Baking Kits are a Big Success
BY DON DEBELAK
In October 2012, Taya Geiger was fed up after 12 years as a financial consultant at just the time her neighbor, Leah Tutin, came up with an idea for a baking kit. They pooled their talents, and today Scratch & Grain Baking Co. products are in more than 5,000 stores with sales growing 500 percent each year. On the way, the company was featured on the reality TV show “Shark Tank,” landed co-star Barbara Corcoran as a mentor, put together an automated production process and survived the departure of Tutin after four years.
Tutin wanted to make cookies with her daughters from scratch but found it was not much fun and a lot of work. Her solution was a baking kit, with all of the ingredients and just the right amount, packaged in individual color-coded bags.
At first, Geiger was apprehensive. “I thought this concept had to be on the market,” she says, only to conduct research and find nothing. “But I wasn’t sure about the product.”
Once she tried the kit, she was all in: “I totally got the concept. It was about making delicious baked goods but also making it fun and easy. No more baking soda, brown sugar, flour and other ingredients sitting in my cabinets until I was ready to bake; no more measuring cups, measuring spoons; and most important, no more major messes in the kitchen. Quick, fast fun and easy was what the product was all about.”
The first goal was to finalize ingredients for four cookie kits: chocolate chip, oatmeal raisin, gluten-free chocolate truffle and gluten-free chewy peanut butter. This past March 1, the founders started putting kits together in 100 square feet of a shared commercial kitchen. They packed and sealed the bags themselves and on March 17 had 40 cases ready.
“Our original intent was to sell online and develop consumer demand,” Geiger says, “but then on a whim we decided to ask a store cashier what she thought of the product. She loved it, brought in the store manager, and he bought it.”
The store manager said he needed a 35 percent margin and felt it would sell at $7.99. The resulting wholesale price of $4.50 was exactly the cost of the product. But the founders went with the price, knowing they could get the cost down when they automated their equipment.
Sales Growth – Number of Stores
March 13, 2013 1
September 2014 400
January 2015 600
July 2015 1,300
November 2015 2,400
September 2017 5,000
Geiger and Tutin called on the stores in their hometown area of Portland, Oregon, and they all took the product. This included chains such as Albertsons and Whole Foods. Most grocery stores and mass merchants allow local managers to buy and stock local products to see how they do. As organic products were starting to take off, managers were happy to stock a local organic product to help fill up their organic sections.
With the Portland market saturated, Geiger and Tutin focused on the next big market, Seattle—where they got their first big break. “We had success in Seattle with the grocers,” Geiger says, “but our big sale was to Sur La Table, a high-end kitchen housewares retailer that also carried a large number of cooking kits. This gave us our first national account.” Still, the two were not making any money packaging the kits by hand. They needed to bring in more automated equipment.
The Shark Tank Experience
In August 2013, Geiger and Tutin decided to email “Shark Tank” in an effort to appear on the show. The program only allows a photo and a few lines to describe the product, so the two maxed out the opportunity with a creative idea.
“We sent in a really crazy photo of us breaking up our spatulas with a straightforward sentence explaining that we were a kit for people wanting to cook from scratch while having fun, no mess, and no measuring,” Geiger says. The show’s representatives called back.
“Shark Tank” only films in June and September for the next year’s shows, and time was tight. Geiger and Tutin filled out all of the forms, answered the phone questions and prepared a video audition pitch. Then came a bombshell: The show was going in a different direction that year.
They put the show aside and kept selling. Then they were contacted again about possibly taping for 2015 shows in 2014, and the producer was very excited.
Geiger learned what happened the previous year. “You need to go through many layers to get on “Shark Tank,”—first a lower-level scout, then an associate producer, a higher-level producer and finally the executive producer. One executive producer didn’t understand our product. She didn’t understand our kit concept and thought the product was a mix, not a kit.” One of Scratch and Grain Baking Company’s supporters, another executive producer for the show, purchased a sample of the product for the skeptical colleague—who loved it and gave the product the green light.
The show was filmed in June 2014 for airing the next January. (Video: https://youtu.be/mT6rbPsZp98) Barbara Corcoran agreed to be the mentor for Geiger and Tutin, and offered a $120,000 line of credit in return for 20 percent of the equity. A line of credit is a source you can borrow money from when needed, though you typically need to provide details about how you will spend the money.
This was straightforward for Geiger and Tutin, who used the money to buy equipment and could document their cash needs. Not all of the money was required, and Corcoran’s share of equity was adjusted downward to match the line of credit. In February 2015, “Good Morning America” featured their products on the show. They were featured again on ABC’s “Beyond the Tank” in March 2016 (you can watch it! https://vimeo.com/164346058).
With equipment in place to increase production and make some money, Geiger and Tutin were ready to expand sales. The founders started to court Target, and in July 2015 they started a 100 store test. (Today, Scratch and Grain Baking Products are in 1500 Target stores.)
They had continued to expand grocery stores sales, which now included Hy-Vee, Safeway/Albertsons, Publix, Ralph’s, Fry’s and select regions of Whole Foods. Geiger and Tutin kept adding to the company’s momentum.
A big move came in December 2015 via direct input from their Target buyer. According to Geiger, “We stepped outside of the cookie world as we knew it and expanded into other areas of the baking category. We launched three new products: Gluten-Free Honey Cornbread Kit (exclusively for Target), Gluten-Free Cheesecake Brownie Kit, and Coffee Cake & Muffin Kit.” Today, two of those three products are the company’s biggest sellers.
In July 2016, the Scratch & Grain Baking Co.’s facility and all non-gluten free products received their USDA Organic Certification. The company kept expanding its product line in September 2016 with the launch of its first CupCake Kit—The Confetti CupCake & Cake Kit—as well as another exclusive product for Target, an Organic Pumpkin Bar Kit, which launched in the retailer’s stores nationwide.
In December, Tutin decided to back away from the company; she left the company on January 1 to spend more time with family. Geiger responded by spending two weeks of every month flying around the country meeting with her customers to kick sales into high gear.
Geiger and Tutin had decided early on to do all sales themselves, bypassing brokers and distributors. Geiger explains: “We just didn’t feel the brokers could give the same enthusiastic presentation that we give. They carried 20 or more products, while we carried just one.”
Geiger’s first move was to launch three out of the company’s four current gluten-free SKUs as Certified Organic! She followed that up this past June—based on the success of the Confetti CupCake & Cake Kit, the company’s No. 1 seller in a mere three weeks—with a launch of a full line of CupCake Kits: Salted Caramel CupCake, Chocolate CupCake, and several seasonal varieties including Valentine’s, Fourth of July, Autumn and Holiday.
For the holiday products, Geiger just signed an agreement with Elf on the Shelf to co-brand on select Christmas products. All of these moves are positioning the product line to stand on its own, without the intense sales efforts from Geiger. So far, it’s paying off: The company has 12 production and three office workers, and sales are growing every day.