Peanut butter is found in nearly every kitchen pantry. But with its high fat content and inherent “messiness”, this staple was missing the trend of people searching for healthier alternatives and higher protein. That is until the invention of powdered peanut butter by PB2. I sat down with Craig Entwistle, CEO at PB2 Foods, to learn more about how the brand is changing the peanut butter category and how they are approaching innovation in growing the business.
Dave Knox: The current path of PB2 is partially a story of entrepreneurship through acquisition. How was the business started and where are you today?
Craig Entwistle: There was a gentleman, his name is J. C. Bell. He was the founder of the business in 2007, and he figured out how to take peanut flour and create a powdered peanut butter. He started the business and branded it as PB2, the two being kind of the alternative to peanut butter. He went out and started presenting it in the trade and built a business with people that were into health and fitness and workout as a protein solution, because it was high in protein and it tasted really good. People used it in their smoothies and shakes as a substitute or as a compliment to whey, because whey didn’t taste so great.
In 2017, Mr. Bell came to me and said, “Craig, I built this business and I really am not a businessman. I’m a kind of an innovative creative guy and I need a businessperson to come help me run it.” So, I came over in2017 and we have now basically rebranded the company a little bit. He had a different name to the corporation. It was called Bell Plantation. His name was J. C. Bell, and it just didn’t really fit in the marketplace. We re-incorporated as PB2 Foods, and Mr. Bell was a board member. He’s somewhat retired and we have a new team running the company and we’ve been actually buying stock from him. The company is now mostly on by the employees and the board. We own over 50% of the company cumulatively. It’s been an interesting transition and it’s been a lot of fun.
Knox: When he originally approached you about the business, what excited you about the peanut butter category and PB2?
Entwistle: As innovative as Mr. Bell was, he was not a consumer-packaged goods guy. He was more of what I would call a mad scientist. He loved inventing things, but he really didn’t understand the challenges of the consumer package space. When he came to me, he had plateaued his business, and in fact it was somewhat starting to decline because he just did not know how to grow it. The team that I brought with me, we had a lot of consumer packaged goods experience. We saw a brand had tremendous loyalty among people that were focused on plant-based healthy foods. It was a relatively small company but had a really loyal following and really good equity. Also, Mr. Bell had been willing to invest money in equipment and he had built a phenomenal facility. We had a 110, 000 square foot processing site that was well run and capitalized and was well-built, but it was not running anywhere near full capacity.
As we looked at this opportunity, we had good brand equity, an awesome processing site, a product that was plant-based and a product that tasted good. It was on-trend and had lots of room for growth. That was what attracted me initially. After 30 years of working for a major CPG corporation, this was more attractive because I had the opportunity to kind of control my destiny and have some ownership in the company.
Knox: From a category standpoint, peanut butter is a really large category. What is the opportunity for powdered peanut butter and where have you focused?
Entwistle: Peanut butter is obviously a very tasty ingredient that you can use in a lot of different ways. However, it has a high fat content and a lot of calories, and it also is messy when you cook with it or use it in a recipe because of the oil. The uniqueness of the powdered peanut butter is that it’s basically oil free, because the oil has been pressed out of it. It has a phenomenal taste, has a high protein content and has a lot of versatility. It can be used in baking. It can be used in blending smoothies and shakes. It can be used in an assortment of different applications. When we looked at it, we were like, “Okay, wait a minute. Now we’ve got a plant-based healthy product with lower fat, lower calories. It’s a great substitute to a comfort food that a lot of people love in a very big category. The story has to be told.” We have spent the last three and a half years working on new innovative items, new distribution, and getting the story out. A lot of it is awareness. You will talk to people about powdered peanut butter and they go, “What is that?” And you just have to educate them. And once you educate them, people are like, “This is brilliant. I never knew it existed. Where does it sit in the grocery store?” So a lot of our opportunity looking forward in front of us is to drive awareness and also drive placement and new innovation to keep bringing people to the space. So that’s where we spent most of our time, energy and effort.
Knox: How is PB2 aligning the business to meet these consumer needs and demands?
Entwistle: Over the course of my career, I have learned that if you are not innovating, you are dying. You have got to continue to freshen the assortment and bring new items. Now we do have three or four items that are the anchor items, but we have continued to try and find ways to bring newness to the space so it’s not just a powdered peanut butter and a powdered peanut butter with chocolate. We have bought to market products that have pre and probiotics added to the formula. We have launched a line of products that are higher in protein and those that are made with no sugar because there’s a significant sensitivity to sugar.
