“People were revolted or they absolutely loved it.”
Two former lawyers have turned the multibilliondollar ice cream industry upside down. Inside the low-cal, high-drama saga of Halo Top’s freezer domination
—JUSTIN WOOLVERTON, co-founder and CEO of Eden Creamery, on a recent ad for Halo Top, its $100 million ice cream brand with a cult following
ON THE AFTERNOON Justin Woolverton almost died, he was driving home from Van Nuys with 40 pints of ice cream in the back seat. The 101 was jammed as usual; he phoned a buddy to pass the time. As they spoke, Woolverton noticed he was having a little trouble breathing. His breath got shallower; his heart began pounding; his head started to spin. He tried to remain calm, but by the time he had reached West Hollywood, he was hyperventilating, on the verge of fainting. An ambulance happened to be in the next lane at a stoplight. He wildly panic-gestured to the driver, hoping he might save him.
A few months earlier, Woolverton had founded the ice cream company Eden Creamery here in Los Angeles. A corporate lawyer by training, he’d taught himself the business—how to manufacture ice cream, how to sell it to grocery stores. Yet for every lesson he’d learned about the temperamental frozen dessert, he tended to miss something glaring. For instance, he knew that dry ice—several pounds of which were also in the backseat— was the coolant of choice for ice cream transportation because it turned into a gas as it warmed up, meaning no messy puddles. What he didn’t know: The gaseous form of dry ice, a.k.a. carbon dioxide, is toxic. Once carbon dioxide rises to 1 percent of the air, it can make the body feel drowsy. By 8 percent, the body sweats, then the vision dims, and then—as Woolverton was learning—the mind begins to lose consciousness. Subsequently, the body suffocates.
The ambulance pulled over; Woolverton lurched out of the car. But by the time the paramedics had a stethoscope to his chest, his bodily functions had returned to normal—he had inhaled fresh air.
Air, it turns out, was becoming a recurring detail in Woolverton’s life. One of the ingredients that would eventually make Halo Top—as Eden Creamery’s ice cream would come to be known—the most unlikely new brand to shake up the cutthroat ice cream category was air. Along with milk, cream, egg whites, thickening agents, and a stevia- erythritol cocktail packed into Halo Top’s calorie- defying flavors like Red Velvet or Pancakes and Waffles, Woolverton pumped some three-quarter cups of air into every pint. Which meant, like Los Angeles, where it was born, and Instagram, where it would prosper, Halo Top would become another beautiful illusion: With only 300 calories and 20 grams of sugar, and a whopping 20 grams of protein in every pint, Halo Top delivered on the promise that it was possible to somehow be both decadent and healthy. It was the ice cream equivalent of a toned woman in Lululemon inhaling a cheeseburger. And in the six years since Woolverton developed his first recipe, it has become one of the best-selling frozen desserts in America.
The company’s trajectory has been unlike any other in the packaged foods business. Two years ago, its founders, Woolverton and Douglas Bouton, were broke and
hundreds of thousands of dollars in debt. The co-founders made every possible mistake, from screwing up their ice cream formula, to developing a brand that had already been trademarked by a litigious competitor, to both of them almost killing themselves. (Bouton had a similar driving-withdry-ice death scare. “I probably should have warned you,” Woolverton tells him now.)
They’ve also managed to rewrite the rules of consumer behavior. Typically, people purchase a pint of Ben & Jerry’s or Häagen-Dazs every couple of weeks, guiltily dipping spoonfuls here and there. But Halo Top has stripped away the need for any self-consciousness about downing an entire $6 pint in one sitting. As it encourages them to do on its packaging— “Stop When You Hit the Bottom”—its fans often buy a pint for practically every night of the week, leaving retailers scram- RYAN YOUNG bling to keep the stuff in stock and the company struggling to produce it fast enough.
As a result, Eden Creamery’s revenue has exploded, from $230,000 in 2013 to more than $100 million this year. In 2017, the profitable company earned the No. 5 spot on the Inc. 500, with a 20,944 percent three-year growth rate. “Halo Top is one of the most disruptive stories I’ve seen in my 10 years in the industry,” says Wayne Wu, managing director and partner at VMG, an investor in food and beverage startups. “They turned an energy bar into an ice cream.”
