Area wholesalers try to expand their brands

By Joe Olivieri

In the Southwest Austin kitchen of Better Bites Bakery, an employee places cookie dough onto a machine's conveyor belt.

The bites disappear behind a curtain of chocolate and emerge seconds later as small glistening morsels.

At the end of the line, Better Bites owner Leah Lopez applies the finishing touch—a chocolate swirl on top.

The Cookie Do Bites are destined for sale, but Lopez will not be selling them to consumers.

Better Bites is one of several wholesalers—businesses who sell products to retailers—who have set up shop in Southwest Austin in the past two years. Wholesale business owners said they were drawn to the area's available space and lower rents compared with Central Austin.

Some local wholesalers report that business is booming. Grocer Whole Foods Market gave Better Bites a Local Producer Loan to purchase new equipment and began offering the bakery's treats in 35 stores in May.

Wholesalers credit the business model as being one that helps them grow sustainably and reach more customers.

"Our decision to become a wholesaler was pretty much the thought from the get-go," said Caleb Simpson, co-owner of Southwest Austin-based energy bar maker Bearded Brothers. "We wanted to see [the business] become a national brand."

Outdoors outfitter REI will begin carrying Bearded Brothers in 115 of its stores in September.

Working with retailers

Retailers such as Whole Foods and Wheatsville Food Co-Op actively seek out new wholesale vendors.

Stores are selective about which products they carry and may offer feedback to help get a product on shelves, Wheatsville Packaged Manager Niki Nash said.

"Often a product is great, but the packaging isn't. Or there may be an ingredient that we know customers typically don't like that can easily be changed," she said.

Nash said during the past 15 years the locally produced product market in Austin has exploded with growth.

"There are so many amazing products being created to the point that we are able to locally source items we never dreamed we could be able to, such as Texas olive oil, paleo [diet]-friendly tortillas and pints of vegan ice cream, to name a few," she said. "We visit farmers markets and keep an eye on local blogs and social media for the next big thing."

Whole Foods works closely with its suppliers and has a local loan program to help businesses grow. Austin-based companies Better Bites and Kosmic Kombucha are recent loan recipients.

In her role as Texas local forager for Whole Foods, Lynda Barrios is uniquely positioned to see wholesalers grow from small businesses to regional companies.

"When I visualize the path of small suppliers, the path to success is more like a spaghetti noodle and less like a straight line," she said. "For some, [becoming a wholesaler] is the path of least resistance. It is the best way to connect with their market and customer base in the easiest way possible."

Barrios said some suppliers are not interested in opening a brick-and-mortar location and prefer the stability of filling orders as a wholesaler.

Better Bites

Lopez said Better Bites sells baked goods without ingredients such as peanuts, gluten, dairy, or artificial colors or preservatives. Lopez said she saw a need for the business after her son was diagnosed as being allergic to wheat, eggs and dairy.

"[Children with severe allergic reactions] are told on and on, 'No, you can't eat that,' 'You can't have a dessert at school,' [and] 'You can't have something at your friend's house because it might have something in it that you would have a bad reaction to and stop breathing.' It's a very serious thing," she said.

Lopez said she decided to grow Better Bites through outside investors rather than take out a business loan or borrow money from family. The bakery has 12 employees and a six-person board of directors.

The products are made and packaged on-site. Local orders are delivered to retailers, and regional orders are packed on pallets, frozen and delivered via a distributor.

Lopez said her products go from the kitchen to store shelves in 24 to 48 hours.

She said she enjoys introducing people to her products at stores.

"I have had moms [of children with allergies] start crying at the [product demonstration] table and say to me, 'You have no idea.' I do know, because I have a child [with allergies]."

Future growth

Earlier this summer Better Bites added retailer Central Market to its list of accounts, which includes People's Pharmacy and local taco chain Tacodeli.

Her Circle Drive facility is close to her house and her community, which she said has supported the business. The site also has a small retail space to maintain a connection with customers, Lopez said.

"[The location] is not the same type of pressure as selling cupcakes and cakeballs to cover [a rent of] $33 per square foot. We are paying a fraction of that [here]."

Lopez said there's a saying that the hardest part of business is getting people to want your product—then you just have to get it to them.

"My opportunity to reach the majority of people who have food allergies would be through wholesaling," she said.