Contract Manufacturer Sees All-Natural Growth

This article first appeared in the September 2013 issue of Food Manufacturing.

Fresca Foods in Louisville, Colo., provides full-service contract manufacturing and brand management services to a growing host of customers operating in the healthy snack foods market.

Fresca Foods began its journey as Pasta Fresca over 20 years ago when it opened the doors to its first retail location in 1993. By 1997, the company had moved its operations to a 6,000 square-foot manufacturing space near Boulder, Colo. At the time the company was focused on providing quality food service products to restaurants and retail outlets in the Boulder region, but the business was about to change.

In 2003, after a leadership transition, the company saw an opportunity to provide value-added services to established but growing food companies in the all-natural foods market. It retooled its business model to focus on contract manufacturing, carving out a unique business model that has served the company well. Since that time, Fresca Foods has seen year-over-year growth of 45 percent, shipping millions of cases of product per year.
“It’s been a wild ride,” says Liz Myslik, Executive Vice President of Brand Management for Fresca Foods.

Plant within a Plant

Fresca Foods now provides contract manufacturing and fully integrated supply chain services to 11 contract partners. The company operates out of 250,000 square feet of space, spanning two processing facilities and two warehouses in Louisville, Colo., just outside Boulder. The company likens its space to an “Olympic training center,” where each customer’s product is processed, packaged and distributed according to contract specifications.

“We build the process around the idea, around the entrepreneur, around their specific product,” says Myslik. “So we’re free from having an existing line we have to retrofit. We actually build the the line around the product and the process.”
Fresca’s “plant-within-a-plant” set-up is unique and designed to best serve the needs of individual customers and their products.

This idea originally sprung from necessity — Fresca Foods began operating in a space that was originally a produce packing facility with some warm and some chilled rooms. This necessitated a clear segregation of processing functions, but later transitioned easily into the company’s current model.

Fresca Foods now operates separate manufacturing pods, which are all designed with distinct HVAC and electrical systems, operating independently of the other pods, which helps preserve the integrity of dietary and allergen claims on the products Fresca Foods manufactures.

While the company does operate some shared equipment across several brands, many functions within these pods are brand specific, with a number of Fresca Foods’ partners even owning equipment within the company’s processing space.

Each brand is designated with a core crew of employees — Fresca Foods has a total staff of 270 across all departments — with longer term, key employees working across multiple brands and multiple processes and managers overseeing several brands and processes.

All-Natural Mission

For Fresca Foods, ingredients are as important to a quality product as the process by which those products are manufacturers. From the beginning, Fresca Foods has been committed to producing all-natural products.

Myslik calls the all-natural foods market a “mission-driven, high-growth industry,” and Fresca Foods is certainly aiding in its growth. All the products produced by the company are all-natural.

A company with these values is well-positioned outside Boulder, Colo., which Myslik describes as a “natural products hub.” With Silk, Horizon and other organic and all-natural giants just down the road, Boulder could easily be described as leading the all-natural charge. Myslik describes a strong sense of community, rather than competition between healthy food producers in the region, with competitors offering support, help and a sense of community, with a “shared objective to grow this industry.”

Though most of its partners focus specifically on the all-natural market, Myslik says Fresca Foods will work with more traditional companies interested in producing lines of all-natural products.

“That doesn’t have to be part of the brand’s positioning,” she says, “but for our own peace of mind, we know it’s something we’ve done for them.”

Though “all-natural” isn’t currently defined by any U.S. regulatory agency, Myslik says the industry itself has carved out definitions with guidance from strong retail partners.

“Whole Foods sets a very clear standard, and if Whole Foods will accept something, then we know it’s okay with us. If we’re ever not sure, we can use them as a guideline.”

Responsibility

In addition to its responsibility to its contract partners, Fresca Foods is committed to maintaining a responsible partnership with its community in Greater Boulder and beyond.

Each year, Fresca Foods donates thousands of pounds of food to local non-profits and its employees volunteer their time helping out in the community.

