POP Gourmet's explosive momentum
2015 Snack Food Manufacturer of the Year
Common parlance (and a bit of onomatopoeia…) leads us to say that popcorn “pops” when the starch inside the heated kernels changes, water expands, pressure builds … and we hear the sudden “pop”! But a more-scientific take is that the kernels explode, transforming into those beloved, puffy morsels—40–50 times their original size—at just the right time, under just the right conditions.
A similar tale has unfolded at POP Gourmet Foods, Tukwila, WA, since its inception in late 2011. Business at the company—our 2015 Snack Food Manufacturer of the Year—has exploded, with significantly expanded sales and production over the last four years, growing 350–400 percent year-over-year, per David Israel, founder and CEO.
Concurrently, the market for ready-to-eat (RTE) popcorn has exploded, with IRI, Chicago, reporting RTE popcorn/caramel corn sales up by 22.36 percent in dollar sales to more than $963 million for the 52 weeks ending Dec. 28, 2014.
Since the company’s initial launch, the ensuing years have seen the RTE popcorn segment grow highly competitive—and grow in culinary sophistication, diversifying well beyond simple butter and salt, or perhaps a dusting of tangy cheese. Now, we see savory, sometimes ethnic, flavors—premium products that command a premium price.
A prison commissary, a garbage bag and a dream
The first product POP Gourmet released stems from a time when Israel was incarcerated and he witnessed the creation of a rather unique product by some of the inmates.
“When you’re in a minimum-security prison,” says Israel, “you can use a microwave. They would pop popcorn, melt caramel, blend peanut butter into the caramel, mix it all together and then toss in M&M’s, chopped Rocky Road candy bars, and Cinnamon Toast Crunch. They’d make it in a big, clean garbage bag, portion it into smaller bags and trade it out to people.”
After trying this fantastic concoction, Israel thought, “This could be a business.” Connections to Cold Stone Creamery, “with all of its mix-ins,” sprang to mind. “I had a business, so I started asking my managers to start sending me information on the popcorn industry and equipment, and started compiling a business plan. One of the officers brought some of the product down to the visiting room so my kids could try it. They went haywire. I knew I had a hit. When I came home, I launched it.” And the Bighouse Mix was born.
“In 2011, David launched the Original Bighouse Mix, packaged it and sold it to local grocery and specialty stores,” says Valencia Wolf, vice president of customer care and support. “It was amazing, and it led to where we are today.
“Even though David was innocent and falsely accused,” continues Wolf, “he and his wife now wouldn’t change one thing.”
Israel has employed several individuals he met while in prison and maintains a work-release program through the Washington State Department of Corrections that now accounts for 20–25 percent of POP Gourmet’s employees. Five employees hired through this program have seen promotion to team leads.
POP Gourmet Foods was off and running, but Israel sought further differentiation. “I decided we needed to have a higher quality,” he says. “We needed to be different, on the cutting-edge—so we would stand out on the shelf.”
So Israel began brainstorming, considering on-trend, upscale flavors. These initial results yielded White Truffle and Chocolate Salted Caramel flavors.
Israel eventually heard that Oprah Winfrey was fond of the White Truffle product. “So we sent a case to O Magazine,” he says. “Two weeks after we sent it, the phone rings on a Friday afternoon, and it’s O Magazine. They say, ‘We love your product. Oprah is coming into town tomorrow. We’d love to have some for her and would like to order five cases.’ They ordered it a few more times, and then a few months later, Oprah puts us in the magazine—part of her ‘Favorite Things’ for the month.”
The next thing Israel knew, retail buyers were calling in orders. “It really was a launching pad for us,” he says. “There was a ripple effect.”
But Israel continued to ask himself, “What’s going to make us connect with the customer beyond just flavor?”
The result was an exercise in co-branding.
“I was looking for a cheese, a brand,” says Israel. “I didn’t want it to be just another cheese on the shelf.” A supplier recommended Rouge Creamery’s award-winning blue cheese. “So she introduced me to David Gremmels at a Fancy Food show.”
Israel had someone dehydrate the Rogue blue cheese and made samples. Gremmels loved the product, and they moved forward—without any sort of royalty, just a partnership.
