Danone-owned organic baby food business Happy Family is expanding its range with the launch of products it believes will drive category growth. Happy Family is also using its technological know-how to trail-blaze into uncharted territory for the business. Katy Askew spoke to new business development director Regina Fechter to learn more.
Happy Family is a business that places innovation front and centre. Founded in 2003, the US company reported turnover of US$115,000 in 2006. When just-food last interviewed Happy Family last summer, the company forecast its sales in 2015 would reach around US$130m.
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The organic baby food maker was acquired by Danone in 2013. It has been able to grow strongly thanks to its resonance with millennial consumers, achieved, new business director Regina Fechter tells just-food, through on-trend innovation that caters to the needs of US shoppers distancing themselves from legacy brands.
“In any industry, but in food particularly, innovation is the life-blood of your growth as a business. Right now the consumer, especially the millennial consumer, is not satisfied with just the brand that your parents knew. It is really saying to the consumer: we know you are interested in health trends, we are going to bring you the latest.”
Happy Family’s latest new product, which it was showcasing out at the Natural Products Expo West trade show in California last month, is a line of “premium” baby food. The range, Clearly Crafted, is packaged in see-through pouches and utilises organic ingredients. Tapping into increased demand for transparency in packaged food – especially baby food – initial sales have “exceeded expectations”, Fechter reveals.
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Fechter also suggests Clearly Crafted’s sales have not eaten into Happy Family’s existing line of pouched organic baby foods. “We are not concerned about sales cannibalisation. We are realistic in that we know that any time a brand launches two lines that are operating in the same category there will be some cannibalisation. But what has been really exciting for us is we have a tonne of retailer support because they wanted to bring a lot of these SKUs on incrementally.
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By GlobalData“We are seeing that we are attracting some moms that were interested in clear jars that are now looking at the clear pouch and are saying ‘there is a transparent pouch and I trust this’. Other moms that make a lot of home made baby food that are still needing something for an on-the-go occasion. The preliminary sales we have had have shown these to be incremental to the [pouched baby food] category thus far. We are not just stealing our own share, or our competitor’s share, we are truly attracting new sales.”
The distinction between Happy Family’s existing core line of “tried and true” recipes and Clearly Crafted goes beyond the transparent packaging. The recipes for Clearly Crafted include more “exotic” items like avocado, passion fruit and papaya. “For us it is all about including the slightly more exotic or premium ingredients at a higher level,” Fechter says.
As a result, Clearly Crafted is sold at a higher price point, retailing at $1.79-1.89 per unit versus $1.49-1.59. “It is mostly related to our production and development costs. The clear pouch is more expensive. To include a full cup of kale [or] avocado, is more expensive. Everything that we have done to do our sourcing story is also investment. It is very comparable on margins.”
On sourcing, Fechter says Happy Family wants to spearhead the “revolution” in transparency underway in the US. “For us, transparency in sourcing means telling the whole story. We really want to focus on the revolution of transparency and we want to lead that in baby food. Telling the whole story for a food company is tracing it back to where the food was grown.”
As Happy Family scales up production, detailing its sourcing will become more of a challenge. However, Fechter says Happy Family has worked to future-proof its sourcing needs. “We are committed to being as transparent as possible with what we can control. We are sharing every ingredient in this line is on our website. We have some smaller partners… it is harder for them to scale [and] we will have to add another partner. But the good news is, Grimway Farms who do our kale for example, actually have very large organic farm in California so they have the opportunity to scale with us. We have strategically picked partners that not only are trusted organic suppliers and farms, but they can also scale with us.”
While innovation is central to Happy Family’s expansion in baby food, the company is also examining other growth avenues. “We are always looking for growth opportunities. We are innovating in baby. This is our core bread and butter. But then we are always looking for growth opportunities that are truly incremental to our business,” Fechter reveals. “Part of our strategy is always to say, we have the trust of consumers of moms who are also millennials, but then we also have capabilities at our company, so what is the sweet spot of using your capabilities? We know how to make an on-the-go pouch product really well and really safely.”
For this reason, the company has expanded into kids with a pouch line called Happy Squeeze. “It is more of a nutritious version of traditional apple source,” Fechter explains.
Happy Family sees further opportunities to grow its range for older children. “We see a lot of space. For us it is looking into what are the opportunities that we as a company can best be successful and tackle and where can we leverage what we already know about snacks in toddler and pouches and grow into kids. Our mission as a company is to change the trajectory of children’s health in the US. That means, it starts at conception, into the first 1,000 days of life, but then absolutely it goes into kids. We are just looking for the right opportunities to see where we can really add to the segment. Our key concern is, as a company you always need to prioritise. As an innovative company we have in front of us 10 different growth opportunities, of which kids is absolutely one of them.”
Happy Family also sees potential to utilise its pouch technology to appeal to adult consumers. To this end, Happy Family launched an adult line of pouches, Shine Organics last year.
“Our Shine Organics line is our adult line of pouches where we bring organic fruit, vegetables and micro-nutrient blend with chia that delivers over 240mg of omega 3. It is innovation for mom – but also for the millennial. To say ‘we know you are interested in an on the go snack that is not necessarily a bar, that will give you great nutrition’ was huge for us.”
The line was launched at the end of last year in retailers including Target and Publix and sales are “just ramping up”, Fechter says. “Because we are seeing traction, we are now really excited to try to get it into convenience stores and a lot of mass grocery stores.”
This extension was been welcomed by Happy Family’s retail customers, Fechter claims. “Some of the major retailers are looking for innovation and want us to drive consumer loyalty and sales for them. When you have some of the larger customers that are really interested in gaining that consumer’s trust and loyalty, you do that through having brands that are authentic and innovative.”
Again, extending its reach into additional categories, Happy Family launched a range of pre-natal products at the end of last year. Likewise, Fechter insists sales here as “really ramping up now”.
With so many opportunities to expand into new occasions, Happy Family must adopt a disciplined approach and prioritise which avenues offer the greatest risks and rewards. Fechter explains: “Margin plays a role, potential growth, where we already have relationships with different retailers in natural and more mass. And then also, where can we make the biggest change when it comes to nutrition in this country? It all fits together. Our motto is babies before business, however, we are a business, so you still need to make sure you have a product that makes money.
“As general categories we are always looking at opportunities to expand our portfolio within baby, to really respond to the trends… Danone is an early life nutrition company, so anything related to how can we bring differentiated nutrition to mom and baby. And then how can we expand beyond. Right now, we have our Shine line – we are still growing it – looking at how it is growing, the relationships, where we can continue to get distribution. We want to make sure it is a successful line before expanding more into adult.”
