A pint-size giant in L.A.

Halo Top’s low-sugar, high-pro­tein ice cream has a de­voted fol­low­ing

Los Angeles Times - - BUSINESS - By Ron­ald D. White

With a $20 ice cream maker and a hunger for a more health­ful in­dul­gence, Los An­ge­les lawyer Justin Woolver­ton con­cocted a dessert that quickly de­vel­oped a cult-like fol­low­ing.

A few years later, his line of light ice cream, called Halo Top, has ex­ploded into sur­pris­ing mar­ket dom­i­nance. Halo Top re­cently bested stal­warts Ben & Jerry’s and Haa­gen-Dazs for the top sales spot in its niche — gro­cery store ice cream pints.

“I thought, ‘This is re­ally good. I’ll bet oth­ers will like it, too,’ ” Woolver­ton said, re­call­ing the trial-and-er­ror break­through made in his kitchen.

Halo Top’s ap­peal is sim­ple: a noshame pint of low-sugar, high-pro­tein ice cream with just 240 to 360 calo­ries for the en­tire car­ton. Vanilla, at the low end, com­pares with 1,000 calo­ries for a Haa­gen-Dazs or Ben & Jerry’s pint.

The gold foil that seals each Halo Top car­ton in­structs “Save the bowl” or “Stop when you hit the bot­tom” — a nod to the way many fans con­sume the prod­uct.

That’s how bud­ding YouTube per­son­al­ity Travis Ste­wart eats Halo Top.

“No one wants to have a few bites and put it back in the freezer,” said Ste­wart, a Cincin­nati ac­coun­tant by day and nu­tri­tion ad­vi­sor by night, with his “Travis S” chan­nel ap­proach­ing 100,000 sub­scribers. “You can eat the whole pint with­out feel­ing any guilt.”

Halo Top’s push to be­com­ing Amer­ica’s best­selling gro­cery store pint ac­cel­er­ated in May, ac­cord­ing to mar­ket re­search firm IRI World­wide.

It closed the gap with lead­ers Ben & Jerry’s and Haa­gen-Dazs the next month and landed the top spot in July. For the 12 weeks that ended Aug. 6, IRI said, Halo Top had sales of $86.9 mil­lion, com­pared with $83.3 mil­lion for Ben & Jerry’s and $78.6 mil­lion for Haa­gen-Dazs.

To be fair, Halo Top rules just one su­per­mar­ket cat­e­gory, not count­ing sales of sher­bet or gelato or sizes other than pints, in a U.S. in­dus­try with 2016 sales of $6.6 bil­lion, ac­cord­ing to Nielsen. Still, ex­perts con­sider the con­quest a ma­jor achieve­ment for a small com­pany.

“It didn’t hap­pen just once; it’s sus­tained. It’s a re­mark­able story,” said John Craw­ford, vice pres­i­dent of the west­ern dairy re­gion for Chicago-based IRI. “It’s crazy that some­one can just come into an es­tab­lished in­dus­try and do this.”

That kind of track record draws at­ten­tion. Reuters re­ported last month that Halo Top was ex­plor­ing a sale of the com­pany, cit­ing anony­mous sources. In re­sponse, Halo Top is­sued a state­ment say­ing only that it had pre­vi­ously re­ceived buy­out of­fers and re­jected them all.

The idea for Halo Top came out of Woolver­ton’s ex­per­i­ments with re­duc­ing his in­take of re­fined sugar and car­bo­hy­drates.

“Peo­ple said you got men­tal clar­ity if you did it,” the UCLA and Columbia Law School grad­u­ate said. “Sure enough, I felt those ben­e­fits.”

Al­though Woolver­ton’s first ice cream at­tempt con­vinced him that oth­ers might buy it, there was a huge fi­nan­cial hur­dle. Woolver­ton was al­ready drag­ging around $350,000 in law school loans when he de­cided to fund his busi­ness us­ing the good credit he built dur­ing four years at the law firm Latham & Watkins.

Woolver­ton said he was more than ready for a change. His work there hadn’t turned into one of the John Gr­isham nov­els he had so of­ten en­joyed and that had in­spired his le­gal ca­reer.

“It took me a year to fig­ure out how to re­ally make ice cream,” Woolver­ton said. “I had a good $150,000 in credit cards just to rack up. I mean, it was head­first. It was a risk.”

There were prob­lems from the start.

A law­suit forced a name change from the orig­i­nal Eden Cream­ery to Halo Top, ul­ti­mately lead­ing to a bet­ter-look­ing brand, Woolver­ton said.

In 2012, Halo Top carved out shelf space in Sprouts, Erewhon and Whole Foods in a cold-call process Woolver­ton found nerver­ack­ing in spite of his ex­pe­ri­ence as a lit­i­ga­tor.

Per­suad­ing a big gro­cery chain to take your prod­uct “was a to­tally dif­fer­ent world,” he said, “like what do you even say to a store? I didn’t have a back­ground in this.”

As he landed the new ac­counts, fresh pres­sures de­vel­oped, such as a longer sup­ply and dis­tri­bu­tion chain. There were also for­mu­la­tion prob­lems to rec­tify, tweak­ing the pro­pri­etary mix­ture of no-calo­rie ste­via and ery­thri­tol in ad­di­tion to the usual milk, cream and eggs.

“As it sits and goes through truck af­ter truck and dif­fer­ent al­ti­tudes and all that,” Woolver­ton said, “some­times it didn’t hold up well.”

Com­ing up with a longer­last­ing for­mula took Woolver­ton to Cal Poly San Luis Obispo’s Dairy In­no­va­tion In­sti­tute.

