The method of Modern Oats
Feb. 8, 2016
by Monica Watrous
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Modern Oats offers gluten-free gourmet oatmeal in single-serve cups.
IRVINE, CALIF. — Just how hot is Modern Oats? The gluten-free, gourmet oatmeal brand has been “on a tear” since its 2013 debut, said Richard Principale, president and chief executive officer of parent company Innovative Beverage Concepts, Inc.
|Richard Principale, president and c.e.o. of Modern Oats' parent company, Innovative Beverage Concepts, Inc.
“Our 2014 sales grew almost 1,000% over 2013, and 2015 sales grew 50% over 2014,” Mr. Principale told Food Business News.
Packaged in single-serve cups and featuring whole grains, nuts and seeds, varieties in the original lineup include mango blackberry, chocolate cherry, nuts and seeds, apple walnut, five-berry and goji blueberry. The company recently added four more flavors: no-sugar-added five-berry, Vermont maple, coconut almond and a plain variety called Just Oats.
“Obviously we didn’t invent the category, and we certainly didn’t invent oatmeal, so we had to be a bit of a disruptor and try new things,” Mr. Principale said “We felt all you hear about are old-fashioned oats… What if you wanted more stylish, up-to-date oats with goji berries and blueberries and tied into some health trends like non-G.M.O. and gluten-free? What would you have? Well, you’d have Modern Oats.”
The products are sold in a variety of food service outlets, including hotels, coffee shops and cafeterias, as well as in Wegmans and Sprouts Farmers Market stores nationwide.
“We’re not going to be the biggest brand,” Mr. Principale said. “Quaker has 95% of the category. That’s not going to change.”
Being a small player has its perks, he added.
“These big companies don’t necessarily just wake up and change things overnight, so it gives you the opportunity to say, ‘Hey, let’s go for it,’” he said. “There’s no big board here to spend three years deciding whether we’re going to go non-G.M.O. We just do it.”
In an interview with Food Business News, Mr. Principale shared insights behind building a “disruptive” brand, plus his tricks for predicting the next big trend.
Food Business News: How did you get into the oatmeal business?
Richard Principale: We have a current company called Innovative Beverage Concepts, which has been established since 1996 — primarily in the specialty coffee and tea sector, making frappes and chai teas and whatnot — so we had knowledge of the grab-and-go morning customer base. And, as such, we have had customers coming to us, always looking for innovative beverage products within the space so they can compete with Starbucks and the like.
One of our customers came to us with this particular project and said, “We have something right now we’re not too happy with; could you perhaps help us create something that’s a lot better?” Initially we turned it down. We looked at it and thought, “We’re not really in that space.”
Modern Oats currently sells 10 s.k.u.s.
But then it got really exciting because it became one of those products where you can reinvent the whole category if you just made it better.
What sets Modern Oats apart from other hot cereal products on the market?
Mr. Principale: If you tend to look at what people search and what people really want, you’ll see it’s pretty much unanimous. People are looking for less processed, gluten-free, non-G.M.O. I know that sounds trite, but, the thing is, a lot of these big companies don’t really react to it. I don’t think they can move as nimble as a smaller company.
We’re up to 10 s.k.u.s (stock-keeping units) now, and we just keep making it better. Now there’s a new trend where people don’t want added flavors, be it natural or otherwise, so our new s.k.u.s don’t even have that. We’re just constantly trying to improve the product and make it better and cleaner and something that people really enjoy.
Why did you develop the Just Oats variety?
Mr. Principale: We’ve got an apple walnut and a chocolate cherry and a goji berry and all these great combos, but I think part of the notion of being modern is to allow some poetic license and allow other people to come up with their own concepts… In listening to what the public wants, maybe there’s a contest down the road to see what flavor may be our next flavor.
Modern Oats developed the Just Oats variety to allow consumers to come up with their own oatmeal concepts.
We’re not so egotistical to say that coconut almond or mango blackberry is the end-all-be-all without listening to what people want.
Tell me about the other new varieties.
Mr. Principale: With the Vermont maple, we looked at the oatmeal category, and one of the biggest selling concepts out there for oatmeal is maple. However, I’m a big maple snob… (and) what was disheartening is there’s really no maple oatmeal; it’s all maple flavor in the oats category. Everybody is flavoring their oats with a maple flavor. Be it natural or otherwise, it’s still a flavor.
I thought it would be kind of novel to actually source a Vermont maple sugar without any flavoring. So, in essence, you’re not really getting a whiff of maple when you open this cup, but you’re really enjoying a real maple product.
For the no-sugar five-berry, our five-berry is one of our biggest s.k.u.s.... (and) I think that with moving toward a trend of low to no sugar, we just thought, “Let’s appeal to people and do one where there is just no sugar.”
Modern Oats recently introduced Vermont Maple and 5 Berry with no added sugar flavors.
In looking at the line, we just wanted to appeal to those people who had those particular interests. Unlike perhaps a larger company, where they say, hey, there’s not enough of a contingent there to make a product, we don’t necessarily look at it that way. We look at it like, “Who is talking to those people? Let’s have a product for them.”
What’s next for Modern Oats?
Mr. Principale: We definitely want to stick with better-for-you, grab-and-go products that fit the same high level of criteria that we’ve already put in place with non-G.M.O. and gluten-free and tasty and flavorful and better-for-you. We’re definitely looking at different expansion concepts.
But we’re not in any rush. The whole point is not to rush to build products under this brand, but to build the right products that we feel are fixing something. We don’t want to be so prolific that we’re building stuff just to build it. That’s not what we’re about.
How do you predict the next big food trends?
Mr. Principale: I used to be a hairdresser a long time ago, so I had a knack for looking at trends in New York City, and there’s some of that element of catching trends and studying people and anticipating what people are going to want next. Sometimes you get too ahead of that, and it’s not good. I’ve done that in the past.
There’s a very chaotic way I put all these things together. It’s a lot of reading and looking at different things. Fifteen or 16 years ago we came up with a Mexican spiced cocoa because that’s when Ricky Martin was at the top of his game with “Livin’ La Vida Loca,” and I was like, “There’s this Latin invasion going on! We’ve got to come up with Latin-inspired products.”
And conversely, there was this Asian invasion going on, and we were the first company to come out with bubble tea in the United States.
I could look at anything from pop culture to a lot of different things and decide where we’re going to land.