The following is part of a series of interviews focused on brand builders and leaders in the CPG Industry. We recently spoke with Nicki Schroeder, Co-Founder and CMO of High Road Craft Brands, a manufacturer of a wide range of ice cream products based in Marietta, Georgia.
Lots of people dream of starting an ice cream company, but few make it out of their kitchens let alone into retailers nationwide. Tell me about the birth of High Road.
Nicki Schroeder: The idea came from my husband, Keith, while studying for his MBA: ice cream by chefs, for chefs. At the time, this is in 2010, he was working as an executive chef at a hotel. His idea was that there’s got to be a way to “take the high road” and create products to honor chefs who want to pass a certain level of quality onto their customers. He knew how razor-thin margins could potentially affect food quality, if you let it, and he saw an opportunity to market ice cream as a luxury item.
One day he said to me: “I really want to start this ice cream company for the culinary community. Do you want to do it with me?”
And I replied, “I’m in!”
We started scratching together money from family and friends and got to work.
What was that first year like?
It was really tough. There were three of us to start. We put every cent into product. Everything was very bootstrap from the get-go. We began with one 30-gallon batch pasteurizer, one freezer, one blast chiller cabinet, and a little top stove to do our caramel. We created everything on site, by hand. We were literally knocking on restaurant doors, selling our ice cream, running back to our little factory, delivering it again, and then billing for it. Overnight we all became ice cream makers, pasteurizers, delivery drivers, event planners, you name it.
Within two months we had nearly 50 customers in the Atlanta area, and we bought a second batching machine so we could double up on what we were doing. We hit $500,000 in revenue the first year and turned a profit. By year two we’d doubled revenue.
Wow, that sort of rapid growth is almost unheard of. What makes your ice cream so heavenly?
The choices we make are centered on quality. Again, we wanted our ice cream to be so good that chefs would be proud to serve it. We start all of our products from scratch and do everything we can in-house. We bring in milk, cream, cane sugar, and egg yolks. We use an old-school vat for pasteurizing, which allows us to control cooking time and temperature, and gives all of our ice cream textural beauty and richness from the start.
We take pride in making all of the inclusions and variegates (cookies, cake, nuts, fruit, chocolate chunks, caramel, ganache, etc.) in-house. We work with beautiful “inputs”: our pecans, nuts, chocolate, and fruit are all really high-quality. This elevates the end product to a luxury state.
Tell me about how you got into the pint game.
The intention was never to be a retail brand. After we launched, we exhibited at Fancy Food in Washington, D.C. in the summer of 2011. There we met Anita DeSanto, a specialty buyer for Central Market, whose parent is H-E-B. She said to us point-blank, “I want your products in our stores.”
Then Whole Foods entered the picture. They have “foragers” who seek out small businesses and producers to work with, and a vice president representing the South Region came to our facility. He said, “We’d love to have you as our regional ice cream provider.”
We were intrigued by both requests, but we didn’t have what we needed to become a retail brand. We didn’t have a pint filler let alone any packaging. Then we learned about Whole Foods’ Local Producer Loan Program through which we could loan machines at very reasonable interest rates. I also happened to be working on my master's in graphic design and I thought, “Well, I could put that to work on our branding!”
And that, in short, is how we got into the pint game.
So you’ve gone from 50 food service clients to thousands of retailers nationwide. What were some challenges you faced while scaling?
When we went a little bit deeper with Central Market and Whole Foods, we needed to quickly find somebody to fund our growth. It became all the more urgent because we learned the manufacturing space we’d been using was going to shutter imminently. So we had to find—and build!—a new space, and we wanted to continue to manufacture our ice cream 100% in-house. We also needed automation. It was very touch-and-go scary. But we did find someone to invest in the company.
By the end of 2013, we went from a 1,200-sq. foot space to a 30,000-sq. foot facility. (We currently operate out of a 75,000-sq. foot facility). Our vats went from 30 gallons to 500 gallons—where does all that water go? And all that piping? The learning curve was insane. There were many times when I thought we were going to fail. But we dug in, did the learning, and figured it out.
How do you maintain healthy gross margins without sacrificing product quality?
The margins for private label product development, food service sales, and retail sales are all different, but we’ve figured out a way for them to work in concert, which helps us maintain both a financial balance and quality standards.
