With non-milk ‘milks’ becoming ever popular, the Almond and soy milk industries are powering America in our cereal bowls and in our coffee mugs. But who is leading this front and doing it with the intention of de-comodofying it? It’s non other than the Califia Farms! Already swaying the hearts of the millions of millennials, Califia has won awards for their incredible commitment to dairy and dairy free communities.
Greg Steltenpohl, CEO, joins LA TechWatch today to talk about the recent funding and about his growing company.
Who were your investors and how much did you raise?
We recently announced a Series A investment of $50 million from Stripes Group.
Tell us about your product or service.
Califia is a leader in the revolution to de-commodify the food and beverage industry by creating innovative, healthy and great-tasting premium beverages that make it easy for consumers to go ‘plant-powered’.
Califia Farms flagship product is its Almondmilk, which has garnered numerous awards not only for its uniquely creamy and delicious taste but also for its beautifully designed packaging. Califia Farms Almondmilk has redefined its almond-based beverages as a premium experience that’s attainable enough to be savored daily. Bottled in chic, modern carafes reminiscent of classic milk bottles, Califia Farms Almondmilks are not simply an alternative to dairy, but are on their way to becoming integral to the healthy, nutritious lifestyle that today’s consumer demands.
In addition to category-leading Almondmilks, Califia Farms ready-to-drink, dairy-free, cold brew iced coffee drinks are also award winning and top sellers. Califia Farms citrus juices and uniquely flavored Aguas Frescas are also highly coveted by consumers looking for healthful, low sugar alternatives to classic drinks.
What inspired you to start the company?
I was (and still am) tremendously excited and inspired by the consumer-based revolution that is disrupting the food and beverage space: consumers are not only demanding healthier, lower calorie solutions to traditionally calorie-rich foods, like dairy and juices, but they also have a growing appreciation for how delicious plant-based beverages can really taste.
Califia Farms is bringing a brand to life that gives choices and opportunities to make it easy and delicious for consumers to make a change in lifestyle that meets their needs of going plant-based, healthy and low calorie.
Our tremendous success in almond milks is a base that has given us a great opportunity to go in new and creative directions to expand what plant-based dairy can offer consumers, including our number one selling Cold Brew Coffees with Almondmilk, Almondmilk Coffee Creamers, and our recently introduced Almondmilk Horchatas, and more.
How is it different?
Califia Farms tackles every category from a premium viewpoint. For example, we have already lifted almond milk out of commoditization – raising the profile of the dairy case with our great design and packaging that is not only intuitive, interactive and ergonomic but also filled with a beverage that, first and foremost, is delicious. Our complete attention is focused on how great and drinkable our end product can be, while creating the “cleanest label” possible, one that is low in sugar and calories. We stick to simple and natural ingredients, eliminating any junk – keeping it free not only of dairy, but also soy, gluten and GMOs.
In contrast to most brands in the space that have concentrated on commodities, we view the dairy category from a creative and experiential point of view – delivering products that surprise and “wow” our customers.
What market are you targeting and how big is it?
There’s no question that there is a global market for plant-based beverages. In fact, Asia currently has the largest demand for plant-based beverages. This is something we’re just catching onto in the US and we think we’re currently just scratching the surface of what is going to become a major segment of a category that previously was exclusively dairy.
Plant-based milk is estimated to grow to over $3 billion by 2019 and almond milk now represents 65% of the non-dairy milk category (Mintel, April 2015) with dollar sales increasing 40% from 2013 to 2014 (Packaged Facts).
For a lot of reasons, we like to focus on Millennials – 56% of them consume almond milk – and they’re leading the charge in today’s demand for authenticity in health. They also love to explore flavors and news ways of combining interesting ingredients; and, finally, their drink usage occasion patterns are very different from that of their parents. Notably, they don’t always have coffee in the morning, instead they like it on the go and basically any time of the day. And iced coffee is their favorite way to go.
And, because our Almondmilks combined with our Concentrated Cold Brew Coffee, create a better and more enjoyable beverage experience than the traditional ways dairy and coffee were drunk in the past, we are creating opportunity to grow the category.