In the processing site where we blend and jar different powders, we have very creatively taken the original formulas that were just a peanut butter substitute, and we have strategically enhanced them with healthier versions. We have also taken those versions and made them higher in protein and moved them over to the supplement aisle. As a result, we are not just sold in the peanut butter aisle, we’re now sold in the supplement aisle and we have realized that the PB2 brand is transferable. Now as we innovate, we are looking for new platforms that can leverage the strength of the brand, and we still have lots of opportunity to build awareness on the brand.
We can’t innovate too many platforms, but we can innovate within platforms. In the powdered peanut butter aisle, we’ve got innovation. In the supplement aisle, we are bringing innovation. And ultimately, we are moving into new spaces. We will continue to innovate and grow and place the brand in good complimentary spaces.
Knox: As you consider complimentary spaces, how do you decide if it’s the right move for PB2?
Entwistle: At one point, there was a lot of talk about dog treats. The number one flavor in dog biscuit treats is peanut butter. We were being encouraged to make a PB2 dog treat. When we looked at it, we said, “That adjacency might not be the right one. I’m not sure we want to put a food brand in the pet aisle.” So, those are the kinds of conversations you have to have. I look at our core consumer. We do know who our core consumer is. It’s a woman, and now we’re bringing more men that are health focused because of the supplement aisle. The brand started resonating initially with women 20 to 45 that were looking for healthy foods, that were looking for weight loss and more healthy diet. So that was where the original genesis started, and that was our core consumer. Now we’re focusing on attracting men who are looking to get more protein in their diets. We have looked at where the brand resonates. And so if we are going to go into an adjacency, we want to make sure the adjacency can leverage the core shopper that we have. So those are the things we do. One of the things we could do is make an ice cream, but I’m not sure that’s a healthy product or a healthy alternative. So, we have kind of looked at different spaces within the box and said, “Where are the right places?” And we do spend a fair amount of time looking to make sure we go to the right adjacencies.
Knox: What held big brands back from seeing this opportunity to innovate the form factor within the peanut butter category?
Entwistle: You get into what I would consider corporate metrics and objectives. And so if something’s not going to be an immediate home run or deliver a significant lift, it’s very difficult to lean forward in a bigger corporation. It’s so much easier just to keep investing in what’s worked and I think it’s a terrible trap. When you are in a smaller entity, you can test and learn and you will accept a lower threshold in a trial. And we also do not have a process that I would call restrictive in the sense of ROI metrics. When we want to launch something, we look at the cost to make it, the cost to distribute and how much trade we’ll put behind it. We can make a decision in 24 hours. That’s a completely different scenario to a larger corporation because of what I would term internal metrics that create barriers. The processes that companies have to launch a new item are so restrictive, and that is what gets big companies in trouble.
Knox: How are you approaching omnichannel retail for PB2?
Entwistle: Since COVID, peanut butter has done extremely well. It’s a comfort food, it’s shelf stable and obviously people went through that whole process of trying to figure out what they were going to do, because they weren’t going out, they were preparing more meals at home and peanut butter was a staple. So you had a lift in the category automatically just because of COVID. Well, that has kind of now worn itself out and now, you’re comping against those numbers. So that lift last year is now a comp issue for most manufacturers and retailers. In that whole broader space, the one brand that continues to grow at double digits is PB2, and the testament to some of the things we’ve done as a team around getting new placements, bringing new innovation, that is a good adjacency and not a diluted item. We are a smaller player in the peanut butter aisle, but of all the brands in the peanut butter aisle, we have been kind of a bit of a star and our data supports it, and we have had double digit growth two years in a row. When we talk to a retailer, this gives us the ability to tell them that these are the things that you may want to consider in your category, and these are the items that we think are complimentary and not dilutive.” We have done a pretty good job of making those suggestions and executing against what we have suggested and delivering. So when you have momentum like that, it’s a very powerful thing.
Outside of traditional stores, we executed a new strategy on Amazon and with a number of our e-commerce customers. It’s the largest growth element of our business. Having said that, we have differentiated our portfolio between our direct-to consumer and our retail partners, and I don’t want to have us lean too heavily one way or the other. We have got to look at each individual segment and, or each individual customer type and figure out how do we fit in that mix? What is the right portfolio? What is the right pricing structure? And let’s make sure we don’t compromise club to retail, to e- commerce, to drug channel to others, and let’s make sure that we are wise in how we promote, and wise in how we price and wise in how we take it to market. So those are the things that we’ve been very cognizant of. A lot of small entrepreneurial companies don’t know how to balance all of that, and I think we’ve done a pretty good job doing it. And all of our key pieces of business are all growing, so that’s exciting.