Vancouver's Yaletown Urban Fare is the sort of up-to-the-minute supermarket where, directly inside the doors, you're greeted by a produce section—a big one, with an emphasis on freshness and organics. On the right, a deli section dominates, with dozens, if not hundreds, of salads and entrées made fresh daily. Considering that this is the store that once flew in Parisian Poilâne bread, the bakery is not the presence it once was—all those gluten avoiders. Nor is the meat department—all those vegans, vegetarians, pescatarians and flexitarians. Conversely, the organic and natural-food section has expanded, as have sections devoted to Asian food and products made in British Columbia—the 100-Mile Diet originated here, after all. There's a relatively modest area filled with packages branded by the Krafts, Campbells and Kelloggs of the world, situated, curiously, beside the busy in-store sushi bar. And on the very back wall, a full 90 paces from the front door, is what might be the quietest place in all of Yaletown—the freezer section.
And here, on a lower shelf, behind the big glass doors, reside eight spots reserved for the entrées produced by a Vancouver-based start-up called Luvo that dares to think frozen food can be healthy and delicious. Only six of the spots are stocked today, which could be regarded as good or bad, much like the prospects of the company itself.
Luvo is a company with a rock-star CEO and a corporate creation myth for the ages, but it is also a very deliberate construct, and Yaletown and its Urban Fare are exactly the kinds of places that it was concocted for. The company says it's doubling its revenues annually (as a private company, however, it won't say what those revenues are). Meanwhile, its entrées—offerings such as red wine braised beef with polenta, and orange mango chicken with whole grains, kale and broccoli—are increasingly available in Canadian supermarkets. Still, there's no disputing that, at $7 an entrée, which is roughly double the price of conventional frozen dinners and slightly higher than other gourmet-oriented brands, Luvo is appealing primarily to the affluent and food-literate. The challenge faced by CEO Christine Day—well, one of the challenges—is that grocery shoppers like these make up precisely the demographic that is turning most rapidly away from frozen foods, a category where American unit sales have been dropping by up to 3% annually in recent years. Meanwhile, the company has taken the seemingly counterintuitive approach of targeting its products, not at one of Urban Fare's ever-fragmenting food tribes, but at a broader public that is beginning to read ingredients lists but is otherwise open to anything that's tasty and nutritious.
Luvo's corporate offices are located across False Creek, a few blocks from the headquarters of Lululemon Athletica, where, as CEO from 2008 to 2013, Day led a transformation from sexy upstart to global juggernaut. Before that, she spent 20 years with Starbucks, where she was a charter employee and ultimately rose to senior vice-president for the Asia-Pacific region.
Day's hiring in early 2014, by Luvo founder Stephen Sidwell, marked the company as one to watch, and attracted the attention of media outlets including The Wall Street Journal, Forbes and Fast Company, which later in the year named it to its list of the world's 50 most innovative companies. Behind the scenes, however, Day and Luvo had already run onto the shoals of a food industry that is infamously tough on launches and that Day calls "broken and dysfunctional at every level."
Day, who is 53, is sitting at what we're going to call a boardroom table. Something of a virtual company, with offices and senior personnel scattered around the continent, Luvo maintains about half of its 60 or so non-manufacturing employees in Vancouver, in space subleased from the Vancouver School Board. Not atypically for a start-up, the premises have not been meticulously tailored to the tenant. At some companies, that can mean people crawling over each other in nooks and crannies, but here there are acres of institutional grey. That boardroom table sits in one corner of a room that is the size of a gymnasium, sharing the mostly empty space with a Ping-Pong table and a half-dozen chest freezers full of samples.
Everyone at Luvo needs to have what Day calls a "food story." Founder Stephen Sidwell's story is that, around 2010—carrying 40 extra pounds and worried about his health—he hired a chef who knocked him out with cooking that scrimped on fat but not on flavour. The personal revelation was a business revelation too: Why not take this to the masses?
It was a neat fit for Sidwell. An investment banker who was already helping to transform Vancouver-based mock-meat specialist Yves Veggie Cuisine into continent-wide Gardein Protein International (since sold to Pinnacle Foods for $155 million [U.S.]), he enlisted the help of two former McDonald's executives and promptly launched both Luvo and a health-food restaurant chain, Lyfe Kitchen, which now has 18 locations in the United States.
Day's food story is less momentous, but more poignant. It has to do with her mom, who lost a limb to diabetes. When Day arrived at Luvo, it had developed nine products that were selling in 5,000 retailers in the U.S., including the Kroger, Costco and Safeway chains. The meals, devised in-house at a test kitchen in California's Bay Area, and made at the company's plant in Illinois, were attracting critical raves, in part due to the unique way they were packaged—not in plastic, but in microwave-ready paper pouches that reduced waste and contributed to a tastier result. They were being served on Delta Airlines, with initiatives under way to add hospitals, education establishments and offices to the mix.
