A startup for millennial parents is banking on a $55 billion food opportunity no one talks about
This isn't a normal brunch - it's a launch party for organic baby food delivery startup Yumi. And everything on the table is technically food for infants.
The company is pitching its products as a healthier option to store brands, which can contain high levels of sodium and sugar. A subscription service, Yumi delivers meals to customers' doors on a weekly basis, making it more convenient and less time-consuming than putting together food at home, according to the company co-founders.
"You used to live in a town where your mom and your grandma lived, and they used to help you. But now you live far away from home, and they might not know the right [baby] food to cook anymore," the company's co-founder, Angela Sutherland, tells Business Insider. "We want to support you, as a mother, so you don't have to think about those things."
From 2010 to 2015, the organic baby food industry grew globally from $36.7 billion to $55 billion. At the same time, sales of traditional baby food have been declining since 2005, partly due to an increase in parents making meals for their babies at home. Gerber, the top-selling baby food in the US, dropped by 2% within the category in 2016, according to Euromonitor.
To keep up, legacy brands like Gerber and Beech-Nut have added organic lines with trendy ingredients like quinoa and kale in recent years.
Yumi, which launched on June 13, works like many food delivery subscriptions: Customers sign up, pay a monthly fee, and meals are brought to their doorstep. All of the products are USDA-certified organic and contain simple ingredients, Sutherland says. The service is available throughout California, and will expand more widely in the future.
Even for organic baby food, Yumi's prices are on the high side. Depending on which of the three plans you pick, meals range from $6.07 to $8.33 each. For comparison, a 3.5-ounce pouch of Gerber's organic veggies costs $1.25 at Walmart.
But Gerber doesn't offer a weekly delivery service or chef-prepared, nutrient-dense meals.
To see how customers might respond to the food and prices, the company conducted a pilot test with 100 babies (and their parents) in early 2017. One Santa Monica-based parent who participated, Natalie Bruss, tells Business Insider that ordering Yumi is worth the time and money she normally spent preparing organic baby food at home.
"I was paying a nanny on Saturday or Sunday afternoons to spend prime-time with my son, Jack, so that I could slave away in the kitchen trying to purée him beets and add wheat germ oil and this and that. It was too complicated. Meanwhile, I could hear Jack goo-ing and gaga-ing," she says. "So, I thought, 'Why am I doing this when I could be spending time with my kid?'"
Bruss used to pay a babysitter $60 to watch her son while she prepared weekly meals. So she considers the $50 plan (for 6 meals a week) a bargain, and supplements it with organic, store-bought meal pouches.
Yumi isn't the only startup offering high-end organic baby food.
Tinder co-founder Sean Rad and Chobani co-founder Kyle O'Brien were early backers in a similar service called Little Spoon, which launched in New York in April 2017. Raised Real, a California-based company that started delivery on the West Coast in 2016, is more like a Blue Apron for baby food. (It sends customers organic ingredients, and they purée the food themselves.) Other healthy meal delivery startups, Thistle and Gather, have recently added organic baby food to their offerings.
To date, Yumi has raised $4.1 million in VC funding, led by Brand Foundry, August Capital, and NEA. Sutherland, previously a director at the private equity firm Sierra Partners, founded the company with former Wall Street Journal reporter Evelyn Rusli. The company says its target demographic is new parents, most of whom are millennials.
"People want more from a food brand - this is not Gerber," Sutherland says. "Millennials want transparency. That's one of the reasons why our food is transparent. It's in a see-through container, so you see what you're getting."
"If we say this is kale, it is kale," Rusli says. "There is that much green stuff [in the container]. There's no hiding it."
While some studies suggest homemade baby food is healthier than commercial brands, most of the research on early pediatric nutrition is new.
"We don't know all the answers yet," Carina Venter, a registered dietitian at the Cincinnati Children's Hospital Medical Center and co-author of a new narrative review of infant nutrition research, tells Business Insider.
In her review, she found there are a handful of key concerns with most store-bought baby food. Yumi manages to avoid many of them.
There is little data available about nutrient profiles for store-bought baby food; it often lacks texture, which can stunt infants' development ability to chew; there is little variety in the ingredients, which in early life has been associated with increased risk of asthma; and the microbial load (the amount of good bacteria) in commercial baby foods is typically much lower than in homemade foods.
Organic foods, on the other hand, have been shown to contribute to a more diverse gut microbiome, which can prevent conditions like allergy development, inflammatory bowel disease, depression, and anxiety.
"We put rosewater in the oats - You would never make that at home," Sutherland says of Yumi's food. "Parents can eat it too. It's a new kind of baby food."