The following is part of a series of interviews with brand builders and leaders in the CPG Industry. We recently spoke with Caroline Cotto, Co-founder and COO of Renewal Mill, a Bay Area-based manufacturer of upcycled ingredients made from the nutritious byproducts of food manufacturing.
Let’s jump right in. Has the pandemic impacted Renewal Mill’s business model?
Caroline Cotto: Yes, it has. We’ve made a concerted effort to shift our revenue model from B2B to B2C. Before the pandemic hit, most of our revenue was coming from our soft-baked vegan cookies, sold as office snacks to tech companies. But the B2B sales cycle is typically around three years and that just isn't a sustainable approach when the future of the communal office space is up in the air. So we accelerated our plans to grow our B2C presence, jumping in with both feet.
We all know of the disruption Covid-19 has had on supply chains. Have you experienced any supply or operational challenges along the way?
Oh, for sure. This has been the busiest three months of my career. Every day we’re playing Whack-a-Mole with some issue or another. These are the three main challenges we’ve faced:
- Packaging. The biggest challenge we’ve had has been with packaging, a supply component that was backordered for a while. We had to order completely new runs of packaging to meet the demand we had coming in for our newest product, a brownie mix, and that took much longer than expected. We’d been doing small, in-house production of the brownie mix but with increased demand, it became clear that that wasn’t going to work in the long run. So in the middle of the lockdown we moved to a different co-packer, and we were able to scale up pretty quickly.
- Dispersed teams. Remote work has also brought on a number of challenges. Right now my co-founder and I are on separate sides of the country due to childcare needs, and we're figuring out ways to optimize our operations to deal with the challenges that come with time changes and physical location access.
- Launching in retail remotely. It's been particularly challenging to launch in retailers like Whole Foods when you can't do product demos, you can't have a shelf-talker, and you can't personally go in and educate the staff about your product. Instead, we've had to get creative—creating videos that can be circulated to WFM staff members across the region, finding social media influencers in the zip codes around the stores we launched in, and sending free products to the influencers and food community voices we know our consumers turn to and trust.
Tell me more about Renewal Mill’s B2C growth strategy.
Our main focus has been to grow our customer base through a variety of online channels along with new product development. Prior to the pandemic we knew we needed to develop a product that could both showcase the taste of our flagship ingredient, okara, a gluten-free flour made from the soybean pulp leftover when you make soymilk, and generate immediate revenue in the B2C space.
We’d done our research and felt strongly that brownie mix is familiar enough to most Americans that they’d quickly overcome any obstacles they might have trying an ingredient like okara or understanding a novel concept like upcycled. We’d planned to debut our vegan, gluten-free, dark chocolate brownie mix at Expo West, but when the show was cancelled we launched the brownie mix digitally through Shopify and officially entered the DTC space. We've also directed marketing dollars away from trade shows towards DTC ads and online marketing to meet consumers where they are.
Any early results to report?
The brownie mix has quickly become our bestseller!
That’s amazing. Many smaller and non-Shopify-or-Amazon eCommerce channels have gained traction during Covid-19. Have you had success with other DTC services?
We have. We’re partnering with companies that have access to a larger customer base that are more ready to purchase upcycled ingredients. For one, we were just officially approved for distribution with UNFI which is a huge win for us. And we’ve started going after what we call “affinity marketplaces” and grocery delivery services like Imperfect Foods, Misfits Market, Good Eggs, Billion Vegans, and Vegan Essentials. The rate at which they were selling flour during the pandemic allowed us to be brought on as a new vendor with Misfits Market, which sends “ugly” produce to consumers’ doorsteps in a refrigerated box. Over time they’ve developed into a full-fledged DTC subscription service that offers fresh customizable add-ons through their marketplace. They’re growing like crazy.
In fact, through our partnership with a subscription box for bakers, we won over a customer who fell in love with the product so much that she buys it wholesale for her bakery business. We feel that once consumers buy into the idea of upcycled, we’ll see more folks willing to try some of our other products, such as the 1:1 baking flour.