So far, so good. But add to all that activity a name change (the two enterprises at first shared the Lyfe Kitchen brand), and the result was near chaos. "[The retailers] had all bought into the Lyfe Kitchen story, and now we had to tell the Luvo story and we'd been on the shelves for two months," says Day. "That caused a lot of turmoil." Beyond that, there was just too much going on. "The strategy was to grow everywhere," Day says. "We had to retrench and concentrate on our best markets."
Day's original plan had been to take a sizable career break upon leaving Lululemon at the end of 2013, but it quickly became apparent, given the confusion at Luvo, that she would have to start immediately. Today she describes the situation as a simple case of Luvo needing someone like her, a CEO, at the helm. "It was beyond what he wanted to be involved with," she says of Sidwell, who was running the company. "He didn't have the expertise. He wanted to get back to being a venture capitalist." In early 2015, she described a more desperate situation, telling a Los Angeles magazine, "I started seeing the first sales report, the cost of goods and the cash-flow position and said, 'There's not going to be anything to manage in October.'"
The triage involved slowing down some of the introductions and focusing efforts on key retailers where the products did best. Canada was another victim. Luvo products didn't debut north of the border till the second half of 2015, a year behind schedule. Now widely available in B.C., they won't become commonplace farther east until this spring or summer, when supermarket chains including those within the George Weston umbrella (Loblaws, etc.) come on stream. As well, Air Canada is close to following Delta's example of offering Luvo meals as an in-flight option.
As operations began to take on a saner look, Day got to work employing some of the lessons she'd learned at Starbucks and Lululemon. One thing she quickly realized was that while all three companies stretched their categories in exciting new directions, Luvo had some real—and largely unfortunate—distinctions.
"Howard at Starbucks was creating a community gathering place and a daily ritual—a sense of belonging—and coffee was the medium," Day says of Starbucks founder Howard Schultz. "Starbucks was about bringing back personal choice, indulgence and high quality to coffee. So that was disruptive, but there was still strong margins."
Meanwhile, the coffee giant also had the advantage of owning its own stores. "Because you had your own format, you could touch the consumer and you could tell your story," Day says. The same was true at Lululemon, which also enjoyed a happy synchronicity with the yoga craze. "It was a new view of how women's athletic clothing should look and it brought back quality and the retail experience to women, because most of that business had been wholesale."
Luvo, however, lacks both the healthy margins and the retail presence that enabled Starbucks and Lululemon to break through so quickly. "What's challenging for me is that I don't get to touch the consumer," Day says. In fact, not only are the products sold in someone else's environment, they're hidden there behind frozen glass. "It's two items on a shelf and how do you tell the consumer the story—what your offering is?"
Simply put, Luvo is up against some of the barriers strewn about that broken and dysfunctional industry that Day likes to speak of, barriers that are particularly jagged in the frozen-food aisle.
"Frozen food is the most competitive section in the grocery store because of the finite space," explains Steve Stallman, an industry consultant. "You can never add anything, and it includes some very high-volume products. It's hard for even the big players."
If apples aren't selling and oranges are going gangbusters, a produce manager can simply switch a bin or two, and if both are hot, he might even expand a little into the bakery manager's territory. Not so the manager of a frozen-foods section, where freezers are built right into the architecture, generally making expansion out of the question. "If they put you in, they have to take out someone else," says Stallman, whose Stallman Marketing is based in Santa Clarita, California. "So their job, and their bonus, is dependent on them making the right decision."
At a minimum, a frozen-foods manufacturer needs a marketing program to impress a retailer's head office, and then a sales force to deal with individual store and department managers. But it also needs to spread around some cash—a lot of cash, actually. "Almost every retailer charges a fee to, what they say, make changes in the system, discontinue someone's item and put yours in," says Stallman—a so-called slotting fee. "It can be as high as $20,000 an item. If the product doesn't fly off the shelves, it can be discontinued in a week. Now you've just paid your slotting fee and your marketing is kicking in."
No wonder a large proportion of food products fail. Toronto consultant Inez Blackburn's 2008 estimate that 70% to 80% of all launches succumb is widely quoted in the business. But a subsequent study by food marketing professor John Stanton of Philadelphia's Saint Joseph's University found that during a recent 18-month period, the failure rate was considerably lower—43% in the "meals and meal centres" category where Luvo competes, for example. Still, the odds aren't great. Stallman cites two primary reasons. "One is inexperience in marketing. The other is just lack of funds."
Day is nothing if not a marketer, and even before she arrived, Sidwell and company displayed a flair for getting the Luvo message to retailers and customers. Meanwhile, in February, 2015, Luvo attracted an investment of up to $45 million (U.S.) from a branch of Goldman Sachs, giving the investment banking giant a 25% share of the company, while leaving Sidwell and Day with around 10% each. (The remainder is divided between early investors and employees.) But if neither of the potential pitfalls outlined by Stallman seems particularly relevant to Luvo, Day can't forget for a moment that there are plenty more pitfalls inside "the toughest industry I've ever been in." Fortunately, for a frozen-foods company, some of these are opportunities more than obstacles.
