Pressed for Wholesale Change

JuiceGridThe opening salvo came in 2011, when Whole Foods introduced a new retail juice line launched by BluePrint, one developed at the urging of the natural foods giant. Until then, bottled cold-pressed juices were almost wholly an online business predicated on sales of popular cleanse-inspired raw juice packs, which proved to be a reliable – and highly profitable – business model for a handful of brands, including BluePrint.

Some companies have stayed online, or even relied on word-of-mouth to create direct-to-consumer or neighborhood drop-off locations, their own small networks, that allow them to deliver unpasteurized products. Some, like Juice Press, have augmented that model by building their own brick-and-mortar stores or kiosks, creating a scene around their products that defies the traditional retailing model.

But for companies seeking sales in supermarkets, where juices are almost invariably purchased, technology, as it often does, changed the dynamic.

Soon after Whole Foods started selling BluePrint, the brand adopted high pressure processing (HPP), a safety method that employs intense pressure instead of heat as a way to suspend bacterial growth in raw foods and beverages.

HPP offered brands a viable alternative to pasteurization – and with its advocates claiming that HPP also significantly extends shelf life while maintaining the raw nature of juice, the technology went on to change how cold-pressed brands would be promoted and sold.

Often marketed as “raw,” brands that undergo HPP offer a much more retail-palatable shelf life of 4-6 weeks than the few days an unprocessed product can sustain freshness. And with the debut of the high pressure processed BluePrint Juice, Whole Foods effectively wrote the first line in what would become a groundbreaking edict: the future of the bottled super-premium juice category is rooted in cold-pressed, HPP products.

Despite the prohibitive price of the juices – commonly in the realm of $8-9, they command a premium that can be regarded as a barrier to brand ubiquity, demand has nonetheless spilled over into conventional channels. Lured by sustained interest for the high margin items, traditional grocers like Safeway, H-E-B and Kroger have gradually embraced cold-pressed juice. And the brands have, too.

“When I started this company, it was to make green juice available to the masses,” said Daily Greens founder Shauna Martin, whose products undergo HPP. “Almost two years ago, it wasn’t available anywhere. You could go stand on-line at a juice bar – if you were lucky enough to live in a city with a juice bar – but [it wasn’t] not true, cold-pressed juice.”

DailyGreen_LineupNow, the race is on to lower the price and bring that freshness to the masses. Yes, Naked, Bolthouse, and Odwalla, each a blended, pasteurized brand, continue to hold the majority market share the high-end segment (despite sustained declines in year-over-year sales, according to SPINS, a leading market research provider on natural and specialty products). And, yes, some storefront- and online-based brands scoff at the notion that an HPP juice is still “raw.” Nevertheless, it’s clear that cold-pressed, HPP juices have ushered in a wave of change at retail, and are the drivers of an evolution that is slowly, but surely, changing the way that consumers look at their juice drinking occasions overall.


National Brands

Certainly, quality is critical, yet price is the element key to amassing – and maintaining – market share, something evident in the development in other beverage categories, such as enhanced water and energy drinks. But achieving scale usually comes with a heavy dose of red line-inducing promotional sales, and as a result, contenders sitting on the biggest bankroll (or, at least, teamed with powerful strategic partners) usually have a significant leg up on the competition.

Evolution Fresh and BluePrint, are owned and armed with the financial backing and distribution muscle of Starbucks and Hain Celestial, respectively – and they are two of the most well-known and widely distributed brands in the segment. While Evolution Fresh has gained some momentum with national distribution in Whole Foods, it’s leaning on a highly visible presence in Starbucks stores in hopes of shining a light on the brand, and aiming to clear a path for greater awareness and wider retail placement of its products. And though BluePrint was certainly the first to capture lightning in a bottle, it is apparent that, outside New York, the brand has struggled to stretch its availability beyond Whole Foods..

