Krave goes krazy
Sebastiani has eight flavors and counting.
What’s a better grade than A-Plus? How about A-Plus followed by six zeroes?
Jon Sebastiani, the serial entrepreneur with the familiar-sounding Sonoma name, was in year two of Krave jerky and the final day of his Columbia MBA.
“It was the last day of class. Two of the most prestigious professors in the whole program came up to me, they said, ‘Jon, we’d like to see you upstairs.’ I said, ‘Yeah? What’s up?’ They said, ‘Well, you got an A-plus, so don’t worry about that. But…we’d like to invest.’ It was a six-figure number. That was nice.”
When your own professors dump big change into your 2-year-old jerky company, you know you’re doing something right. But it didn’t take professorial acumen to divine that Krave jerky was a good bet. You could tell just by looking at the numbers.
“We grew 500 percent last year,” explains Sebastiani. “We anticipate growing at a similar rate this year. We’ll do potentially 5 million units in 2012. The gross? We expect to be north of $10 million next year.”
Those “units” are MBA-speak for 3.25-ounce bags of nitrate-free, double-marinated, surprisingly moist, 97 percent fat-free and creatively flavored slices of beef, pork, and turkey breast jerky.
Krave’s success is partly a result of the mouth-and-flavor-friendly quality of the product, and partly a result of brilliant planning and market analysis by Sebastiani, who says the idea came to him while preparing for the New York Marathon in 2009. A serious runner, Sebastiani said he got tired of snacking on jerky with the taste and consistency of shoe leather. Most of the products he had tried fit the description of “gas station food.”
Now, remember that Jon’s father, his uncle, his aunt, and his iconic grandparents all made and sold wine. And so did Jon. Marketing and market research were not new ideas. Still, it took a certain adventurous and visionary instinct to look at jerky and see a market ready to be—as Jon Sebastiani, MBA, likes to say—“disrupted.”
That market, Sebastiani explains, “is worth $4 billion a year, with 50 percent of market share held by companies that literally haven’t done any product innovation in 20 years. And what they have done is almost kind of gross—these chicken tender things that look like something you might give your dog.”
Krave, Sebastiani says, “brought some sophistication to a stale category.” And to make the point in marketing-ese, he wrote a 10-page thesis outlining the Krave business plan, explaining why he thought it would be successful, and he gave it to one of the 800-pound gorillas in the food marketing jungle—Safeway.
“They believed it, we executed against it and, fortunately for both of us, it’s working.”
Working doesn’t just mean that a whole bunch of people are buying Krave jerky at Safeway; it means that a whole bunch of people are buying it a second time.
But even though Krave is now in every Safeway store in America, that’s just the beginning of a growth trajectory that hasn’t begun to approach its limits.
“Our curve is just like—whoosh—there’s no stopping, we don’t know where we’re going to end up,” Sebastiani says with a boyish grin that instantly erases about 10 of his 41 years.
“We’re going live in Target nationwide in July,” he reveals, and two more big chains in Texas and the Southeast will begin carrying Krave next year, taking the brand deep into barbecue country. And then Whole Foods is scheduled to start carrying it later in 2013.
Hand in hand with retail success is brand promotion, and that’s where Sebastiani the marathoner intersects Sebastiani the jerky entrepreneur. “We’ve been sponsoring events,” he says, “a lot of races, including the San Francisco Marathon. We were right there, along with the companies you’d typically expect, like Cliff Bar. There were 20,000 runners, we had a Krave tent, and people just went gaga over it. They loved it. We also sponsored the Great Aloha Run in Hawaii, with 30,000 people.”
Dangling Krave in front of serious athletes does two things: It’s good exposure, to be sure, but it also offers the opportunity to change the perception of jerky as gas station junk food. The Krave logo is a stylized runner and the company’s Web site has forums and a chat room where people spend time talking jerky flavors (“The smoky grilled teriyaki pork—best jerky I’ve ever had!”) and fitness. Sebastiani describes preparing for a half-marathon on a diet of Krave jerky, with fruits and vegetables in the evening. He lost seven pounds in the process.
Now Sebastiani is pushing the gourmet envelope, organizing Krave tastings with beer and wine. It’s all about “growing the category” and expanding the boundaries of what constitutes healthy snack food. It’s a wild ride, and it’s likely to get wilder when Krave releases what Sebastiani refers to as product extensions. “Our name is Krave,” he says, “not jerky.” So, you might want to start looking for some new, non-jerky Krave snacks in the months ahead. Odds are they’ll be tasty and nutritious because, remember, two Columbia Business School professors invested.
From the 2012 summer issue of SONOMA