30 Jan 2013 Popchips: The next $1-billion snack food or just full of hot air?
“We set out to do something completely different by applying the science of one product to another,” says Keith Belling, CEO and co-founder of popchips, the omnipresent US snack food. He’s referring to his 2005 purchase and conversion of a rice-cake plant in LA, retooled to make a new kind of potato chip, applying the same heat-and-pressure process to spuds.
But he might as well be talking of his yearning to replicate the crazy success of vitaminwater – the drink that, with revenue just north of $300-million, was sold to Coca-Cola half a dozen years ago for a staggering $4.1-billion.
Belling – whose entrepreneurial résumé includes a coffee-bar chain, a restaurant group and allbusiness.com (sold to NBC for $225-million) – has long had a weakness for vitaminwater. But over the last four-plus years he’s also adopted virtually every aspect of its growth strategy, from its private equity backing to its celebrity pimping, in the hopes of reengineering a similar success.
In the $90-billion-a-year global snacking market, where the odds of survival are slightly worse than riding out the Ebola virus, can lightning strike twice?
Popchips started with a distinctive edge. “Popping was a breakthrough,” says Kara Nielsen, a so-called food trendologist for CCD Innovation, a San Francisco consultancy.
But Belling and cofounder Pat Turpin, an ex-investment banker who managed private-label brands for Costco, needed to get the snack out there fast before they could persuade chains like Safeway and Whole Foods to clear shelf space. So they gave away samples – lots and lots of them – on Google‘s Mountain View campus and the Menlo Park offices of Facebook, as well as at road races and charity and community events. Street teams descended on hip neighbourhoods, concerts and cultural events, as vitaminwater had, to give out free bags of popchips.
By 2008 popchips sales reached $6.5-million, drawing calls from private equity firms. Only one got Belling’s attention – from Alex Panos, managing director of TSG Consumer Partners, whom he’d known socially for years.
“Here’s this triple-A firm, and we’re still so small,” recalls Belling. “I laughed and said I’d love to meet, but I didn’t want to waste his time. But when Alex said [popchips] reminded him of vitaminwater, I shelved the rest of that discussion.”…..