Dan Malovany: Thinking Outside the Bag
Aug. 1, 2011
After Terry McDaniel became president and CEO of Inventure Foods five years ago, he found himself in the enviable position of joining a business that specialized in making products other salted snack producers don’t. In fact, just a few years earlier, the Phoenix, AZ-based company had changed its name from Poore Brothers to Inventure because its fundamental focus involved “innovation and new ventures.”
“We’re really focused on different products that meet different consumer needs,” he said. “We’re not a flat chip, tortilla, cheese doodle, pretzel company.”
In many ways, Inventure Foods is the quintessential snack company for today’s consumer. First, it produces on-trend products sold under licensed brands that provide the snack company with instant brand recognition and its food service partners with a presence in the retail channel. For example, it markets potato skins under the T.G.I. Friday’s brand, indulgent specialty products such as extruded onion ring snacks under the Burger King brand and, later this year, other snacks under the Nathan’s Famous restaurant brand name.
Second, it produces premium kettle-cooked chips and dual-sheeted, natural snacks such as Rice & Adzuki Bean and Hummus Chips under the Boulder Canyon Natural Foods name. And it even makes fruit snacks under the company's Rader Farms brand and fruit smoothie kits under a licensing agreement with the Jamba smoothie brand.
Fruit? Smoothies? Snacks? In 2007 when Inventure Foods purchased Rader Farms, fruit — not salty snacks — were the No. 1 snacking option, Mr. McDaniel noted. According to research presented at the Institute of Food Technologists (IFT) meeting in June, liquid snacks — such as soda, smoothies, iced coffee and other beverages consumed between meals — now account for 50% of the calories consumed through snacking.
Furthermore, the IFT research indicated, conventional and beverage snacks now account for 25% of caloric intake by Americans daily. “The good news is more and more consumers are getting their daily food intake through snacking,” Mr. McDaniel said. “The bad part is, if you are a salty food manufacturer, consumers are looking for alternatives in snacking.”
Overall, Inventure’s “better for you” snack offerings — Boulder Canyon, Rader Farms and Jamba All-Natural — grew 27% last year, and its indulgent/specialty portfolio rose 7%. Just five years ago, the better-for-you segment represented only 4% of sales. It now accounts for about half the company’s $134 million in annual sales. Look for Inventure to move into other natural food segments under its Boulder Canyon brand.
In addition to on-trend products, Inventure counts channel diversity as one of its biggest strengths. In fact, the company has presence in all major large-format stores such as grocery, club, mass and dollar as well as small-format retailers with a big presence in vending and c-stores. Inventure also sells its products nationally in natural food and even home improvement stores. Traditional supermarkets, which accounted for 10% of its sales five years ago, now make up more than 30% of revenue and are among its fastest-growing channels.
The company also takes a different approach to private label. Partnering with retailers, Inventure Foods confidentially gives them a sneak preview of what it’s developing and offers them the chance to get first-to-market distribution under its brands. It will even work with them to develop a unique twist on snack products to help differentiate their store brands. “The consumer and ultimately the customer will determine if we’re successful, so it behooves us to get a better understanding of them upfront before we make investments in new products,” Mr. McDaniel said.
To keep up with its growth, the company is making some of the biggest capital investments in its history. “Sometimes I feel like a kid in a candy store,” Mr. McDaniel noted. “We have so many opportunities. It’s just a matter of where do we go first?
Innovation and new ventures: In today’s ever-changing market, that combination makes up the mother of Inventure and the definition of success.