A ‘friendly competitor’ for years, Sonoma Brinery founder Dave Ehreth had helped brothers and Cleveland Kitchen co-founders Drew and Mac Anderson on and off over the years finetune the science behind their approach to fermentation, which deviates from heritage kraut brands on the market by preserving the crunch, color and bold flavors of the foods they pickle.
So after Cleveland Kitchen successfully teamed with a co-packer to expand into the pickle business in the summer of 2021 at the behest of Walmart after focusing primarily on kraut, kimchee and dressings for years, the brothers knew they needed their own manufacturing facility to produce the highest quality product at scale.
“When we started to look at scaling up, we knew we really needed good processes in place, a good team, really good science, and then also cucumber sourcing from farmers who can supply year-around. And that wasn’t something that we could easily turn on and start manufacturing out of our Cleveland plant,” which was created to make sauerkraut, kimchee and a few other products, CEO Drew Anderson told FoodNavigator.
From this starting point, he said, “We asked ourselves who makes the best pickles on the market, and immediately the team was like, ‘Sonoma Brinery,’” which like Cleveland Kitchen focused on traditionally fermented pickles and sauerkraut.
“There are not a lot of people that make naturally fermented sauerkraut and pickles across the country, and so we were speaking the same language when we sat down with them, which was pretty cool,” he said, adding that their aligned cultures made the deal even easier.
As part of the acquisition, all 50 employees from Sonoma Brinery will join Cleveland Kitchen’s team, including Ehreth, who will serve as a consultant and bring his nearly two decades of knowledge about fermentation science to the company.
“This acquisition is really an investment in their proprietary fermentation knowledge and manufacturing capability to make a high-quality proven product that will increase our speed to market and allow us to take full advantage of the opportunity in refrigerated pickles,” Drew Anderson said.
The Sonoma Brinery team will transfer from their facility in Healdsburg, Calif., to Cleveland Kitchen’s new, highly automated facility in Santa Rosa, Calif., which is slated to come online this summer.
“When we started building the new facility, we knew we wanted it to be state of the art – highly efficient, high output, low footprint with a lot of automation," that will not only allow employees to produce up to four or five times the product in the same amount of time, but it should also help with labor recruitment and retention, Anderson said.
“It is difficult to find good folks right now. We are competing with the likes of Amazon, and they’re big with distribution centers popping up across the country. And so we have to really look at our pricing, salary and pay models and make sure that we are being fair because we really these people – they are good, they have a good knowledge base. And automation is the key to keeping the same great people, but allowing them to produce more and more easily” while also pushing the margin, Anderson explained.
Series A fundraise fuels acquisition, expansion
The acquisition and new facility was made possible in part thanks to a Series A fundraise that Cleveland Kitchen closed the same cold day in February that it took over Sonoma Brinery.
The round was co-led by the CPG-focused venture capital group Amberstone, which Drew Anderson noted has a deep knowledge about cold chain and “really believes in fermentation,” and the South Korean conglomerate CJ Group, which he said has a strong R&D team. Together they bring strategic knowledge that will help Cleveland Kitchen as it quickly scales production and expands its portfolio.
Existing investor Clover Vitality also joined the round.
In addition to building out Cleveland Kitchen’s CAPEX capabilities through the acquisition of Sonoma Brinery and the construction of its new pickling plant in Santa Rosa, the fundraise will help the company fill out its sales, operations and marketing teams, Anderson said.
“We’re out there on a hiring spree. We are bringing in some great people both operationally and on the sales side … and then on the marketing side we are looking for a VP of marketing,” he said.
14,000 doors nationwide and counting
The funds also will go to product innovation and supporting expanded distribution, said company co-founder and chief commercial officer Mac Anderson.
He explained that after Cleveland Kitchen’s successful initial launch with pickles in Walmart last summer, it is doubling its store count so that the products will be in every major metro area and about 3,000 doors.
In July, the company also will expand across the entire Publix banner, and on the natural side it is teaming with Whole Foods, and soon Target will take up the products nationwide, he said.
As excited as the company is to expand its distribution, it is also eager to expand its portfolio with the upcoming launch of single serve products, which it hopes to launch in time for back-to-school season, he said.
At the same time, Cleveland Kitchen will continue to support its recent expansion into kimchee, which Mac Anderson said has “fantastic growth” and has been one of the highest velocity items on the cabbage SKU side of the business with double digit growth.
Between the strong existing portfolio, new product line-up and upcoming expanded production capabilities, the company expects to grow 100% in 2022, on top of previous 60% year-over-year growth.
Drew Anderson added: “We are just excited to continue to grow the category and continue to be good partners to our retail partners and delivering fantastic goods to our consumers.”