Hormel giving local nut butter company Justin’s a chance to spread
BOULDER — Justin Gold was just thinking about keeping his roommates from eating his homemade almond nut butters when he started labeling them, “Justin’s.”
“It really just made them want to eat them more,” said Gold, who founded his organic nut butter company on that brand in 2004. He originally began experimenting with homemade nut butters as a means to supplement the protein in his vegetarian diet, especially when store-bought nut butters just weren’t cutting it.
“Back then there was really only two kinds of peanut butter (chunky or smooth). When I had almond nut butter, it tasted a whole lot different than when I had a handful of almonds in my hand,” he said. “So I started making it myself.”
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Today, Justin’s basic 16-ounce jars of almond butter account for about 70 percent of the company’s income last year, although the product list has expanded a great deal. Gold also hopes the company will continue to expand into domestic and international markets as a result of last month’s $286 million sale to food-making giant Hormel.
“The reason we partnered up with Hormel is they have Skippy. Let’s leverage their manufacturing resources to make a better product,” Gold said. “Then let’s figure out what other resources we need.”
Peter Burns, Justin’s president and chief executive, said there is an incredible amount of market real estate in which to expand, both domestically and internationally. Hormel may have felt the same, given the purchase price it paid for Justin’s — with annual sales “north of $50 million” — compared with the 2013 purchase of Skippy: $700 million for a company with $370 million in annual sales.
“Our No. 1 item is only hitting about 40 percent of the (domestic) retail market; there’s a whole lot of white space out there,” Burns said. With an extremely limited international presence for a varied natural/organic product line, “the whole franchise has a whole lot of growth runway in front of it.”
Gold actually began experimenting with different flavors for almond butter even before introducing the product first at the Boulder Farmers Market. Today the company’s flagship product is available in classic, maple, honey, vanilla and chocolate hazelnut varieties, but even when experimenting, he found that his roommates were still into the jars marked with his name.
“It almost made them try them, and I was using a lot of different ingredients — fresh banana, dried banana …” he said, “but it was really this unique grinding approach we developed. Ours tastes more fresh because of this proprietary grind.
“So we’ll just add a little flavor … and that’s really the bread and butter of our company.”
Soon after introducing both almond and peanut butters at the Farmers Market — “The almond was seen as a newer product; a lot of consumers had not heard about it” — Gold was working on a business plan. During the year in which he developed that plan and ended up securing about $1 million in angel investment, Gold said he learned a lot about business — and people, as well.
“In the early days, one of the original challenges was finding people who believed in what you are doing; finding people who were crazy enough to take this risk with you,” Gold said. “That can be from a coworker to an investor to a retailer.”
Along the way, Burns noted, there were supply issues, especially during California’s long drought. California is almost the only almond game in North America, and almonds are a water-intensive crop.
“Any time you are scaling a business that is growing 40 to 50 percent year by year, staffing is a problem,” said Burns, former CEO of Celestial Seasonings and the CEO of Boulder’s Izze when it sold to PepsiCo. “Getting them staffed and getting them trained; but those are what we call ‘high-class problems.”’
There were also tough procurement and manufacturing questions as the company expanded into nut butter snacks and organic peanut butter cups. For instance, the company peanut butter cups are USDA-certified organic and are made with Rainforest Alliance Certified cocoa.
Keeping the company mission-based — to “Nourish, Nurture, Inspire and Educate” is the company’s stated goal — also adds a certain complexity. Keeping the company on that mission was a reason to go with Hormel, which is keeping the brand as a subsidiary in the company’s grocery-products segment, and operating out of Boulder.
Helping out was finding the right people, Gold said. For instance, Burns was part of his original advisory board. Gold also credits the private equity company VMG Partners, to which he sold a minority share of the company for $47 million in 2013, as being an important partner.
“It’s important that everyone here in Justin’s was an owner, and there were also 60-plus angel investors, and they all believed in building this company,” Gold said. There were at least several different companies interested in acquiring Justin’s, but Gold said the company is exactly the right fit — already entrenched in peanut butter manufacturing and committed to allowing Justin’s to stay the mission-based company it has always been.
“It’s mind blowing, and it really hasn’t sunk in yet,” Gold said. “The food landscape has really changed, and the fact that one of the top and most respected food manufacturers out there wants to help us grow is great.
“The icing on the cake is they don’t want to change anything. For me, it’s a dream come true.”
