Based on Beetnik’s rapid growth over the past two years, however, it’s safe to assume that most people are having extremely good experiences with Perkins’ products – organic, gluten-free frozen meals – which were launched in October 2014 and are now available in around 4,300 stores from Whole Foods Market to Walmart (MSRP $4.99-6.99).
Perkins – a trained chef who has worked in everything from semiconductors to software over the past 30 years and has invested in several food businesses – first started thinking about frozen meals after investing in a small chicken farm in Lexington Texas and a business selling organic meat direct to consumers on the internet.
“The online company had a customer base of 40,000+ consumers that were buying the meats, but the costs to scale an online business like that - delivering frozen product with dry ice - were exceptionally high.
"However at the same time people were asking for convenience, so I decided to start a line of single-serve organic frozen entrees made with animal proteins.”
While entering the frozen case is not for the faint hearted, he acknowledges, he only realized that later on: “It’s proven to be very challenging but someone a long time ago told me that the definition of an entrepreneur is someone that doesn’t fully grasp the risks they are taking.”
We’ve just got into 1,700 Walmart stores with a four-SKU ‘Paleo’ line
That said, retailers are actively looking for new products in the frozen entrée category, which is dominated by legacy brands that are struggling to connect with younger consumers, said Perkins, who is based in Austin, Texas.
“We’ve actually just got into 1,700 Walmart stores with a four-SKU ‘Paleo’ line as they have introduced paleo products in their better for you category.
“Retailers are devoting more space to natural and organic brands in the main freezer space – so maybe they have two or three doors of natural and organic and 19 or 20 in conventional. Some still put us in separate natural and organic freezer sections, but we’re seeing less of that now.
“We’re sitting alongside brands such as LUVO and Amy’s but I wouldn’t say we’re all taking business off each other, we’re all growing and we’re displacing conventional products as they go from two doors of natural and organic to three doors, for example.”
"Someone a long time ago told me that the definition of an entrepreneur is someone that doesn’t fully grasp the risks they are taking."
David Perkins, founder and CEO, Beetnik Foods
About 45% of our customers are millennials
He added: “Yes, we’re more expensive [than Banquet, or Healthy Choice, or Lean Cuisine], but by stocking brands like ours, retailers can improve their gross margins even if the turns are lower than some of the high-volume low-cost products.
“They also know that stocking brands like Beetnik can bring in the kinds of consumers that they want to attract to the center of the store. For example we know from our online sales that about 45% of our customers are Millennials, which is extremely high, although we are also very popular with health conscious empty nesters. I don’t know if the same metrics apply to bricks and mortar but I don't imagine they are wildly different.
“For us the next step is to do family-sized portions, although it’s challenging to make this affordable when you’re using organics. We also want to bring organic products to the deli section, and we’ve got a bunch of things in the pipeline.”
As for pricing, he said: “Now that we’ve got more scale we’ve been able to move away from principally spot-buying organic ingredients to contracting with farming co-operatives on an annual basis, which is better for price and security of supply.”
Co-packing blues
On the manufacturing front, Perkins admits he had a few sleepless nights a while back when his co-packer in the Dallas Fort Worth area got into financial difficulties, and he ended up buying the business in order to maintain continuity.
“It was stressful, and we looked at multiple alternatives, but we concluded that for the size of business that we were, we felt the best option was to do it ourselves until we got to the size where we could go to a credible, established high quality co-packer and be an interesting customer for them and know we would get a competitive deal.
“But it’s actually been super exciting for us as well because it gives us complete control over our products.”