As labels such as "plant-based," "natural" and "sustainable" have become among the most trendy in food, executives at Kalsec felt they had been preparing for this moment for the past 63 years.
Founded in 1958, Kalsec produces natural colors and ingredients for everything from breads, soups and sauces to pickles, poultry and plant-based proteins.
“Natural is here to stay," said Katie Whalen, Kalsec's director of discovery and open innovation. "I think that is evident over the entire duration of Kalsec's existence.”
Just five years ago, executives at Kalsec began working with food manufacturers to replace synthetic colors in their existing products with natural alternatives as consumer demand for better-for-you options took hold. It was a sometimes difficult and time-consuming process.
"Because of the level of investment in R&D, and all the things we are doing with vertical integration as well, we portray to the customers that we’re working closely with that we’re probably a bigger company than we are.”
Chief commercial officer, Kalsec
Today, CPGs are incorporating even more natural colors and flavors into their products — but this time, they are doing so at the very beginning of the development process. This has created a robust marketplace for Kalsec. A Nielsen study in 2014 showed more than 60% of U.S. consumers cited the absence of artificial colors and flavors as an important factor when making food purchases.
But not all product color change-ups have succeeded. After General Mills updated its Trix cereal in 2016 to remove the artificial colors, consumers said the naturally sourced ones were depressing and the flavor was different. As a result, the cereal maker brought back the brightly colored Trix just one year later. And while Hershey has turned to simpler ingredients in many of its candies, it has struggled to recreate the vibrant reds, greens and other colors that give its Jolly Rancher hard candies their signature brightness without using artificial colors.
Julie Heine, Kalsec's chief commercial officer, said creating a natural match for a synthetic color can be a challenging task. Arguably the biggest obstacle is finding an ingredient that comes close to matching the desired hue. The process is further complicated by the fact that a color can be influenced by a product's fat ratio, water content and shelf life, and whether it will be displayed on shelves or in the refrigerator section. For plant-based hues, the weather also can affect how much color or flavor is expressed in a particular crop.
The pandemic has been a boon for natural, organic, plant-based and other offerings as consumers look to eat healthier. A survey last year by Beneo, a supplier of functional ingredients derived from chicory roots, beet sugar, rice and wheat, found that 75% of consumers globally said they plan to eat and drink healthier as a result of the pandemic. This has spilled over into the fast-growing plant-based category; a separate survey by Archer Daniels Midland found that 18% of U.S. consumers bought their first plant-based protein products during the pandemic, and nearly all of them planned to remain long-term buyers.
"We’re getting just as many, if not more, requests ... for new product development," Whalen said. "I think that is driven by the fact that we sell all-natural ingredients. People that want clean labels are associating clean eating now as the new healthy eating.”
Kalsec knows it's not the only company playing in the ingredients and colors space, but it believes its all-natural focus differentiates it from competitors — making it a go-to supplier for large CPGs and small startups alike. The company also has adopted a vertically integrated approach by partnering directly with farmers, many of whom it has worked with for decades. This enables Kalsec to provide its producers insight on growing crops such as paprika or carrots, while at the same time allowing the company to amass a deep understanding of the ingredients coveted by its own customers.
"Because of the level of investment in R&D, and all the things we are doing with vertical integration as well, we portray to the customers that we’re working closely with that we’re probably a bigger company than we are," Heine said.
During the pandemic, Kalsec was approached by food companies that were unable to procure ingredients from their usual suppliers, said Mark Staples, executive director of marketing. "As a family, private company we can do things that public, larger companies can't," said Staples, a former Kellogg & Co. executive. "It was really kind of empowering and exciting to see that."
Another differentiator is Kalsec's B Corp certification, which signifies a company's commitment to social and environmental performance standards. According to Kalsec, it is among fewer than 500 food companies in the food space to attain the certification, joining businesses such as Ben & Jerry's, Earthbound Farm, Once Upon a Farm, Danone and Plum Organics. The creation of the B Corp more than a decade ago gave Kalsec a way to formalize what it had been doing for years and talk about it with greater transparency, Heine said.
B Corp certification growth across multiple industries comes as the spending power of health-conscious and environmentally aware millennials increases. This demographic is more likely to go out of its way to do business with companies that reflect its values. While Kalsec isn't directly using its B Corp certification as a selling point, it does pique the interest of customers when they hear about it.
"It also holds us accountable to the goals that we set within that space, and I think for customers it's becoming more and more important," Heine said. "It's gone from being 'that's interesting' to an expectation."