Move over quinoa! Steel cut oats aren't just for breakfast, says Grainful co-founder

Today, ‘steel-cut’ meals and sides from Ithaca, NY-based Grainful are in 600+ stores from Wegmans to Shoprite, and likely to hit 1,200 more by late 2016, and Sacco and co-founder Jan Pajerski sit at the helm of a company that has created a completely new food category.

Now before you start envisaging mushy oatmeal with veggies, it’s important to point out that steel cut oats are much more like rice – chewy, grainy and slightly nutty – than the rolled oats you get in instant hot cereal packets, says Sacco, who develops all the recipes herself, while Pajerski (the number cruncher of the duo) handles the less sexy parts of the operation, such as fund-raising.

“The first thing we always say to people is that it’s not your grandmother’s oatmeal," says Sacco. "It’s much more like a risotto. You can base a whole dish around it.”

Novelty is a strength... and a weakness

Retail buyers, meanwhile, have been enthusiastic about Grainful - which competes with brands such as EVOL Foods, LUVO and Amy’s in the freezer aisles with its frozen entrées, which can be baked or microwaved ($4.99+), and Uncle Ben’s in the ambient aisles with its new ‘steel-cut sides’, which can be heated in a pan with water ($3.99) – says Sacco.

However, the sheer novelty of the concept is both a strength (it’s new and exciting) and a weakness (savory oats are in unfamiliar culinary territory), she adds.

“Retail buyers get us, they are always looking for new and different things, and they want products that are convenient and clean label with a short and sweet ingredients list. But we need to educate consumers about what we're selling."

That said, consumers instinctively know oats are nutritious and satiating, and while having them for dinner is new, the idea is not so crazy that it sends shoppers running for the hills, says Sacco, who says that as a chef, steel cut oats are way more interesting to work with than ‘on-trend’ grains such as quinoa.

“We test all our products first with a tasting committee or consumers, and we’ve got a pretty good system going where we have a partnership with a local store in Ithaca that allows us to test market new products before we approach other retailers about them.

“It’s one thing for consumers to sit in a focus group and say yes this tastes great and I’d pay five bucks for it, and another to actually see if they go into the store, put it in their cart and buy it, and come back the next week and buy it again.

“We’ve also learned about not asking leading questions like, Is this too salty? [as opposed to asking people what the product tastes like, or how’s the salt on a scale of one to 10, for example].”

It’s not like there’s a website that has a list of all the co-packers and their capabilities

Finding a co-packer was tough, meanwhile, explains Sacco. “It’s like a lot of things in the food industry; it’s not like there’s a website that has a list of all the co-packers and their capabilities. You have to network and network and then it’s a case of a contact that puts you in touch with a contact, who knows a guy and so on. It’s incredibly secretive.”

And then there is the usual chicken and egg situation, whereby a retailer won’t take you on unless you have a distributor lined up, and a distributor won’t take you on unless you have a retailer lined up, although in Grainful’s case, they both “said yes at the same time”, says Sacco.

“You can get in these catch-22 situations, but we were really lucky because got Wegmans and UNFI on board at the same time.”

Velocity, velocity, velocity…

As for growth, investors that Sacco and Pajerski were trying to tap for cash in the early days were laser focused on velocity over top-line sales figures, she recalls.

“They want to be sure that the product had repeat buyers, that we were starting to get a following. So when Wegmans brought us on, we really focused on the 67 stores we were in. We’d drive down and stay in a hotel room and do 12-15 demos over a weekend.

“As we went into our next phase of fund-raising, we had to show more top line revenues as well. But we wouldn’t be where were are today without that initial velocity.”

There has also been some learning when it comes to prioritizing resources, she adds. “At first, we would look at our figures and say these two stores are not performing well, let’s spend time figuring out why, when it made more sense to focus on stores where the product was performing really well.”

In other words, if you’re selling four units per week per store per SKU (stock keeping unit), with a bit of effort, you could double velocity at that store and sell eight units, whereas doubling velocity at a weaker store (which does 2 units/store/week) might take the same amount of time and energy, but would generate only four units after all the extra attention, she explains.

Product pipeline

As to whether Grainful belongs in the conventional or the natural channel, Sacco is pretty confident – based on the initial response to the brand – that it can straddle the two.

The price could potentially come down as the brand gains further traction and the economics of scale kick in, she said, although the products are currently “competitively priced” compared with other upmarket brands such as Amy’s and LUVO.  

As more large manufacturers and retailers start sourcing humanely-raised meats and non-GMO chickens and eggs, meanwhile, prices for these goods will also come down, she predicts. “Right now we can barely afford to buy Non-GMO Project verified chickens.”

Steel cut oats are not just for breakfast

Ultimately, Grainful could be in every freezer and pantry in America, says Sacco, who has been working on a large number of new products in recent months so that when retailers do allocate more shelf space, the company will be able to deliver immediately, not six months or a year later.

“If a retailer comes to us and says we’ll give you another shelf, we’re ready."

She adds: “We just want to get people to realize that steel cut oats are not just for breakfast…”