KeHE Distributors preps Innovation HQ to open in 2024

When people in the natural and organic foods industry hear the word KeHE, they rightfully imagine things like trucks, warehouses, boxes and forklifts. As one of the industry's leading food distributors, KeHE Distributors' business revolves around getting the natural products industry's functional beverages, frozen plant-based burgers, organic corn chips, non-dairy ice cream pints and canned goods to natural grocers across the country.

Innovation? That gets associated with the brands turning proteins and plant botanicals into new products, rather than the company with the semitrailers.

In the coming year, however, KeHE anticipates formally opening a new Innovation HQ in Boulder, Colorado, where it has maintained its natural sales and marketing offices since 2013. The new, 10,000-square-foot facility will feature an elaborate kitchen complete with technology to film cooking demos and hold classes; collaboration spaces; spaces dedicated to video and audio production, including podcasts; and a planogram lab, which will help emerging brands better understand how best to organize and display products on grocery shelves to boost sales.

The point of this ambitious project is to help KeHE's many brands—last year alone, the company brought on 5,000 new brands—succeed in what is a highly competitive marketplace. With brand success comes bottom-line vigor for KeHE.

"Five years from now, I hope we look back and say, 'Look at this brand that is hot in the market today. We had a hand in helping them get started or advance along their path.' There's nothing we like doing more than that," says Brad Helmer, executive vice president of business and corporate brand development at KeHE. "We want to provide a pathway for new and innovative brands to get to market and get on shelves. But it's difficult. For brands that are small but which we think will become much bigger, we want them to be able to come here, shoot video, demo the product and tell the story."

The path toward the new center began several years ago when the Naperville, Illinois, company laid out a strategic plan to become a next-generation distributor. The key to that achievement, KeHE would need a location to serve small brands that lack resources for professional video services, and offer teams savvy mentorship surrounding vital business pursuits, such as marketing, that often get jettisoned as busy founders and teams devote themselves to product development, sales and networking.

At first, KeHE envisioned a farm where the company would grow crops, build a retreat center and welcome partners for brand-building get-aways. But then KeHE learned a handsome two-story brick building was available in downtown Boulder, less than a block from the city's iconic Saturday and Wednesday Boulder County Farmers Market. For years, the market has served as its own kind of brand incubator for the natural and organic foods industry: Justin's Nut Butter, which sold to Hormel in 2016 for $286 million, started out there.

KeHE skipped the agricultural gambit and bought the building in Boulder, a city with "very deep and rich roots in the food industry," Helmer says.

"We wanted to be closely connected to that community, and its history and tradition of bringing new food brands to life," he adds.

Corporate leadership then explored other incubators for inspiration, notably Factory in Bethlehem, Pennsylvania, where partner brands get help with packaging design, food testing, marketing and supply chain in exchange for a financial position with the nascent brand. With its Innovation HQ, KeHE doesn't anticipate seeking a piece of partner brands, at least not now. But KeHE appreciated the Factory's commitment to building brands from kitchen projects into national players.

Seventeen KeHE employees work out of the downtown Boulder office, which opened in 2022. By the time the HQ opens in 2024, KeHE expects 25 employees to work from the space, where the first floor will be devoted to the partner brands. Among other things, the first-floor kitchen opens to a patio on Boulder Creek. Helmer says the company might even erect a pizza oven on the patio.

Pizza or not, KeHE expects that its Innovation HQ will be busy with employees and partners.

"We believe that real innovation is fostered, that real connection to companies is developed, through face-to-face contact, through working together," Helmer says. "Our approach is to use a carrot versus a stick, and say, 'Hey, it's pretty great working out of this place in Boulder [within sight of] the Flatirons and near the farmers market.'

"When we have employee groups come from elsewhere, they'll meet for half a day and then take a hike in the mountains. This location fosters the ability to think outside of the box."