By Angela Rose | Mar 05, 2017
Industry: Food & Beverage
Products: Natural food, composting and cleaning
Savage knows a thing or two about the natural products market. Before launching the company that eventually became 1908 Brands in 2010, he founded Boulder's Eco-Products in 1990 and ran the company until its sale in 2012.
"Boulder Clean was at Eco-Products," he says of his current company's first brand acquisition, "but when Eco-Products started focusing in on the food service category, we discontinued a lot of other things, including natural cleaners. Instead of letting it die, I basically started Natural Eco Wholesale, also known as NEW, to absorb it."
NEW represented more than 100 natural products manufacturers to 1,000 or more retailers until Savage elected to sell the wholesale portion of the business in 2012 and transition it into the 1908 Brands of today.
"Wholesaling was never our long-term strategy," he explains. "But it gave us better visibility and insight into hot trends, generated more revenue, and gave us the opportunity to sell a part of the business to get cash to fund our long-term objective, which was to own our own brands."
That insight guided him to the purchase of several other natural products manufacturers over the last five years including CompoKeeper, Thrive Tribe (formerly Wholly Bites), Fruitivity Snacks (formerly Appleooz), Schultz's, and Yummari. The company also partners with Pasta Jay's to sell the restaurant's pasta sauces and salad dressings.
Savage has been particular about the brands he acquires, a strategy that has enabled him to take his company from $5.5 million in 2016 to a projected $10 million or more this year. "There has to be a need in the marketplace," he says. "For example, I wouldn't be interested in a coconut water right now. There are 20 coconut waters out there already. So, there has to be a characteristic about the brand that will enable us to get it to over $20 million in revenue."
The benefits to the brands he brings in are tremendous. Because 1908 Brands has its own marketing and sales teams, as well as operations, "We can usually eliminate 90 percent of their expenses on average," he explains. But cost reduction is just part of the process. "When we bring in a company, we look at three things. First, can we make it taste better? Second, can we make it so it has better nutritional characteristics? And finally, can we reduce some costs?"
1908 Brands manufactures Fruitivity, Yummari, Thrive Tribe, and Three Bears -- a new natural oat brand they've created from scratch -- at an 8,800-square-foot facility in Longmont that houses the company's kitchen and warehouse. Schultz's is manufactured in Wisconsin, and CompoKeeper is made in California. Manufacturing of Boulder Clean takes place in both Denver and Wisconsin. Pasta Jay's is still producing their sauces at the restaurant in Boulder, but the plan is to move production to a co-packer soon.
Challenges: "Just like most natural foods companies that have to compete with larger companies that use cheap ingredients and spend millions and billions on marketing, it's hard to get shelf space," Savage says. His strategy to overcome this obstacle? Focus on conservative shoppers while keeping prices low and products simple.
"We really go after the bulk of the population, not just those shopping at [natural grocers]," says Savage. "And we do this by keeping our ingredients simple, our products price-competitive, and doing a better job at educating consumers. In the long run, we will win."
1908 Brands will be unveiling Three Bears at the 2017 Natural Products Expo West in California on March 9, along with multiple new flavors of Fruitivity Snacks' crunchy apple chips, and several new BBQ sauces and hot sauce flavors from Schultz's. Additionally, Thrive Tribe's new paleo snack bars boosted with MegaFood Supplements will launch at the popular natural products convention.
Opportunities: "'The strength of the buffalo is in the herd' is an expression I like," Savage says. "And leveraging our resources -- including our team -- to make each brand under 1908 Brands successful is our biggest current opportunity." He expects the company will double its employee count in 2017.
Needs: Capital is first on the list. Savage is currently focused on building up his brands in preparation for the pursuit of Series A financing in 2018. "Leading up to that, we have to prove that our brands can have a solid place in their respective categories," he explains. "We've proven we can buy companies. We've proven we can rebrand them. We've proven that buyers have a lot of interest and, in most cases, have committed to our products. But we haven't proven that we can generate each brand past $10 million yet. That's 100 percent of our focus right now."