AUSTIN, TX— Modern-day health-and-wellness looks quite different now than it did just a few years ago. “Healthy” is a lifestyle choice — a concept, if you will — where consumers see individual products as pieces of a puzzle, and the sum is often greater than its parts.
This has paved the way for a bevy of new bakery and snack brands, and that’s capturing investors’ attention. In the CPG space, innovation has become eye-catching, especially for entrepreneurially spirited venture capital (VC) funds.
Genevieve Gilbreath, co-founder and general partner for Springdale Ventures, a VC fund investing in emerging health-and-wellness and lifestyle consumer brands, knows firsthand what it’s like to be a startup in need of capital.
“I’ve been an entrepreneur in the consumer product space since the early 2000s,” Gilbreath said. “At that time, there weren’t a lot of smaller funds in the consumer space, and it was really challenging.”
After the transaction of her second brand, Gilbreath ran an accelerator called SKU to help other entrepreneurs learn how to fundraise and scale their businesses. It was there she discovered the cyclical challenges that come with fundraising, and she set out on a mission to secure capital for early-stage CPG brands.
“A lot of these founders would have a great idea and their brand would have a good market fit, so they’d start to scale,” she said. “Then they would go out for capital, and they’d either have to talk to a million different angels, or they’d find tech or real estate investors who didn’t know how to scale a consumer brand.”
Gilbreath, along with her co-founder and fellow entrepreneur Dan Graham, raised a nearly $27 million VC fund in 2019 with a strategic plan to support innovative companies scaling quickly and needing early-stage capital.
“It was twofold,” Gilbreath said. “I wanted to give back by helping entrepreneurs, and I saw real white space in the market where we could add value and build that for our investors.”
The duo set their sights on trailblazing companies in lifestyle and health-and-wellness where product development could lead to real transformation.
In areas including food and beverage, pet nutrition, books, cookware and more, Springdale’s brands positively influence consumers in nearly every aspect of their daily lives. And the portfolio is built so individual companies can synergize with marketing partnerships and ideation across products, brands and markets.
“When I look at the portfolio that Genevieve and Dan built, it’s tremendous,” said Marissa Epstein, Springdale general partner. “It impacts people’s lives throughout the day and during any occasion. We joke that we could build a ‘Springdale house’ and fill it with all our products. There wouldn’t be an empty room.“
With the growth happening in the “house of Springdale,” bakery and snack producers will do well to take notice. Certain brands in its portfolio are poised to impact the industry, especially with consumers’ views on wellness and how food plays a role.
“Consumers are increasingly aware and self-educating on what’s on the nutrition panel,” said Epstein, who has extensive nutrition expertise, including working directly with former first lady Michelle Obama on her “Let’s Move!” campaign and launching a nutrition innovation curriculum at Stanford University. “Ten years ago, the majority of consumers reported they had very low confidence in their ability to read back-of-package information. Now, more than 65 percent say they have high confidence, and that number is increasing.”
Current consumer awareness is the result of a metamorphosis born from a complex set of market conditions and a varied food culture in the US. Epstein cited specific market abnormalities, including micro-cultures based on geography, age and ethnicity.
“There are no real uniting factors that drive people toward or away from certain ingredients, so variety really is the spice of life in American eating,” Epstein suggested. “Also, without any formal, systematic integration for nutrition education across the country, many people self-educate.”
“There are no real uniting factors that drive people toward or away from certain ingredients, so variety really is the spice of life in American eating. Also, without any formal, systematic integration for nutrition education across the country, many people self-educate.” —Marissa Epstein| general partner | Springdale
That’s critical to understanding why consumers choose certain baked goods and snacks. It creates opportunities for CPG brands to educate consumers, not only as to why to choose their product but also on making smart choices about nutrition.
When consumers are better informed about their food, they can navigate healthy lifestyles and, in turn, develop loyalty to specific brands.
One example is Tiny Organics, a producer of ready-to-eat non-puree organic meals for babies and toddlers delivered on a subscription basis. The brand’s platform positions itself as a resource for parents to learn how to introduce healthy first-foods to their young eaters based on baby-led weaning.
“Tiny Organics’ innovation roadmap is extraordinarily exciting because there’s so much information on this topic, and new parents might not otherwise know how to navigate it,” Epstein said. “This brand comes alongside its consumers and helps them make choices guilt-free.”
This type of consumer interest is also pushing innovation in the world of bakery. Aligning with consumers’ value sets can inspire product development that will take brand loyalty to new heights.
In many ways, entrepreneurs have an inherent edge in product development. For Epstein, that’s what she looks for in a potential fit for the Springdale family. She has an affinity for what she calls “consumer obsessed” founders.
“I’m always looking for how obsessed an entrepreneur is with their consumer base,” she said. “How learning-minded are they in their willingness to receive consumer feedback and inform their own strategy accordingly?”
Epstein looks for the joy that comes with developing a new product or brand, but there must also be muscle and mechanics behind the obsession. It’s about leaning into what consumers are dictating and allowing those critical factors to inform product development and business strategy.
This is especially important today as mindful consumers think of holistic health in every aspect of their lives (or every room of their house). There’s been a serious evolution of the consumer relationship with commercially produced baked goods; attitudes are shifting like tectonic plates and causing massive disruption in the market.
“Traditionally baked goods are a staple in most American households,” Esptein said. “Consumers are experiencing both real-time and reflective realizations of how many products are manufactured. We need to ask ourselves, ‘What does this look like for the next generation of wholesome baked goods coming to market, and how do we manufacture them at scale?’”
It’s something that brands like FitJoy and Maxine’s Heavenly bring to Springdale’s table. FitJoy’s grain-free snack portfolio began with protein bars and puffs, as well as the snack market’s first gluten- and grain-free pretzels. After a 2020 rebrand, FitJoy streamlined to better fit its mantra, “Joyful Snacks Fit for All,” and focused solely on its pretzel line, now certified vegan.
Using ingredients like coconut sugar and dates, Maxine’s Heavenly reinvented the cookie experience with a line of gluten-free, plant-based treats based on the original recipe from co-founder Tim Miller’s mother, Maxine. Miller took what he “loved” about his mom’s cookies and combined it with what he “knew” about clean eating and crafted a new formula for a nutrient-rich cookie that tastes every bit as decadent as his mom’s.
These brands have tapped into what modern consumers are looking for as snacking remains prevalent with those seeking healthful products that also taste good.
“Where Maxine’s and FitJoy excel is by communicating, ‘Hey, these things are better for you, but they still taste really great,’” Gilbreath explained. “It’s one of the things we really loved about Maxine’s. The cookies have wholesome, natural ingredients, and they’re super tasty. It’s a combination of a traditional cookie, better-for-you ingredients and fun packaging that tells a great story.”
Clean-label product development comes with major manufacturing implications, but Epstein recognizes modern-day food manufacturers that are finding new ways to get their products to market.
This story has been adapted from the June | New Products Annual 2022 issue of Commercial Baking. Read the full story in the digital edition here.
