Protein bars are popular among health enthusiasts, athletes,
people too busy to eat a proper meal and those looking for a healthy option to
the mid-afternoon chocolate break. The many types of protein bars – meal
replacement bars, energy bars – each contain different amounts of protein, fats
and carbohydrates. Because customers are always looking for variety, there is
still plenty of room for new protein bars on the market, especially in niche
areas, such as gluten free, organic and even kosher
But Kind bars have rapidly become a serious competitor in the
snack food industry. The fruit-and-nut snack is the fastest-growing energy and
nutrition bar in the country and can be found in 80,000 locations nationally.
Sales were close to $120 million in 2012, the privately held company says.
That’s up from about $10 million in 2010, according to an estimate by market
intelligence firm Euromonitor International.
Yet to simply state the company’s store count and growing revenues
does not come close to describing the product’s omnipresent feel. Kind bars are
showing up in in locations where they are the only bar — or sometimes even the
only food product — for sale. When you board an Amtrak train, Kind bars are the
only bars around. When you go to work, Kind bars may be placed out for free by
your employer if not available for sale at the company cafeteria. When you go
out to grab milk at the convenience store, Kind bars will stare you in the face
at the register. When you go to a hockey or basketball game, Kind bars are sold
next to the pizza and beer. And when you’re checking out at Bed Bath &
Beyond BBBY -0.98% , Jamba
Juice JMBA -2.09% , or Au Bon Pain, Kind bars are right
there too.
All the standout places you may find a Kind bar are just one piece
of the product’s extensive distribution network. A snack that was once
available in just 1,000 specialty grocery stores like Whole
Foods WFM -0.87% , Kind is now sold right next to its
competition — mainly Clif Bar, General Mills GIS -2.16% ,
and Kellogg’s K -2.47% — in more than 50 major U.S.
chains including Trader Joe’s, Wal-Mart WMT -1.17% ,
Target TGT -1.27% ,
Costco COST -1.07% , and 7-Eleven.
Kind bars’ distribution has grown so quickly that Lubetzky admits
he is sometimes caught off guard when he walks into a store and sees his
product on the shelf. “It is impossible not to find it once in a while in a
place where you are [surprised],” says Lubetzky. He insists that he isn’t
blindly saturating markets. He says Kind has been profitable with positive cash
flow since the beginning. And he insists the company has to be methodical about
putting the bars in outlets where they will actually sell, because they contain
nuts and can go stale. “We want Kind to be available everywhere that our consumers
are likely to look for us and not anywhere else.”
In the cutthroat competition for shelf space, it is a bit of a
mystery how exactly the company is beating out its larger competitors. Several
big retailers contacted by Fortunedeclined
to discuss Kind. Naturally, Lubetzky attributes the bars’ ability to get shelf
space primarily to their taste and how quickly they sell. Out of the 2,000
products in the nutritional bar category, six of the top 10 fastest-selling
products are Kind bars, according to data from Nielsen provided to the company.
(A representative from Nielsen said she could not share the data directly
with Fortune due to client agreements).
“That data sells the shelf space itself,” Lubetzky says, noting
that sales have doubled on average in each of the last four years.
Kind also relies in part on Lubetzky’s original mission —
spreading kindness — to drive awareness of the product. Rather than rely
strictly on direct sampling, company employees are now distributing plastic
cards that are meant to reward random acts of kindness. If they see a person
doing a kind act like giving up a seat on the subway or helping an elderly
pedestrian across the street, they give the do-gooder the card. In turn, Kind
will send the samaritan a couple bars as well as another card to pay the
kindness forward to someone else. The company, which calls itself “not-only-for
profit,” also has pledged thousands annually to support customer-generated
projects that give back to the community.
“We found a way that seems authentic to honor kindness, to inspire
kindness, and to get more people to try the product,” says Lubetzky, who is
also the founder of an organization called PeaceWorks that works to create
business relationships in conflict regions.
During the company’s formative years, Lubetzky could barely pay
himself a $24,000 salary, let alone invest in getting more people to try the
product. Then in 2008, private equity firm VMG Partners invested in the
company, although it will not disclose the amount.
Kind bars were sold in just 20,000 locations when VMG got
involved. The investors immediately put their capital to work to get the
product into more people’s hands with free samples. Lubetzky’s sampling budget
was $800 in 2008, and he was reluctant to increase it, but by 2009 that budget
ballooned to $800,000. Today, Kind spends upwards of $10 million in efforts to
get people to try Kind bars. The company has a full-time field marketing team
in 25 U.S. markets that organizes sampling in stores, sponsoring sporting
events, taking free samples into corporate offices and putting them in gift
bags at company events.
Kind is also surfing a trend in American eating preferences. A
decade ago, energy and nutrition bars were largely considered a specialty
product purchased only by dieters or athletes, according to a report by
Euromonitor. Today, a new type of consumer looking for healthy and easy-to-eat
snacks has emerged. Americans continue to spend less and less of their
paychecks on food and shy away from paying top dollar for an expensive meal
out, says Harry Balzer, an industry analyst at consumer market research company
NPD Group. Portable bars that purport to be healthy and filling, like Kind,
fulfill a growing need. Roughly 27 million more Americans ate bars in 2013 than
in 2003,
In a place where there is no humanity, strive thou to be human.”
Ultimately, Lubetzky believes that Kind can continue to gain distribution and
become a top food brand — not just bar brand — in the aggressive food industry
while still doing the “kind” thing. Kind bars may already be in 80,000 stores
across the country, but Lubetzky said he can envision that number one day
growing as large as 300,000.
First, he said his biggest challenge is to expand his customer
base even further. While 77% of Kind customers eat more than one bar a day, 80%
of Americans are still completely clueless about the product, according to the
company. The founder hopes to further his following with new offerings
including both granola bars and bags of granola.
If he is successful, Kind products won’t stop showing up in
surprising places anytime soon.
“Kind bars are an iconic product,” said Whole Foods executive
global grocery coordinator Errol Schweizer. “Like Cheerios or Kool Aid or Kraft
Singles — except a lot better for you.”
