By Eric Peterson | Nov 30, 2020
Food co-packing services
Following a career in finance that took him to London as global head of equities for Credit Suisse, Kreitman was looking to move back to the U.S. to raise his kids. "I picked a place on the map and moved to Boulder, Colorado," says Kreitman.
That was 2007, serendipitously a year before the 2008 financial crash. Kreitman subsequently started a private equity firm, Acme Investments, and bought stakes in 50 small businesses from "technology to whiskey to food products," says Kreitman.
One such investment went to Motherlode Provisions, a Longmont-based manufacturer of barbecue and steak sauces and bloody mary mix, in 2012. "It was a small investment," says Kreitman. "All of a sudden, that bloody mary mix caught on."
Motherlode Provisions turned to Original Juan Specialty Foods (now Spicin Foods), a co-packer in Kansas City, Missouri, that employed Kit Maxfield and Greg Dennis. Kreitman now calls the duo "perfect bookends" for running a co-packer, with CMO Maxfield handling marketing with clients' brands and COO Dennis heading up operations.
The duo approached Kreitman in 2018 about starting a new co-packer, and they launched Motherlode Co-Packing with Motherlode Provisions founder Leland Oxley as CEO. The company acquired the 50,000-square-foot former home of Denver Plastics on two acres about 30 miles northeast of Denver in Hudson and gave it a major upgrade. "It was an old-school manufacturer in the middle of rural Colorado," says Kreitman.
After about eight months and a $4.5 million investment in construction and equipment, the co-packing operation launched in mid-2019 with a test kitchen, refrigerated warehouse space, four 800-gallon kettles, and hot-fill bottling lines, for sauces, beverages, syrups, and condiments. The facility, which is FDA-, HACCP-, and SQF-certified, has since added a canning line.
Kreitman jokes and calls it "the exact opposite of lipstick on a pig," noting that the drab interior masks a cutting-edge manufacturing operation. "This place looks more like NASA than a food manufacturer," he touts.
When he took over as CEO in early 2020, Kreitman brought a renewed focus to the numbers. The operation has since seen monthly sales snowball from about $100,000 to $700,000, with a forecast of $7 million in revenue for 2020.
With more than 200 customers -- 180 of them recurring -- "It gives us a really strong financial base, because we're not tied to one or two customers," he says. "Because we have such flexible equipment, we're able to do more diverse products."
The names of most customers are kept under wraps; one local client is Georgia Brothers BBQ in Frederick, Colorado, and the operation continues to do co-packing for Motherlode Provisions.
"We're not having a problem right now finding customers," says Kreitman. "We're actually being pretty selective. We're trying to do at least 60 percent of our business with local brands."
He adds, "Our calendar is full through January of next year. The business is there. We've had no shortage of new customers and new products."
Kreitman says the facility is operating at 35 to 40 percent capacity, which he sees increasing to 60 percent by June 2021 and 100 percent by the end of 2021. "After that, our facility will be fully utilized," he says.
"I'm just an entrepreneur," says Kreitman. "I go out and I look at companies and I look at opportunities, and the food manufacturing business is a pretty good one. It has 40 percent gross margins. It's doable because a lot of these contact manufacturers are old-school."
That makes it ripe for innovation, he adds. "There really was an opportunity there, and I saw it with these guys."
Challenges: "The challenge is execution," says Kreitman, citing integration of equipment, communication with clients, and quality control as keys to the company's success. "The challenges are all on us."
Supply chain interruptions during the COVID-19 pandemic have also impacted operations: "Trying to get exotic ingredients the last few months, or even non-exotics -- lids, plastic containers, all of that stuff -- has been incredibly challenging."
Opportunities: Dynamic growth in the Denver/Boulder "hub" of food manufacturing, says Kreitman."Hudson from a logistics standpoint is phenomenal," he says. "I-76 is such a breeze compared to I-25."
There are benefits to using as a Motherlode for co-packing that have nothing to do with manufacturing, partly rooted in value-added services based on Kreitman's background in finance.
"We're unique," he says. "We're not just a food manufacturer. We'll help you retool your products. . . . We're going to incubate you. We're going to help you with your brand, we're going to help you raise capital, we're going to help you sell shares."
He adds, "Right now, I'm trying to raise capital for three of our customers. Where we're different is we've got someone that was in banking and trading and stock markets and raising capital for people for 30 years now running a food manufacturer, which is the hottest business there is. . . . They could pay someone 8 percent to go and raise capital, or they could come and be partners with us and I'll help them find capital."
That can be a big boost for a food entrepreneur with more experience in the kitchen than the office. "When you're trying to get into Costco, you might as well be going to Mars," jokes Kreitman.
Needs: Kreitman says he's considering adding a staggered shift, which would require some new hires. He anticipates adding about 20 employees in 2021. "We need people, we need to hire good people," he says. "We also need to constantly upgrade our equipment."
Once the sole owner, Kreitman has moved to more employee ownership, and expects to give 25 to 40 percent of the company to employees in the longer term. "It allows us to attract a strong management team, and it allows us to be a little bit more flexible with compensation," says Kreitman.