Califia Farms ignites RTD coffee, almond milk and citrus categories
Company continues to innovate with new flavors, categories
From tasting freshly squeezed Florida orange juice as a young boy to driving past rows of almond trees in blossom en route to his Bakersfield, Calif.-based plant, Califia Farms’ Founder and Chief Executive Officer Greg Steltenpohl derives inspiration from smelling and tasting new innovations, while listening to and leading a team of passionate employees.
Founded in 2010 in partnership with Pasadena, Calif.-based Sun Pacific, Califia Farms LLC, also based in Pasadena, Calif., is shaking up the status quo, Steltenpohl says. With a portfolio of 55 SKUs of premium plant-based almond milks, coffee creamers, ready-to-drink (RTD) cold-brew coffees and specialty citrus juices, Califia Farms is fueling a plant-based beverage revolution, he adds.
“Califia has really shaken up and disrupted the status quo by offering consumers a tasty, premium plant-based brand that delivers on every level: healthful clean ingredients that taste great and are delivered in a beautiful, appealing bottle,” Steltenpohl says.
“We believe that, first and foremost, whether milk or creamers, our refreshing citrus blends or our coffee drinks — the flavor always leads the way. Our variety brings many delightful routes for the consumer to explore because there’s always something new for them on the shelf.”
Steltenpohl adds that same disruption applies to the brand’s packaging. “Our iconic 48-ounce carafe truly stands out on the shelf and is an icebreaker with retailers,” he says. “Its pleasing shape has opened the door for lots of consumer trial and internal innovation because the shape …piques curiosity and ultimately endearment.”
Since 2012, Califia Farms has added 45 SKUs including nine varieties of almond milk, four varieties of coffee creamers, nine RTD cold-brew coffees, a cold-brew coffee concentrate as well as a specialty line of citrus juices, aguas frescas and clementine juices.
“We approach all product development in the same way,” Steltenpohl says. “We listen to our consumers. Lowering calories, lowering sugar and creating cleaner labels is, and will always be, a leading-edge for Califia. We believe that equally important to what’s in a product is what’s not in it.”
Consumers actively are seeking Califia Farms, and it’s considered one of the fastest growing natural beverage companies in the country, according to Schaumburg, Ill.-based SPINS.
Available at 27,000 retailers nationwide, Califia Farms has nearly quadrupled the number of retailers carrying the brand since 2013. Slated to open in early 2016, a new distribution center opening adjacent to the current Bakersfield bottling plant will give the company more than 100,000 square feet and will further increase supply chain efficiencies, Steltenpohl notes. The company plans to be running at more than 10 million cases a year by the end of 2016, he adds.
Califia Farms has contributed to a 40 percent growth of almond milk sales in both the natural and conventional markets, according to SPINS data.
In the refrigerated nut beverages segment within the natural channel, Califia Farms grew 55.8 percent from June 14, 2014, to June 14, 2015, with the natural category overall experiencing a 9.2 percent increase, according to SPINS’ data.
Califia Farms’ refrigerated almond milk — ranked No. 5 — amassed sales of more than $25.4 million, a 226 percent increase, in U.S. multi-outlets through Sept. 6, according to data from Information Resources Inc. (IRI), Chicago.
“A huge part of this is the premiumization that Califia brings to the category — both our emphasis on a premium-quality drink and on premium packaging — which has captured consumer attention and elevated the dairy shelf,” Steltenpohl says. “Our now iconic bottle tells consumers that they are about to have a truly unique experience, one that is not commoditized.”
He adds that almond milk’s taste and authenticity are appealing to more diverse demographics, including men who “traditionally value taste above good-for-you-ness.”
Having grown up with a mother who was an accomplished chef and well versed in the food business, Steltenpohl’s vision for Califia Farms was born when he discovered the flexibility of almond and coconut milks for cooking and drinking.
“They are a wonderful medium for flavors with a great mouthfeel,” he explains. “They really make the flavors stand out, especially when combined with coffee or spices, such as in our Vanilla and Cinnamon Horchatas, Holiday Nog or our extensive line of cold-brew coffees, including Salted Caramel, Double Espresso, Dirty Chai and Mocha.
“As consumers are becoming more eco-conscious they are recognizing that, given their low-carbon footprint, plant-based beverages are more sustainable for our planet’s future,” he continues. “And our plant-based milks simply make people feel better because they are free from undesirable ingredients, such as GMOs, gluten and extra added sugars and fats, while being sustainable and high in calcium.”
Steltenpohl says Califia’s mission is to create healthy, great-tasting beverages for consumers who want to go ‘plant powered’ and dairy free, without compromise.
“We avoid using the word ‘natural’ because it means different things to different people. We don’t want our consumers to have to interpret the meaning of our labels,” Steltenpohl says. “When it comes to ingredients, we feel less is more. We start with getting our core ingredient right — whether its almonds, coffee or fruit —we always use a process that brings out the best.
