Industry: Food & Beverage
Co-founder John Huber has implemented a manufacturing strategy for his company’s innovative nutbutters that dovetails into online marketing.
Greg Koch, co-founder and CEO of Escondido-based Stone Brewing (the eighth-largest craft brewing company in the U.S.), fell in love with nutbutters in Italy, when he realized how much flavor there was to be gained by using regional varietals, as opposed to fungible commodity nuts.
Koch took his passion home with him. “Greg has been stonegrinding nutbutters in his kitchen or garage for some time,” says Huber. “He wanted to make this into a company.”
After meeting through friends, Koch and Huber co-founded Nutista with a third partner, Tristen Cross. “The three of us have developed a really good chemistry,” says Huber, who runs the day-to-day operations with Cross while Koch splits his time between brewing and stonegrinding. “Tristen and I have a really good working relationship. My weaknesses are areas where she has strengths.”
A stock market analyst and portfolio manager for most of the 21st century, Huber took a different path to Nutista. “The last 10 years or more, I’ve been trying to exercise more and eat right,” he says. Working with a nutritionist in 2008, Huber made a list of his daily diet, which included a fair number of peanut butter and jelly sandwiches. “She said, ‘What kind of peanut butter?'” Huber told her it was a mass-market brand and she told him to steer clear of it.
“I was flabbergasted,” he says. “It’s been a 10-year journey to learn what is a natural food and what’s mostly chemicals.” Huber’s rule of thumb: “If you can’t pronounce it, don’t eat it.”
After Nutista was incorporated, the founders embarked on more than a year of R&D before the first product was sold in August 2017. That process involved handpicking the right nut varietals for Nutista’s butters. “Greg was very big on making sure we understood different varietals of nuts have different flavors and different attributes,” says Huber, noting that hazelnuts grown in Italy and Oregon have distinctive tastes. “There are over 500 varieties of pecans, for example.” (For the record, Nutista uses Elliot pecans from Georgia.)
Huber likens it to grapes, coffee, and cacao for chocolate. The regional differences in grapes define a wine, but that mindset hasn’t yet crossed into nuts. “What people have been using up until this point have been what we call commodity nuts,” he says. “It’s almost as if they put all the grapes together and made wine with it.”
Huber espouses the Nutista motto, “Thoughtfully sourced and artfully crafted,” adding, “What we are working on bringing into the fold is just like when you walk into Starbucks and see single-origin coffees from Sumatra or Colombia. Nuts are similar.”
Nutista launched with a catalog of three nutbutters: The Nut Job, with cashews, almonds, peanuts, and pecans; The Mountie, with nuts and maple; and The Monkey King, with peanuts and bananas. Special limited releases allow Nutista to experiment and see how the market responds.
All of the butters are stoneground for three to four hours on burly granite wheels in batches up to 150 pounds at a time. (The grinders got a big upgrade in May; the old system only handled about 30 pounds at a time.) That allows for almost any ingredient, including fresh fruit and coffee beans, to be added to the mix. “You get a very nice texture,” says Huber. “You can put a lot of things between two granite stones and grind them down.”
There’s no processed cane sugar, no palm oil, no additives, and no preservatives. The nutbutters are shelf-stable for nine months.
The oil that pools atop most jars of natural nutbutters has been minimized through trial and error. “We figured out ways to mitigate it,” says Huber, noting that experimentation with roasting, sprouting, and blanching the nuts led to less oily recipes. “Every nutbutter we do is a different equation.”
By keeping all manufacturing in-house, the company is able to keep an eye on quality and experiment with new products. “There’s two advantages,” says Huber. “The stonegrinding gives us a greater breadth of products we can use in our nutbutters.” The second advantage is speed to market. “We’re able to bring out blends faster than if we were outsourcing it,” says Huber, citing “two months from concept to jar.”
The special releases have an opportunity to go year-round, as was the case with Tangerine Express IPA (with brewers yeast, malt extract, tangerine, and pineapple), one of a series of four collaborations with Stone Brewing.
Most recently, a pina colada nutbutter hit the market. “There’s a dozen coconut nutbutters on the shelves,” says Huber. “Nobody’s taken a coconut nutbutter and added pineapple. It’s a great flavor. Everybody loves pina coladas.” He sees potential for it to emerge as a year-round product.
The strategy of using limited releases to draw attention to core brands flips the marketing of big food brands on its head. At its essence, it’s niche narrowcasting versus spendy broadcasting.
“If you complete the circle, our stone grinders give us broader capabilities of what we can put in our products and owning our manufacturing allows us to go faster to market,” says Huber. “Those two things allow us to come out with those special limited releases and bring in eyeballs.”
Nutista sells direct online and through a number of regional grocery chains on the West Coast, including Jimbo’s, Erewhon Natural Foods, and Clark’s Nutrition and Natural Foods. Two national chains also recently approved the company’s products for their California stores. “By the end of the year, we’ll be in 50 to 75 stores,” says Huber.
E-commerce is a critical part of the Nutista strategy that dovetails into its manufacturing. The website “is a proving ground for these special limited releases,” he explains. “Which one is going to make it to the big leagues?”
Challenges: “We started off as two people working all the time,” says Huber. “In the past 12 months, we’ve hired our first three employees. We need to manage that growth effectively. It’s a good challenge to have, but it’s definitely a challenge.”
“Also there’s a lot of technology that goes into an e-commerce company,” he adds. “It costs a lot of money and requires a lot of work. It’s just like building manufacturing.” Nutista recently launched a wholesale portal for small retailers, but it’s just a first shot,” says Huber. “We’ve got to build in a lit more functionality.”
Opportunities: “Other regions are definitely the opportunity,” says Huber. “Right now, our stores are centered in the West.”
New products are another big opportunity for Nutista. “There’s a very strong demand for pistachio nutbutters,” he says, noting that collaborations are a big part of the mix. “We want to show potential partners this is an opportunity. Collaborations can get you P.R. in a way you can’t get with one brand.” He sees other food companies and winemakers as targets. “Chocolate is an obvious one. . . . There’s a reason Reese’s has been doing what they’ve been doing for the last 100 years.”
Needs: Space, capital investments, workforce. “It’s all of the above,” says Huber.
Nutista currently rents space at the Crestone Group‘s GMP-certified bakery in Carlsbad. “In the next couple of years, we’ll hit the point we’ll have to find our own spot,” he says. “We look forward to that.”
The company recently added a filling machine to its inventory of equipment. “It sounds pretty mundane, but we’ve been hand-filling,”says Huber. “We believe as this grows we’ll be able to add grinders and leverage economies of scale.”
Another need: diving into the data from online sales. “We need to analyze everything,” he says. How well are collaborations doing? Does it matter which day a special nutbutter is released? How many customers are repeats? “All these are on my wish list of things I want to know,” says Huber.