The complexity of growing Simple Mills

by Keith Nunes
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Simple Mills is one such company that uses almond flour as its base and differentiates itself by promoting the simplicity of its ingredient list.

CHICAGO — Small companies are striving to make inroads into many large retail categories. Baking mixes is one such category. In a market dominated by the likes of Betty Crocker, Duncan Hines and Pillsbury comes Simple Mills. A three-year old company, Simple Mills is one such company that uses almond flour as its base and differentiates itself by promoting the simplicity of its ingredient list.

The difference, said Katlin Smith, founder and chief executive officer, starts on the ingredients panel. Simple Mills products never have more than 10 ingredients and at the top of the list is almonds. Traditional baking mix products tend to have more ingredients and lead with “enriched flour bleached.”

“We are focused on nutrition vs. empty calories,” Ms. Smith said.

Katlin Smith, founder and c.e.o. of Simple Mills

She started the company in 2012 with her own money and, as the enterprise has progressed, the concept has proven durable. In 2014, as a student in the University of Chicago’s Booth School of Business, Ms. Smith tied for first in the program’s New Venture Challenge and was awarded $30,000 to put toward the business. Then, also in 2014, the company closed on a first-round of seed money from Hyde Park Angels, a private investment group in Chicago that is known mostly for funding tech startups.

Simple Mills’ product line runs the gamut of baking mixes and includes muffins, cakes, bread, cookies, pancakes, waffles and pizza.

Ms. Smith’s initial foray into the food business was personal. She wanted to “clean up” her diet by reducing the processed foods she ate, but did not want to give up baked goods. Research led her to product recipes and eventually to the use of almond flour as a base. From there, and with the encouragement of friends and colleagues, she decided to launch the business.

“I don’t think the use of almond flour is rare,” she said. “I know there are a number of retailers that sell it and it does very well. It is something that is higher in protein and vitamins and minerals and it has a Glycemic Index of one. To give you an idea, rice flour has an index north of 90.”

Ms. Smith recounts going through the checkout of her local Trader Joe’s and buying large quantities of almond flour during the inception phase of Simple Mills.

“People would look at us and wonder what we were doing,” she said. “But that’s how you start a food business.”

Since then, Ms. Smith has settled on the variety of almond flour that works best in Simple Mills products, finely ground, and the company is now working with an ingredient manufacturer for supply.

Today, Simple Mills products have distribution in more than 1,700 retailers throughout the United States. Most of the customers are specialty retailers, but Ms. Smith said they have made inroads with some national chains.

Ms. Smith defines her average customer as someone who is “health curious.”

“They are curious about different ways to be healthy,” she said. “They are willing to experiment and try new things. They may read magazines and blogs, and talk to friends about different ways to stay healthy. They are not tied to a specific diet like gluten-free. They are not dogmatic. They want products that are better for you, simple and great tasting.”

Simple Mills products initially were packaged in stand-up pouches, but the company shifted to a more traditional box format this past year.

“(The box) has a larger panel and they don’t get knocked over,” Ms. Smith said. “With the old packaging, I would walk down the aisle of some stores and it would look like a bomb had gone off.

“What we are trying to do with our packaging is get them curious about the ingredients. It’s an almond flour mix and that is different to some consumers.”

With a few years of experience running a food business under her belt, Ms. Smith said one thing that surprised her is how difficult it is to identify the right people to hire.

“We are looking for amazing people to be a part of our team,” she said. “They need to be entrepreneurial but also understand what it takes to run a business. It took me a lot of time and effort to identify the right people.”

But she said the effort has paid off. In March Simple Mills is planning to launch a product line that will take it out of the baking aisle, Ms. Smith said.

“Our team decided to produce the product in July and today we already have it sold into 450 stores,” she said. “That is less than six months later. To get the concept, do the pilot run and be where we are today says a lot about the people involved with the company.”

As more companies like General Mills and Campbell Soup continue to increase their focus on specialty products, Ms. Smith expects to experience more competition.

“It is competition, but it is also a benefit for us,” she said. “More people in the market raise the level of consumer awareness. Plus, we don’t have the marketing dollars necessary to have a significant impact. Those larger companies do, and a rising tide can lift all boats.”

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