Private-label food brand Cadia plants flag in the heart of organic industry mecca

BOULDER — When Naperville, Illinois-based foods company KeHE Distributors LLC bought private-label organic products brand Cadia about a decade ago, the company’s leaders looked westward for a place to nurture and grow their new asset. 

“About eight or nine years ago, KeHE said that we want to be more closely connected to the natural foods community and the epicenter of the natural foods industry,” KeHe executive director of brands Ben Friedland told BizWest.

That epicenter, of course, is Boulder. 

The company launched a satellite office near 38th Street and Arapahoe Avenue in Boulder to serve as the de facto headquarters of the Cadia brand.

This year, KeHE and Cadia “doubled down on our commitment to our presence in the Boulder community by moving and opening a new innovation and growth hub” off 14th Street and Canyon Boulevard, Friedland said. 

That the new office is a stone’s throw from the Boulder Farmers Market, perhaps the natural foods super-epicenter within the broader Boulder epicenter for the industry, isn’t lost on Cadia leaders. 

“KeHE is focusing all of its growth and innovation initiatives out of this Boulder office,” Friedland said. 

The Cadia brand, which differentiates itself from other natural and organic food and goods suppliers by exclusively catering to independent retailers, operates from the 10,000-square-foot Boulder hub, which is about quadruple the size of the company’s previous local operation.  

“With that [addition of square footage], comes an investment in more people for this space,” Friedland said. 

The Boulder operation houses about 15 employees in a variety of  procurement, operations, logistics, sales and marketing roles.

“I don’t want to go so far as to say that the epicenter of the company is shifting,” Friedland said, “but there’s a lot of inertia, a lot of energy that’s moving toward Boulder.”

In fact, a handful of upper-level KeHE executives have relocated from Illinois to Colorado in recent years, he said. Remote workers and Illinois-based employees support the Boulder team. 

“We’re a natural foods, specialty products company, and we’re making a commitment to that by hiring more bodies here [in Boulder], creating a larger space here and connecting to the local community,” Friedland said. 

Cadia offers more than 600 products, from coconut water to canned beans to toilet paper.

Those products are offered only to smaller grocery stores such as Niwot Market, and not to big players like King Soopers or Whole Foods Market. 

“There is an altruism in that,” Friedland said, “but there’s certainly a business case as well.”

Independent retailers “are critical to the fabric of a community,” he said. 

Local grocery stores “are these amazing, culturally rich epicenters that people want to support,” Friedland said, but “retailers need to be able to offer high-quality, high-margin, low-priced products to their customers.”

Too often, local operations that focus on natural and organic offerings price out many buyers in the communities that they’re designed to serve, he said. Customers who shop locally might only buy certain items from their neighborhood retailer, making extra shopping trips to chain stores to buy staples. Cadia aims to fill the gap and allow independents to remain one-stop shops for customers. 

“It’s not feasible for a small, independent retailer that has one, two or three locations to produce their own private-label products,” Friedland said. “As a result of that, they’re competing against larger retailers who have a private label.”

Cadia pools orders from independent retailers across the country to replicate the economies of scale that are often the exclusive domain of large operators.

“We can produce Cadia [food offerings] on behalf of the aggregate,” Friedland said. “… Now that same person who wants to support [local grocers] is shopping a bigger basket. They don’t have to [make an additional stop] at that larger retailer to get black beans at a lower price.”

Margin comparisons to the private labels offered at big chains differ depending on the individual product. “We’re not always going to be the cheapest,” Friedland said. “But we get a lot closer, and in some areas we’re at or below [the margins and prices offered by] these large retailers.”

The availability of high quality, private-label goods is especially important for retailers in areas such as Boulder County where shoppers tend to “buy mostly organic and are extremely knowledgeable about natural food,” Niwot Market co-owner Alison Steele told BizWest.

“We’re little — we can’t buy like a Whole Foods, we can’t buy 25 cases of [branded product] at a time and sell it at a lower price.”

With Cadia, Niwot Market can buy smaller quantities of private-label organic products that are “very similar” to branded offerings at high-end chain grocers, sell them at a competitive price and still maintain reasonable margins, Steele said.

Maintaining margins is more critical than ever for small operators who are struggling under heavy inflation and a supply-chain crunch that are making wholesale products more expensive and harder to source. Combine that with the ultra-tight labor market, and local grocers need to save pennies wherever they can.

“Right now, we’re doing well,” Steele said. “But it is always scary with the way the world is changing. Food [prices are] going up. Everything’s going up.”

Source: BizWest