Squeezing success out of an almond
After a meteoric rise and then a tragic fall, Odwalla founder sees new opportunities in upstart Califia Farms.
Greg Steltenpohl, 63, heads Califia Farms, an almond and plant-based beverage company he cofounded in 2010. With about $100 million in annual sales, the company is something of a redemption for the Stanford graduate, whose first lightning strike in the beverage business, Odwalla, started as a way to fund his avant-garde jazz band, and ended with a fatal food poisoning and recall that eventually left the company in the hands of Coca-Cola. Citrus in the blood: Steltenpohl grew up “feral, roaming the woods” in San Bernardino County, where his father, an engineer employed in the defense industry, kept moving the family away from development that was peeling back the area’s signature citrus groves.
“My dad had a thing about citrus. He wanted a house that was in a grove,” Steltenpohl said. “They just kept mowing them down. We had to keep moving farther and farther away until finally there were none left. I kind of got that in my blood.” An improvisational career: Jazz saxophone also got into his blood. Environmental science, his field of study at Stanford, just wasn’t happening.
“The truth is there were no jobs in environmental science back then, unless you wanted to be part of the coverup,” Steltenpohl said. “Odwalla got started because I didn’t really have a plan. I was focused on music and just thought, ‘Hey, I can make some juice on the side, play music and all that.’ ”
The band’s eclectic mixtures of unpasteurized juice were more popular than the band’s music and, by 1993, Steltenpohl and his partners took Odwalla public. Fast rise, faster fall: Accidental success met accidental fall in 1996, the year Odwalla hit its peak sales of $59 million. An E. coli outbreak traced to Odwalla’s raw apple juice sickened dozens and killed a child in Colorado. Federal criminal charges, fines, lawsuit settlements and a precipitous drop in sales left the company so short of cash it wound up controlled by new investors who eventually sold the brand to Coca-Cola.
Steltenpohl tried his hand at several other businesses before getting a call from Berne Evans, the head of Sun Pacific packing, who had helped pioneer easypeeling mandarins — trademarked Cuties.
“Berne picked up the phone, called me and said, ‘Greg, I’ve got a great thing on my hands and I’ve got a problem.’ The great thing was people loved the easypeel mandarins. But 20% of their crop was either too small or had a little blemish on it,” Steltenpohl recalled. “They were losing 100,000 to 120,000 tons a year that was just going to the cows, literally, in giant piles. So, that’s the sort of challenge I inherited when we started Califia, to find a way to use those.”
Evans’ partnership with the other grower of Cuties dissolved in acrimony, diminishing the supply of ugly fruit for juicing. So, for that and other reasons, Steltenpohl turned to almonds. Sabor Californio: Steltenpohl set his new company on a more deliberately cross-cultural course from the start — naming it for Queen Califia, a character in a 16th century Spanish chivalric novel who came to be adopted as the spirit of colonial California.
An image of her garlanded face graces the bowling pin shaped bottles of the company’s almond milk, as well as its version of Mexican horchata, a cinnamontinged rice or nut-based drink that Califia embraced in 2015.
Horchata is considered the trendy drink of 2017 — Starbucks earlier this year even offered a 390-calorie frappuccino version.
It was an obvious move, and not a niche, Steltenpohl said. “It’s core to us. The Latino population is way underestimated in terms of their appreciation of healthy products,” Steltenpohl said. “If you’re not buying Califia’s horchata, then you’re probably buying something with two or three times the calories.” Lightning strikes: Steltenpohl blanches at the idea that he has some knack for catching food preference waves just as they crest — with Odwalla, then with almond milk, and now with a line of almond-based cold brew coffee drinks.
“It sounds like that,” he admitted with a laugh. “But you figure I’ve been doing it for 37 years. You could say I hit the waves, but there’s a lot of paddling in there.” Not first, better: He also wasn’t exactly first to get into almond milk — the niche is dominated by much larger companies, several of which were bought by major food conglomerates.
“It’s not always the important thing to be the first,” Steltenpohl said. “I think it’s more important to solve a number of other problems.… The way we talk about it is: something different, something better — that’s kind of the hurdle we have to pass internally. If we can’t answer to ourselves why is it different, why is it better, how does it move the bar higher, then why are we doing it?”
Growing up: For all the freewheeling creativity infused in the company’s downtown Los Angeles office in the old Arts District, Califia’s true heart is in a factory in Bakersfield designed around a state-ofthe-art pasteurization process.
“When you have your own manufacturing facility, you can innovate in the process as much as you can innovate in the concept. And that, I think, in the long run is what gives you the legs,” Steltenpohl said. “You have to learn how to scale that, you have to think it through, you have to learn how to make it work in successive stages.”
“That’s a little bit different from most entrepreneurial start-ups, where the goal is to make something that’s attractive to a bigger company and then sell it,” Steltenpohl said. “What typically happens is entrepreneurs make a good product initially. Then as it gets turned over to professional managers or it gets bought out, they scale it out and literally dumb it down. They will reduce all the authentic products and find cheaper products. That’s just the way it works.” Not waiting for Coca-Cola: Nearing retirement age, and having had a liver transplant due to a congenital disease, Steltenpohl has been forced to consider his legacy — though he is far from slowing down.
“I don’t feel safe — I’m too old for that,” he said. “I’m a minority owner of the company, so, it’s not like, ‘Greg says so and that’s what happens,’ ” he said. “What I do think is the investors we have all are longterm oriented.”
“Having a legacy of just flipping it over to a bigger company just because we can doesn’t really give much satisfaction. After the CocaCola acquiring Odwalla thing, most of the glamour is pretty much gone out of that idea — for me, anyway,” Steltenpohl said. “If you’re competitive with the bigger guys, you’re going to force them to do more of the right thing just by market-share dynamics.”