HIRAM, Maine — A 43-year-old organic granola company in a rural Maine town that elbowed its way onto breakfast tables across the nation plans major changes as it faces a crossroads in its growth.
GrandyOats, whose revenue has doubled over the past five years and whose production of organic products rose 67 percent during that time to 2 million pounds in 2021, experienced its first year of losses in 2020 when health food stores closed bulk granola bins and universities stopped buying in bulk during the early COVID-19 pandemic.
That business has recovered and revenue has returned to pre-pandemic levels. But the situation has led the company to make major changes to keep growing, including broadening products, attracting new customers and changing its name while dealing with rising costs, supply chain pressures and international trade issues affecting other industries.
It will now be called Grandy Organics, a nod to its selling nuts, muesli and other organic products along with granola. Co-owner Nat Peirce is departing, leaving Aaron Anker as sole owner and CEO. The company, which sells to large retailers, including Whole Foods, Market Basket and Hannaford, is increasing online sales, which have reached 30 percent of total sales. It has 32 employees, 27 of whom work in Hiram.
Anker said the pandemic challenged the company, but it pivoted from being a top seller of bulk products, which made up half of its business, to selling packed granolas. It also partnered with online subscription companies such as Imperfect Foods to be included in its food boxes and expanded online sales to consumers on its own website.
“The pandemic forced us to diversify our business,” he said.
The company is placing more digital ads to attract online customers. It also had to learn how to sell online, where products need to look good in two dimensions instead of three dimensions on a store shelf. Grandy Organics also was able to offer more variety of products online, including roasted nuts, marketing manager Evan Connolly, said. Some products sold on its website, where it can experiment with new products, are packed in compostable packaging.
The pandemic created some pluses for Grandy Organics, including consumers stuck at home who wanted to eat healthier foods that are high in protein and low in sugar. Connolly said consumers are more likely to research the ingredients of products and compare them to similar ones when they buy online. The company also offers gluten-free granolas made from coconuts and low-sugar granolas.
As it faces its growth pains, Grandy Organics is taking on the same pandemic-heightened challenges faced by much larger competitors, including General Mills and Quaker Oats, such as supply delays, product shortages and inflation.
Grandy Organics is increasing prices 8 percent to 12 percent in line with inflationary and supply chain pressures, Anker said. General Mills, which sells granola cereal, is expected to raise prices up to 20 percent on hundreds of items this year, a wholesaler told CNN Business. Those prices likely will be passed on to retail stores and down to consumers.
Companies like Grandy Organics are being squeezed on pretty much all supplies and ingredients, Jaime Pelosi, purchasing and logistics manager, said. One big hit is on organic honey, a key ingredient in granola cereals.
Last year, U.S. beekeepers filed an anti-dumping lawsuit with federal regulators alleging that Vietnam, Brazil, Ukraine, Argentina and India were artificially lowering the price of honey. With anti-dumping tariffs potentially coming against those countries, Grandy Organics has decided to source organic honey in Mexico. Pelosi said U.S. beekeepers cannot supply enough to meet demand. It uses about 120,000 pounds of honey per year.
Changing ingredients in established recipes is not possible, Pelosi said, because the company’s products are certified organic by the Maine Organic Farmers and Gardeners Association, and any change would require recertification, Pelosi said.
Even getting cardboard boxes for shipping is difficult, with two-week lead times turning to 10 weeks and most recently to 14 weeks.
Anker said the supply situation will remedy itself, “but not quickly.”