More and more, consumers are eCommerce-natives who are as open as ever to trying new products, flavors, and ingredients, including okara.
Have you found that the pandemic accelerated the adoption of certain food trends, like upcycled ingredients such as okara?
Definitely. Okara fits with a lot of consumer trends right now. It’s gluten-free, grain-free, and low-carb, and while other upcycled flours might have off-notes or a dark color, okara is neutral in color and flavor. It integrates well into traditional baked goods products, especially vegan ones.
Stay-at-home mandates and other social distancing restrictions have opened up a world of opportunity for us. For example, the uptick in baking at home has provided a small window for us in retail during the pandemic. It’s no secret that it’s really hard to get new products on shelves right now if you weren’t already at a retail location to begin with. But we’ve been able to sneak onto some decimated baking aisle shelves in Bay Area retailers like Erewhon, Bi-Rite Markets, Woodlands Market, Draeger's, Andronico's, Berkeley Bowl, Rainbow Co-Op, and some Japanese specialty markets. If a grocer is all out of all-purpose flour, shoppers might be willing to try something they haven’t heard of but looks like flour, such as our okara flour.
We’ve been able to convert a number of those customers who realize they actually like the product. Like, okay, this isn’t scary, this is actually delicious.
And because it’s upcycled, okara is a no-brainer buy for the health- and environmentally-conscious consumer.
Are there plans to expand your portfolio and harvest another byproduct, besides okara?
Yes! Our second upcycled ingredient is going to be the pulp leftover from oat milk production. We can use a very analogous process to okara and dehydrate and mill that into a high-protein flour. Renewal Mill wants to be the go-to ingredient company for food producers to purchase upcycled ingredients.
Tell me more about upcycled ingredients and that growing movement.
The term refers to the process of mining the food system for places where nutrition is being lost, and finding ways to reincorporate that nutrition into the supply chain and feed people at the highest level. I’m Board President of the Upcycled Food Association, which is a key part of making that vision a reality because it’s going to require a huge amount of consumer education. We’ve been able to release a formal definition of upcycled food, which is going to serve as a cornerstone of a product certification program we’re hoping to launch this fall. The certification will help work against greenwashing—unsupported environmental claims that undermine the integrity of that movement—and build consumer trust about what it means to purchase a certified-upcycled product.
You must have seen early promise on a massive scale. Tell me about the origins of Renewal Mill.
My co-founder, Claire, survived cancer in her early 20s, and she saw the very distinct link between nutrition and overall health. She founded Boston’s first organic juice company as a way to connect citydwellers with healthy, locally sourced produce. But she left each day with a mountain of super nutritious pulp waste that just went into the trash because she couldn’t find a way to use it quickly enough. That’s where upcycling comes into play.
Our first partner, Hodo, is a manufacturer of tofu and plant-based products. They’re based in West Oakland where space is a huge premium. For every pound of soy milk they make for tofu production, they also produce more than a pound of okara pulp, which spoils quickly and takes up a lot of factory floor space when stored before disposal. By working with Renewal Mill, Hodo is able to turn their waste stream into a revenue stream. Larger manufacturers can create up to six billion pounds of fibrous byproducts a year. That’s a lot of wasted nutrition—and money left on the table.
Less waste, more space, more nutrition. There’s obviously a better-world ethos at play here—an added value for consumers and food producers alike who want to make a difference.
I very much see an overlap between the upcycled movement, environmentalism, and racial justice because there’s so much evidence that the communities most affected by things like climate change are economically disadvantaged communities of color. What okara and a lot of other upcycled products are is actually the fiber being processed out of the American diet. And, in fact, fiber is what Americans are most deficient in. Eating more fiber can help solve some of the key nutritional and health challenges that people in lower socioeconomic communities—which are often disproportionately Black and Latinx—often have to deal with. Upcycled ingredients are a great way to add that affordable nutrition back into foods that people would be purchasing generally. It’s important to me to make sure we reach the people that need it most.