And we already know that Millennials prefer coffee over energy drinks for an energy boost and that ready-to-drink coffee will reach $2.3 billion in 2018.
What’s your business model?
That’s a great question! I think most entrepreneurs struggle from a lack of thinking beyond their first few moves. Califia Farms started off with the long view in focus and the intention to build a very scalable business. To that end, we took the extra expense to build our own manufacturing process, including all of our own technology that allows for our products to be packaged in the cleanest way possible.
Because we’ve created a production process that is flexible and allows for continuous improvement, our speed to market and ability to innovate on the turn of a dime makes us much more competitive than the larger players who wait for research and are embroiled in longer term decision-making process.
By coupling our entrepreneurial instincts with the feedback we gain on social media with the control we have over our supply change, we are able to have a direct response to the latest trends in the marketplace.
What was the funding process like?
It’s no secret that funding is often a painful experience! However, this really was one of those rare cases where our success with the consumer gave us the ability to be choosey with our suitors. And we were able to really focus on finding investors we have a true affinity with, one that shared our core values and vision for how expansive this market really is.
What are the biggest challenges that you faced while raising capital?
Like any entrepreneur running a small business, one of the biggest challenges is being able to focus on day-to-day operations while being submerged in the middle of huge growth and then taking the time to do due diligence on the background and behavior characteristics of the potential investors.
One of our great advantages was having a great initial partner with Sun Pacific. Their patience allowed us to continue to be very choosy about who we ultimately partnered with.
What factors about your business led your investors to write the check?
I think there were a number of factors: namely, recognition of the size and growth of the market opportunity; along with our unique combination of innovation, success in the marketplace, gung-ho entrepreneurship and depth of the team all make Califia Farms a unique proposition for scalability.
The type of Investors that we were interested in are very discerning – so it’s fair to say that the fact we were already one of the fastest growing natural beverage companies in the US and the fastest growing brand in the almond milk category, as well as leader in ready-to-drink coffees, we had the unusual good fortune to have the ‘pick of the litter.’ Clearly, it doesn’t hurt to have great traction and a string of success in the marketplace to give investors confidence that you got what it takes to make it a lasting success.
In 2015, we were named one of the Top Eight Breakout Brands by Beverage World magazine; a Top 10 Challenger Brand by consultancy Seurat Group and Beverage World named me to the list of Top 50 Beverage Disruptors. These are some of the attributes that top tier venture/private equity firms like to see.
What are the milestones you plan to achieve in the next six months?
We’re about to move into a new marketing headquarters in the Art District in Downtown LA, as well as opening a new 62,000 square foot distribution warehouse near our factory in Bakersfield which should allow us to start getting some of the manufacturing and supply chain efficiencies that many of our large multinational competitors enjoy.
In terms of products, we will be introducing two ground breaking product concepts in spring…one based on coffee in a whole new packaging format and another that will extend us into a whole other category within the dairy case.
Our new investment has also allowed us to grow our team and to attract key personnel to a significant number of positions that we need to fill across the business in operations, R&D, product development, and sales and marketing.
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
I have found that the most important element to raising capital is having the persistence to find early traction in the marketplace and a way to generate cash to keep the momentum going. My recommendation is to gain true traction, build off those early successes and then look for investment partners.
Where do you see the company going now over the near term?
I see the Califia Farms continuing to have great growth in the natural sector but also to really grow within some of the more traditional retailers as well. We’re already having great success in these retailers and I expect it to continue. In addition, I see us opening new channels that give consumers different access the product up and down the street, as well as finding it in specialty outlets.
We like to densify access to the brand by picking select markets where we can achieve high visibility. This coming year we’re putting a great emphasis on Southern California and DTLA in particular.
What’s your favorite LA bar, when you need to kick back and relax?
Although I love mixology and I hear Matthew Biancaniello is killing it at The Library, I’m not as heavy into the alcohol side. Lately I’ve been getting into coffee bars and love to support the great folks at all the independent places that appreciate Califia products. When I’m in my neighborhood (Silver Lake), I drop in on Dinosaur Coffee and LAMILL whenever I can.