Amy's Kitchen Inc.

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Amy's Kitchen Inc.

P.O. Box 7868
Santa Rosa, California 95407
U.S.A.
Telephone: (707) 578-7188
Fax: (707) 578-7995
Web site: http://www.amyskitchen.com

Private Company
Incorporated: 1988
Employees: 850
Sales: $200 million (2005 est.)
NAIC: 422420 Packaged Frozen Food Wholesalers; 311422 Specialty Canning

Amy's Kitchen Inc. is the top producer of natural frozen foods in the United States. It sells about 60 million vegetarian meals a year. The product line spans more than 130 items, including frozen dinners, pizzas, burgers, and burritos. Shelf-stable items such as soups and salsa have been on the menus since 1999. The company has emphasized organic ingredients from the start, and was a pioneer in making packaged organic foods. Owned by the Berliner family, which is vegetarian (including the dog and cat), the young company has already employed three generations, notes People Weekly. Founder Andy Berliner is CEO; his wife Rachel addresses marketing and design issues; Rachel's mother has contributed copy for the packaging. The Berliner's child, Amy, whom the company is named after, has been involved from an early age. Amy's Kitchen handles all of its own packaging and production, building a 200,000-square-foot facility in Medford, Oregon to complement its 100,000-square-foot plant in Santa Rosa, California. The company even makes its own organic tofu. It also handles much of its own distribution, though middlemen sell the products as far away as the United Kingdom and New Zealand. Originally limited to health food stores, the brand's reach has taken off, reaching mainstream supermarkets, warehouse clubs, at least one school district, and even Continental Airlines. Amy's is committed to organics, preferring to use produce grown without pesticides. Where milk is used, it is rBST hormone-free (the products do not include fish or eggs). Banned substances include hydrogenated fats. A number of dishes address specific dietary concerns, such as cholesterol and sodium restrictions and gluten allergies.

Earthy Origins

Amy's Kitchen Inc. was launched in 1987 by a Petaluma, California family that believed that vegetarians needed more healthful vegetarian options on the frozen foods aisle. Andy Berliner, who had worked for an herbal tea company (San Rafael's Magic Mountain Tea), and his wife Rachel had each eschewed meat since the 1960s and grew their own food—at least until her pregnancy slowed down the gardening. They wanted to develop a business, but were unsure how to keep their healthy eating habits when their schedules were compressed by the demands of entrepreneurship.

The Berliners decided to address the lack of tasty convenience foods for vegetarians, settling upon the humble pot pie as their entrée into the frozen foods industry. Rather than mechanically separated chicken, their version of the American comfort food classic would feature organic vegetables.

Soliciting advice from friends and relations, the couple whipped up some recipes at home for a few months before launching their new business in a barn on an old dairy ranch in Sonoma County. Start-up capital of $20,000 was raised by pawning a gold watch and car and getting a second mortgage on their Victorian farmhouse, Andy Berliner told People Weekly. The company, incorporated in 1988, was named after their new baby.

According to Entrepreneur, while sales calls were made from the barn, for the first few months the Berliners farmed out production to a bakery. The veggie pot pies sold like hotcakes—soon reaching 36,000 per month. Other pie varieties, including an apple pie, were soon developed, even though the original contractor, unable to keep up with the volume, suddenly bailed out. Amy's then hastily set up its own kitchen in rented space. It would continue to handle its own manufacturing from then on.

New Markets, Facilities in the 1990s

Amy's entered the 1990s with about two dozen employees. The company made its first international sales in Canada in 1991, according to Entrepreneur. The business was moved to Santa Rosa, California in 1994. The new 100,000-square-foot facility cost $12 million and was formerly occupied by St. Francis Winery.

In 1996, Andy Berliner and Fantastic Foods founder Jim Rosen began building a spiritual center in Sonoma County for Science of the Soul. This group was led by Gurinder Singh, a native of India and proponent of vegetarianism. (Andy and Rachel Berliner had originally met on a spiritual retreat in India in 1979.)

