When Drew Anderson was ready to sell sauerkraut he homemade with brother-in-law Luke Visnic, Drew knew just where to start — the farmers market. His mother started farmers markets all over Northeastern Ohio, markets where Drew and his little brother Mac spent their weekends working as kids.
“We saw how small food businesses would start. Farmers markets a great way to test your products, to pitch, to get direct feedback on what’s working and what’s not. You’re getting paid for market research,” says Drew, who started Cleveland Kraut with Luke and Mac (chief marketing officer) over six years ago. “Farmers markets are going to be some of your most honest customers, and those original farmers market customers are still some of our best customers to this day. We raised our first capital at farmers markets.”
Sage advice from the fastest growing brand in the fermented foods industry. Cleveland Kraut continues to grow since its humble beginnings in 2013 as a side hobby of three brothers. Back then, when Cleveland Kraut was ready to expand to retail, Drew liquidated his savings to buy equipment, slept in the warehouse and drove truckloads of kraut himself to avoid shipping costs. Today, Cleveland Kraut will produce 4 million pounds of sauerkraut this year, thrives on capital from backers like NBA star George Hill, employs a growing staff of 20 full-time employees and will expand internationally later this year.
Check out our Q&A with Drew, a Forbes “30 Under 30” honoree and board member of The Fermentation Association.
Q: What is your advice for other fermented food producers who want to sell in retail stores?
Honestly, you have to grind. It’s a category that buyers are just now waking up to, so getting in the door is difficult. Especially when you have established players who are doing really well. You have to go in and say “How am I going to compliment the competition? How am I going to add these other flavors?” It takes time. It’s a lot of grind, you’re going to lose some sleep.
Q: Where do you see the future of the industry for fermented products?
Obviously, you have a lot of beverages out there that really paved the way, kombucha has been a huge success story. But fermented vegetables I think are, one, you’re getting a ton of free press from dietitians and doctors who are saying you need to eat this stuff, the rest of the world eats this every day, Americans need to eat it, too. Second, gut health is tied into everything, and that’s pushing fermented product sales. There are studies proving gut health is linked to your mental well-being, its liked to weight managements, its linked to your skin health. Then third, exciting flavors and new and exciting brands. Fermented products need to be approachable products for the American palate, and I’m proud to say that we’re a big driver of that. We’re showing what can be done with a simple product.
Q: What problems do you see facing the fermentation industry?
It’s not a huge category right now. The challenge is continuing to push consumers. We have to taste test, teach consumers what is this, what are the benefits, we need to get the mass market to understand what real fermented foods are and to test them out. We need to expand the category by showing people how good fermented foods are and how good they are for you. That’s going to be a big challenge.
I also think, the challenge on the retail side, buyers are continuing to expand the set. I think there’s room for a lot of different brands in one fermented set. When we go in to the market, we have a lot of competition. But competition brings the whole category up. It’s less cannibalization, it’s opening up a category and growing it.
Q: What about strengths, do fermented producers have unique strengths for the food industry?
There are not many co-manufacturers that make a quality product. So you have young companies who are still manufacturing their product. It’s not just a brand with a manufacturing facility miles and miles away. These young companies are putting really quality products out there. And I think that’s a real strong suit. The product is the same as everybody else when you have co-manufacturers involved. Brands that own their manufacturing, I think you get more interesting, higher-quality products.
Another strength is fermented foods can be something that’s delicious and exciting but also super beneficial for you. This is true health food, this is not fake healthy. This directly impacts people. If more people were eating fermented food products every day, our country would be a lot healthier. I think that’s a huge strength for us and we’re going to lean on that hard.
Q: Tell me about Cleveland kraut. What makes it so unique?
We are a manufacturer but we’re culinary branded. We really care about taste, texture and health. If you’re doing fermentation right, then its always going to be healthy. But we want the crunchiest, most vibrant sauerkraut. We’re the taste leader, we’re the fastest growing brand in fermented foods. We’re about flavor. You go to Asia and they eat fermented foods every day. For us, we’re creating the fermented foods that Americans will eat every day. And we’re seeing that with our customers. They’re eating it with their eggs for breakfast, they’re putting it on their salads for lunch, they’re making it traditionally and eating it with meat and sauerkraut for dinner. It’s fast, quick meals, throwing it on rice bowls, soups, burgers.
