How Tribe 9 Eases Make-Or-Buy Decision For Growing Food Brands

One of the most difficult steps for food and beverage entrepreneurs who experience initial success is the decision whether to scale up output of their own stuff or to grow by contracting out production to an existing manufacturer. Brian Durst has been building his own startup, Tribe 9 Foods, by providing a third, sort of hybrid path: a food maker that understands the manufacturing challenges and other aspects of building a brand because it also has some small food brands of its own.

Durst, a veteran of both the venture-capital and private-equity worlds and of the food business, formed Tribe 9 Foods in Madison, Wisconsin, four years ago as a platform for acquiring and nurturing some of its own brands as well as helping other small fry leverage capable contract manufacturing. That way, Tribe 9’s manufacturing clients  could pay attention to product development, sales, marketing and distribution – the parts of their business that were going to be most consequential to further growth.

“Small food is a difficult business model,” Tribe 9’s CEO told Chief Executive. “You need a ton of working capital. You need a whole bunch of sales and marketing support, trying to drive consumer awareness. Your margins aren’t fluffy like for say, software. And you need to get food on store shelves.”

And reason enough for up-and-coming food companies to count on a rising expert such as Tribe 9 instead of trying to handle their own manufacturing. “If you’re a food brand, you can spend $1 million on a piece of equipment, or in much more impactful ways. The better allocation of capital is to partner with us.”

Tribe 9’s brands are Taste Republic, a line of refrigerated, gluten-free fresh pastas; RP’s Pasta, an “all-natural” and “artisan” conventional pasta brand; and Yumbutter, a leading nut-butter brand. But about three-quarters of Tribe 9’s solidly mid-market revenue base is manufacturing end-use nut butters, pastas and other products for other branded food companies and under private labels for retailers, as ingredients in items such as confections and frozen meals, and for foodservice markets.

“I talk to so many entrepreneurs looking for a manufacturing partner, and they have a glossy notion of what it would look like, and why it would be so attractive to them, to do their own manufacturing,” Durst said. “But we run a complex business. We have to make really heavy investments not just one time in a piece of big equipment, but annually. When small brands need to scale up, by comparison they’re often ill-equipped.”

In addition to becoming free to focus on brand building, Tribe 9’s clients also benefit from the company’s continual efforts to improve its manufacturing. “We’re always trying to apply more sophisticated engineering processes and equipment to smaller run sizes, by taking a flexible approach – maybe swapping out pieces of equipment,” Durst said. “We’re not talking about doing batch runs, but things that help our clients take more of their own market share.”

Tribe 9 also is a “B Corp,” a certified designation that requires the company to devote itself to stakeholders in the company other than its private shareholders alone, including employees and the community. All Tribe 9 production employees earn above the “living” minimum wage, for instance, and the company is 100-percent powered by renewable energy, Durst said.

The company’s clients can borrow equity from Tribe 9’s unusual status as a B Corp manufacturer – a designation that, for instance, didn’t apply to the contract manufacturer used by Yumbutter before Tribe 9 acquired the Wisconsin-based brand in 2018.

“If you’re a brand that cares about that yourself, and your consumers care about that, you can plant to our B Corp certification,” Durst said.