San Francisco / San Mateo, California
Industry: Food & Beverage; Brewing & Distilling; Supply Chain
Products: Snack bars and other foods made from brewers' spent grain
Co-founder Daniel Kurzrock is upcycling spent grain from breweries into snack bars, with a plan to disrupt the food manufacturing supply chain.
Two years after he brewed his first batch of beer, Kurzrock first came up with the concept behind ReGrained in 2011. "I was an underage homebrewer at UCLA," he remembers. "We started making bread with it. My twist was selling loaves of bread to friends so I could brew beer for free."
"The industry calls it 'spent grain,' which isn't very appetizing," says Kurzrock. But it's a terrific ingredient: It's high in both protein and fiber, and readily available.
The problem? Spent grain "is pretty unstable if you don't treat it," says Kurzrock. "That's the core of our IP." For that reason, about 80 percent of it is currently used as livestock feed, but ReGrained sees potential for a better use.
"We saw a huge opportunity to close this loop," says Kurzrock. "We came up with a way to stabilize it and then grind it into a flour," dubbed SuperGrain. "It's taking this waste byproduct and turning it into a viable ingredient."
It's also a versatile ingredient, he adds. "We've made crackers and cookies and pasta and bread."
Kurzrock returned to his native San Francisco after graduating in 2012 and worked for a marketing software company while launching ReGrained as a home-based cottage business with co-founder Jordan Schwartz.
The duo selected snack bars as the first ReGrained retail product based on logistics. "We didn't have any money," says Kurzrock. "We had to come up with something we could make in a home kitchen." Bars also have long shelf lives, he adds, and they're easy to make in bulk.
But they knew they needed outside help to get to the next level. "We were working nights and weekends," says Kurzrock. "We realized we were kids and we didn't know anything."
In 2015, Schwartz and Kurzrock connected with the USDA Agricultural Research Service in Albany, California. "We brought them our scaling problems," says Kurzrock. "They have a lot of experience around that."
The collaboration solved the instability problem in an undisclosed manner, and a patent has been filed on the proprietary process. "We can't really talk about it," says Kurzrock. "It makes this whole thing possible."
He says that the process is notably energy-efficient. There's also a social component to the business: "Align the food that we eat with the planet that we love," Kurzrock says. "We're doing what we call edible upcycling. It's the highest possible use. We're simultaneously decreasing a waste stream and creating a food stream."
Considering that a six-pack is a pound of grain, there's a lot of supply. In the U.S., breweries produce tens of billions of pounds of spent grain annually, and that means ReGrained has plenty of room for growth.
"We're operational with the first commercial pilot," says Kurzrock. "We operate our own facility. We actually produce the bars ourselves. That will be moving to a co-packer." ReGrained will subsequently focus on producing SuperGrain.
In six years, the company has gone from making dozens of bars daily to thousands. ReGrained SuperGrain Bars now come in three varieties -- Chocolate Coffee Stout, Honey Cinnamon IPA, and Blueberry Sunflower Saison -- and are available direct online and at retailers in California (including Whole Foods, Sprouts, and numerous independent markets) and numerous states all over the country.
The company started with small amounts and now takes entire batches of spent grain from several partner breweries in the Bay Area, including 21st Amendment Brewery, Magnolia Brewing, and Standard Deviant Brewing. "[Volume] is increasing all the time," says Kurzrock.
The company is about to take a big leap after numerous smaller steps: ReGrained is scaling up to begin processing several tons of spent grain daily in early 2019. After closing on a $2.5 million Series Seed financing round led by Griffith Foods in September 2018, the company is consolidating its office in San Francisco and its kitchen in San Mateo into a larger production facility in Berkeley by the end of the year. "We're building out our first commercial version of [the system] -- we call it the ReGrainery," says Kurzrock. "This next year, we'll be focused on scaling our first ReGrainery in Berkeley."
The end goal: selling SuperGrain to food manufacturers. "We're not selling flour yet," says Kurzrock. "We basically want to become a supply chain for the food industry."
The strategy calls for building a retail brand to prove the concept to other manufacturers. "We're focused on building a market and selling a product," says Kurzrock. "If we execute everything to a T, it's not crazy to think we could be a billion-dollar company. There's a huge market and we have the potential of unlocking it."
Challenges: ReGrained is currently spinning quite a few plates. "We're pioneering a new method of food production," says Kurzrock. "We're commercializing an invention. We're this hybrid business model" straddling R&D and supply chain. That's not to mention building a retail brand: "That's a business in itself."
There's a method to the madness, however. "When we start selling this ingredient, there's going to be a latent demand that'll be ready for SuperGrain," he says.
Opportunities: With two breweries opening every day across the country, largely concentrated in urban areas, Kurzrock sees potential for ReGrained to close the spent grain loop nationwide -- and beyond. "We're interested in scaling it wherever beer is brewed and food is made," says Kurzrock. "There's a few different models. We might look to open an additional location in 2019."
In 2019, the company is also launching a savory snack line of "chip-like products," says Kurzrock, with taprooms being a prime retail target.
Needs: "We're always looking for additional partners," says Kurzrock. "We want to create products with partners and become part of their supply chain."