Q: A lot of Americans are still scared to eat a fermented food. They’re unsure of trying the food, they don’t know what it is. Do you think that’s starting to change?
Oh yeah. One of our taglines here is “People try it, they like it.” You walk into a room and ask 100 people “Do you like sauerkraut?” and 75 percent of them are going to say no. We flip that after they try it. They try our product, they go “Wow, I never knew that was what sauerkraut tasted like.” It’s a natural fermentation, its crunchy, its vibrant, its bright, its fresh – that’s real sauerkraut. We change minds.
Q: You have a business background and were an analyst in finance industry. What made you decide to move over to the food industry?
Our mother started farmers markets in Northeastern Ohio. She was a chef, she had a degree in biology and she was super into where food comes from and what she’s feeding her kids. We grew up running farmers markets on the weekends, cooking in the kitchen, everything was central around food. We learned early on how to cook, how to prepare our own food and how to identify good products. It kind of helps you see why we’re so tall, we ate really well.
Fast forward, I went to school at Cleveland State University. I have a degree in statistics, so I was hired by a bank to build models and forecast. I moved to Virginia on the east coast where I couldn’t really get authentic, Eastern European fermented food, the sauerkraut and sausages which we grew up with in the Midwest. I started fermenting my own sauerkraut and making my own sausages. I got hired by a bank, moved back to Cleveland, and I found out my brother-in-law (COO Luke Visnic) was also making sauerkraut. He has a history – his grandmother is from Germany and they always had a crock bubbling away. One night over a beer in 2013, we’re eating some really fresh sauerkraut right out of a Mason jar. We’d been reading about this huge movement of fermented foods and probiotics. So we said “Let’s take it to the farmers markets.”
For a couple years, we would work our day jobs – Luke’s an architect, me in finance and my brother Mac who had just graduated college and was working in finance. We were teaching Mac how to ferment while he was in college. So all three of us, we’d work our day jobs and then come to the commercial kitchen in suits and start making sauerkraut until 2 in the morning, packing, processing. And then on the weekends we’d sell it at the farmers markets and to restaurants.
Q: When did you finally decide Cleveland Kraut was big enough to make the switch from your day jobs to working on Cleveland Kraut full-time?
In the second half of 2015, when we launched retail. We built a new commercial kitchen in this big factory, this old warehouse, that we cleaned out and made a nice fermentation space. I slept in an office way above the floor. There were no showers, so I joined the Y up the road, and I would shower there and then go into work and sleep in the office at night. It was great.
Q: Tell me about your unique flavors.
We have the traditional Classic Carraway that’s very Bavarian style. We have a Whiskey Dill where we add a little bit of whiskey, it gives it a subtle sweetness on the back end and a lot of dill up front. Roasted Garlic is probably our best seller besides the classic. It’s made of raw garlic, black pepper, its fantastic, super savory, people put that on everything. Beet Red is huge for us – it’s red cabbage, beets, carrots. This is the really fresh, super healthy sauerkraut that people are throwing on salads. Think of like an arugula salad with a little bit of spice, a goat cheese, almonds and then a light vinaigrette then with a Beet Red sauerkraut on there. Oh, its beautiful. Curry Kraut, that’s definitely going to be our healthiest. You have turmeric in there, ginger, garlic, it’s got a little bit of zip to it, a beautiful yellow color.
But our game changer, our conversion kraut is the Gnar Gnar. This one’s interesting. We knew we had to make a spicy kraut because our favorite is to eat a spicy sauerkraut like a kimchi. When we were first testing out flavors in my mother’s cellar, we had this spicy concoction going and this super, super potent smell and we were like “Man, this is going to be so gnarly!” and my mom starts saying “What’s that gnar gnar down there?” So we had to name it Gnar Gnar. That’s the one chefs are using. Iron chef Michael Symon, he’s got a BBQ restaurant at the Palms in Vegas, every plate serves Gnar Gnar.