Nothing about the way Woolverton and Bouton run the company is traditional—not its product, its marketing, or even its workday. Halo Top produces ads that are purposefully strange and off-putting. It counts ripped fitness buffs, minor professional athletes, and svelte C-list celebrities among its
fans but doesn’t mind having detractors, too. The company has no office, behaving more like a software startup than a packaged foods business. Its 75 full-time employees work from home, messaging one another via the chat app Slack, most of them meeting up in various Los Angeles WeWork conference rooms. Woolverton starts his business day at 10:30 a.m., but works only in three-hour blasts until midnight. In between, he surfs Reddit, plays Civilization III, and works out. Midday siestas are not uncommon. “It’s just Justin and I, sitting at home in our sweatpants, eating Nestlé’s and Unilever’s lunch,” boasts Bouton, who, like Woolverton, had no experience in the grocery business before starting the company.
The two former lawyers might be killing it in their loungewear, but they are also now in the throes of discovering the consequences of irritating industry giants. In the past year, Unilever and Kroger have come out with their own steviainfused Halo Top copycats. Now, Woolverton and Bouton are pursuing their most aggressive growth strategy yet. In October, they introduced Halo Top’s new line of dairy-free ice cream. In November, they debuted the first of 10 planned retail locations. By spring, they’ll continue to roll out new flavors. The co-founders not only have to outpace their new competition, they have to upend the most stubborn tradition of all: the curse of the low- cal-food fad. IN 2011, JUSTIN WOOLVERTON was just another useless guy in Hollywood. His four years at the white-shoe law firm Latham & Watkins had crushed the notion that his career would ever measure up to his childhood dreams of strutting across a courtroom like the lead attorney in a John Grisham novel. At 32, the most glamorous thing the former Navy brat had done was fly to Hong Kong for a high-profile contract arbitration, where he then spent 10 days reviewing documents in a conference room, clicking a button in database software whenever one was relevant to the case.
Fortunately, Los Angeles has plenty to offer the young and aimless: When he wasn’t working, Woolverton took improv classes, read screenwriting books, and wrote a pretend episode of his favorite TV show, FX’s The League. He did standup at open mics in coffee shops, telling bad jokes. “It was the cringiest period of my life,” he says.
After burning out on comedy within a few months, he turned to the next best hobby in Los Angeles after performing and writing spec scripts: optimizing one’s diet. He had long been practicing intermittent fasting, limiting his caloric intake to certain hours of the day, and avoiding sugar and carbs. He’d regularly skip all food until 4 p.m., and then ingest two highprotein entrées, such as a chicken burrito bowl from Chipotle and a pork shoulder omelet. He felt this kept his mind sharp and his beach body taut. But this disciplined lifestyle left his sweet tooth unsatisfied. The man needed dessert.
Woolverton was hardly a chef, but he was determined to concoct a healthy and decent-tasting treat. He assembled his early recipes like crude equations, adding Greek yogurt to berries, then adding stevia—a lowcalorie, plant-based sweetener that had recently become popular—and hoping the mixture, once blended and frozen, would equal ice cream. It didn’t. It was hard and icy, like a yogurt Popsicle. He varied the amounts he combined, figuring out how much stevia was needed for just the right level of sweetness. He bought an ice cream maker, and the mixture tasted even better. Once he finally hit the perfect recipe, “I could barely sleep at night,” he says.
Soon Woolverton was phoning independent manufacturers, known in the industry as co-packers. A small-time one in Van Nuys agreed to let him come in on the weekend and use the six-gallon mixer. Woolverton’s first batch of ice cream was slop. “Absolutely garbage,” he says. “It didn’t even freeze.”
