Fruit-based snacks make up nearly 18% of all global snack launches, according to a study by Innova Market Insights, which is more than double the amount it was five years ago (8%). Fruit snacks now rank third among snack category launches, close behind savory snacks and nuts/seeds.
Good thing Scott Jensen, Co-Founder and CEO of Rhythm Superfoods, is ahead of the curve, and has been for the last ten years. The company has an incredibly robust pipeline for the next 18-24 months, and they anticipate reaching 30-40% growth this year and next.
“It’s so far been one of the best years we’ve ever had,” says Jensen. One could call Jensen a more seasoned founder – he’s not new to the game, and after a decade of veggie-snack success, he is still building growth and revenue in his company. In addition to co-founding Rhythm, Jensen co-founded and served as CEO of Austin, TX’s Stubb’s BBQ.
So how to keep growing an already successful veggie company?
SAVORY TO SWEET, BUT KEEP THE CRUNCH
Rhythm Superfoods, an innovator in plant-based snacking, has been known for years as the pioneer of the air-crisped kale chip. Following the kale boom, they successfully launched their crunchy beet chips and dried-not-fried carrot sticks, each with satisfying seasoning options like cinnamon or salt.
Now, Rhythm is expanding their vegetable options, and growing into fruitier territory.
“We have been a vegetable snack company since the first days that we opened, and although we will continue to develop some really unique and interesting snacks made out of vegetables, we started to look into where the open space would be for fruits,” says Jensen.
The company raised about $9 million to help with research and development, marketing, and outreach, due in part to investments from General Mills’ venture capital arm 301 INC, plus the CircleUp Growth Fund and Blueberry Ventures.
Jensen sent Rhythm’s research and development team out on a mission to buy produce, process it, and test its viability as a tasty fruit snack. The company already had the technology, facilities and equipment on hand for making vegetable snacks, so transitioning to fruit from a practical standpoint wasn’t as complicated or expensive as starting from scratch, the way it was for the early kale chip days. (In the earlier days, Rhythm had no kale co-packers available, so they built their manufacturing facilities from the ground up).
Jensen also made it clear to his team that he didn’t want to reinvent the wheel by choosing any fruits that were tired, and had been done before. “If there are people making crunchy apple slices in five different ways, then we don’t want to do that. We want to find the white space,” says Jensen.
His unwavering stance on originality carried over into the way the fruit was processed, too. “There are tons of people selling soft mangos, but no one selling crunchy mangos. There are freeze-dried mangos out there, but as you might imagine the flavor and mouthfeel are different from what Rhythm has to offer,” says Jensen.
The R&D team’s hard work in combination with Jensen’s vision and values resulted in a crunchy mango bite, a crunchy pineapple bite, and seedless watermelon jerky. Jensen is excited about these choices, noting, “Not many people are making crunchy pineapple. And there is nobody else making watermelon jerky out there. We succeeded in finding unique, interesting and universally loved fruits and made it into a shelf-stable snack.”
Competitors have ingredients like added sugars and trans fats, but Rhythm’s leg up remains right on their label: certified organic fruit, non-GMO, low-calorie, and no added sugars.
Alongside their foray into fruit, Rhythm is maintaining their consistently strong reputation by staying true to their roots on the veggie side. In addition to the fantastic fruit snacks, they’re rolling out light, crunchy Cauliflower Bites, with delicious dairy-free seasonings like sea salt, buffalo ranch, and white cheddar, at Costco and Whole Foods.
“Crunch is the number one flavor of snacking,” says Jensen. “We seek to mimic what the behavior is of someone that would normally grab a bag of potato chips, or tortilla chips, and say hey, you know, let’s deliver on crunch, let’s deliver on flavor, but let’s see if we can find something that is delicious and delivers on nutrition too.”
NEW PRODUCTS = NEW FANS = NEW LOOK
As part of their expansion into fruit, Rhythm is in the midst of launching a redesign of their brand. The company will be rolling out new packaging this month and next on the shelf, and this fall the online presence will change over.
