Fluid Situation for Califia Farms During COVID-19 Crisis
Prepared Foods gets an inside look with Califia Farms co-founder, CEO Greg Steltenpohl
* Plant-based food and beverages processor Califia Farms flexes shelf-stable capacity to meet consumer demand during COVID-19 crisis.
* Co-Founder, CEO Greg Steltenpohl gives Prepared Foods an inside look at COVID-19’s impact on sourcing, operations and R&D.
* Growing product mix, sales show consumer interest in at-home comfort.
Editor’s Note: How are CPG companies responding to the Coronavirus Disease 2019 (COVID-19) pandemic? Prepared Foods gets an inside look with Califia Farms Co-Founder, CEO Greg Steltenpohl.
A global leader in plant-based beverages, Califia Farms actually got its 2010 start as a juice company. It quickly transitioned to plant-based almond milks and today it manufactures and distributes more than 100 individual SKUs in the United States and worldwide. Its line spans ready-to-drink coffees, juices, plant milks (including oat milks) and creamers and probiotic, plant-based drinkable yogurts.
Califia Farms is perhaps best known for its refrigerated cold brew beverages and plant milks in distinctive, contoured 48oz plastic bottles (reminiscent of traditional milk bottles). It also processes and sells refrigerated oat milk creamers and yogurts in 25.4oz plastic bottles and plant-based drinkable yogurts in single-serve 8oz varieties.
Steltenpohl says one primary shift at Califia Farms in the wake of COVID-19 pandemic was a decision to dramatically boost shelf-stable milk capacity.
Califia Farms first introduced a shelf-stable line in 2015, starting with a 1-liter Almond Milk in a Tetra Pak® carton. Today, the company offers more than 20 shelf-stable options including an Oat Barista Blend, now billed as the #1 selling oatmilk on leading digital ecommerce platforms. Recognized as a packaging innovator with the motto, “Something Different, Something Better,” Califia Farms recently repackaged many of its shelf-stable offerings in Sig Combibloc 16.9oz cartons.
Shelf-stable items are packaged in aseptic, recyclable cartons and come in two different sizes: 16.9oz for most of its Better Half Coffee Creamers with Coconut Cream and Almondmilks; and 32oz for Califia Farms’ Concentrated Cold Brew, Almondmilk Creamers and Barista Blends. For the record, the line also includes Califia Farms Nitro Draft Lattes with Oatmilk, which offer on-the-go energy in a single-serve 7oz can. This RTD option even comes equipped with widget for instant foaming.
Califia Farms relies on a national network of co-packers to fill shelf-stable products. Steltenpohl admits there’s a lack of capacity for certain critical sizes, but because of the company’s consistent reputation and its relatively high volumes—Califia Farms often secures the capacity it needs on filling lines.
Following is Prepared Foods’ conversation with Steltenpohl.
PF: We’re seeing photos of grocers’ empty refrigerated dairy case shelves, particularly involving milk. When and how did Califia start planning to flex and boost shelf-stable almond milk production?
Greg Steltenpohl: Because of our international plans and investor base, we really saw what happened in China (starting last December) as a view into the future and then began to scenario plan accordingly. About one month ago, in February, we started making deliberate adjustments to our operating plan.
PF: What did your actual capacity shift look like? How did you achieve it?
Steltenpohl: We knew pantry stocking would become a reality and that fresh, shorter shelf life dairy would have a hard time keeping up. We not only started stockpiling inventories of both critical raw materials and core finished goods SKUs, but quickly got in touch with all the critical players in our supply chain.
We began with a focus on (1) reserving extended production runs at co-packers, (2) increasing resiliency by getting secondary suppliers and (3) by pushing through heavier scenarios through the entire demand planning system.
PF: What’s your goal for the next three months or so, say into early summer?
Steltenpohl: Our goal is to be a reliable industry partner by making sure we can continue to meet consumer demand for our shelf-stable product—particularly as that demand continues to surge with key SKUs like our Oat Barista Blend and Unsweetened Almondmilk.
Sales of these products have skyrocketed in recent weeks. In response, we’ve increased production and stockpiled ingredients and packaging materials to ensure both are available to support this increased demand.