“For example, in the case of our almond milks, our process is different because we start with a whole blanched almond, instead of the nut paste utilized by many of our competitors,” he continues. “Our process resembles an artisan method used in the Middle Ages, and allows us to use more almonds per ounce than conventional commercial almond milks, thereby delivering an ultra creamy, velvety mouthfeel without using a lot of gums and binders.”
Coffee is king
In addition to its success in the almond milk category, the company also is making its mark in the natural channel’s $50.7 million RTD coffee category. It is No. 1, with a 32 percent market share and 76 percent growth year-over-year, for the 12 weeks ending June 14, according to SPINS.
“At Califia Farms, we view coffee as an adventure,” Steltenpohl says. “It’s the central element in a world full of unique flavors, milks, creams and textures. We are creating an entire ecosystem based around coffee in all its permutations — with our flavorful Cold Brew Coffee at its core.”
Califia Farms’ RTD cold-brew coffees with almond milk are available in 48-ounce multi-serve bottles in four flavors: Café Latte, Double Espresso, Salted Caramel and Mocha. It also offers 10.5-ounce single-serve bottles available in Salted Caramel, Double XXEspresso, Cocoa Noir, Dirty Chai, Mocha Mexica and Triple Shot flavors. The coffees are dairy and soy free and contain no saturated fats, oils, GMOs or gluten. They also are significantly less acidic than hot-brewed coffee, notes Steltenpohl.
“Today’s coffee lovers, especially the coveted millennials, are extremely sophisticated. They like to customize their daily cups, depending on their mood — hot or cold, sweet or strong, flavored or not, rich or subtle,” Steltenpohl notes. “And, increasingly, they want those cups to be easy to make, healthy and dairy free.”
Disrupting the dairy case
With its distinctive hour glass shape, Califia Farms’ 100-percent recyclable bottles stand out from the standard cartons in refrigerated dairy cases. That, too, is by design, Steltenpohl says.
“As we developed our delicious beverages, we also worked to create magic in our packaging. We spent months of experimentation to invent a bottle that really stands out on the shelf,” he notes. “We did it to not only delight consumers, but also to challenge the dullness that has defined the dairy case.”
Califia Farms’ packaging innovations are being recognized. Consultant firm Seurat Group recently named Califia Farms a “Top 10 Challenger Brand,” noting that its “bottle is reshaping today’s dairy case.”
“Our bottle epitomizes our mission, and we were very honored to be named a top challenger brand because challenging the status quo, dullness and commoditization is our central mission,” Steltenpohl says.
He adds that the tactile relationship with the Califia bottle — making it feel good in consumers’ hands —was critical to the design process as well.
“We created a soft, feel-good plastic with a grippable neck and ergonomics that lend itself to an easy twist-off cap,” he adds. “And, because sustainability is core to our ethos, we embedded sustainability into the bottle: we use a resin that goes into one recycling stream, ensuring the bottle is 100 percent recyclable.”
Although known for its plant-based beverages, Califia Farms also is the largest marketer of tangerine juice in the United States, according to Steltenpohl. Although the citrus category has remained flat, if not declining, in most parts of the country, that’s not the case for Califia Farms’ juice brands, he says.
“This is another interesting example of how Califia can ignite a category,” Steltenpohl notes. “Sales of our citrus drinks are growing at the same rate as our cold-brew coffees and other categories. That’s really the power of coupling a great brand with innovative approaches.
“We offer products that everyone can relate to, not just niche customers,” he continues. “The mass appeal of Califia Farms is bringing people to these categories much sooner than they would have in the natural evolution.”
Califia Farms isn’t Steltenpohl’s first foray in the beverage business. Thirty years prior to launching Califia, he co-founded Odwalla Inc., now a wholly owned subsidiary of Atlanta-based The Coca-Cola Co., in partnership with two friends from Stanford University.
“A glass of fresh-squeezed orange juice was a pleasurable part of my childhood and really influenced the romance the beverage industry had for me,” he explains. “It was a huge part of the origins of Odwalla, which began while I was just out of college and bought a hand squeezer and started delivering fresh-squeezed orange juice to local restaurants.”
Overcoming adversity is not easy for any entrepreneur, and Steltenpohl faced a big one in 1996 when tainted juice forced a recall. “Odwalla gave me a lifetime of learning on many levels,” he says. “In terms of the difficult product recall, the first and foremost lesson is to have operating principles in place for employees to freely report any problems directly to top management.
“I learned that you can use your team and your culture as a significant competitive advantage and as a foremost approach to business systems strategy. Applying that to manufacturing and development has brought Califia untold creative opportunities, a higher degree of quality control and a new kind of excitement,” he continues. “Our culture is infused with a closeness to the product — which pays off greatly in the long run.”
In spring, Califia Farms will introduce two new concepts — one coffee-based that will be available in a new packaging format and another that will extend the brand into a new category within the dairy case, Steltenpohl notes.
“Through Califia’s R&D process, we’ve learned some incredible things we can do with creamers and will be bringing new innovations to the market,” he says. “I’m particularly excited about our plant-based Unsweetened Almondmilk Coffee Creamers that are 100 percent sugar free.
