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Innovative Food Holdings is so good at what it does that its executives helped some of its suppliers achieve bigger success than they have had so far.
Certainly, Naples-based Innovative Food has successfully grown sales at double-digit annual percentage rates in the last three years by providing America's top chefs with the best ingredients it can find. Products range from heirloom tomatoes to sashimi-grade tuna, soft-shell crabs, foie gras and Italian gorgonzola.
But some of the 6,500 products the company provides to 30,000 chefs around the country come from small producers. As a result of distributing through Innovative Food, these purveyors of fine foods have achieved success they wouldn't have had otherwise.
To capitalize on the success of its suppliers, Innovative Food plans to launch a program called Food Hatch that will invest equity in small farms and food manufacturers and provide expertise. “We've built a team of mentors,” says Sam Klepfish, the company's CEO.
Using its own funds from operations, Innovative Food plans to invest in incubator companies to which it will lend help in areas such as marketing, accounting, retail, food brokerage and website management. “We can handle five to six companies at any given time,” says Klepfish.
What's more, suppliers have access to the vast network of U.S. Foodservices Inc., one of the nation's largest food-distribution companies with whom Innovative Food has a distribution agreement.
Klepfish and Justin Wiernasz, president of subsidiary Food Innovations, say they've helped dozens of companies informally. Since word got out about Food Hatch, Wiernasz says they've been “inundated” with interest from small farmers and food producers.
For example, Innovative Food executives say there are opportunities to invest in small producers of specialty foods that are in short supply now. “Alligator and ostrich meat are scarce right now,” Wiernasz says.
Meanwhile, Innovative Food's main business of providing food for chefs at restaurants, country clubs and hotels across the country has benefited from the healthy food trends such as those that are gluten free or low sodium. Now, the company offers more than 600 products in what it calls the “health care” category. “That's been a good, fast-growing segment for us,” says Wiernasz, noting the addition of customers such as nursing homes, hospitals and colleges.
In 2011, the company's revenues rose 17% to $11.6 million and it swung to a profit, posting net income of $1.5 million. Its shares trade publicly under the symbol IVFH.
With its own software programmers who provide the behind-the-scenes order processing, Wiernasz says the company can add customers and change the prices of more goods without adding staff because everything is automated. That's allowed the company to focus on acquiring more customers by spending more on marketing.
For example, the company has been aggressive both online and at food-industry trade shows. “We probably do 14 to 17 shows a year,” says Wiernasz.
Innovative Food also recently acquired Artisan Specialty Foods in Chicago for $1.2 million. Artisan supplies more than 1,200 gourmet-food items to more than 450 customers in the Chicago area.
More important, Artisan owns a warehouse facility where it can repack and store specialty items. That's key because it can buy items in bulk at a discount and repack them for distribution.
For example, some chefs order specialty blends of rice, so Artisan can buy large quantities and repack them so it can avoid the higher cost of ordering small quantities. “They were one of our suppliers,” says Klepfish. “They have a great management team.”
Besides being able to repack bulk goods, Klepfish says the Artisan acquisition allows the company to buy certain goods in season when they cost less and store them. “It really gives us a lot more flexibility,” Klepfish says.
Innovative Food has also taken advantage of building its network of suppliers for chefs by creating an online retail site called ForTheGourmet.com. “The products we sell are the same as the ones for professional chefs,” says Klepfish. “That's very hard to find.”
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