Steve Hughes: 'You'd be surprised how fast brands can scale now.'
Boulder Brands CEO: In 3-5 years there will be a bunch of $300-500m brands that you've never heard of today
Hughes, who was speaking at a webinar hosted by New Hope Media's NEXT Accelerator on April 15, added: “You'd be surprised how fast brands can scale now. I think in three to five years there are going to be a bunch of $300m to $500m dollar companies and brands that you've never heard of today.
“The great brands of tomorrow, of the next generation, are on sale in stores like Whole Foods, Sprouts, and Earth Fare today.” And they are going to scale this rapidly in part because large conventional retailers need to replace sales that legacy brands are losing and stock more products that resonate with Millennials, he said.
Buzzwords: Authenticity, pure, simple, sprouted, fermented…
“Millennials are coming of age and their economic impact will be breathtaking… The next three to five years are going to be by far and away the most dynamic and exciting [for food and beverage] entrepreneurs that I’ve seen.
“If you look at how the large caps have spent the last 35 years destroying the health prospects of the consumers they are meant to serve… this has in part created a window of opportunity for the natural foods industry.”
And once you reach a critical mass in the natural channel, buyers at the large conventional retailers will be calling you, added Hughes, who said 'authenticity', 'pure', 'simple', 'sprouted', and 'fermented', were all growing trends.
The meteoric rise of EVOL Foods
As for Boulder Brands itself, he acknowledged that its Smart Balance brand – which appeals more to baby boomers - was struggling, and posting significant declines, but said other key brands in the portfolio (Earth Balance, Udi’s Gluten Free and EVOL) all appealed to 18-44 year olds, with EVOL in particular appealing to Millennials.
“One of our real focus points is how to buy and build brands… Earth Balance was doing $5m when we bought it and is approaching $70m this year; Glutino was doing $50m in 2011 when we bought it and is on course to do around $100m this year.
"Udi’s [Gluten Free] was doing $65m in 2012 and this year will be doing well north of $200m; and EVOL Foods [acquired in December 2013 with $17m in annual sales] did $50m last year and this year we hope will be approaching $100m.”
Boulder Brands posted a $127.1m net loss in 2014 compared with a $10.4m net profit in 2013. However, revenues were up 12% to $516.6m driven mainly by growth in EVOL Foods, Udi's and Earth Balance.
Hughes blamed the losses on a weak operating environment for buttery spreads (poor sales of Smart Balance), service issues in its natural segment, and higher costs for egg whites.