The thing that Day says completely shocked her about the food industry is the amount of waste. In the case of fruits and vegetables, a 2012 research paper by the U.S.-based Natural Resources Defense Council pegged the proportion at 52%. That broke down to 20% in the fields, 4% during storage, processing and packaging, 12% in shipping and the retail chain, and 28% at the hands of consumers. Frozen foods can help solve this, says Day. When they're supplying the frozen industry, producers cut down on losses in the fields, since they can use produce of irregular appearance that would otherwise be thrown away. The frozen stream (so to speak) also virtually eliminates losses within the retail chain and the mouldy back corner of consumers' fridges. Moreover, the potential exists to do even better, Day thinks. Luvo is in discussions with groups that are installing dehydrators right on the farm.
Frozen food is normally not thought of as virtuous or aspirational, but waste reduction could give Luvo its own story, that crucial feel-good association that could resonate within Luvo's natural constituency, the affluent and food-conscious.
Only too aware of frozen food's bad rep, Sidwell made another high-profile hire besides Day in early 2014: Samantha Cassetty, who now holds one of the rarest corporate titles: VP nutrition. Based in New York, where Luvo has a satellite office, Cassetty joined Luvo from Good Housekeeping, where, as nutrition director, she was the arbiter of whether food companies that were prepared to pay for the magazine's famous seal of approval for a given product could in fact be granted it. "They came to see me and pitched their product, and I thought it was very interesting," she says of Luvo. So interesting that, within months, she had joined the company.
Cassetty, like anyone in the nutrition end of the business, knew about the frozen-food industry's contention that their products rival the taste and nutrition of garden-picked produce, since the vegetables involved are picked at their peak ripeness, then flash frozen. Meanwhile, their equivalents in the produce section would more likely have been picked green, ripened during transit, then spent days or weeks in a store bin or home refrigerator, awaiting their turn on the stove. Steve Stallman also buys into the idea of frozen foods as gourmet fare, while admitting that it's a tough sell. "Some people get this, and some people don't," he says.
This writer expected to be in the "don't" category, but was surprised by the ingredient quality, flavour profiles and considerable zip of three of the four Luvo entrées he tried. Easily prepared, the dishes stood up well against the supermarket deli products that are their most direct competitors. (A professional food critic did not agree: See below.)
On the nutrition front, Luvo's case appears to be solid. A recent study, albeit one supported by the U.S. Frozen Food Foundation, concluded that the nutritional value of frozen fruits and vegetables is generally equal to—and in some cases better than—their fresh counterparts. The study, conducted at University of California-Davis, found frozen foods to be particularly adept at preserving vitamin E and minerals such as calcium, magnesium, zinc, copper and iron.
That's frozen food in general. Luvo has some additional advantages, says Cassetty, and not just over traditional brands like Swanson (which Day calls the industry's 1.0s) but also the 2.0s: healthy labels such as Amy's Kitchen. Although it does claim that some of its products are organic and free of genetically modified organisms, Luvo puts most of its emphasis on what its products do contain: an appropriate nutritional balance, limited calorie count, and low levels of fat, sodium and sugar (the red line for both calories and milligrams of sodium is 500). "That's a very different conversation," says Cassetty, compared to competitors who stress what they are "free from."
Here again, there is science to support Luvo's decision to concentrate on overall nutrition rather than food-tribe obsessions such as gluten, organics and GMOs. Recent meta-analyses taking into account hundreds of individual research studies have concluded that there is no or little nutritional benefit from organics and no danger from GMOs. Meanwhile, the Australian scientist who provided the first evidence of non-celiac gluten sensitivity has recanted his findings, given the results of further, more rigorous research. All of these studies have plenty of skeptics, but the obvious takeaway remains: The most direct route to good nutrition and the better health that follows is a balanced diet. Advantage: Luvo.
But, at the same time, Disadvantage: Luvo. The company may have taken what science suggests is the high road, but in doing so it denied itself access to the focused and hence relatively cheap marketing and advertising streams that cater to the various "free froms." By comparison, reaching the masses of mainstream grocery shoppers is frighteningly expensive, especially for a new brand whose message is as much educational as promotional. Luvo has made some small U.S. media buys, in 2015 focusing a magazine campaign on nutritional benefits, with taglines like "talk wholesome to me."
But from the very beginning, even before Day's arrival, the company was successful in gaining considerable profile through a couple of alternative promotional methods—one of them very new, the other very old.
The new one is social media. Day is proud of the company's prowess in this arena, noting that its traffic consistently vies with the much bigger 1.0s and 2.0s. This is a large part of how a lifestyle brand is made today, she says.
