The Austin packaged food economy is booming, even in a pandemic. For more than a decade, Central Texas food and drink businesses have sold their products far beyond the boundaries of Central Texas, reaching the grocery carts of shoppers from coast to coast.
Hundreds of companies call Austin home, from established homegrown brands like Siete Foods, Vital Farms, Beanitos and Me and the Bees that are now national names, to transplants, including Skinny Pop and Lantana Hummus, which started elsewhere but moved to Central Texas to be part of this booming segment of the economy.
Small-to-midsize consumer packaged goods companies have taken billions from the pockets of the largest food companies, so much so that the big guys have been on a buying spree, snapping up Austin companies like Stubb’s BBQ sauce, Sweet Leaf Tea and Epic Provisions.
Austin’s packaged good industry dates back to the 1800s, but only in the past 10 years has it grown to such national significance, rivaling established CPG hubs like Boulder and the Upper Midwest, where mega food companies such as Kraft, General Mills and Kellogg have long been based.
In 1888, Adams Extract became one of the Austin’s first major consumer packaged good companies, and for most of the next 100 years, local food businesses were mostly frozen foods (Night Hawk, Michael Angelo’s), salsas (Jardine’s), salad dressings (Briannas) and, with the opening of White Mountain in 1980, increasingly niche, natural foods, like Bulgarian yogurt.
During the 1990s, money from the tech boom made its way into the food economy through companies like Sweet Leaf Tea and Guiltless Gourmet. Out in Fredericksburg, jam-makers Fischer & Wieser developed their blockbuster raspberry chipotle sauce, ushering the start of the "foodie" movement.
In the past decade, the number of local food companies has easily doubled thanks to an influx of investment capital and food-savvy entrepreneurs who are willing to take a risk on creating foods and drinks that consumers have never seen. Grocery stores are increasingly willing to take a risk on those products to lure in the growing number of customers willing to try them.
Scott Jensen, CEO of Rhythm Superfoods, moved to Austin in the early 1990s to take the helm at Stubb’s. "There wasn’t a collective place where we all got together and shared ideas," he says. "Now there is a good ecosystem here, and I think it’s really just starting."
Many of the city’s food businesses are small enough that they can work out of one of more than a dozen commercial kitchen spaces, which include Cook’s Nook, Capital Kitchens, Just Add Chef and Wingman Kitchens.
Fort Worth, Houston and San Antonio all have larger co-packing facilities than Austin, which means many products might be based here but produced elsewhere.
Salsa and barbecue sauce used to be one of the only parts of the grocery store where you frequently saw "new" products, but that has changed dramatically, Jensen says.
"Your odds of success are so much better in a category that’s growing fast, which is one reason why we’re seeing totally new-to-market, niche-within-a-niche products," he says, like sprouted crackers, quinoa puffs or kombucha that tastes like Dr Pepper. "But just because you come up with an idea doesn’t mean that there’s a factory to produce it."
One of the new-to-market success stories is Cece’s Veggie Co., an Austin-based veggie company that started in 2015 and now has a 42,300-square-foot facility in East Austin that employes more than 200 people. In 2019, the company, which sells spiralized and riced vegetables and veggie meal kits in more than 2,000 stores nationwide, was named the third fastest growing company in the U.S. by Inc Magazine.
Michael Angelo’s 132,000-square-foot manufacturing facility remains the largest in Central Texas. Owner Michael Renna moved his company here from California in the early 1990s, and he’s watched the Austin consumer packaged goods industry mature into one that now competes with his home state for attention at the big food shows.
"I’ve had people say to me, ‘Austin’s got more going on than anywhere else right now,’ and the only other city that used to be touted in a similar way was Boulder."
One of the busy bees in the local CPG hive is TexaFrance, which started in the mid-1980s as its own sauce and pesto company and now makes dozens of products for more than 30 other Austin food companies at a 10,000-square-foot manufacturing space in Round Rock. They make, among other things, salad dressings, marinades, bloody mary mixes, jellies, condiments and quesos — just about anything in a jar, plastic container or bottle.
"I get a call a day, at least, from people who want to start a new product," says co-founder Jean-Pierre Parant, who started TexaFrance with David Griswold. "I will take on people who have a product, a label and are ready for the shelf, but I can’t hold their hand" from the beginning.
It’s not uncommon for food businesses to use farmers markets as a small business incubator to test out an idea and see if there’s enough interest to make the product viable.
Nora Chovanec, deputy director of Texas Farmers’ Market, says that farmers markets used to be a place where customers shopped mostly for produce and meat, but they increasingly want to try new products, snacks and even hot foods.
Making the leap from a small farmers market to a regional supermarket is easier to do when the chain is based in your backyard, as is the case with Whole Foods, Wheatsville Food Co-op and the San Antonio-based H-E-B.
H-E-B launched its Quest for Texas Best competition in 2014, where food companies across Texas compete for prize money and distribution through Texas’ largest grocery chain. Hundreds of Texas-based food companies have found their way to H-E-B shelves through this contest and Primo Picks, the company’s local product promotion program.
Another reason we’re seeing so many more food brands today than a decade ago is the expansion of Texas Cottage Food Law, the legislation that allows many at-home food businesses to operate.
The original legislation went into effect in 2011, and it allowed for the sale of many baked and canned goods but greatly restricted how cottage law businesses could market and sell their products. In 2013 and again in 2019, the law expanded to include more items and allow people to market and sell their products directly to consumers online.
That small change to allow online sales has made a huge difference. Companies, including Nutssosweet, Sweet Bean and Dough Re Mi, have been able to open relatively quickly and sell directly to customers, as long as they meet the requirements.