Look for three Your Business features this week on companies that are carving out a niche in organics. This is the first installment, followed by a new post today and the final one Friday.
It was a business move launched by the smile of a happy toddler.
Raymond Leung was the chief financial officer at Vancouver-based health food company Soya World when he bought a Happy Planet organic smoothie for his three-year-old. While taste initially drew him to the popular B.C. juice company, his business sense soon took over.
"One thing for [Soya World]and myself was the brand, what it represented, how aligned it was to not only my personal philosophy, but to our corporate one of finding good, premium food," Mr. Leung said. "Good for our community and good for our environment – all those aspects were key. When I met the team [at Happy Planet]it was wonderful, their style of entrepreneurialism."
He was so taken by the company's approach to its product and clientele that he advised Soya World to buy into it. The company listened, and today Mr. Leung is Happy Planet's president.
"I think it was the right time for Soya World [to make the purchase] Soya World is more commodity oriented, but still alternative. [Happy Planet]is what I call an affordable luxury. Soya milk you will consume at home. Brand is not as important. Happy Planet, you buy and you're proud that you've bought it, you're proud that you support it."
Since taking over a majority share in 2004, Mr. Leung has raised the stakes for the Vancouver-based firm with three new product lines of organic sauces and soups, drinks, and energy shots that he says will build on its dedication to "juicecraft" and take it beyond its current niche market.
"[People]should pay attention to us because we're not the underdog, we're the 'right-sized' dog. We're bringing out relevant products … and we give options for people to eat better," he said.
Expansion, he added, will ensure the future of the company, which was founded 14 years ago by its current vice-president of brand development, Randal Ius, and Vancouver mayor Gregor Robertson. This can be done without cutting back on quality, Mr. Leung said.
Until 2004, Happy Planet was very much a family operation made successful by Lower Mainland shoppers' inclinations for wholesome organics, locally grown produce, and fair trade. That year Soya World became the majority shareholder.
Mr. Robertson and the Ius brothers continue to own a minority share in the company, but the mayor no longer has input in day-to-day operations.
As Soya World came in, the organic juice market was being challenged by large U.S.-based competitors, Mr. Leung said. "[Happy Planet was]at a crossroads about who they were. Could they continue to be this little juice company or do they partner with someone and get more resources to innovate?" he said.
Happy Planet generates $10 million a year in sales, and it has 22 staff. This represents a doubling in revenue since 2004, but with 43 fewer employees as the production, warehousing and truck delivery was outsourced or sold off in the summer of 2005 to save money.
"The perception out there is that we're a $200 million company and we're owned by Coke, but that's just not true," Mr. Leung said.
Mr. Leung said Happy Planet's juices are made at a Vancouver plant owned by the parent company, Soya World. For now, he added, soups and savoury sauces will be made at Happy Planet's own Richmond facility.
This, he said, allows the company to retain full quality control over the production end of its products, something customers expect. "We established that we need to focus on sales, marketing and innovation. Those three things we got out of were labour intensive, while the other aspects of the company are creative."
Mr. Leung said high quality is still expected for their organic ingredients, with Happy Planet buying local where possible.
"We continue to put our resources into small farmed bananas from Costa Rica, those are important factors to us… We buy six million pounds of organic apples in Canada … we know the farmers. We're not buying from some conglomerate."
Mr. Leung believes the success of Happy Planet's earlier juice products have created a following that can be called upon to sample their new drinks and sauces, with a customer loyalty that is not put off by paying a little more for quality in a lacklustre economy. So while its popular ethical style of business remains the same, Mr. Leung said, Happy Planet has added three other product lines to the organic juices that won it its original fan base.
The first move, in 2006, was to sell organic juices and smoothies nationally in gables sizes, larger family versions of their already established flavours. Growth of the line has been a brisk 40 per cent a year.
"We built our brand on the 325 ml smoothie business that you get in cafes, and we thought it should be available for the home. By the end of this year it will probably be our single biggest business segment."
This past summer, Happy Planet launched a line of fresh savoury soups and sauces, with organic versions of such favourites as butter chicken, Thai curry, and white wine-French mushroom sauce. They will soon be available nationally.
David Eto, vice-president of the BC Food Processors Association, believes Happy Planet's move will strengthen its brand presence. "They have a very loyal following and I see them as quite cutting edge in making a move like this," Mr. Eto said. "I would be very intrigued and interested, as a consumer, to try their new products."
He said it made sense for the company to develop what he called its "unique corporate values" with customers by expanding from juices to sauces and soups. "It's not like they're trying to make rubber tires. They're staying within their core strengths."
But Mr. Leung conceded the move has its risks "Yes. It's a risk in that the brand Happy Planet resonates in a person's mind as a juice. But we want to inspire as a company like Apple Computers. It [has gone]from being a computer to a lifestyle. We want Happy Planet to be a lifestyle component," he said.
What the company achieved by selling ethically produced smoothies and juices 10 years ago it now wants to do with soups and sauces, Mr. Leung said.
"When the next product comes out we want people to think 'Oh yeah, you made my life better….' We want them to think 'this is a simpler, better way and I don't think I could ever go backward,'" he said.
"People that purchase the smoothies are usually urbanites, willing to be pro-active and pay a premium for a healthy brand that they trust."
The gamble, he said, is recession proof.
"At the moment, people are taking a pro-active approach to their health. They stay closer to home, take care of themselves more. They're getting back to the basics," Mr. Leung said. "Tropicana sell for $4.99, we sell for $4.99 and we're certified organic."
But Mr. Leung believes the most radical addition to the product stable is Shots, launched six months ago.
Shots is a marketing challenge by Happy Planet to the massive energy-drink market. Four distinct concentrated juices, combine with other goodies like ginseng and ginger, are sold in 75 ml, 40-calorie bottles and possess defined health benefits: Energy, Immunity, Detox and Glow. There is no added sugar, no preservatives and no artificial ingredients.
Mr. Leung said the company considers Shots a concentrated health alternative compared with energy drinks that are all chemicals and all calories.
"I think the Shots idea is very radical… very different because you drink lots of orange juice when you have a cold, and you might take Echinacea for cold relief. We took two steps – we use the juice component and we add all the herbs and marry the two. We took it to the next level," he said.
"In our smoothie business we found our number one, two and three best sellers sold well, but also had attributes in them that people decided they needed. They say 'you know why I drink Extreme Green? It's my vegetable.' And so on."
Mr. Leung said sales in traditional health food outlets for Shots are going "extremely well," and he is still hopeful for sales growth in convenience stores, or as he called them "traditional chemical stores" such as 7-Elevens and Macs.
"People go to these stores for instant gratification, but we have to convince them there is instant gratification in a healthy way. So that's out challenge over the next six months."
Other products are being planned, he adds.
Special to The Globe and Mail