Packaged foods and co-packing services
What happens when aerospace engineers open a small batch artisan foods label? The answer is Durango Artisan Foods.
Founder Mark Grubis found himself in semi-retirement from aerospace engineering, with ideas percolating about what was next. With the help of his wife, fellow engineer, and business partner, Kara Grubis, Mark envisioned a transition to the food world in a big way: hot sauce.
Though hot sauce and aerospace engineering do not appear to have much in common upon first glance, the bones of a business were in place.
"A lot of this manufacturing is just like anything else," says Mark. "The essential, basic principles are the same, whether you're making spaceships or jars of salsa. Many of the skill sets you learn are the same; people are people, products are products, manufacturing is manufacturing, finance is finance. They all operate on the same principles."
He was spot-on. Since opening in 2018, Durango Artisan Foods has cultivated a groundswell of support throughout Colorado and beyond. What initially started as a small-batch homemade hot sauce company has since organically burgeoned into various food products: salsas, spices, jams, jellies, condiments, sauces, marinades, rubs, and coffee roasting, to name a few.
Durango Artisan Foods' business model is three-fold: creation, acquisition, and incorporation.
The Grubises create many of their recipes in-house, often pulling inspiration from international trips that left lasting impacts in the way of flavors, spices, and aromas. The success of the early signature recipes brought credibility to the Durango Artisan Foods label and set the company up to also be a business of acquisitions.
Consistently, Durango Artisan Foods has found a shortcut to new customers by acquiring product brands approaching retirement. "In 2018, we bought another company, O'Hara's Jams & Jellies, who had previously purchased San Juan Mountain Mustard. In addition to picking up their two brands, we picked up their facility and equipment as well."
Almost immediately, the Grubises fell into another serendipitous opportunity: co-packing. As the primary co-packer in the area, Durango Artisan Foods has received a steady stream of work in addition to a word-of-mouth pipeline between businesses in search of a small-batch manufacturer willing to help perfect recipes.
"[Manufacturing for other brands] started in 2019 on a small scale and began building momentum in 2020," says Mark. "In 2021, it has really accelerated; this year, we've picked up about 10 new companies, even one in Denver."
Much of The Durango Artisan Foods manufacturing is automated: conveyor belts move jars through bottling, dating, lidding, packaging, and sealing. But the initial manufacturing model was much leaner.
The early years did not feature a space exclusively dedicated to manufacturing nor cutting-edge equipment. It heavily relied upon manual precision. "When we started with one hot sauce recipe, we were essentially renting out the fairgrounds' commercial kitchen and making three to five gallons at a time. We were trying to fill little hot sauce bottles by hand. We figured out that that wasn't working and purchased our first piece of equipment: a $200 manual hand pump that fills sauce bottles."
The Grubises have since evolved, including their approach to managing the business. Explains Mark: "When you start, you're working in the business. You're doing all the stuff. But to be successful, you have to work less in the business and more on the business."
Fast-forward three years: In addition to upgrading to a 100-gallon kettle and developing a working partnership with Durango's beloved Ska Brewing (and its sister business, Ska Fabricating, to design their signature bottling line), the finishing touches on a new Durango Artisan Foods facility in the downtown Durango area are close to completion -- an easily identifiable marker of growth.
"Part of our success is building relationships with recognizable brands," says Mark. "To work with Ska and make products out of their Mexican Logger, True Blonde, and Pinstripe, we don't have to convince people to try it. They're going to try it because they love Ska. That aspect has fueled our growth and our own brand recognition that gives us a foot in the door."
Challenges: Looking ahead, Mark foresees the biggest challenge to be the growing pains of building a sustainable business. Given the rapid growth, it's an ever-changing calculation. "I never understood how your growth can exceed your revenue. Now, that's very clear to me; learning how to manage your growth and how to fund your growth is a massive challenge.
Opportunities: "We have an ongoing development plan that includes building out some of our existing product lines and adding new product lines," says Mark. "I would say there is easily five to 10 years' worth of product ideas that we can go pursue; drink mixes, pickled goods, dehydrated foods, snack foods, beverages.
"There's an endless amount of ideas we can pursue," he adds. "At the same time, we're always looking for strategic acquisitions."
Needs: "Our next step is to find a piece of land somewhere, two to three years down the road, where we can purposefully build a manufacturing facility to automate as much as we can and have a proper flow of product: incoming, producing, and outgoing," says Mark.