Michael Schwartz’s modest Bloomfield co-manufacturing plant has been referred to as a Willy Wonka factory of healthy food in glowing media profiles.
Maybe it’s not that fanciful, but, like magic, would-be food and drink entrepreneurs do show up to it with sometimes no idea of how food manufacturing works or how to put their dreamed-up beverage in a bottle … and they come away transformed.
Certain realities have set in over the past few years, however. The pandemic and supply chain issues have made the business of putting items on grocery stores’ shelves more difficult.
There’s now no one doing what Organic Food Incubator does on its particular scale for startups in New Jersey, Schwartz said, as various business interruptions have wiped out similarly minded co-manufacturers. The 40-employee Organic Food Incubator has held on, however — carrying Schwartz further on his path in the sector. It’s a journey that began when he and a buddy started a food brand in 2009 in a Jersey City basement.
It’s not always a Hollywood ending for the food and beverage businesses Organic Food Incubator works with. Even if an idea is exciting, some small businesses find a freezer aisle-cold reception from customers.
To help avert that, Schwartz has picked up a knack for knowing when once-trending products could be reaching their expiration date in the market. He spoke to ROI-NJ about that and more.
ROI-NJ: To start with, can you give some insight into the type of products that are most often brought to you today? And what do you see as trending food and beverage items?
Michael Schwartz: Hot sauce continues to be the one. There seems to be a bottomless market. Every time I turn around, there’s another hot sauce company coming to us. And there seems to be no end to the mood for more hot sauce varieties. We’ve also seen an uptick in alcohol replacement beverages. That’s beverages with wine-like flavors, packaged in a more elegant bottle that would appeal to someone who doesn’t drink alcohol but wants to have an adult-looking beverage at the bar. We have a few clients that manufacture products like that, and it seems to be growing. Cocktail mixes continue on as well. We’ve had a recent uptick in clients looking for flavored sugar syrups for coffee drinks. That’s new for us. We’ve done the syrups for alcohol, but these are specifically geared toward people who want to flavor their coffee.
ROI: On the other side of things, what are some food or beverage products that you can confidently say have come and gone?
MS: The interest in cold brew has definitely waned. There’s still some, but we’re not seeing a lot of startups wanting to do cold brew coffee anymore. I think that fad has timed out. For a long time, we were seeing a strong uptick in food and beverage products with CBD, but we’re not seeing that anymore. Just my opinion, and I’m not sure how true it is, but it seems like people were just kind of testing the waters with CBD products to get ready for the legalization of recreational marijuana. Now that that’s legal, they’re pivoting and reformulating for that. So, we’re not seeing as many of those anymore. Pressed juice has peaked and is now waning. Right when we started, we had eight pressed juice companies we worked for. And now we don’t have any. I think a lot of it has to do with the larger grocers starting to make their pressed juice in-house and the regulation involving the packaging and shipping has gotten stricter, which means it’s not as profitable anymore.
ROI: Say a client comes to you with an idea for one of those products that there’s less of a market for today. … What do you tell them?
MS: Depending on what it is, I’ll have the ‘That’s been done before’ conversation. I really don’t want to go too far to discourage people, though. People come to me with their dreams. I don’t want to crush their dreams. But I will certainly talk about the market and where I see it going. And, if I don’t think it’s a viable product, I’ll try to let them down gently. But it’s interesting how these things come in waves. All at once, we’ll get a ton of inquiries for coffee syrups, and then, next week, it’ll be barbecue sauce. I don’t know how it happens, but people seem to have similar ideas all at the same time. So, in the same way, everyone stops coming to us with cold brew coffee. Well, actually, one did recently. I told them why it’s been done a lot before, the regulatory obstacles they’d have to jump over and why they’d have to test it before going into full production. After that, if they’re still gung-ho, I’ll help them do it.
ROI: What are some success stories you’ve had come out of the Organic Food Incubator?
MS: In spite of what I’ve been saying about cold brew, we worked with a company called Wandering Bear, a cold brew company, that has been successful. They’ve moved on to a larger, Midwest co-manufacturing facility. We worked with a company called Daily Harvest when they first started, and they’ve done really well. They make a subscription-based, make-your-own smoothie product. There’s a company called Chia Smash, making a jam with chia seeds in it, and it’s delicious. They’ve got some big contracts with national grocers now. It’s a really good product. There’s others that have done well, but I can’t talk about them because they’re under NDAs. And the rest are smaller players, doing well on a small scale. They probably can’t support themselves on the business, but for them it’s a hobby, and they enjoy it.
ROI: Outside whether they’re producing a food or beverage item that might be flying off of shelves or not at a given time, what are some of the hallmarks of a successful small business in this sector?
MS: The ones that tend to do well are the ones with a leader with a huge personality. It’s really difficult for a small brand to compete with the mass-produced products. So, they have to find some way to set themselves apart. So, a lot of them do it with a flamboyant face to the business, or some kind of — I don’t want to call it a gimmick, but a catch. We have a client upcycling products, making a beverage with avocado pits. They’re reusing something that would be wasted. Those types of businesses do well because they have a story to set themselves apart from everyone else; small brands need that.
