Founded in 2010 in California by the late Greg Steltenpohl, plant-based milks producer Califia Farms is well established in retailers, independent and mainstream coffee roasters across the US, and has been steadily working to expand business overseas.
In 2017, the company launched into retail and foodservice in Canada, the UK and Australia, working together with third-party distribution partners. The group’s latest entry was in Ireland in 2020.
While the brand in the US offers a range of plant-based milks, flavoured and plain barista blends, RTD coffees and teas and creams, NPD has been comparatively slower in its European markets. Innovation, however, is set to become more of a focus for Califia Farms in the region this year, with nine chilled products expected to be launched between July and early 2025.
Just Food met up with Damien Threadgold, the general manager of Califia Farms’ business in the UK and the EU at this year’s London Coffee Festival, to discuss the group’s innovation strategy, its ongoing push into foodservice and the growing consumer interest in simpler plant-based milks.
Just Food: Where are consumers most readily buying Califia Farms’ products: in foodservice or retail?
Damien Threadgold: At the moment, it would be retail. A larger proportion of our business goes through retail than it does through our away-from-home [segment]. That’s something we want to change. We want to grow that away-from-home channel, which will then drive more people into buying in grocery.
Just Food: Can you explain a bit more about your strategy for selling into the foodservice channel?
Threadgold: To me… when you are buying your favourite coffee at your favourite coffee shop every morning and that coffee is being made with oat milk, and [specifically] Califia, what are you more likely to buy when you walk into a Tesco’s or a Sainsbury’s? It’s a way to maximise our brand visibility though the out-of-home sector.
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What we know is that, if we can drive trials, we can get people tasting the products and they like the products, then that drives advocacy. That’s really what we want to do to build a sustainable brand rather than a brand that’s here today, gone tomorrow, and we can do that because we have a great-tasting product.
Just Food: With the plant-based milk category being so saturated, how do you convince the big coffee shop chains, independent cafes and baristas to stock your brand over other brands like Oatly?
Threadgold: It’s a great question and it’s not something we’re going to be able to do overnight. It’s something that’s going to take a little bit of time but, the more people that we work with that get to try the product, they realise that our performance is superior to some of the other brands, that we do taste different.
And then there’s the health aspect, too. We are lower in sugar compared with a lot of the other brands and that’s naturally derived from the oats. So, we’ve got a lot of different pillars that we can stand on but ultimately it comes down to taste.
Just Food: How do you plan to grow sales in foodservice in the UK this year?
Threadgold: It’s events like this [London Coffee Festival]. We’re here today to trial the product to as many people as possible because people may have seen us but they might not have tried the product. It’s about getting people to actually taste [it], whether it’s in the affogato or whether it’s in a flat white, the different variants like the almond and the oat organic.
We’ve had some really high-end customers come on recently. We’re working with [London coffee chains] WatchHouse… we work with Blank Street, we’re working with Soho House. There are a number of high-end people that we’re now working with and that appreciate the quality of our products and so we’ll continue on that journey.
Just Food: Are you spending more on innovation as you’re looking to grow?
Threadgold: I mean, from an innovation perspective, we haven’t actually launched a whole lot in the previous years and before my time. When I joined [in June 2023], we definitely had to look at what our strategy was going to be going forward and started to plan out the next three to five years. In 2023, we launched Pumpkin Spice Oat Barista, which was an innovation on a flavour profile designed for a specific time of year.
We’ve definitely seen the trend for organic becoming more and more prevalent
This year, we have a number of different things coming in but the main ones coming in for the barista segment is an almond [milk] and the organic milks. We’ve definitely seen the trend for organic becoming more and more prevalent and you’ve got retailers like Pret that will only buy organic. If you want to be stocked there you have to be offering [it] so that [move] makes sense and it’s more aligned with who we are as a brand, too.
Then from an almond perspective, [the variety] has been declining for a number of years. That’s beginning to reverse and we think the entry of that product will really help boost our profile within the barista faction, so you’ve got variety with [both] oat and almond.
Just Food: In terms of your strategy for the next three to five years, is there a specific amount of money you’re investing into business growth? What will you use that money for?
Threadgold: Yes, there’s always a certain amount of money that is being invested. I think we want to be proactive and we want to be leading rather than following, so it’s about looking at what’s coming.
We’re very fortunate that we’ve got a US business that’s the parent company. Now, their business is already looking at what’s coming in five years’ time and in this particular [plant-based milk] space as well they are maybe a little more forward-thinking as the parent, so we can utilise some of the innovation that they’re doing there so we can potentially put that into our pipeline as well where it’s relevant and where it’s translatable.