Making ice cream commercially was not so simple as multiplying his kitchen recipe by 50, as he’d thought. Ice cream is an odd and finicky product; it freezes soft, due to its high sugar and fat content. If you attempt to circumvent this formula, you need to find combinations of ingredients, such as probiotic fibers and erythritol, as well as gums to stabilize it. But getting the balance of ingredients right is treacherous—a gum that might fix the texture can completely throw off the flavor. Woolverton went back to his internet research and developed a more methodical approach, listing all of his ingredients in a notebook and tweaking the proportions, until, eventually, he found a balance of gums and fibers and milk proteins that produced a good taste. To reduce the calorie content of a pint, he spun his ice cream full of that air—a process known as overrun. (All ice cream brands do this, but less expensive and low-fat concoctions contain significantly more air than brands like Häagen-Dazs and Ben & Jerry’s.)
After a year of trial and error, Woolverton finally had a
product that satisfied him, even if it was temperamental: Straight from the freezer, the ice cream could still be chalky and hard as a rock. But after several minutes on the counter, it warmed a bit, and the consistency became smooth—as good, in his mind, as any full-fat ice cream. He paid a graphic designer $30,000 to develop the logo and the packaging, and spent over $100,000 more on raw ingredients and materials, using up every last paycheck from his day job. He decided to call the brand Eden Creamery, to evoke the idea that such a good-for-you ice cream was a product of paradise, untainted by sin. (Not too long afterward, Woolverton realized he’d made a grave error with his company’s name—a corporation, Eden Foods, already held the trademark and he had to scrap everything, coming up with a new brand name—Halo Top— and designing a new logo.)
Natural-food stores began buying into the appeal. The first supermarket to carry his ice cream was Erewhon, an L.A.-based gourmet chain that was also Woolverton’s local grocery store. Luckily, the patrons were his people—the kind who loved pricey indulgence so long as they think it is healthy, too.
When Woolverton flew up to San Francisco to pitch the Bay Area Whole Foods, the buyer put in an order for 225 cases without so much as tasting the stuff. Tagging along with Woolverton was a lawyer buddy from his basketball league, Doug Bouton. Bouton had also wanted to leave law; after the Whole Foods meeting and a subsequent trip to a trade show, Bouton wanted in too— as Woolverton’s business partner.
Woolverton would continue to be chief food scientist, and run marketing and finance. Bouton, a math and theology major who still enjoyed managing complex fantasy football leagues, organized Woolverton’s mess of Excel spreadsheets into a supply chain and a sales operation. Bouton set his sights on mainstream grocery stores and raising money.
But when Bouton began showing up at the headquarters of mass-market chains, he encountered resistance. “Every buyer was different, but the pushback I’d get was ‘Healthy ice cream? That sounds disgusting,’ ” says Bouton.
Serving perfect ice cream to buyers became one of the co-founders’ primary challenges. Their product was still very sensitive to temperature, and if the pints arrived encased in dry ice they could take 45 minutes to thaw to the ideal smoothness. Bouton began showing up to meetings an hour or more early, looking for ways to intercept the ice cream samples before the meeting so he could make sure to serve them himself—stalling the conversation or expediting it when necessary. If he could get a buyer to taste an ideal sample, the meeting almost always transitioned to negotiating deal points. If not, he’d stumble.
Bouton visited 75 buyers in six months. In 2013, the company signed up three more Whole Foods regions and several smaller chains. Halo Top’s distribution expanded into supermarkets across the country. Woolverton and Bouton finally quit their day jobs.
But just as the founders began to get the ice cream on store shelves nationwide, the company’s finances were on thin ice. Early in 2013, the pair had raised $500,000 from family, friends, and old colleagues, which they hoped would sustain them until business took off. But to get on new store shelves, they had to either give the retailer the first cases of product free or pay a slotting fee—as much as $150 per flavor, per store. For large chains, these fees could run into hundreds of thousands of dollars, killing their cash flow. As if that weren’t enough, in 2014, growing pains with quality control had cost the company a huge account: Sprouts reduced its orders and eventually stopped carrying Halo Top in its more than 200 stores.
The founders struggled to make ends meet every month. Woolverton maxed out five credit cards, carrying a balance of over $150,000. Desperate, Woolverton applied for a predatory loan, which had an interest rate of 24.9 percent—and got turned down. Bouton applied for the loan instead, securing them another $35,000. When the money arrived, they celebrated. “That buys us like two more months,” Bouton said. BY THE END OF 2015, they had managed to raise $1 million from angels and the CircleUp crowdfunding website, which gave them a runway of 16 months. “Basically, 2016 was the makeor-break year,” says Bouton. If they ran out of money this time, they would wind down the company and sell it for liquidation. “We’re not going to raise money again. It’s too
painful,” says Woolverton.
