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Business Observer Friday, Jun. 10, 2016 4 years ago

Familiar twist

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Purchased from Kraft Foods in 2012, Back to Nature has grown from a granola company to one with 117 products and more than $100 million in sales.
by: Jean Gruss Contributing Writer

Executive Summary
Company. Back to Nature Foods Co. Industry. Food Key. Natural foods need to be familiar, too.

Vincent Fantegrossi has quietly built a $100 million food company in Naples over the last four years.

Back to Nature's granolas, crackers and soups can be found in more than 30,000 grocery stores around the country, including Publix, Whole Foods and Costco. The company has a loyal following: about 273,000 follow it on Facebook.

Fantegrossi established Back to Nature's corporate headquarters in Naples in 2012 and has hired about 20 people since then. “Most of the people we hired are local,” he says.

Back to Nature was a brand of Kraft Foods, now Mondelez International, when Greenwich, Conn.-based private-equity fund Brynwood Partners bought the majority of the business in 2012 for an undisclosed sum. Fantegrossi, a longtime food company executive, was named president and CEO. “We bought a brand and created a company,” Fantegrossi says.

Fantegrossi picked Naples because he planned to join the snowbird population, migrating every winter from his home in Needham, Mass. In February, he sold his home in Massachusetts and is now a year-round resident of Naples. “This is a full-time job,” he says.

Fantegrossi says he hasn't had difficulty hiring talented people in Naples, though he has recruited hard-to-find executives from outside the region such as Mark Kavanaugh, the company's vice president of research and development. It didn't take much persuading to lure Kavanaugh from Minnesota's freezing climate. “The weather and the tax climate have been great recruiters,” Fantegrossi says.

Although Kraft Foods retained a minority interest in the business, Fantegrossi rebuilt the business outside Kraft. “We've made everything independent,” he says.

Soup to nuts
Founded in San Dimas, Calif., in 1960, Back to Nature is one of the original natural food companies in the United States. Kraft Foods, now Mondelez, acquired the company in 2003 when it was just a $10 million business. “It was basically just a granola company,” Fantegrossi says.

Kraft acquired the small brand and grew it to $55 million in sales. “Kraft was doing a good job, but it didn't meet the criteria of a multibillion-dollar company,” Fantegrossi says.

Brynwood, a private equity firm that focuses on lower middle-market companies in consumer products and light manufacturing, acquired Back to Nature in 2012 for an undisclosed sum.
Mondelez retained an ownership stake and has a seat on the board, an unusual arrangement for both companies. “It's been a very good partnership,” says Fantegrossi. “It was a first for both organizations.”

Fantegrossi attributes Back to Nature's doubling in sales in just four years to the focus its executives have brought. When it was part of Mondelez, Back to Nature was just one of myriad foods, and its salesmen weren't fully dedicated to the brand because it was small and didn't generate big commissions of bigger Kraft brands.

“Our guys focus on one brand,” Fantegrossi says. “When you focus on a brand, you do better.”

Fantegrossi is a veteran of the food business. Previously, he had served as president and CEO of Richelieu Foods, another Brynwood investment. During his tenure at Richelieu, a private-label food company that made frozen pizzas and salad dressings and marinades, Fantegrossi grew sales from $100 million to $250 million, generating 40% returns for investors and six times total invested capital when it was sold in 2010.

Prior to Richelieu, Fantegrossi was the president and CEO of Cape Cod Potato Chips, which he revived after it was shut down by Anheuser Busch. Under his leadership, the company grew from zero to $50 million in annual sales.

Fantegrossi knows the supermarket business, too. He was executive vice president and chief financial officer of Bread & Circus, a natural-foods grocery chain in New England that was acquired by Whole Foods in 1992. The deal was notable because it was Whole Foods' first major acquisition and it doubled the company's revenues to $90 million at the time (Whole Foods reported $15.9 billion in sales last year).

Familiar with a twist
Fantegrossi's Back to Nature strategy has been to boost the number of natural products without straying too far from the mainstream of tastes. “We look for things that are on trend and put guardrails,” Fantegrossi explains.

While Americans like natural products, they're more likely to buy a natural food item if it sounds familiar. For example, the company developed an almond chocolate chip cookie with quinoa and chicken and rice soup with kamut. “It's unique but familiar,” Fantegrossi says.

Back to Nature has incorporated ancient grains such as quinoa, millet and chia and it's made its products gluten free because so many customers demand it. “It's familiar with a twist,” Fantegrossi says.

The company now has 117 products, including 23 kinds of crackers, 18 kinds of cookies and 11 kinds of granola. Back to Nature has a special website that lets consumers select products with criteria ranging from peanut-free to dairy-free, kosher, vegan and Rainforest Alliance Certified, for example.

In recent years, Back to Nature launched new products such as soups. Fantegrossi says it was a natural extension of the brand. “Our crackers were always promoted with other people's soups,” he says.

Lean operation
Back to Nature contracts its manufacturing to 21 facilities, including several operated by Mondelez. But it has its own 100,000-square-foot distribution center in Columbus, Ohio, which is centrally located to the whole nation.

The most recent push by Back to Nature has been to certify all its products non-genetically modified. Kavanaugh has been charged with the project, which cost hundreds of thousands of dollars in research. That's because it has to identify the suppliers who can trace the ingredients, and Back to Nature must confirm the non-GMO foods with its own laboratory tests.

Currently Back to Nature has sourced more than 300 non-GMO ingredients that it plans to use in all its products by the end of the year. “It's a major undertaking,” says Fantegrossi.

Fantegrossi says he expects the volume in sales to make up for the additional cost of using non-GMO ingredients because retailers won't accept a price increase. “You can't just walk in and pass on a price increase,” Fantegrossi says. “They'll push you back.”

But the consumers are demanding these ingredients and Fantegrossi says non-GMO ingredients could boost sales by 4% to 5%. “We're still growing and adding value,” he says.

Food is big business

Besides Back to Nature Foods Co., there are three major food companies headquartered in Collier and Lee counties. The companies include:

Company: Alico
Headquarters: Fort Myers
CEO: Clayton Wilson
Snapshot: Alico became the nation's largest citrus producer in 2014 when it sold its sugar land and acquired 29,000 acres of citrus groves in Central Florida. The company reported annual sales of $153.1 million in the most recent fiscal year ending Sept. 30.

Company: Innovative Food Holdings
Headquarters: Bonita Springs
CEO: Sam Klepfish
Snapshot: Innovative Food Holdings delivers more than 7,000 specialty food items to chefs at upscale restaurants around the country. Innovative Food reported sales of $30.4 million in 2015.

Company: Lipman
Headquarters: Immokalee
CEO: Kent Shoemaker
Snapshot: Privately held Lipman is the largest open-field tomato grower in the U.S. The company operates farms, packing warehouses and distribution facilities in Florida and all over the U.S. and in Latin American countries such as Mexico and Guatemala. It also has a research and development department with five Ph.D.s in Estero and a breeding operation in California that creates new varietals. The company doesn't disclosed revenues.

By the numbers
Company: Back to Nature Foods Co.
Headquarters: Naples
CEO: Vincent Fantegrossi
Annual sales
2013: $62.5 million
2014: $105 million, up 68%
2015: $106.5 million, up 1.4%

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