The company's first frozen pizza came out in the mid-1990s. Beginning with a simple cheese and sauce pie, the line was expanded to ones with roasted vegetables and spinach and feta. Revenues were about $25 million in 1996–97, reported the Press Democrat. Company founder and CEO Andy Berliner later mused that he had originally anticipated reaching sales of $3 million per year.

In the late 1990s, mainstream grocery stores such as Albertson's and Publix, eager to differentiate their offerings from those of warehouse clubs, embraced the organic packaged food concept quickly. In fact, by the 1997–98 fiscal year, Amy's was deriving half of its revenues from mainstream supermarkets, reported Frozen Food Age. According to the journal, overall sales had increased 80 percent in a single year.

By this time, Amy's employed 400 people preparing more than two million meals per month. Amy's grocery line hit store shelves in 1999. This grew to include a range of canned soups, chili, and beans, as well as salsa and pasta sauce in jars.

Still Growing Fast in the New Millennium

A significant new product line was launched in 2001: bowls. Sales, growing at a 25 percent clip, exceeded $100 million during the year. The company was doing more of its own distribution and was upgrading manufacturing. The manufacturing process was labor-intensive, with dough kneaded by hand and pizzas, pies, and burritos assembled by hand. Sophisticated robotic machinery was installed later, however, to handle the packing. Amy's Kitchen had 700 employees. The local Press Democrat gave it kudos as being a commuter-friendly workplace for doling out free bus passes and special carpool parking spots.

By 2005, Amy's Kitchen was preparing five million meals a month. Its product line had expanded to 100 items. The natural foods market in the United States was then worth an estimated $15 billion and was growing at up to 15 percent a year. Amy's held 70 percent of the organic frozen section of the market. Full-year sales were estimated to be between $150 million and $250 million. According to BusinessWeek online, the company had a relatively low profit margin of 3 percent. Distribution extended as far as the United Kingdom, Dubai, and New Zealand.

Building for the Future

To meet demand and save money, the company built a new $40 million, 200,000-square-foot plant in Medford, Oregon, which offered lower costs than California, and had lobbied heavily in the previous two years to try to win the new facility. Other locations in California (Modesto) and several other states including South Carolina also had been considered.

California Governor Arnold Schwarzenegger had pushed to lower the company's electricity rates—a legacy of the state's recent power crisis. The prospect of Oregon's lower worker's compensation and development costs, however, plus an ample supply of workers, proved too attractive. Proximity to Oregon's produce farmers was another selling point. The new location also gave Amy's its first direct rail access. The new plant was opening with about 350 employees.

Principal Competitors

ConAgra Foods, Inc.; The Hain Celestial Group, Inc.; H.J. Heinz Company; Homegrown Naturals, Inc.

Company Perspectives:

Have you ever noticed how something almost magic happens when you cook your own food from scratch? How you connect with each ingredient and feel your way through each step of the creation? How you use your senses to make even the smallest adjustments toward perfection? This "magic" happens every day at Amy's. When people learn how we prepare each Amy's recipe from scratch, they immediately understand something about why the products taste, well, homemade. Amy's is just a large kitchen where the staff begins each day with the most basic of tasks—hand chopping fresh onions and carrots, building soup stock from fresh vegetables, and proofing doughs for pizza crusts and pot pies. And yes, even our tofu is made in the traditional Japanese method. While our pots may be large (400 gallons!), the techniques for preparing food are much the same as those used in cooking at home.

Key Dates:

1988:: Andy and Rachel Berliner of Petaluma, California, begin making Amy's vegetarian pot pies.
1995:: Business is relocated to Santa Rosa.
1997:: Sales are about $25 million.
1999:: Amy's grocery line hits store shelves.
2001:: Sales are more than $100 million.
2005:: The company begins building a second plant in Medford, Oregon.