By then, the co-founders had become scrappy. Bouton persuaded stores to discount their slotting fees. The savings were then used on ads that drove traffic to those specific stores. Woolverton continued buying hyper-targeted Facebook and Instagram ads aimed at people who liked ice cream and healthy foods and lived in the ZIP codes immediately surrounding each new location. “I quickly figured out I could spend $150 on an in-store demonstration, or I could spend that on targeted ads that cost 10 cents per eyeball,” Woolverton says. “You drive a lot more traffic doing it that way.”
Bouton and Woolverton reached out to fitness buffs with sizable Instagram followings, hoping they would talk up the brand for free in exchange for ice cream coupons. They became extremely responsive to anyone who contacted the company, whether by customer service or through an informal mention in Instagram. “The goal always was to talk to people the way we talk to our friends,” says Woolverton. Bit by bit, word of mouth began to spread.
In the months that followed, serendipitous things began to happen. A West Hollywood personal trainer at a gym just a few miles from Woolverton’s apartment was working out with a magazine writer. The trainer had recently discovered Halo Top and couldn’t stop talking about it—the high of knowing he could eat a pint of the stuff a night and feel no guilt. In January 2016, the writer went gonzo, writing a story for GQ.com chronicling 10 straight days during which the only thing he consumed was Halo Top. The headline: “What It’s Like to Eat Nothing but This Magical, Healthy Ice Cream.” A little over a month later, BuzzFeed published an article emphasizing “I tried [Halo Top] and OMG. LIFE- CHANGING.”
Halo Top couldn’t have orchestrated better timing. By then, Bouton had gotten Halo Top in nearly 5,000 grocery stores nationwide. Meanwhile, Woolverton’s team had built up the ice cream’s considerable following on Instagram and Facebook and had figured out how to use the platforms to promote positive articles and target specific groups. As both the GQ.com and BuzzFeed stories went viral, sales jumped. “Those two [stories] put millions of eyeballs on us,” Bouton says. “And the snowball started.”
Over the next three months, Halo Top’s growth rate doubled, with sales increasing an average of 78 percent a month. Eden Creamery turned cash-flow positive, and finally the company was on firm financial ground.
At Rex Creamery, the dairy that makes Halo Top’s ice cream mixes, executives wondered what was going on. “We were making 1,000 gallons every couple of months for them,” says Gary Ericks, who runs sales at Rex. “All of a sudden, they started ordering 3,000 gallons. And then it got to the point where we couldn’t believe what was going on—it got to 9,000 to
12,000 gallons a day.” Shoppers, it turned out, were buying Halo Top differently from how they’d bought ice cream in the past. Rather than purchase the occasional pint, many customers were scarfing down a pint of Halo Top every night.
The behavior took both supermarkets and Woolverton and Bouton by surprise. Shelves went bare; inventory dwindled; Eden Creamery began having trouble filling its purchase orders. Its co-packer was reluctant to give it excess capacity at the expense of its other clients—a frequent problem in the industry, says William Madden, a food and beverage supply chain consultant.
As the summer of 2016 approached, the founders looked for ways to make more ice cream. They worried that if they failed to fill their orders, a big competitor could clone their product, ramp up production, and push them off the shelves. Bouton and Woolverton decided to make a big bet. They did a deal with DariFill, a maker of ice cream–manufacturing equipment, and approached co-packers with an offer: If they built a new line dedicated to Halo Top, Eden Creamery would finance the new equipment purchases and guarantee a full production run for an extended period of time. By the summer of 2016, Bouton got two co-packers to agree to the deal. Halo Top now had its own dedicated assembly lines—factories within factories—giving the company the freedom to manufacture what it wanted when it wanted. IN A LITTLE LESS THAN TWO YEARS, Halo Top’s relentless sales growth has afforded the founders something most entrepreneurs only dream of: They run a profitable company, at scale. They retain majority control. Their debts are paid off. “My credit score is finally above 600,” says Woolverton.
