” said Heinold. “And six years later, we're still going at it.”
‘I'd seen Mark Cuban say he takes cold emails from entrepreneurs, so I figured, what the hell…’
Pretty soon, it became clear they were onto something, and by 2017 Cree began forging plans to introduce Baozza to retailers’ freezer cabinets in the US, and fired off a speculative email to Dallas Mavericks owner and Shark Tank investor Mark Cuban.
“I'd seen him say in a panel discussion I was watching on YouTube that he takes cold emails from entrepreneurs," said Cree, "so I figured, what the hell, I'll just try and find his email on the internet and reach out.
“I told him, we're two Americans living in Beijing, we've got this proof of concept with street food events in Beijing. Our product is wildly popular and we need capital… and nobody responded." The next day, he wrote back: "I was like, Hey, did anybody get this? And then boom, within a couple minutes, he replied with two words: ‘Got it.’
“I asked him if he wanted to see our deck and our business plan, and then we were off to the races. The due diligence was quite thorough, but we had a deal by the end of 2017,” said Cree, who moved back to L.A. in late 2020 to focus on the US operation, while Heinold stayed in Beijing to run the Chinese operation, which currently supplies about 300 retail locations, but also has a DTC business.
Since then the pair have raised more money here and there, including a million dollar check from a large grocery chain.
Baozza (tagline: ‘Pizza tastes better in a Baozza!’) puts cheesy pizza fillings inside a soft bao bun that’s steamed, not baked. Available in five flavors (Margherita, Pepperoni, Italian Sausage, Cheesy Spinach, and BBQ Chicken), the brand is now available in around 1,000 stores in the US including Sprouts and Harris Teeter.
Ingredients (Margherita): Enriched wheat flour (wheat flour, niacin, reduced iron, thiamin mononitrate, riboflavin, folic acid), water, cane sugar, yeast, baking powder (sodium acid pyrophosphate, baking soda, cornstarch, monocalcium phosphate), basil, oregano, garlic.
Filling: low-moisture mozzarella cheese (cultured pasteurized milk, salt, enzymes), tomato sauce (tomatoes [tomatoes, salt, citric acid], onions, tomato paste, canola and olive oil, sugar, garlic, salt, xanthan gum, black pepper, oregano, basil), bamboo fiber and psyllium husk fiber.
Nationwide launch at Sprouts with six-month exclusive
The products, which are manufactured by a co-packer on the west coast, are now sold in packs of two for $5.99 at Sprouts, which took on Baozza on an exclusive basis for six months, starting in early summer, 2021, said Cree.
“Sprouts wanted to take us nationwide with all five SKUs, which was a great opportunity for the brand to take its first steps. It’s interesting to a lot of people that here were two Americans that had been been cutting their teeth and learning the business in China, but were effectively rookies in the US.”
And while the product is the same, the markets are very different, said Heinold. “The US is more of a staid market; there are annual resets, calendars, processes you go through. In China, anything goes; there's no set margin structure in most places and everything’s a negotiation. You can have a good meeting and be on the shelf the next week.”
'In China, you can have a good meeting and be on the shelf the next week'
Cree picked up several retail accounts that were non-competing with Sprouts including Harris Teeter and Price Chopper during 2021, but says this year, Baozza is really “off to the races” after securing listings at a couple of top-tier conventional grocery accounts, and expects to be in anything from 3,500-6,000 doors by the year end (up from around 1,000 now).
Buyers, he said, are welcoming brands that bring something fresh to a category which has been engaged in something of a race to the bottom on pricing over the years, although the frozen food category as a whole has benefited from changing food consumption patterns during the pandemic: "We're winning almost every pitch."
While the $5.99 price point for a two-pack has been low enough to encourage trial, said Cree, $5 is probably the sweet spot going forward: “Over the course of 2022 the majority of the places we'll be selling will actually be at $4.99.”
‘Kids like the soft, squishy texture’
So who is Baozza targeting?
First off, young kids, tweens, and teens love the product, said Cree, in part because of the “softer, squishy texture.”
But the products – which are ready in 60 seconds - “actually have pretty wide appeal,” he noted, particularly with Gen X, a demographic cohort that is often overlooked by brands. “But we’re learning new things [about the audience] every day.”
“There's a school in Seattle where the kids bring their little colorful thermos to school, and eat Baozza for lunch. But then we got fan mail from the daughter of a 94-year-old father, who celebrated his birthday with Baozza because it was soft enough for him to eat."
“It’s a bit different in China, where bao is seen as a breakfast thing," said Heinold, "plus it’s also really resonating with younger consumers there as Gen Xers did not grow up eating pizza or cheese.”
As for usage occasions, one very attractive thing about Baozza, added Heinold, is that you can eat it at any time of the day or night, for breakfast, lunch, dinner, late night snack, or on-the-go snack.
“We did get some people pushing us to really emphasize one day part or usage occasion, but our experience with customers is that they're really eating them throughout the day."
‘We've got our morning and evening windows where we're both awake’
So what is it like running a business when one co-founder (Heinold, in Beijing) is 15 hours ahead of the other (Cree, in Los Angeles)?
“We've got our morning and evening windows where we're both awake,” said Heinold, who admits doing business in China is raising his blood pressure right now, given the covid-inspired lockdowns (his operations manager “hasn't left her apartment for seven weeks").
“I’m taking care of Asia and Alex is handling North America, but we’ll align on important things like hiring or strategy for a new retail account. We’ve been doing this long enough that we're kind of completing each other's sentences by now.”