Meanwhile, Suja, another brand, has shown rapid growth since its inception. Like BluePrint, Suja began as an online brand, hawking pricy juice cleanse regiments to locals in Southern California. Yet within months of its launch, the company entered Whole Foods and has been on a torrid pace ever since.

Having achieved $18 million in 2013 revenue (with gross margins of 40-50 percent), Suja became something of an overnight sensation with Forbes ranking the company third in its 2014 list of “America’s Most Promising Companies.” The brand picked up $10 million in an investment round led by Boulder Brands’ venture capital arm and another $17.5 million from Alliance Consumer Growth, a fund focused on emerging consumer brands. A majority of the funding went to capital expenses such as pressing equipment and the purchase of an HPP machine, which went online in July. Church said the company is now producing 275,000 bottles of juice per week, on average.

Taking advantage of what Church calls “a once-in-a-lifetime opportunity,” Suja has, quite simply, moved faster than anyone could expect from a two-year-old brand, often employing a flexible “what does the retailer want?” strategy to new product innovation.

“Unlike in the past when you’d take your time and build the brand and incubate the concept, it’s a bit of a rush,” said Suja CEO Jeff Church. “Either you jump in and build that distribution out or somebody else is going to jump ahead of you.”

Bottle-Lineup-ElementsIn January Suja introduced Essentials, a line of products which feature simpler formulations as compared to its Elements and Classic lines. Priced at $3.99 per 12 oz. bottle, Church described Essentials as intended to be a “scale driver” for the brand, which debuted at Kroger and Safeway stores.Two months later, Suja unveiled a Costco-exclusive Essentials “3 Day Fresh Start,” added a new cold-pressed tea line, and in August, the company unveiled a new six-SKU 49 oz. multi-serve package that is part of its Elements line. This month, Suja is set to enter 1,200 Target stores with single-serve bottles of Essentials along with a smaller subset of its classic line set.

“[It’s] been super challenging,” Church said. “We have now over 40 SKUs between the three different lines. And because it’s all fresh, there’s no inventory build. We make every single product, every single week.”

Production complexities aside, the ever-expanding size of Suja’s portfolio is all about creating “the right value proposition” for consumers, Church said, noting that “you can’t try competing against pasteurized juice brands on the market and have a product that’s placed to price.”


Smaller Competition

Despite operating in the midst of an overall shift toward healthier consumption habits, the cold-pressed craze seems to have caught conventional retailers somewhat flat-footed. As a result, large retailers have reached out to the largest HPP brands looking for reliable supply as they build out their natural foods presence.

But alongside the national brands has come an explosion of newer regional, wholesale-focused, cold-pressed juice brands, with natural retailers realigning shelf sets and carving out new space in a nod to high demand for the products. Amid a super-premium juice category roiled in revolution, scores of upstart companies have taken arms in a battle of one-upmanship, claiming differentiation via premium ingredients, freshness and unique formulations, bidding to secure expanded – yet still coveted – shelf space.

“We are in many ways competing against corporate-owned or private equity-backed companies,” said JC Hanley, the co-founder of Forager Project, which operates on the West Coast. “But it’s good, because when you don’t have a lot of money to spend you become more efficient about how you deploy it.”

By delivering fresh juice to retail customers within hours of production, Vital Juice is one such brand attempting to separate itself from the pack. In order to do so, the company is in the process of creating a network of “micro-juiceries” spread across several densely populated cities, according to CEO and founder Edward Balassanian, a former Microsoft executive and technology entrepreneur, who is funding the juice company via his incubation outfit Be. Labs.

Vital Juice is currently in the process of moving its headquarters from Seattle to New York City, and the transition comes as Vital Juice is readying the launch of a new juicery in the city, a critical step in Balassanian’s plan.

