Tracey Halama is Vice President for Sales at Vital Proteins, the Chicago-based collagen-products company that has grown exponentially since its founding in 2013. She did a presentation at Naturally Chicago’s Friday Morning Mingle on January 24 titled “How to Build a $100M Brand: Growth and Retail Strategies for Every Phase of Natural Startup.”
So it was no surprise that our space at LYFE Kitchen in the River North neighborhood was packed to the gills, with early-stage entrepreneurs making up much of audience. It is hard to imagine many startup businesses not wanting to build a $100 million brand.
The presentation was a great set-up for Naturally Chicago’s first big event of 2020: the Winter Wellness Party to be held January 30 at Vital Proteins’ beautiful headquarters in the Fulton Market District. Visit the Naturally Chicago events page or scroll below for more details.
Halama first explained the origins of Vital Proteins and its products, which contains bovine-derived collagen, a protein touted for its benefits to human joint health, hair, skin and nails.
She said Kurt Seidensticker, the Founder and CEO, runs for exercise, and as a 40-something was finding his body was recovering slower than it had after a workout. He consulted with his daughter who was attending medical school, ultimately determined that collagen had the benefits he was seeking — and turned the concept of ingestible collagen into one of the fastest-growing business in the Good Food and Natural Products sector. (Seidensticker is now a member of the Naturally Chicago Board of Directors.)
Here are transcript excerpts with takeaways from the rest of Halama’s talk:
Your First Idea is Not Always Your Best Idea
“I joined the company as one of the board of advisors, when the company was about six months old. So I remember when we were a $50,000 company… Our first branding looks very different than our branding today… It was that bad…
“So this was Day One when Kurt first gave me the packaging and said, ‘Hey, what do you think? This is my company.’ And I said, ‘Who are you trying to appeal to?’ He said, ‘You know women, women like you.’ ‘Where would you like to sell it.’ He said, ‘Wow, a dream customer would be Sephora [a chain of personal care and beauty stores]. I’m like, ‘I’m not sure that this packaging is really going to work in Sephora.’” [A subsequent packaging redesign was very successful and help boost the brand.]
Finding The “Need State”
“One study in particular said for every 0.6 kilograms of weight, our bodies need one gram of collagen. Kurt is 6’4″ and probably 230, he realized that he needed about 80 to 90 grams of collagen a day. So then he went to Whole Foods and he went to CVS, and everything on the market in the collagen category was in capsule form, and it was 500 milligrams. So he realized that he was going to have to take a lot of pills in order to get to that 80 grams of collagen…
“He was like, ‘Wow, there’s a real need state here. This is this could be a booming category if we made it into a protein powder. So that was really kind of the premise behind Vital Proteins… Vital Proteins was the first brand to commercialize collagen in the protein and meal replacement category, and deliver an efficacious serving.”
Showing the Cow
“The other thing that we did that I think was pretty smart is we wanted to be very transparent about how collagen was made. If you look at the packaging of other players in the space, it was collagen, but is it a vegan product? Is it not a vegan product? Who knows what collagen actually is. So we decided to put a cow on front of the pack. So there was no turning back, everyone knew that it was a bovine-based product. And so that really was a key decision that I think really helped us. It kind of put us at the forefront, here was a company that was being very transparent about what they were putting into packaging…
“The timing for us was really, really right, because people were looking for components, clean protein, clean nutrition that could easily be incorporated into their Whole30 diet and their Keto diet.”
“One of the first trade shows we ever did, we met up with Melissa Hartwig of the Whole30 movement. It was before the Whole30 movement was what the Whole30 movement is today, and we realized the power of influencers. There was also another influencer back in the day in 2015 named Wellness Mama, who posted positively about Vital. So these were two people that took our brands from probably a run rate of shipping out 200 canisters a week to 2,000 canisters a week. Building that brand, building that kind of social digital presence was really, really important.
“So digital was definitely part of our strategy, and I think that was another core reason why we hit that $10 million (in revenues) sooner than later, because we really built a brand first, before taking it into retail.
“Lots of new brands want to immediately go into retailers and get the exposure, get the shelf space. Depending on who your target audience is, who your target shopper is, I think you really need to establish your brand identity before you figure out your retail strategy.
“The great thing about e-comm, number one, it’s a lot more profitable, right? So more profitable, you don’t have to deal with distribution. But in the beginning, when you have to keep the lights on and manage expenses, a great way to do that is by building a strong e-comm brand.
“Obviously as you grow up as a brand, you have to be in retail, your brand will never be taken seriously until you do have a retail footprint. But it’s great to have retailers want you because they know your brand, they’ve seen your brand on Facebook or Instagram, or they have consumers that come into their stores and say, ‘Hey, do you carry Vital Proteins?’”
On Target, and a Child Shall Lead
Halama explained Vital Proteins connected with the Target store chain, now a major customer, at Natural Products Expo West in 2017, where it was featuring a “Collagen Beauty Water” line (now “Beauty Collagen”) in epicurean flavors such as lavendar lemon, cucumber aloe, and melon mint. Target’s buyer noted that Vital Proteins’ price point at the time was high for their mostly middle-class customer base, but invited the Vital Proteins team to corporate headquarters in Minneapolis.
