Amy'S Kitchen Inc. Business Information, Profile, and History

Company Perspectives:

Have you ever noticed how something almost magic happens when you coo k your own food from scratch? How you connect with each ingredient an d feel your way through each step of the creation? How you use your s enses to make even the smallest adjustments toward perfection? This " magic" happens every day at Amy's. When people learn how we prepare e ach Amy's recipe from scratch, they immediately understand something about why the products taste, well, homemade. Amy's is just a large k itchen where the staff begins each day with the most basic of tasks-- hand chopping fresh onions and carrots, building soup stock from fres h 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 fo od are much the same as those used in cooking at home.

History of Amy'S Kitchen Inc.

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. Th e product line spans more than 130 items, including frozen dinners, p izzas, burgers, and burritos. Shelf-stable items such as soups and sa lsa have been on the menus since 1999. The company has emphasized org anic ingredients from the start, and was a pioneer in making packaged organic foods. Owned by the Berliner family, which is vegetarian (in cluding the dog and cat), the young company has already employed thre e generations, notes People Weekly. Founder Andy Berliner is C EO; his wife Rachel addresses marketing and design issues; Rachel's m other has contributed copy for the packaging. The Berliner's child, A my, whom the company is named after, has been involved from an early age. Amy's Kitchen handles all of its own packaging and production, b uilding a 200,000-square-foot facility in Medford, Oregon to compleme nt its 100,000-square-foot plant in Santa Rosa, California. The compa ny even makes its own organic tofu. It also handles much of its own d istribution, though middlemen sell the products as far away as the Un ited Kingdom and New Zealand. Originally limited to health food store s, 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 g rown 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 conce rns, such as cholesterol and sodium restrictions and gluten allergies .

Earthy Origins

Amy's Kitchen Inc. was launched in 1987 by a Petaluma, California fam ily that believed that vegetarians needed more healthful vegetarian o ptions on the frozen foods aisle. Andy Berliner, who had worked for a n 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 eat ing habits when their schedules were compressed by the demands of ent repreneurship.

The Berliners decided to address the lack of tasty convenience foods for vegetarians, settling upon the humble pot pie as their entr&eacut e;e into the frozen foods industry. Rather than mechanically separate d chicken, their version of the American comfort food classic would f eature organic vegetables.

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

According to Entrepreneur, while sales calls were made from th e 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 soo n developed, even though the original contractor, unable to keep up w ith the volume, suddenly bailed out. Amy's then hastily set up its ow n kitchen in rented space. It would continue to handle its own manufa cturing from then on.

New Markets, Facilities in the 1990s

Amy's entered the 1990s with about two dozen employees. The company m ade 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 bu ilding a spiritual center in Sonoma County for Science of the Soul. T his group was led by Gurinder Singh, a native of India and proponent of vegetarianism. (Andy and Rachel Berliner had originally met on a s piritual 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 wi th roasted vegetables and spinach and feta. Revenues were about $ 25 million in 1996-97, reported the Press Democrat. Company fo under and CEO Andy Berliner later mused that he had originally antici pated 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 warehous e 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. Accord ing to the journal, overall sales had increased 80 percent in a singl e year.

By this time, Amy's employed 400 people preparing more than two milli on meals per month. Amy's grocery line hit store shelves in 1999. Thi s 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, gr owing at a 25 percent clip, exceeded $100 million during the year . The company was doing more of its own distribution and was upgradin g manufacturing. The manufacturing process was labor-intensive, with dough kneaded by hand and pizzas, pies, and burritos assembled by han d. Sophisticated robotic machinery was installed later, however, to h andle the packing. Amy's Kitchen had 700 employees. The local Pres s Democrat gave it kudos as being a commuter-friendly workplace f or 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 t he 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 orga nic frozen section of the market. Full-year sales were estimated to b e between $150 million and $250 million. According to Busi nessWeek online, the company had a relatively low profit margin o f 3 percent. Distribution extended as far as the United Kingdom, Duba i, and New Zealand.

Building for the Future

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

California Governor Arnold Schwarzenegger had pushed to lower the com pany's electricity rates--a legacy of the state's recent power crisis . The prospect of Oregon's lower worker's compensation and developmen t costs, however, plus an ample supply of workers, proved too attract ive. Proximity to Oregon's produce farmers was another selling point. The new location also gave Amy's its first direct rail access. The n ew plant was opening with about 350 employees.

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

Chronology

• 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, O regon.