“We want to continue to ‘wow’ both consumers and retailers with innovations like our refreshing Aguas Frescas, which offer a healthful option to the sugar-laden juices,” he continues. “For example, we released a special Cranberry Cocktail Agua Fresca for the holidays, helping retailers to position juice as an exciting option this winter.”
In mid-September, New York-based Stripes Group invested $50 million to further Califia Farm’s innovations in plant-based beverages. The investment helped fund the opening of a new marketing headquarters in downtown Los Angeles as well as the opening of its new warehouse in Bakersfield in early 2016.
Stripes Managing Partner Dan Marriott calls Steltenphol a “true product visionary” who takes everyone’s point-of-view seriously. He also encourages more than 120 employees to think outside of the box.
Califia Farms’ Director of Marketing Kaitlin Walter agrees. “Greg’s approach is to bring as many different and diverse people and backgrounds to the table and to figure out where everyone can contribute,” she says. “This has resulted in a product development cycle completely unique to Califia. He enables staff to identify opportunities that lead them to new experiences…something that isn’t likely to be revealed by focus groups or market research.”
Although innovation has played a key role in Steltenpohl’s success, he says that innovation for innovation’s sake is not his key driver.
“Innovation with a goal of developing products that make categories better, bringing newness and delight to the consumer is what’s important,” he says. “To create a true scalable opportunity for healthy plant-based beverages, you can’t just think the same old way. There has to be structure to the process.
“Part of how we do that is by encouraging multi-generational input and thinking,” he continues. “It makes the experience richer for everybody on the team and, in the end, helps avoid foolish short-term mistakes. This is a clear part of our management strategy — and, I believe, our success.”
When it comes to pinpointing his success, Steltenpohl says it boils down to three main points: persistence, passion and purpose.
“Persistence and hard work may not be glamorous, but they count for a lot,” he explains. “And, of course, passion overrides everything — to succeed in the beverage industry or any industry, you have to love what you do.
“And my purpose to contribute to a sustainable food supply is directly tied to the health of our planet and the people in it,” he continues. “To make a positive impact on this, within a lifetime, unites my passion and purpose.”
The beverage-maker says he also derives satisfaction from his team when he sees their excitement for an item that won’t be on the shelf for another year as well as the immediacy and frequency of the “fan love” on social media.
Yet, the power of coupling a great brand with innovative approaches remains his biggest inspiration.
“While we’re always inspired by the natural channel and its leading retailers, we’re also interested in being part of the evolution happening in conventional channels,” Steltenpohl says. “We’re challenging what is the norm for a beverage company. Our mission is to be the food and beverage company of the future.”
A commitment to sustainability
To keep up with demand of Califia Farms’ products, a new distribution center opening adjacent to the current Bakersfield, Calif., bottling plant will give the company more than 100,000 square feet. The company plans to be running at more than 10 million cases per year by the end of 2016.
Based on consumer feedback, the plant recently eliminated carrageenan after consumers raised concerns about the commonly used natural thickener.
”We re-engineered and re-configured our plant, which was an enormous endeavor, and, by Dec. 31, all of our products will be carrageenan-free,” says Califia Farms’ Founder and Chief Executive Officer Greg Steltenpohl.
“This is one of the huge advantages of being a young, nimble company,” he says. “We not only have the courage, but also the capacity, to make changes to our products that are right for our consumers. We are not entrenched in the status quo.”
Steltenpohl says plant sustainability is a key driver of the company’s success.
“We work hard to attain sustainability in our manufacturing, and focus a lot of our efforts on water conservation,” he notes. “Our juice pasteurizer is a high-efficiency regenerative plate pasteurizer, which is 75 percent more efficient than standard pasteurizers.”
He adds that the company recently installed a new high-capacity, high-efficiency air compressor that uses recycled water for cooling rather than evaporative single-pass water. It also has partnered with Hydrite, a sanitation supply company, to assist with water and chemical conservation, which has resulted in a 25 percent reduction in water and a 50 percent reduction in chemicals for equipment washing.
“We have reduced water usage in the plant by about 50 percent compared to 2014,” Steltenpohl notes. “In partnership with our local electrical company, we participate in energy downtimes during peak usage in the summertime. This initiative conserves thousands of kilowatt-hours every year.”
The fully automated plant also saves electricity through usage timers on lights and isolation switches on equipment that allow for rooms and machines to be powered off completely when not in use.
Although the California drought is a complex issue, Steltenpohl notes that Califia Farms continues to work with almond growers who prioritize water efficiency and sustainability. The company also is collaborating with industry partners on solutions to the water shortage.
“I’m glad that some of the misinformation about almonds and water usage is being challenged in the media — people are beginning to understand that it takes much less water to produce a liter of almond milk than a liter of dairy milk,” Steltenpohl notes.
“Almonds are a great friend to the movement toward a more carbon-neutral, plant-based and planet-friendly diet,” Steltenpohl adds. “And they are a great friend to California’s agriculture economy.”