There’s investment going into what we do within our grocery landscape, specifically regarding some of the NPD we’re launching later this year. Then, from an away-from-home perspective, we’ve brought some new people into the business to support our planned growth in that [channel].
Just Food: What are consumers telling you about your products? What flavours and ingredients are they looking for?
Threadgold: They want something that tastes really good and something that performs well for the in-home café experience. It’s something that really took off during Covid and people are continuing to [engage with] that so they want a product that actually does steam well and that they can practice their latte art with.
Then health, obviously, which is a consistent trend across every [food and drinks] category and we’re starting to see that having a lower sugar content helps with competition, so that’s becoming much more important to look at.
Just Food: Has the clean-label trend had an impact on how consumers buy plant-based milks?
Threadgold: Clean label is becoming more and more important and we have some innovation coming down the pipeline [in the second half of 2024] that will aim to tackle that.
Just Food: With the increasing interest in health and clean label, have you seen consumers veer away from some of your flavoured products, given these typically have more ingredients and sometimes more sugar?
Threadgold: The flavour doesn’t really impact the health [aspect] of the product, but where we are going is simpler products and with [fewer] ingredients.
Just Food: How do you expect consumer trends to develop in Europe towards plant-based milk in the years to come?
Threadgold: What we’re seeing is it’s continuing to grow. There’s more interest in that particular space, the benefits of it.
What we’re starting to see right now, particularly in the [coffee] world we are in right here, is that more and more coffee shops are offering oat or other dairy alternatives as the standard to milk and that is the way we need to see things continue.
Just Food: What is your approach to pricing? Have you had to cut prices to convince some wholesalers to buy your products?
Threadgold: We have a premium position in the category anyway. I think the fact that we are great-tasting is quite helpful, the quality and the health aspects are the selling points, so we haven’t had to use price as a decision-maker for our buyers.
Just Food: So, would you say inflation and consumers trading down isn’t something you’ve had to grapple with either?
Threadgold: I’m not saying we’re not reactive and caring. Obviously, we definitely want to be part of that, and we have a promotional strategy that we run with our retailers. But, as far as it relates to a decision-maker outside of the consumer, we’re talking to them about [the quality of the product] as opposed to price.
The category has been on the upward trajectory for some time and we’re growing faster than that category trajectory
We certainly haven’t seen [inflation] reflect on our sales numbers. The category has been on the upward trajectory for some time and we’re growing faster than that category trajectory so that wouldn’t suggest that price is [affecting consumer’s] decisions.
Just Food: With growth in the category comes competition. How do you convince bigger retailers to stock your products?
Threadgold: We’re very fortunate in that when I took over… we already had distribution in those major retailers [such as Sainsbury’s, Waitrose and Tesco]. Now what we’re looking at doing is how we broaden that and how we actually get fair share of the shelf, which is really important to us. So, right now, when you look at some of the major retailers, with our position in the category, we should have more space so that’s one of the things the team and I are working on.
Just Food: How do you plan to expand that shelf space in retail?
Threadgold: Through data. We buy data that supports our category stories that we can go and talk to the retailers about… And also, of course, through innovation. Our three-to-five-year pipeline and what we’re doing this year, we want to see that innovation becoming incremental to what we’re doing already.
Just Food: After the UK, Ireland is your second-largest market. How does your presence there differ from the UK and how will you work to grow in that market this year?
Threadgold: In the UK, the majority of our volume is from retail – so less than 10% from foodservice. In Ireland we have more of a 50/50 split.
We’re seeing a decent amount of interest coming from retailers [in Ireland] which are relevant to us, such as Tesco.
But I think specifically we’re actually doing a really great job in away-from-home, which is reflective in sales [there]. We have a great [distribution] partner… they had a Dublin Coffee Festival a few weeks ago, the first one [taking place] there, so that scene is definitely growing in Ireland and that’s something that we can support going forward. From an independent coffee shop-perspective, we’re in a lot of places. We have a pretty high penetration in Dublin in that particular world.
We will continue to drive the same innovation that we have [in the UK] into Ireland. The future looks bright there, too. The category is still growing, we’re outpacing the category, but [our plans] do mirror what is happening here.
Just Food: Do you have plans to expand the brand further into Europe?
Threadgold: [We plan to enter the Netherlands]. The launch is likely in Q3 and it will be into foodservice, though we can’t share anything more specific at the moment.
Just Food: As the plant-based milk category grows, it is becoming more mature. What do brands like Califia have to do to stay relevant?
Threadgold: I think that’s [down to] our innovation pipeline. We’re looking at what the consumer needs are and we’re saying: how do we best deliver on those things? And that’s why have our range of Barista [products] to deliver on a range of coffee experiences and then we’ll have those products coming in that will deliver on the consumer needs that need meeting.