The much older one is the celebrity endorsement. Retired New York Yankee shortstop Derek Jeter's role as a brand-development officer dates back to 2013, before Luvo products were widely available. Like others who have signed on—including American swimmer Natalie Coughlin (a 12-time Olympic medallist) and Seattle Seahawks quarterback Russell Wilson—Jeter is compensated with stock and possesses one of Day's food stories. A physician's son, he formed a foundation to promote healthy lifestyles early in his career. Swimmer Coughlin, meanwhile, is a committed foodie who practises organic gardening and blogs about nutrition. And then there is Wilson, who shares with Day aspects of his food story in addition to a Seattle connection.
Wilson, Day notes, approached Luvo, not the other way around. The quarterback's father, it turned out, had died from diabetes complications at the age of 55. The relationship was consummated at a Seattle Mariners game, attended by Jeter, Day and Wilson—creating a considerable commotion in the stands, says Day. Reached via e-mail, Wilson explained his motivation: "My partnership with Luvo is not a typical sponsorship deal; I have a unique position not only as a brand ambassador, but as an investor," he wrote. "As a professional athlete, I have the ability to affect people's lives and with that comes a responsibility to endorse only the products that align with what I believe in, and Luvo is one of those brands."
Luvo's newest marketing wrinkle marries social media and the celebrity endorsement within an initiative loosely modelled on a Lululemon program that enlists local sport figures, yoga teachers and the like as "inspirational leaders." In the Luvo iteration, the chief requirements for local mini-stars joining the "Influencer" program are a lot of social media followers and, of course, a food story. The first to be brought on, Vancouver-based Dai Manuel, is a CrossFit coach and motivational speaker who overcame teenage obesity and counts 55,000 Twitter followers. He hopes to increase his exposure and influence by piggybacking on Luvo's social media reach, even as Luvo does the same with his. No monetary compensation is involved. Rather, says Manuel, "We share the same message, and fight the same fight."
And for Day, it will be a fight. At Lululemon, she made her name by building a company that created a category all its own. As it happens, food trends come and go as quickly as yoga fashions. If Luvo can get on the right side of those, and then stay there, Day's credentials as corporate rock star will be complete.
Globe restaurant critic Alexandra Gill puts Luvo to the test in the kitchen
I thought this was supposed to be an easy dinner. Convenience is the main reason people opt for fast food, be it the frozen, canned or restaurant variety. So why are the cooking instructions on Luvo's "steamazing" healthy entrées so complex and confusing?
The meals come with two sets of instructions: one on the box, the other on the paper pouches that go in the microwave or conventional oven. (For some reason, toaster ovens won't work.) The directions involve 10 steps—more if you read the pouch.
"Take the ravioli out of the oven!" I yelled at my sous-chef. (It required a shorter cooking time and lower temperature than the orange mango chicken.)
"No, no, no!" he later scolded as I "carefully" cut along a dotted line to release the steam from the vegetable coconut curry pilaf pouch, while pinching the opposite corners aloft to gently "shimmy" the contents onto a plate. "It has to lay flat while you cut," he said, reading aloud from a different set of instructions.
"This had better taste good," I muttered, thinking to myself that it would have been easier to make pasta.
The microwave is Luvo's recommended method of cooking. I'm not sure why. Yes, the microwave is much faster and heats more thoroughly. (The orange mango chicken's whole grains, kale and broccoli were still cold after 33 minutes in the oven and the required 60-second resting period.) Yet when the pouches are cooked in the microwave, they blow up like popcorn bags, causing some sauces to splatter and stick to the top of the bag. Also, the microwave's kinetic energy doesn't do texture any favours: The ravioli came out rubbery, with a thick, gummy kale-ricotta filling.
The meals were, however, attractive. Three out of five slid from their pouches looking similar to the pictures on the box, with all their colour-coordinated portions of proteins, starches, vegetables and garnishes intact.
The presentation, however, was not matched in taste. Sickly sweet sauce in the mango chicken needed to be stirred into its bland green grains before it was edible. The curry's red-chili gremolata had a nasal-cleansing sharpness until we mashed it in the pulpy butternut squash. Everything, I'm afraid, cried out for salt.
There were a couple of decent dishes. Steel-cut oatmeal with sliced fruit (one of two Luvo breakfast offerings) was composed with the perfect balance of cranberry tartness and pineapple sweetness. Chicken chili verde was robustly spiced with cilantro, smoky chipotle purée and hot peppers.
But the latter, generously portioned with eight morsels of processed white chicken meat, did make us wonder why the other chicken dish only contained three. And why were we still hungry after eating two meals each?
Luvo's frozen dinners might be nutritious, but they're scarcely convenient, rarely consistent and barely satisfying.
Me, I'd rather cook.