As we approach the biggest eating week of the year, I’ve noticed a growing number of entrepreneurs in Boston trying to figure out how to get onto your shopping list and into your fridge. And investors are trying to figure out how to get a piece of the next Annie’s Organic (acquired by General Mills for $820 million this fall) or Vitaminwater (acquired by Coca-Cola for $4.1 billion).
“Vitaminwater was like the Google of the beverage business,” says Gad Liwerant, who this fall launched a line of packaged smoothies called Applause. “Their success provided motivation and inspiration for a lot of people.”
It’s an interesting moment for the food and beverage industry. Big companies in search of the next big taste are nurturing and acquiring startups. Social media is making it cheaper to build consumer awareness. And hustling to get shelf space at the local Shaw’s may not matter much longer.
“When Amazon gets its same-day delivery of products nailed down, there should be a flood of new consumer products” delivered straight from a warehouse to your doorstep, says Sung Park, founder of Greater Good, a Cambridge beverage company.
All those factors are creating a surge in startups, and the variety of different food ventures around Boston would make for a very strange Thanksgiving meal.
Motto is a sparkling drink made with matcha green tea, packaged in what looks like ginger ale bottles. Six Foods raised $70,000 on the funding site Kickstarter this year to crank out tortilla chips and chocolate chip cookies made with ground-up crickets (it’s high in protein).
Needham-based Purple Carrot delivers ingredients and recipes for vegan meals. Buen Sabor in Newburyport is making all-natural empanadas, rice and beans, and tamales.
Much of this is driven by consumers’ desire for healthier and more convenient foods. At Applause, Liwerant says he wanted to create a smoothie made with “100 percent fruits and vegetables, that was exactly what we like to eat at home,” but without the prep and cleanup. Sold frozen inside brightly colored bags, Applause’s smoothies are priced at $3.25. (A bag makes two servings.) They started appearing at Target stores in September.
Supporting the scene are shared workspaces like CropCircle Kitchen, the Food Loft, and Hope & Main in Providence, which make it easier for foodie founders to share advice and kitchen equipment. Even investors who traditionally backed high-tech or health care businesses are branching out.
“The two biggest stocks that have gained the most over the last decade were Keurig” — the Massachusetts maker of coffee pods and brewers — “and Monster Energy drinks,” says Jeff Fagnan of Atlas Venture in Cambridge. “We are seeing a plethora of food deals.”
He says the firm is still undecided about investing in the field and hasn’t so far. But Fagnan has made personal investments, including in Avion tequila, a high-end brand run by his sister that was acquired this year for a reported $100 million.
In Cambridge, Flagship Ventures plans to increase its investing in food and nutritional products, said spokeswoman Lauren Digange. Among its investments are Quantum Designs, which collaborated with Stonyfield Farms to develop WikiPearls, a frozen yogurt bonbon packaged in an edible “skin” instead of a plastic wrapper.
In June, chef Adam Melonas opened an incubator for food products on the edge of Central Square, Chew Lab. Melonas works with consumer products companies on rather stealthy product development efforts — like “redefining breakfast so kids beg you to eat it,” he says.
Melonas has a staff of 11 food scientists, chefs, and product developers. He hopes to put together a $10 million or $20 million fund to make bets in the food and beverage business.
Melonas, who cooked at restaurants in Australia, Spain, and China, came to Boston in 2010 to help launch a new candy brand, Unreal; he left that company last year to start Chew Lab.
Unreal took a dramatically different approach than most startups, which scrape together cash to get a product onto store shelves, and then hustle to get people to notice. The founders of Unreal included Michael Bronner, an entrepreneur who started businesses like the digital marketing agency Digitas, and his two teenage sons, Kris and Nicky.
Unreal had one of the splashiest launch campaigns you can imagine; its endorsers included Matt Damon, Tom Brady, Gisele Bundchen, and Bill Gates. The Boston company aimed to “unjunk” junk food, selling chocolate bars and peanut butter cups with less sugar and fewer artificial ingredients.
The 2012 launch put Unreal products into about 30,000 stores nationally. But sales slumped after an $8 million first quarter, and retailers started sending product back. Unreal’s packaging was confusing. It was hard to see the brand’s name or figure out what it meant. The company also was paying big bucks for placement on shelves next to Hershey’s and other mainstream candies.
Unreal, which has raised more than $50 million, shut down production late last year. It reformulated its products, focusing on peanut butter cups, with added ingredients like quinoa and coconut. This fall, it began a narrow launch in the natural foods sections of about 900 grocery stores of the Kroger chain. They’re relying more on word-of-mouth and “mom bloggers” instead of paying for public relations and mass media.
“You’ve got to start small, says Steve Konczal, Unreal’s chief executive, a veteran of Heineken and Unilever. “You want to minimize the cost of learning what works.”
As my grandfather liked to tell us when we learned something the hard way: Sometimes you’ve got to pay for an education.