The margins on our food service products were excellent. We sold directly to chefs, a network we knew well, and they understood that high-quality ice cream costs a bit more. But the challenges of retail were a bit different. We had to drink from the firehose of: distributor margins, OTIF scores, on-shelf timing, retailer margins, promotional spend and strategy, pricing strategy, shopper marketing, big data, et cetera. It was a whole new learning curve and much of it eroded our margin.
Now, each segment has a margin goal and helps to balance the lower-margin products while maintaining the quality of products we’re known for putting out. We understand that some of our products are going to have thinner margins. That’s okay with us. The quality of our products, the level of quality that’s been with us since Day 1, is our guiding principle. It always will be.
You’re now a multimillion-dollar company. Your portfolio continues to expand. It seems the sky’s the limit. Can you reflect on this?
We’ve come a long way from knocking on restaurant doors. We have spent the past 10 years focusing on being great food makers, innovative product designers, and the go-to team for private label product developers in the retail and foodservice spaces. We love our partners! We have built a portfolio of six brands, including Ciao Bella, and a team of 70 employees. Our revenue for 2020 is forecasted to be over $30MM. We're so excited about the future!
But this didn’t happen overnight nor was it pain-free. I have to say, it’s all about resilience. We have fallen down so many times. I feel like sometimes people hear our story and think, “Oh, it’s easy!” But it’s an ongoing struggle. You might be up for 24 hours for weeks and weeks at a time to get something done, but if you’re still standing at the end of that time, you feel like you can do anything! I can take my face in the mud as long as I have a little sip of air every once in a while.
The learning curve was enormous, but it was not insurmountable. We were methodical about the projects we took on and the ones we did not. We have focused on our company culture and we take pride in depending on our talent to carry us. I know that our business foundations are super solid now.
Our goal is to become one of the top three product development teams in the U.S. We love making ice cream but we see a very interesting future beyond it. Since we have such a great manufacturing asset, our work starts with ice cream, but will go far beyond.
Nicki, it’s been a pleasure talking with you. To finish, tell me a few fun facts or anecdotes about the High Road journey.
On the importance of the Atlanta community
Georgia as a state is super business-friendly. They want us to succeed, especially knowing that we’re developing a great community inside of this place, too. Our team is amazing, and it goes from line-level team members all the way up to people who are making sure our SQF (quality and safety) scores are high.
We have so many opportunities to just reach out and call people if we have a question. Even the regulators held our hand when we first started—they weren’t out to get us. They walked us through all the things that could potentially be a hazard. When we did get inspected, we were flawless because we had someone from the state actually coming in and helping us rather than being a pencil-pusher.
On bringing the High Road brand to life
I wanted the pint to feel like a gift. I chose black to convey a luxurious feel and included pops of color on the lid rim to help it stand out on the freezer shelf. Looking back, the flavor names were a bit hard to read behind a frosty door, which is something I did not anticipate early on and was an important lesson to learn.
With new innovation, like our Wallops these needed a different plan for packaging. For this “snack superhero” we looked to graphic novels and old time comic strips for inspiration. The colors are bold and vibrant; the typography, more fun.
Even within the first year of launching Wallops, we have made packaging changes to really focus on what a Wallop is, and the pure size of these treats. New (and clearer) packaging will be arriving next week in time for our Walmart launch. We’re also currently working on new designs for our pints and single-serve ice cream sandwiches for a 2021 launch.
On learning to treat customers with the utmost dignity
One day during our first year of operations, our neighbor, a retired Vietnam veteran in his sixties, knocked on our front door and said: “I hear you guys are starting an ice cream company. I’ve always wanted to drive an ice cream truck!”
We told him, “Unfortunately, it’s not that kind of ice cream truck. It’s a delivery truck.”
“I don’t care!” he said. “As long as I get a bell, I want to deliver for you guys and I’ll do it for free.”
We financed a truck for him and we named it Bessie. We masking-taped a little bell on the window for him because that was the one thing he really wanted. He began delivering our ice cream in a tuxedo and top hat, and white gloves. And so he became known as “High Road Roy.”
His whole thing was customer care. He embodied it. He loved our chef customers and our chefs loved him. He would bring spoons for the chef to try our ice cream to make sure it met their quality standards. We use a lot of what he taught us in how we treat our customers today.