“Com­pletely dif­fer­ent from a place like UCLA,” Wol­lver­ton said with a laugh. “You’re park­ing be­tween cows.”

Turns out, it was worth step­ping in the oc­ca­sional cow­pie.

“The ice cream came out bet­ter, more re­silient through the sup­ply chain,” Woolver­ton said.

Mean­while, ice cream man­u­fac­tur­ers told Woolver­ton his for­mula, with so much pro­tein in it, was too thick — “too vis­cous was how they put it,” he said — to safely run through pro­duc­tion pipes.

When he found a con­trac­tor will­ing to give his for­mula a shot, “sure enough, it does ex­actly what they warned us it would do,” Woolver­ton re­counted.

“It was like a movie. It’s try­ing to go through the alu­minum tubes. I’m sit­ting there watch­ing and think­ing, ‘Do I need to move out of the way? Oh no, it’s go­ing into the red. It’s gonna blow!’ The bolts start fly­ing off across the room.”

Woolver­ton fid­dled with the for­mula once more, this time to make it less vis­cous. For­tu­nately, the ice cream maker was will­ing to let the fledg­ing busi­ness try again, as long as Woolver­ton agreed to pay for any­thing that broke.

“We were like, ‘Of course, that’s fair,’ ” he said. “It worked fi­nally.”

As he de­vel­oped the prod­uct, Woolver­ton also was care­fully as­sem­bling a team, start­ing with the Bou­ton brothers, Doug and Ryan.

Doug Bou­ton was an­other dis­en­chanted lawyer Woolver­ton met through their am­a­teur bas­ket­ball league; he’s now Halo Top’s pres­i­dent and chief op­er­a­tions of­fi­cer. Ryan Bou­ton, a former ac­tor, was brought on to han­dle so­cial me­dia and wound up stay­ing.

As the com­pany grew through word of mouth, Halo Top kept adding fla­vors, usu­ally with the as­sis­tance of its rabid so­cial me­dia fan base. Halo Top has more than 550,000 fol­low­ers on In­sta­gram. Once there’s a siz­able list of fla­vor sug­ges­tions, Halo Top’s 50 em­ploy­ees of­fer their votes, too.

“It’s pretty col­lab­o­ra­tive and fun,” Woolver­ton said.

The com­pany has stuck close to its fru­gal be­gin­nings, and the 38-year-old fit­ness buff sees no rea­son to change the recipe. There’s no fancy head­quar­ters build­ing filled with hip­ster of­fices, just a low-rent cowork­ing space in L.A.’s Fair­fax Dis­trict.

“There is lit­er­ally no rea­son for us to have our own of­fices,” said Woolver­ton, who usu­ally works at home or on the road, as do the rest of his em­ploy­ees.

The staff gets to­gether on a vary­ing sched­ule at the cowork­ing space and the rest of the time com­mu­ni­cates elec­tron­i­cally or by smart­phone.

Third par­ties man­u­fac­ture and dis­trib­ute the 25 fla­vors sold in ev­ery ma­jor U.S. gro­cery chain.

Some see it as the type of busi­ness that can suc­ceed through the strength of its brand alone.

“They are out­sourc­ing pro­duc­tion, out­sourc­ing dis­tri­bu­tion and fo­cus­ing all of their tal­ents on the strat­egy of the brand,” said Deb­o­rah Cours, in­terim dean at Cal State Northridge and a pro­fes­sor who has taught mar­ket­ing and busi­ness cour­ses.

“They can be lean and flex­i­ble. This is a way that small busi­nesses can re­ally be suc­cess­ful,” Cours said. “It shows that the core of a prod­uct’s suc­cess can be the brand.”

An­dres Terech, a mar­ket­ing pro­fes­sor at UCLA’s An­der­son School of Man­age­ment, said Halo Top may face a chal­lenge main­tain­ing growth with­out re­sort­ing to busi­ness norms. As com­pa­nies scale up, Terech said, “there is an in­flec­tion point where hav­ing things un­der one roof and unique poli­cies be­come more ef­fi­cient.”

It hasn’t been a prob­lem so far.

“Other busi­nesses are go­ing to re­al­ize this and start shar­ing co-work­ing spa­ces where you only come in maybe three days a week,” Woolver­ton said. “It’s just the fu­ture, in my opin­ion.”

Pho­to­graphs by Kirk McKoy Los An­ge­les Times

HALO TOP pints re­cently out­sold Ben & Jerry’s and Haa­gen-Dazs in stores. Above, meet­ings are held in a co-work­ing space in Los An­ge­les.

THE IDEA for Halo Top came out of CEO Justin Woolver­ton’s de­sire to re­duce his in­take of re­fined sugar and car­bo­hy­drates.

Pho­to­graphs by Kirk McKoy Los An­ge­les Times

FOR THE 12 WEEKS that ended Aug. 6, Halo Top had sales of $86.9 mil­lion, com­pared with $83.3 mil­lion for Ben & Jerry’s and $78.6 mil­lion for Haa­gen-Dazs. The com­pany’s prod­ucts are sold in ev­ery ma­jor gro­cery chain. Third par­ties man­u­fac­ture and dis­trib­ute the 25 f la­vors of ice cream.

HALO TOP has 50 em­ploy­ees and a rabid so­cial me­dia fan base. With no head­quar­ters, the staff gets to­gether on a vary­ing sched­ule at an L.A. co-work­ing space and other­wise com­mu­ni­cates elec­tron­i­cally or by phone.

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