The fact that the project would require 50,000 pounds of Rogue blue cheese to yield 5,000 pounds of powder—the projected amount needed for a year—caused some hesitation in Gremmels, considering the strong demand for his cheese. Israel explains: “So I said, ‘David, look, this is a great opportunity. And you’re still selling your product. And I’m going to put it on a product that’s going to get exposure, immediately going into T.J. Maxx, Marshalls and some of the other national accounts we had set up.”
Gremmels thought about it for a while and then agreed to move forward. “And,” exclaims Israel, “I put him in the powder business!” Now Rogue sells Blue Heaven powdered blue cheese—the same powder Israel uses for the popcorn—in Whole Foods Market and other retailers. “And a lot of foodservice companies are now reaching out to him.”
Israel notes that Rogue Blue was his top-selling product, until he launched Sriracha.
While the name Huy Fong Foods might not ring many bells outside of the food industry, the company’s Sriracha Hot Chili Sauce—with that iconic rooster on the bottle—certainly has.
Israel was set on producing sriracha popcorn—but not using any sriracha. He wanted Huy Fong. “They were very protective of their brand,” he says. “I reached out with my concept. I made calls, sent emails. Never heard back.”
In the meantime, sriracha-flavored products—including a popcorn—begin to hit the market. But it wasn’t Huy Fong sriracha popcorn.
“So I wrote a letter,” says Israel. “I explained my company, what we did, who we partnered with. I told them the story—and that they should let me do a Huy Fong Sriracha popcorn.” He also continued to refine his sriracha popcorn—using Huy Fong’s legendary “rooster sauce,” dehydrated—and sent samples to David Tran, founder and owner of the company, and his team.
Then, Israel finally received a response. Tran loved the samples, and POP Gourmet could proceed with the co-branded effort—once again, royalty-free—as long as it was made with their sauce and Huy Fong could approve the packaging and the final product.
As was the case with Rogue Creamery, the relationship with Huy Fong yielded a new powdered product that’s used on the popcorn, but also stands alone as a product in its own right.
POP Gourmet has also forged partnerships with Brown & Haley (Almond Roca), Wakaya Perfection (ginger), Rhythm Superfoods (kale), fitness personality Tony Little (Diet POP) and celebrity chef Tom Douglas (Rub with Love).
Life beyond popcorn
It was only a matter of time before POP Gourmet expanded beyond popcorn. Now potato chips and croutons are coming down the pike—and in some familiar flavors. Rogue Blue and Sriracha kettle chips are two of the company’s newest products.
POP Gourmet is now manufacturing croutons, starting with—yep—Rogue Blue and Sriracha. Expansion into this product area came about through POP Gourmet’s relationship with Seattle’s Schwartz Brothers Bakery.
POP Gourmet is also expanding into tortilla chips, which will launch in the second quarter of 2015—and Israel noted that Sriracha will be the first flavor, with more to follow. “We’re in discussions with another major company, and we will probably do a potato chip and a tortilla chip with them, as well,” he says.
Another product, POP Gourmet’s award-winning Fire Corn Jalapeño popcorn, also yielded a unique, standalone product. “We put sliced jalapeños into the kettles as part of the popping process,” says Israel. “That’s how it infuses the flavor, but it also creates a jalapeño chip. So people started calling and asking if we sell just the jalapeños, so we’re launching a line.” POP Gourmet Jalapeño Chips will also release in the second quarter of 2015.
Other innovations have come via expansion. “We are now distributed in Australia, Canada, U.K., Japan, Russia and Dubai,” says Wolf. “We’ve opened licensed stores and production facilities in Japan and Russia.” The facilities in Japan and Russia opened in fourth quarter of 2014.
Israel has tested each point of expansion as a launching pad. “The Australia deal happened because of the Japan deal,” he says. “The Russia deal happened because of the Dubai deal.”
As it made plans to enter Russia, POP Gourmet became acquainted with Russian popcorn manufacturer Maple Village, famous for its Maple Caramel Popcorn, and acquired the business. The brand was in about 1,800 retailers throughout Russia, notes Israel. Now, in addition to selling POP Gourmet products in Russia, he is looking to bring maple popcorn to the U.S. “I’m looking into deals like this in other regions, as well,” he says.
POP Gourmet recently redirected its focus on Safe Quality Food (SQF) certification for first quarter of 2015, but Wolf notes that the company has been food-safety-audited for two years. The company is also kosher-certified, all products are gluten-free and natural, and most products are non-GMO (with the only exceptions being the Huy Fong co-branded products).