This summer, financial news outlets reported that the company had hired Barclays to shop it for a $2 billion acquisition. Woolverton and Bouton say that’s untrue. They acknowledge they’ve had conversations with bankers and say they’ve been pitched relentlessly by private equity firms and other would-be buyers, but they are having too much fun to sell. They opened their first shop, Halo Top Scoop Shop, in L.A., and they continue to add new flavors, both in their stan-
HALO TOP HAS FOUND ITSELF AT THE CENTER OF A DEEP PHILOSOPHICAL DIVIDE: THE ICE CREAM PURISTS VERSUS THOSE HUNGRY FOR A CHEAP CALORIE THRILL.
dard and new dairy-free lines, in whatever varieties tickle their fancy.
But the industry giants are starting to encroach with their own stevia-based desserts. In the past year, Breyers, the ice cream brand owned by Unilever, introduced a low-calorie, high-protein ice cream with the calorie count printed in big letters on the container, just like Halo Top. Kroger has also introduced its own private-label clone, Simple Truth Low Cow Lite Ice Cream. These new entrants join an existing Halo Top com- petitor called Enlightened.
In the battle for shelf space, Halo Top is taking the threat seriously. Bouton, armed with Halo Top’s strong sales figures, is pushing to expand its typical footprint in stores from two shelves to even more. The company now offers a free branded freezer chest to any store interested in stocking its product on the floor. Meanwhile, the founders are working to stifle their competitors. They have exclusive deals with some 16,000 stores, meaning no direct competitor can advertise with displays in those stores or in their circulars unless they approve them first.
“If they had introduced clones a year earlier, it could have been checkmate on us,” says Bouton, citing the slower demand back then and the company’s trouble filling orders. Now it’s a different story. “When we go head-to-head in the freezer case we’re the bestselling thing by two, three, four times,” says Bouton. “Buyers have never seen it before.”
To keep feeding that momentum, the company has hired seven people who do nothing but offer free ice cream to influencers, be they pro athletes, designers, or Doug the Pug, a dog with an agent and 2.9 million Instagram followers that recently appeared in a photo lounging in a bathtub with a pint of Mochi Green Tea–flavored Halo Top.
If all of this—the euphoric personal trainer, the celebrity dog on social media, the pints filled with air—has the ring of a bubble to you, you’re not alone. This has been the perennial problem of low-fat brands. The diet end of the freezer case has been something of a revolving door, with one faddish ice cream followed by the next (see “Out to Pasture,” page 100).
But unlike the brands that came before it, Halo Top isn’t competing on calories alone. Like politics and religion, Halo Top has found itself at the center of a deep philosophical divide: the ice cream purists versus those hungry for a cheap-calorie thrill. Two bites of Talenti or gorging an entire pint of “low-fat ice cream” (as Halo Top has been classified by the FDA)? It’s a heated debate that often plays out on social media. A keyword search of Halo Top on Instagram yields endless close-ups of baremidriffed fans smiling with their favorite pint, while ranters like @joshkrugerPHL don’t hold back on Twitter: Halo Top is “ice cream for people who hate life.”
But Woolverton’s a modern marketer. Rather than run from the criticism, he’s barreling Halo Top toward its center, stoking its cultish image. Recently, the company ventured into movie theaters with a disturbing 90-second commercial. It’s a dystopian satire on the idea of eating nothing but ice cream, but in this version, a confused elderly woman awakes in a futuristic all-white room to find out that everyone she’s ever known is dead. To her horror, the only thing left to sustain her for the rest of her life is an ice-cream-serving robot.
“People were revolted or they absolutely loved it,” says Woolverton of the public’s polarized response. Sure, part of his product’s staying power will be the science and flavors fueling its formula. But the way he sees it, if you want to outlive a fad, you have to be willing to make yourself part of the cultural conversation, good or bad. The riskiest thing you can do is play it vanilla.
THE DIET END OF THE FREEZER CASE HAS BEEN A REVOLVING DOOR, WITH ONE FAD FOLLOWED BY THE NEXT.