Jensen pointed out that the rebranding wasn’t just because of new products: new products go hand in hand with new audiences.
“When we started going through our pipeline of new products and starting launching carrots and beets, and started testing with cauliflower and fruits, we were finding a big shift in who our consumers were going to be,” says Jensen. “When we were mostly selling kale chips, we had a pretty hardcore natural and health focused consumers – lots of vegetarians and vegans, but also just health food-focused people.”
When a company like Rhythm reaches the ripe old age of 10 (!), and starts adding a broader range of products, the original customers can shift, sometimes dramatically, and new customers might have entirely new expectations.
“There was a big, dynamic shift to millennials. Millennials are buying more fruits and vegetables than any other demographic group. They’re also snacking more than anyone else – snacking 3-4 times/day, not sitting down for big large meals,” says Jensen.
Other brands can attest to the significance of packaging and design. Ice cream company Van Leeuwen saw sales rise by 50% following a packaging re-design catered to social media viewing, while Mast Brothers chocolate shop said it attracts 80% of new customers from Instagram. A whitepaper by Simplify My Packaging showed that 38% of consumers bought a new product because they enjoyed the packaging, while 28% switched brands because the packaging was different.
“We recognized that we had to speak to [Millennials], because it’s a much bigger audience for us, but also not lose the people we have. The voice of the brand and the look and feel of the brand has been refreshed to atone for this dramatic change going on in our consumer base,” says Jensen.
THE UNCOMMON CHALLENGES OF KEEPIN IT FRESH
The $23 billion snack industry in the U.S., for the most part, is just empty calories. Jensen asked himself the question: How are you going to change the world and make everyone healthier if you can’t deliver a snack that has exceptional nutrition? To him, freshness was the answer to that question.
Freshness is one of Rhythm’s most compelling qualities as a snack brand, but it’s also one of the most unique challenges of the company.
“If someone is making a bag of tortilla chips, they just have salt, corn matza or cornmeal as 90% of the ingredients. There’s a very easy-to-forecast understanding of the supply chain of those ingredients. There’s no disturbing the nature of that supply chain,” says Jensen.
Rhythm’s process is very different, for good, tasty reasons. Within 48 hours, the company picks produce fresh from an organic family farm, puts them on a truck, washes them at triple wash stations twice, hand-cuts, skins and slices the veggies and fruit, processes them, and puts it into a bag.
“All of that can be done relatively painlessly, except if Mother Nature decides that she doesn’t want to give us enough sun or rain for two weeks straight. Our supply chain is literally day-by-day – what is coming in tomorrow that we should prepare to make?” he says.
The watermelons, mangos and pineapples are grown and sourced from Mexico, near Rhythm’s facilities, allowing the company lower shipping costs, which is important given the increasing transportation budgets for food manufacturers.
Creating a truly “fresh” supply of product has two main and unexpected challenges, according to Jensen:
- Big cold fronts and storms can cause the produce to grow at half the rate it normally does, causing complications with supply and demand. “We are dealing with customers that don’t expect that from their suppliers. If I’m making potato chips, I don’t call the retailer and say ‘I just can’t get my hands on oil!’ Everyone can get their hands on oil,” Jensen says. “But sometimes we have issues in our two manufacturing plants located in Guadalajara, right in the middle of the biggest growing region in North America, which usually grows 12 months out of the year.”
- Current calamities at the border have had an occasional effect on supply as well. “From time to time, people rallying politically can block the border,” says Jensen. “With the ‘crisis’ of thousands of people showing up at the border every month, the government has pulled a lot of employees who normally process [produce] to help with processing people. [Recently} it has taken a week to a week and a half to cross the border with a product that would normally take 1-2 days.”
Both of these challenges are due to the structure of Rhythm’s supply chain, unique to a majority of other snack makers.
For Jensen, it’s all worth the battle in the long run. “It makes it that much harder on the operations side, but on the sales side there is no lack of demand for what we are making,” he says. “We already have approvals at retailers that know our numbers. The next two years are going to be the best two years of Rhythm’s life.”