Sustainability initiatives though the years have included reduction of plastic materials in the plant and reusing or recycling paper and corrugated products. “We continue to minimize overall waste and decrease our energy consumption,” says Wolf. Also, all organic waste is used for animal feed.
The company just finished construction of a brand-new plant in Tukwila—its fourth plant in just three years. “It is designed for efficiencies, long and short production runs, and 10 times the production capability,” says Wolf, adding that it features five lines, with three dedicated lines. A new gluten-free tortilla line is in the works. The plant can produce up to 165,000 bags per day. “We made a significant investment into equipment, and the automation is used strategically, since we are committed to handcrafting our products. Our extraordinary growth has driven our need to increase the size of our plants so frequently.”
Israel notes that the company does not farm out any production. “We’re one of only a few popcorn companies that actually makes all of its own products,” he says.
POP Gourmet strives to balance the need for automation and its handcrafted reputation. “We were very cautious, very thoughtful, about that,” says Israel. “We’re not going to forsake the handcrafted part of our product for automation.”
Packaging is one area where automation made sense, and Israel notes that he has implemented certain mechanisms to help streamline manufacturing. He also notes that he automated portions of the caramelization process for the caramel and butter toffee products—but not at the expense of the quality.
“On the savory side of things, I actually have achieved a higher-quality product by automating the application process,” says Israel. “You’re going to get a more-consistent product when flavors are sprayed on. It’s more evenly coated.”
But as production has ramped up, the ability to innovate hasn’t disappeared. “We still have small batches,” says Israel. “We have certain clients that we do unique things for. So I’ve come up with ways to implement these efficiencies, to automate portions of our lines, that will help us drive our margins and cut down on our labor, but still maintain the quality at the highest level.”
It’s often a matter of achieving balance. “Most people, when they build a plant, they go automation, automation, automation,” says Ron Gai, chief operating officer. He notes that quality and ingredients were top considerations when building the new Tukwila plant. “I’m excited about building a plant like that because it’s the same way my father did it for years.” Gai’s father, the late Phil Gai, was a major figure in the Seattle-area bakery industry.
Two of the lines in the Tukwila facility are side-by-side, each outfitted with 12 large poppers that can each yield 650 pounds per hour. After popping, they dump onto a conveyor that runs to spray seasoning and packaging via the plant’s five new automated form/fill/seal packaging machines. The plant also features two lines of electric poppers for “smaller, more-controlled batches,” says Israel. Those lines go to tumblers.
While the caramelizing and butter toffee technology remains hand-operated, POP Gourmet has automated the cooling and separating processes. “That doesn’t affect the integrity of our popcorn,” says Israel. “And really speeds up our process.”
Much of POP Gourmet’s product range nicely aligns with prevailing trends across the snack industry. “I see a continued strong push toward non-GMO, natural and gluten-free products,” says Wolf. “We made this a part of our strategy early on, but we look to find cleaner and cost-effective ingredients to help us drive higher-quality products with competitive pricing. Everyone and their brother jumped into the popcorn business the past two years, making it very competitive. But we put our nose down and stuck with our highest quality, better service and co-branded plan. It’s working.”
For more on POP Gourmet Foods, see "David Israel of POP Gourmet Foods on fine-tuning retail sales"
At a Glance
Company: POP Gourmet Foods
Headquarters: Tukwila, WA
Year founded: 2011
Website address: www.popgourmet.com
Plant size: 32,000 square feet
Number of production lines: 5
Number of employees: 76
Products: Popcorn, potato chips, croutons, seasonings, crunchy jalapeño chips
Brands: POP Gourmet, Huy Fong Sriracha, Fire Corn, Wakaya Ginger, Rhythm Superfoods Kale, Tony Little Diet POP, Rogue Blue, POP Lite
Founder and CEO: David Israel
VP of International Markets and Product Development: Sachin Ajith
Chief Operating Officer: Ron Gai
VP of Customer Care and Support: Valencia Wolf
Director of Business Development: Grant Blumenstein
National Sales and Key Accounts Manager: Morrie Benveniste
National Sales: Lexus Moore
International Business Development Manager: Larisa Golovkova