RXBAR's prescription for the future: New name, new products, changes in leadership
RXBAR, which Kellogg acquired for $600 million in late 2017, has created an umbrella company to expand into new product lines. According to Food Business News, Insurgent Brands will debut four varieties of its TIG savory snack bars with chickpeas, lentils and wild rice this week at Expo West.
RXBAR, which will now be known simply as RX, will be introducing RX Oats, single-serve cups of egg white protein, almonds, dates and oats in four flavors. This will be the brand's first foray into breakfast items. New flavors of the RXBAR protein bar will also be coming, the company said.
CEO and co-founder Peter Rahal is shifting to a role focused on vision, strategy and innovation, the Chicago Tribune reported. Former CFO Jim Murray will become company president, but there will be no CEO, the newspaper said. "I'm an entrepreneur," Rahal told NOSH. "I need novelty and this [role] just didn’t align with some of my strengths and also my interests. So I wanted to put myself in a position to add more value."
The trendy RXBAR brand has lifted Kellogg's sales since it was acquired a little more than a year ago. Kellogg executives recently said at the Consumer Analyst Group of New York conference that the brand's distribution more than doubled last year and sales had grown 180% in measured channels.
Before the purchase by Kellogg, RXBAR had become known as one of the fastest-growing brands in the natural and organic segment and was racking up triple-digit growth year over year. When the Michigan-based CPG giant announced the deal in October 2017, it said RXBAR would generate annual net sales of $120 million.
However, not everything has gone smoothly at RXBAR. The company laid off 40 staff members in December, or about 20% of its workforce. Rahal told the Chicago Tribune it was because the brand miscalculated personnel needs. RXBAR also issued a recall in January for undeclared peanuts in some of its products. The recall had to be expanded after customers complained about allergic reactions to more varieties.
Despite these rough spots, and given the company's overall track record of success, it may be a smart move to create a new framework from which to launch products, rebrand RXBAR and bring out other items based on the brand's clean-label legacy.
The TIG savory snack bars sound like a crunchy and less-sweet alternative to what consumers are used to from RXBAR. The initial flavors — barbecue, buffalo, chili lime and pizza — could resonate with millennials, Gen Zers and other consumers looking for something tasty and different.
As for single-serve instant oats, a breakfast item offering protein, fiber, almonds, dates and the well-known RXBAR brand — now known as RX — will probably appeal to consumers looking for a convenient and healthy morning meal with a stripped-down ingredient list.
The Chicago Tribune noted the new product displays its four ingredients on the front of the package, just like the RXBAR. They include one egg white, nine almonds, one date and one-third cup oats. The RX instant oats will be available in apple cinnamon, maple and chocolate varieties.
Rahal told the Chicago Tribune both the TIG snack bars and the single-serve instant oatmeal were in development before Kellogg acquired the company, but that the larger firm's resources had helped bring them to market.
"We have to experiment," he said. "If we’re not doing these things we’re just going to die, or be like everyone else."
RX operates as an independent entity within Kellogg, so it is able to do things differently than in a more traditional corporate structure. The company plans to market its new products online before going to retail so it can adjust based on feedback. It may also be able to get along without a CEO since it has a president to oversee daily operations and a broader leadership team in the works.
Kellogg so far seems to be giving the unconventional company and its co-founder sufficient space and resources to develop in the directions seen fit. An independent startup-like operational model can inspire more creativity and is likely to remain as long as the new products are successful and sales growth stays strong.