In addition, Myslik says sustainability is “core to our mission,” and that much of the drive toward green business operation stems organically from the company’s all-natural vision. Fresca Foods is 100 percent wind powered, with about half of that power generated by the facility itself and half coming from the purchase of wind energy credits.

The company has designated a key group of employees as its “Green Team,” which is made up of senior executives, plant floor personnel and everyone in between. The Green Team researches and proposes new company initiatives to increase sustainability plant-wide.

In addition to Green Team-driven initiatives, the company sets one annual sustainability goal each year, and 2013’s mission has been to become a zero-waste facility. Other goals have included energy conservation, packaging reduction and buying local. For initiatives like these, each department evaluates its own operating protocol to determine cuts or adjustments that could contribute to the company’s overall objective.

Increasing sustainability efforts at Fresca Foods is an ongoing process that will tackle increasingly ambitious goals. Myslik says the company has chosen to start simple, by identifying the “low hanging fruit,” goals that are easily achievable with the largest impact relative to investments of time and money. As these easier goals are reached, the company moves on to greater challenges, with an eye on the benefits to its own business as well as those to its community.

Creating Partnerships

While Fresca Foods is always on the lookout for new partnerships to add to its stable of all-natural brands and products, the company is selective in the contracts it adds. Each year, the company receives 500 requests from food companies hoping to be added to their roster.

In addition to these inbound inquiries, Fresca Foods also monitors the market for potential partners and makes outbound inquiries to companies it believes will fit well into their core mission.

When evaluating any potential partner, Fresca Foods uses what it calls the “Four Ps” to help quantify the potential for a valuable partnership. These are:

• People. Myslik says the company is on the lookout for “entrepreneurs who give us a reason to believe they can build a $50 or $100 million brand.” These people are authentic, creative, passionate and visionary.
• Products. Fresca Foods seeks products that are highly differentiated within large, existing categories. Myslik says, “We don’t try to create new categories. We think that’s very hard and very expensive for a small brand in particular. Trying to educate consumers about your category as well as your brand within that category is incredibly prohibitive.” Promising categories for Fresca Foods include ice cream, bars, popcorn and crackers. Fresca Foods likes to see a product in one of these categories that is “really differentiated within that category, that’s really doing it differently than anybody else.”
• Proof-of-concept. Fresca Foods is seeking products that have proven potential and sales velocity in the market. These companies are typically not start-ups, but not yet household names. Companies should have proven market demand in the areas in which they are currently sold, which can be reasonably demonstrated by metrics like same-store sales growth.
• Profit. Fresca Foods looks to partner with businesses that can fund themselves. “We really look to try to drive as much of the growth investment of the brand from the brand’s cash flow. We think the business should fund itself as much as possible,” says Myslik.

Once Fresca Foods has contracted with partners who meet these criteria, the company offers a wealth of contract partnership services, operating an end-to-end supply chain model. Fresca Foods offers partners investment capital and manages R&D, product formulation, manufacturing and distribution, freeing up cash flow for partner sales and marketing.

The company offers what it has termed “open book pricing,” in which it reviews expenses and shares savings with partners. This model fosters a stronger partnership through transparency and trust.

Creating Growth

Much of Fresca Foods’ growth can be attributed to its aggressive drive toward new product development.

“We view the greatest opportunity for growth for ourselves and for our partners in creating new products, so that’s extremely important to us,” says Myslik. “We’re always focused on both line extensions of existing product lines, as well as exploring new platforms for the brands.”

The company works closely with its business partners to brainstorm new products and optimize existing recipes for quality and profitability. This process is collaborative and involves input from Fresca Foods R&D team as well as the R&D teams of its partners.

To aid in the development process, Fresca Foods has a portable line of processing equipment specifically designated for R&D. The flexibility this offers helps the company build its product development process around the demands of each entrepreneur.

These initiatives fit with Fresca Foods’ mission statement, says Myslik, which is: “Be our best selves every day and help others do the same.”