The New York facility is expected to be fully operational by late September and follows the launch of a temporary juicery that Vital Juice opened in Orange, Calif. earlier this month. Balassanian said that the facility offered Vital Juice an opportunity to test out a new partnership with Amazon Fresh, which distributes its products in the Los Angeles area. The online food delivery service operates in Seattle, Northern California and Southern California, and recently expanded to New York City. Vital Juice products will also soon be distributed in Gelson’s supermarkets, natural grocer Jimbo’s and several independent retailers in L.A., Balassanian said.

“We’re trying to be as good as the local juice shop, but a much safer product because we’re HPP’d and not pressed by… mediocre equipment that’s not cleaned properly or maintained properly,” Balassanian said.

For some companies, the establishment of a hybrid retail model with a focus of marketing products to affluent consumers – a demographic key to the growth of the category – is the road paved with potential.

While direct-to-consumer e-commerce is the lifeblood of Urban Remedy’s distribution strategy, the company also operates two brick-and-mortar storefronts in Northern California, and three weeks ago launched a pop-up cart on Santa Monica’s Third Street Promenade. Certainly, the stores are intended to be revenue drivers and profitable, however CEO Paul Coletta sees a more critical purpose, that of “3-D billboards” for the company.

Focusing on small spaces with light build-out costs, Coletta, who came on as CEO of the company in June, sees the goal of the storefronts as driving the trial and awareness of Urban Remedy in “high-traffic, high-influencer locations.” The hope is that consumers “come and experience Urban Remedy at one of these pop-up carts or non-traditional retail storefronts, and migrate online, where we do an even better job of servicing” the customer, Coletta said.

Coletta explained that because Urban Remedy has been more successful targeting customers online than off – and found the strategy more cost-effective – the company has no plans to begin wholesaling with distributors.

“I own the customer experience,” Coletta said. “I’m not paying slotting fees, and I’m not competing with four other cold-pressed juice companies, or beverages in general.”

That said, he noted that the brand’s products are also sold in non-traditional distribution outlets “where the customer is and the competition isn’t,” offering yoga studios and day spas as examples.

“It’s a page out of Red Bull’s playbook,” he said, comparing Urban Remedy’s strategy to the energy brand’s point-of-sale buckets at hardware stores.

Like Urban Remedy, San Francisco-based Project Juice leans on a well-heeled following, though in a reversal, it’s focus is primarily on the development and growth of its brick-and-mortar storefronts and “store-within-a-store” kiosks, which are spread across the Bay Area. It’s an effective way to give new consumers an education about the perceived benefits of raw juice and insight into how the products are made, according to co-founder Rachel Maslin.

“It’s definitely important, especially when you have a product that’s retailing for $9-10,” Malsin said. “People have a lot of questions, and I think they want to come in and sample the product and see who’s behind the brand.”

Though Project Juice launched as an e-commerce brand, currently, less than 10 percent of the company’s sales are online-based, a factor surely tied to the growth of its off-line presence, but also perhaps customer repudiation of the high cost of overnight shipping for cold-pressed juice.

“I think that the shipping cost is a tough thing for people to swallow,” co-founder Greg Maslin said. “Spending $50-60 on juice and then another $50-60 on shipping, it goes against everything that people believe in when purchasing online. It’s definitely a challenge and something we’re working on.”

In the meantime, Project Juice is looking to round out its distribution strategy with delivery of its juices to local corporate offices via a specialty DSD operator, as well as sales in other non-traditional channels, including coffee shops and fitness clubs. As for future wholesaling of its juices, Greg Maslin sees a possible expansion into grocery “down the line,” but noted the already highly competitive set in natural grocers has, for now, made traditional retail an uninviting option.

“We always knew that it was going to be a game of marketing spend if we were to go the Whole Foods route, and there were some big players ahead of us,” he said. “And we didn’t want to compete with who looked prettier on the shelf.”

If it seems like the race to cold-pressed glory is coming fast and furious, it’s because the category is one that, despite the presence of established players, remains full of possibilities for success.

“This is one of those displacement opportunities, disruptive opportunities that, frankly, doesn’t come around more than once in a career, for most people,” Church said.