Hampton Creek CEO: People told me foodservice was a high-volume, low-margin play with no branding opportunities; they were wrong

Tetrick was speaking to FoodNavigator-USA about new products, including a new ranch dressing that will launch with Kroger in about three months; a new light version of Just Mayo set to follow shortly afterwards; a ready-to-eat cookie for vending; and new wasabi and sesame variants of Just Mayo.

Just Scramble [like Egg Beaters - minus the egg] is proving the most challenging from an R&D perspective, however, he added: “We’re making good advancements with Just Scramble, but we are still not where we need to be. It has to taste as good or better than the best farm fresh free range eggs that you’ve ever had. We’re still pushing to get it out by the end of the year but we’ll see.”​

Compass partnership gives us the kind of scale that most companies our size can only dream about ​

As for the foodservice opportunity, the partnership with Compass was a game changer, he said. “Compass is the largest foodservice company in the world and we have an exclusive agreement with them that Just Mayo will become the standard mayo they use in their operations all across the United States. And Just Cookie Dough ​[Hampton Creek’s egg-free cookie dough product] is becoming their core cookie."​

But he added: "This is not about cookies or mayo, but the fact that almost in the blink of an eye a young company like us has tapped into a national distribution infrastructure that would typically take years and years to build; it gives us the kind of scale that companies our size can only dream about. ​

“So going forward, first and foremost in our minds when we develop products, is what fits in the context of a foodservice architecture?” ​

It’s an opportunity for us to tell our story​

Around 18 months ago, said Tetrick, he had been advised that foodservice was a “high-volume, low-margin play”​ that would not present interesting marketing or branding opportunities.

In fact, the reverse had proved to be true, he said, with foodservice companies now increasingly keen to flag up partnerships with brands such as Hampton Creek, which appeal strongly to Millennials thanks to their animal welfare and sustainability credentials.

“Imagine you’re at a restaurant and the pump you are using to dispense mayo is Hampton Creek branded; the mayo sachets are Hampton Creek branded; there is a big sign to your left talking about the impact we are having, and that’s just the start. It’s an opportunity for us to tell our story.”​

And that in turn reinforces what Hampton Creek is doing in the retail side of the business, said Tetrick, who has always maintained that he did “not go into business just to sell products to vegans in Northern California”.​

He added: “Through Compass we've got literally millions of people that are going to have an opportunity to connect with us for the first time, and it’s an opportunity for us to tell our story. It’s our hope that that connection will increase the possibility that they will also want to hear our story in Target, or Sprouts, Whole Foods, or Walmart.”​

We’re expanding the mayo category​

As for the retail side of the business, Just Mayo is in around 21,000 locations (mostly in the US) and is about to enter the UK market via deal with its largest retailer (Tesco), he said.

Meanwhile, Just Cookie Dough - which launched in Whole Foods earlier this year – is now rolling out to Kroger, Costco, and other leading retailers.

While Hampton Creek does not disclose its revenues, its impact on the market has been significant, a fact acknowledged by market leader Unilever in a lawsuit​​ filed  - then later withdrawn​​ – last year, which noted that “Just Mayo already is stealing market share from Hellmann’s.”​

But it’s not just stealing share from CPG’s biggest guns, but is also bringing new consumers into the category and driving incremental growth, claimed Tetrick.

“We’re expanding the mayo category. 22.9% of our mayo buyers are new to the category; they did not buy mayo before.​

"Millennials for the first time are coming into the category, even people that hate mayo are coming into the category for the first time, and we’re seeing people come in for health and wellness reasons.”​

Flavored mayo – Just Mayo now comes in Chipotle, Garlic, and Sriracha flavors as well as plain – has also been a big hit for Hampton Creek, which has secured $120m in funding from investors including Microsoft founder Bill Gates, Facebook co-founder Eduardo Savarin and Asia’s richest man Li Ka-shing, said Tetrick.

“We have 53.3% of the flavored mayo market in Target."​

Litigation: Lawyers, not consumers, are driving these lawsuits​

So what’s happening on the litigation front?

While Unilever’s decision to drop its legal action against Hampton Creek generated a lot of positive PR for Hampton Creek last year, a copy-cat consumer class action lawsuit​​ - which was filed in Florida in March and makes near identical allegations - is still in play.

So what does Tetrick make of the complaint, which accuses Hampton Creek of misleading consumers by falsely advertising its flagship product as 'Just Mayo' when it does not meet the federal standard of identity for mayonnaise​​?

There is no news to report on this case, said Tetrick (the company has not yet filed a motion to dismiss the case), but added: “Let’s just say that these cases can be less about individual people​ [‘injured’ plaintiffs] and more about particular law firms.”​

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