LOUISVILLE —
Before Silk Cashew Milk hit the shelves last fall, the finished product went through more than 100 iterations.
That type of trial and error is the norm for WhiteWave Foods, the Denver-based firm that has built a multibillion-dollar business out of selling organic milk and plant-based foods into the mainstream.
Until recently, WhiteWave’s roughly 20,000-square-foot test kitchen in Broomfield served as the heart of the company’s research-and-development work.
But lately WhiteWave has been on a tear, and the company behind brands such as Horizon Organic and Silk needed a new R&D center to match.
During the past two years, WhiteWave quadrupled its market share to $8.8 billion via a combination of organic growth and $1.7 billion in acquisitions to bolt on brands such as dairy-free So Delicious, Earthbound Farm organic fruits and vegetables, and Vega nutrition bars and shakes.
“I think it just shows we’re going to have to, as a company, demonstrate that we can quickly come up to speed in new food categories and learn about them and develop fantastic foods,” said Blaine McPeak, WhiteWave’s president of Americas Foods & Beverages division.
WhiteWave has started settling into its state-of-the-art Technical Innovation Center, a 66,000-square-foot facility in Louisville that includes a demonstration kitchen; 10 bays for acuity taste-tests; culinary development areas that are part kitchen and part science lab; and a packaging-sciences area with a slew of household microwaves and refrigerators to test how well designs fit in at home. The center also includes a pilot manufacturing area to help determine whether products that are good in a small batch can scale up to commercial production.
“The key is fail fast, fail small,” said Wendy Behr, WhiteWave’s senior vice president of research and development and sustainability. “It helps us get product to market in an optimal way.”
The facility was designed to root creativity in science and foster collaboration across a variety of departments, including R&D, quality assurance, information technology, marketing and business development, she said.
“Simply giving people a brand new building wasn’t going to drive brand innovation,” Behr said.
WhiteWave expected to invest more than $13 million in the operation nestled in the expansive Colorado Technology Center, according to city of Louisville records. Louisville awarded WhiteWave a $193,000 incentive for the project, which is projected to generate $450,000 in revenue from the construction-related fees and taxes.
During its most-recent quarter, WhiteWave reported double-digit gains in earnings and sales and reeled in $47 million — excluding a one-time investment in its joint venture China Mengniu Dairy Co. — and posted revenue of $924 million.
By September, about 200 employees in the innovation center will be working to integrate the newcomer brands, incorporating the best practices from each and trying to position WhiteWave for continued growth, officials said.
The work will be critical if WhiteWave wants to maintain its trajectory, said Bill Chappell, managing director at Suntrust Robinson Humphrey.
“The retail customers,” he said, “they certainly want to see the newest products. Continuing to have a healthy pipeline of innovation is the only way you can augment growth and get incremental market share.”
WhiteWave pumped 50 new products into the marketplace last year and expects to launch as many — if not more — this year. The additions include building off core competencies — launching a line of Earthbound Farm “Powermeal” bowls and extending the cashew-based product development to the newly acquired So Delicious — and bringing products to new categories, such as a line of Horizon Organic macaroni and cheese and Silk-branded yogurts.
“You have a business — be it Horizon, be it Silk, be it So Delicious, be it Vega — that has its own R&D capabilities in-house, and you’re trying to centralize that,” said analyst Chappell, who does not own shares of WhiteWave.
The new R&D capabilities, which complement other WhiteWave facilities across the U.S., should help the company refine its technical expertise and further ensure manufacturing consistency, said Steve Demos, who founded White Wave Inc. in 1977, making tofu in a bathtub, and served as president of WhiteWave Foods when it was owned by Dean Foods Co. Dean spun off WhiteWave in 2012.
Demos, who no longer has a financial stake in WhiteWave
, said he admires the effort the company has made in catering to consumer desires for natural and organic products.
However, the research-and-development facilities can go only so far, he said.
“While this kind of facility can stretch the brands’ shelf presence horizontally, with new flavors, shapes and uses, that is not new trend discovery or emergence,” he said in an e-mail. “Again historically, new trends and innovation have come largely from kitchen entrepreneurs and other startups.”
Moving forward, companies such as WhiteWave also will have to keep their sights on a broader set of consumers, notably those in the millennial age group who have become “jaded by too many product hypes and promises not fulfilled,” he added.
“How clear and true the company and the brands stand to their purpose and product promises, the better their chances of making a connection with this consumer,” Demos said. “This is the biggest challenge and the biggest prize.”
Alicia Wallace: 303-954-1939, awallace@denverpost.com or twitter.com/aliciawallace