Retailers are now seeing the advantages and flexibility of high-quality shelf-stable products, so we are accelerating plans to bring shelf-stable versions of our refrigerated SKUs to market. That will be a core focus as well.
PF: Are retailers providing extra shelf-stable space and merchandising?
Steltenpohl: Yes. Because of some of our expertise in logistics, during the COVID-19 crisis, many mid-size to smaller retailers—who are having trouble being supplied by their main-line distributors—have come to us for help in receiving pallet quantities directly.
PF: Do you have national distribution for shelf-stable offerings. Secondly, what trend lines do you see when you look at your top selling shelf-stable SKUs?
Steltenpohl: We are currently in what we call “channel specific” select national distribution. Premium “specialty cafés” are our forte, but increasingly, supermarkets have begun to realize that the consumer now wants a more premium latte type experience at home as well. This has made our Barista line of steamable plant milks a real hit with progressive grocers.
PF: Can we look back quickly and more directly at your operation? In what ways has this situation impacted front-end, purchasing-related processes—involving sourcing of ingredients and packaging? How have you managed around those issues?
Steltenpohl: As I mentioned, when we first started hearing the news out of China about this pandemic, we made the decision to build out business contingency plans right away. These plans included stockpiling raw ingredients and packaging materials for core SKUs.
Thanks to these proactive measures and our excellent relationships with key suppliers and co-packers, we were able to build up months’ worth of inventory and get to the front of the manufacturing line. As a result, we’ve been able to meet the increased demand and fulfil our customers’ product needs on schedule.
Our recent round of financing in January has certainly helped shore up resources, establishing a “war chest” of sorts that we feel will allow us to weather this storm better than many other brands. We’re also fortunate because most of our key raw materials, like almonds for example, are located near our plant in California. We have a fairly local supply chain and suppliers who count us as their biggest accounts, so we’re in a relatively secure position.
Of course, the situation is fluid and very dynamic, so we’re remaining vigilant and making pivots in real time where consumer and customer needs require.
PF: How are manufacturers such as Califia impacted by California’s official shelter-at-home mandate?
Steltenpohl: We’ve let our team know that the Governor’s address was not aimed at food producers like Califia—but was only focused on increasing the steps the state could require to limit large group and unnecessary personal interactions in order to slow the spread of the COVID-19 virus.
Califia is fully open for business and our operations and manufacturing plant are running as normal. We will continue to deliver product as expected. Califia Farms is exempted as part of the state and nation’s critical food infrastructure and all employees associated with our manufacturing will continue to work as scheduled.
We’ve established enhanced safety and sanitation measures including restricting access to the Bakersfield manufacturing plant to essential plant employees only and tightly limiting visitors and contractors. We’ve also implemented a health monitoring plan for production employees, including temperature checks prior to entry or before work shifts.
The most fundamental part though has been employee support and education on proper awareness and mindset—along with increasingly stringent and frequent enhanced cleaning, scrubbing and sanitizing procedures throughout every shift.
PF: Prepared Foods serves all those executives whose jobs involve new product development—from strategic innovation and consumer insights to actual purchasing R&D and even package design. At a time like this, do your new product development activities continue as normal? Is there any disruption to your day-to-day work or planning in this area?
Steltenpohl: During these extraordinary times, we have found that there is really no area of business where we have business as usual. We think consumer demands—amongst progressive areas of the population—will definitely be changing and therefore future product planning will need to adapt as well.
We foresee great price sensitivity during a coming recession as well as a continued greater demand for functional health and wellness products. We are accelerating our plans in those areas accordingly.
PF: Last question. It was certainly unfortunate to miss out on Natural Products Expo West, which was canceled in early March. Were you planning to introduce more new offerings there?
Steltenpohl: Yes, we were disappointed that we couldn’t show up after the months of work and planning involved—but it was absolutely the right decision.
We had planned to debut a few new products, including our first foray into culinary applications with the launch of our plant butters, which have the same incredible flavor and body and behave just like butter. They can be used in baking, frying, sautéing—you name it!
We also planned to launch a new almond-based Keto Creamer at Expo West. The creamer is on par with our other creamers and contains 500g of MCT oils per serving, which is derived from coconut cream.