How this company makes $33M off the things it doesn't do

Scott Mandell needed to do more than go gluten-free.

The entrepreneur envisioned a food company free of what the FDA defines as the eight most common food allergens: milk, eggs, soybeans, fish, shellfish, peanuts, tree nuts and wheat.

“Just being gluten-free was not a unique-enough selling proposition long-term,” Mandell says.

That decision enabled him to build Enjoy Life Foods, and enjoy its success: Sales hit $23.7 million last year, double what they were in 2009. This year the Schiller Park company is on track to hit $33 million, says CEO Mandell.

Enjoy Life is the leading player in the “free-from” category — a $3.9 billion market globally that’s expected to heat up to $12 billion by 2020, he says. The company makes 43 products, including cookies, snack bars, granola, cereal, chocolate bars, baking chocolate, trail mix and a lentil-based salty chip snack.

Its products are found in 14,000 stores, in every state, including locally at Jewel, Target and Whole Foods.

The company traces its origins to a group business plan project Mandell worked on while an MBA student at Northwestern’s Kellogg School of Management in 2000. The mother of one of the members of his project group had multiple sclerosis and had trouble finding tasty foods because of dietary restrictions.

Mandell sniffed out opportunity in part in the gluten-free market. Research showed that celiac disease, a disease of the small intestine, was one of the most misdiagnosed diseases in the U.S., he says. The treatment is a gluten-free diet — one free of wheat, rye and barley.

“New studies were coming out showing that what was first thought to be a rare disease was quite prevalent,” he says. “I felt that over the next decade this was going to grow in the U.S. and become a real marketplace.”

When class ended, he and one of the students from the project continued to work on the business plan. Production began at the new Enjoy Life Foods in November 2002. The decision to expand beyond gluten-free was a major strategic decision the company made that contributed to its success, Mandell says.

His advice to other would-be entrepreneurs: “Don’t be a me-too brand. You’ve got to be unique, to have something that sets you apart.”

He says another key strategic decision the company made was to manufacture its own products instead of outsourcing.

“We had to be a manufacturer because we needed to make sure there was no contamination,” he says.

Enjoy Life, which employs 75 people, started off selling its products online. A grass-roots consumer move helped the brand land on store shelves: Enjoy Life put a retailer-request letter in every order it shipped.

“It said, ‘We would love for you to carry Enjoy Life products,’” Mandell says. “All that consumer had to do was sign it and bring it to their local store. We started getting calls from stores all over the U.S. saying, ‘I have consumers coming in asking for your product,’ and the [the stores] started to order.”

For others looking to get their products on store shelves, think marketing, he says.

“What are you doing from a building awareness standpoint, from a sampling standpoint,” he says. “You’ve got to go in with a program. You can’t just say, ‘Here’s my product, please take it.’”

He adds landing on the shelves without an effective marketing plan can be costly.

At some stores, “you may have to pay slotting charges, and if the product doesn’t move, they’ll remove your product,” and you’ll have spent a lot of money that you’re never going to recoup, he cautions.

“You’ve got to make sure you support the brand.”

Brand support is a priority at Enjoy Life. It has done some 220 consumer events this year, including food allergy walks and participating in support groups for people with food allergies. It also has a strong presence on social media.

The company has nearly 150,000 Facebook fans and close to 9,000 followers on Twitter. But, Mandell says, the taste of the products is the most important ingredient.

“It’s not OK from our standpoint to have a product that’s good enough just if you have a food allergy,” he says. “These products have to taste on par with traditional products. That’s our standard. If the products don’t taste great, they’re not going to sell.”

Maintaining trust in the brand also is a must.

“We’re providing peace of mind for the consumer. We get a significant amount of testimonials from consumers,” he says. “We hear things like, ‘Your products allow my child to live a normal life.’

“There are over 200,000 emergency room visits a year from food allergies, some of which are fatal, and the trust behind the Enjoy Life Foods name is really significant. Maintaining that trust is how I measure our success.”