We’re bringing excitement and life with our flavors, our crunch, our branding. We’re really brightening up this category and bringing a lot of new consumers.
When we go in to the market, we have a lot of competition. But brings the whole category up. It’s less cannibalization, it’s opening up a category and growing it.
Q: Your brand name, you wanted to true to the Cleveland area?
For us, fermented foods really come from the Midwest. It’s a lot of Eastern European roots, it’s a working-class food that comes from farmers. It’s a blue-collar food, its simple food, cabbage is cheap. It’s a way to preserve foods when you didn’t have refrigeration. People have been surviving on cabbage for thousands of years.
For us, growing up, sauerkraut was a food that was local. It comes from the Midwest. We have glacial till soil here, super nutrient-rich soil. All our cabbage is hearty, it’s delicious, you eat the raw cabbage and it has a spice to it, it’s fantastic. We’re super proud of where we are in the Midwest. Building a factory and putting our city on the front of the package has been key to us. Honestly, it creates a local vibe wherever you go. People in Southern California are buying us at Lazy Acres and Gelson’s and Bristol Farms and they’re saying “I like the Cleveland stuff. They know what they’re doing in the Midwest. They know how to ferment things.”
Q: Tell me about the Cleveland food scene.
The Cleveland food scene is growing. We have a lot of good chefs, we get a lot of ex-New York chefs who want to open their own spot and they come to Cleveland because there is a lot of wealth there so it can support the fine dining and experimental restaurants.
And the business food scene, the manufacturing, its growing. There’s a popsicle company from Cleveland that’s taking off, Chill Pop. Nooma is an organic electrolyte beverage that is taking off nationwide, they’re in stores like Walmart and Whole Foods. There’s a lot of us, we’re paving the way. Then the Akron, Canton, Cleveland areas, there’s a lot of big, big manufacturers that are behind the scenes, you’ve never heard about them, but there’s a lot of food being made here. Cleveland is young – we’re not a Boulder, we’re not a San Francisco, but its popping up. We’re going to give Brooklyn a run for their money in 10 years.
Q: Last year, you started putting your kraut in new packaging, you switched from glass jars to resealable pouches. Tell me about that.
The issues with glass jars is you’re putting in a live product. When you’re at natural stores, a Whole Foods, and you have early adopters buying it, they understand that when you twist that lid, it might bubble it, it is still alive. But when you get into a place like Walmart, Giant Eagle, Target, these people are later on the adoption curve, they may not know so much about what a fermented live product is, so when they open it up and see a bubble, they think “Whoa, something’s wrong.”
The other thing is we couldn’t fully automate the jar the way we wanted too. Our demand was so high, we were in there packing jars, and we couldn’t find the right equipment to automate it. We searched for years. And so the pouch solved the issue, because it has a vent and allows the kraut to breath, to exhale. And it can be automated.
We’re cutting down our carbon footprint significantly. A full truckload of glass takes so much diesel because it’s so heavy. Pouches can fit on a single palate and they’re fully recyclable. We have a great customer base, so I trust people are going out and recycling.
Q: What’s next for Cleveland Kraut.
We’ve got a lot of new products coming out. We’re going to really take hold of the fermented space, the fermented category, were going to drive a ton of growth. I’m excited for the next year and a half, you’re going to see some exciting things out of us, we’re going to keep pushing the brand.
We don’t just play in natural stores anymore. We love those stores, that’s where we started, we’re always going to be there, that’s where our best relationships are. But were pushing into conventional heavily. That means mass market people are getting the experience. On the back of our products, it says “Fermented foods for all.” This is not just a high-end product that only wealthy people who are super focused on health need. This is going to sell at Walmart, this is going to sell at Whole Foods. We’re going to get fermented foods everywhere. We’re going to push it very hard. In five years, people are really going to be eating fermented foods every week, every day, and were going to be a big driver of this.