“At the time we were like, ‘What are we going to pitch Target? How do we kind of reinvent this product? How do we make it more Target-appealing?’… We were struggling with our formulations and what be a good formula for Target, it needs to be a little less complex than lavender lemon or cucumber aloe. We were all wrapping our heads around it. We were overcomplicating it, calling it Ginger Tangerine… Then my daughter, 10 years old at the time, who was very upset that she had come to the office with me because it was spring break, said, ‘Mom, this is super easy, it’s strawberry lemonade.’ And we’re like, ‘Huh, yeah, that could work.’ So, of course we formulated a strawberry lemon version of our Beauty Collagen…
“Last year we did $13 million in Point of Sale, Vital Proteins is the number one brand protein brand being sold at Target, and we had 707 percent growth year-on-year at Target. And the irony of it is that 65 percent of our protein revenue is coming out of the Beauty section, and only 35 percent is coming out of the Sports Nutrition/Over the Counter sets.”
Never Stop Innovating
“We’ve had double-digit growth year on year since inception. In 2018, we ended the year at $105 million, 2019 we ended the year at $180 million from a top-line revenue perspective. In order for us to continue to grow up that pace, we can’t grow at that pace by selling more blue [label] collagen peptides… Now, even though we drive more than 50 percent of the revenue for the collagen category at Whole Foods, we have probably 23, 24, 25 percent shelf space… Part of our strategy is if they’re coming in and copying our existing innovation, then we have to out-innovate them.
“For us, if you think about the Whole Foods shopper, 24 percent of them hit the Whole Body section where we’re merchandised, the rest don’t. So 76 percent of Whole Foods shoppers never make it into whole body. It was really critical for us to find innovation that would be in the [store] perimeter in different places and find different ways to draw in the new consumer and different price points.
“So our Collagen Bars are $3 each. Our Collagen Waters, which are sold here at LYFE Kitchen, are $3.99 … It was important for us to have different points around the perimeter and get to be more of a lifestyle brand where you weren’t thinking about Vital Proteins as a protein powder company, but rather Vital Proteins as a lifestyle company.”
“They always say it takes seven to nine times of seeing something until it gives you that moment of activation. So we wanted to make sure that we found a way to that seven to nine times outside the traditional grocery. So that was kind of critical to the Nordstrom [product placement], the Sephora, the Neiman Marcus, the Urban Outfitters, the LYFE Kitchens, the Protein Bars, the Barry’s Bootcamps, the X-sports of the world carrying our product line.”
Don’t Miss the Winter Wellness Party at Vital Proteins
Thursday, January 30, 5:30-8:00 p.m.
939 West Fulton Market Street, Chicago
Don’t miss out… register now for Naturally Chicago’s Winter Wellness Party, next Thursday (January 30), 5:30-8:00 p.m. The Party is happening at Vital Proteins’ offices (939 West Fulton Market in the West Loop).
Admission to this Members-only event is just $20 (it is at least a $75 value). Click here to register.
And as an incentive to become a new member, anyone who signs up for a $65 annual membership before the Winter Wellness Party will be able to attend for free. After you register as a new member, we will send you a comp code with instructions to register for the event.
So many reasons to attend…
Vital’s Beautiful Venue
It is worth attending the Winter Wellness Party just to get a peek at one of the most special workplaces in all of Chicago. Vital Proteins —whose collagen products have enjoyed exponential growth — has converted a former chicken processing plant in the Fulton Market District into a showplace.
Inc. magazine included Vital Proteins in its 10 Most Beautiful New Offices of 2019, stating, “Its beachwood, whitewashed brick and light-blue-and-gray color scheme are meant to break up those long Windy City winters.”
Learn From Wellness Experts
Speakers at the party include Vital Proteins CEO Kurt Seidensticker, a Naturally Chicago Board member, and Dr. Ed McDonald of University of Chicago, a chef, media star and advisor to our Good Food Is Good Medicine program.
The Yum Factor
There will be delicious healthy food, mostly from local producers:
Simple Mills (Naturally Chicago Board member)
Kitchfix (Naturally Chicago Board member, sponsor)
Jenny’s Tofu (Naturally Chicago Board member, sponsor)
Soup Explorers (Naturally Chicago member)
Grecian Delight (new Naturally Chicago member!)
Beyond Meat (not local, but Executive Chair Seth Goldman gave the Keynote Speech at the 2019 Good Food Financing & Innovation Conference)
And there will be a gift bag with wellness-focused treats to take home!
No Designated Driver Needed
In keeping with the wellness theme, the Party will feature on-trend mocktails, with ingredients from Chicago-based Ritual (a maker of zero proof whiskey and gin alternatives); Aspire Healthy Energy Drinks; Twisted Alchemy cold-pressed juices; and Vital Proteins products.
We will also have samples from Hairless Dog, a Minneapolis-based company that is one of the few producing alcohol-free craft beer.
Well Into The Night With The Time Out Chicago After-Party
Want something a little stronger for a nightcap? Join us for the after-party at the new Time Out Chicago food hall, across Fulton Market Street from Vital Proteins, starting at 8 p.m.
The after-party is open only to attendees of the Winter Wellness Party.