The Smoothie Wars Continue

Getting a convenient, high-quality, reasonably priced packaged smoothie product into American homes has taken a long while. While Dole probably thinks they did it first, they were only first to do it in the frozen aisle for pantry-stocking. Dole has been unable (or willing) to offer an organic product line. Not yet, at least. 

And yet, “organic” is highly mainstream in produce. It’s the largest organic ‘category’ out there in the American grocery retailing system. So, organic smoothie product innovation has been left to startups. The demand has been building quietly for years. The rise of high-quality, rapid home blenders like Vitamix and Ninja has spread the infrastructure necessary for consumers to blend frozen produce quickly and simply on their kitchen counters. 

What follows is how placement in the value chain drastically affects pricing power and the ability to tap into unmet mainstream demand such as organic, freshly made smoothies.

The produce-rich blended smoothie is as old as natural foods stores, Venice Beach smoothie bars, and veganism. However, until Dole and others launched their products in the freezer aisle, the freshly made smoothie was a foodservice category. Consumers did have access to Odwalla juice products, but culturally, these were more “juice” than “thick, fibrous” smoothies. 

Dole is now offering conventional produce smoothie packets with 130-150 calories each under its Crafted line for as low as $2.37 per 16 oz finished serving.

Daily Harvest sells organic smoothie cups with a similar finished size for $8.95! That’s a 3X price premium for organic or a brand or both.

But now there is Fresh Start Smoothie Blends, the frozen brand you’ve never heard of, sold at Costco right now in the frozen fruit section. This company has managed to produce a six-packet fruit smoothie packet line that is 100% organic at $2.50 per packet. You read that right. They more or less eliminated the typical organic price premium in their apparently exclusive Costco item. 

They can do this because the manufacturer in question is a produce distributor with Individually Quick Frozen plants (and the required packaging lines). Oregon Potato Company uses its own organic produce from its own farms and buys other fruit directly from organic farms at prices most likely lower than Dole, which would have to buy through wholesalers or distributors at marked-up raw ingredient prices. 

As the pockets of growth in packaged food get harder and harder to find, produce companies will continue to have an enormous market advantage over venture-backed fresh food brands like Daily Harvest.  This is a reminder that, as a brand owner, if you want a defensible CPG brand, you need more than just branding and capital; you need some technical insulation like that owned by Once Upon a Farm. Or else, ingredient processors can and will take the market from you.

Dr. James Richardson

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