Cold-pressed juice brand Lumi Juice is moving its headquarters to the Philadelphia area as it seeks to reduce overhead costs and expand its sales and distribution footprint. The company, which markets a variety of cold-pressed juices and shots, recently signed a deal with Universal Pasteurization, a provider of cold storage and high pressure processing (HPP) services to food and beverage manufacturers, to lease a 6,000 sq. ft space within its Malvern, Penn. facility.
Lumi founder and CEO Hillary Lewis told BevNET that the move from the company’s headquarters in Charlottesville, Va. will give it better access to supply and distribution lines in the Mid-Atlantic and enable it to sell its HPP machine.
“In Charlottesville, it’s difficult to have a food manufacturing business,” Lewis said. “We’re only able to get produce three days a week, and from a distribution standpoint we can only hit a certain number of people within a 150- to 200-mile radius. Moving to Philadelphia will give us the ability to receive produce six days a week [and] improve our manufacturing.”
The deal with Universal was precipitated by a meeting Lewis had with the company in October. At the time, Lumi was unable to repair a problem with its HPP machine and $30,000 worth of juice was at risk of spoiling. Lewis reached out to Universal, which agreed to process the juice. At the same time, she spotted some open space inside the facility and asked about the potential for Lumi to manufacture within it. After a few months of negotiations, Universal agreed to lease the space, which is refrigerated at 37 degrees Fahrenheit, to Lumi and also high pressure process its juices.
Lumi plans to move its equipment into the Malvern facility over the next two weeks, during which Lewis doesn’t expect any major disruption in its business operations because of supply on hand. Its HPP machine, however, isn’t coming along; Lewis is putting the Hiperbaric 55 unit on the market at a price of $425,000. She noted that the machine can process over 440 liters of liquid per hour and that Hiperbaric will install the unit and train its buyer on how to use it.
“We were hindered by owning our own HPP machine,” she said. “It was really great to get us off the ground [but] it’ll be great to have one at our disposal that’s operating at a much higher unit per hour output, so that we can really meet the demand that we’re now seeing in the marketplace.” Lewis noted that Universal Pasteurization operates a Hyperbaric 525 machine, one that can process 3,000 liters of product per hour, or 12 times the capacity of the 55 model.
Lewis is also enthusiastic about the facility’s new location, which will give Lumi closer access to retailers in Philadelphia and New York. Both cities are home to a vast number of independent grocery stores and small chains, a key area of focus for the company since ending its relationship with The Fresh Market last year. The specialty grocery store chain had represented 70 percent of Lumi’s retail sales, but with a change in ownership — private equity firm Apollo Global Management acquired the company in March 2016 for $1.36 billion — came a reshuffling of its grocery set, including a halving of cooler space. Although The Fresh Market, which operates over 170 stores across the U.S., gave Lumi a national presence, it began pressuring the company to reduce its prices, something that wasn’t feasible for Lewis.
“Those were concessions I couldn’t make from a small business standpoint,” she said. “We decided we needed to make an exit from The Fresh Market, which at first made my investors nervous. But in my gut and looking at the numbers, in actuality, from a same-store sales standpoint, there are a lot of smaller organizations that were selling our product at a higher velocity and that we needed to focus on those accounts.”
In the first three months following its exit from The Fresh Market, Lumi’s cash flow took a significant hit. However, Lewis said that the company now has a much more diversified retail portfolio and is “doing far better than we were with The Fresh Market.”
“We’ve had the best four months since [our] inception,” she said. “It was definitely a big risk, but we’ve pivoted and didn’t skip a beat on changing our strategy. And now we’re changing our production capacity to meet an influx in demand.”