Boulder Brands: 'The consumer has already moved'

by Keith Nunes
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BOSTON — The next three to five years are going to be disruptive for some and “cataclysmic” for others in the food and beverage space, said Steve Hughes, chief executive officer of Boulder Brands.

“For some, (it’s) a phenomenal opportunity because the consumer has already moved,” Mr. Hughes said Sept. 3 during a presentation at the Barclays Back-To-School Consumer Conference. “And now the question is: Who is in front of that curve? I think WhiteWave, I think Hain, I think Annie’s, and I think us. And who’s behind that curve? I think it’s a very dynamic time as you look at where value is going to be created in the food space.”

Mr. Hughes defined disruptive brands as those that were “born in Whole Foods, raised in Whole Foods, crossed over to natural, (and) now crossing over to conventional.”

The top retailers want to go natural as fast as possible, because they want that consumer in their store, Mr. Hughes said.

“And if you look at WhiteWave, Hain and Annie’s indexes, they probably look very similar,” he said. “And that’s why I think those four public companies, and other companies of scale, are going to do very well here because these brands and this consumer is going to really resonate across all channels. And what was always the purview of just natural will be at Costco, will be at Target, will be at Safeway, (and) will be at Wal-Mart.”

As an example of the situation some food processors are facing, Mr. Hughes pointed to Boulder Brands’ EVOL line of frozen products.

“The story is pretty simple,” he said. “I mean, in EVOL, everything in that product you can pronounce and buy in a grocery store. Lean Cuisine, you need a Ph.D. in biochemistry.

“And that is the issue in the food industry. Even tomorrow, if Lean Cuisine converted its ingredients to look like EVOL, the millennial is never going to buy it because the millennial didn’t buy it and discover it in Whole Foods. It’s a mainstream brand that doesn’t connect. So I think that, ‘A’, this sums up I think the dilemma that large food deals with today, which is the consumer has shifted very quickly to, ‘What the heck’s in my food?’”

Boulder Brands has developed a frozen food program that consists of EVOL items as well as Udi’s frozen gluten-free pizza products.

“We have a great proof of concept with Target,” Mr. Hughes said. “They’ve been very, very proactive as part of their Made to Matter program. Today, at Target, (during the) last 12 weeks, EVOL was the No. 8 brand of 100 frozen food brands. (It’s) larger than Healthy Choice, just behind Stouffer's Red Box. (It’s come) out of nowhere, because a retailer’s embracing this because they want this consumer in their store.”

Despite his belief in the strength of natural, clean label products at retail, Mr. Hughes said that is not the strategic focus of Boulder Brands.

“We focus on large need states,” he said. “We’re not going to own 50 brands. We want to own strategic brands that we think are category elastic. What’s truly fascinating to me is, in the food industry, many brands are category captive. Cheerios is a cereal. Pepsi is in soda.

“We’re looking for brands that really address a need state. So, Udi’s theoretically can be in every category that is relevant from a gluten standpoint. Earth Balance, from a plant-based standpoint. So, these brands have a lot of legs to them and I think something that we can leverage over the long term.”

The company’s three priorities for this year include expanding its gluten-free products and velocities across all geographies and channels; leveraging its frozen portfolio with EVOL and the launch of Udi’s frozen; and to revitalize its spreads business, which include the Smart Balance and Earth Balance brands, and begin to position its products as plant-based butters.

“We think the future is in being a butter alternative, a non-dairy butter alternative play,” Mr. Hughes said. “We’re trying to create brands that are millennial magnets. You go to a retailer and talk to the retailer and say, ‘72% of the consumers, if they can’t find Earth Balance, will go someplace they can find it.’ It’s going to be a good leverage point as we try to build out that footprint fairly rapidly in the grocery space.” 

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