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US diabetic bread start-up eyes expansion

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By Kacey Culliney+

03-Sep-2014
Last updated on 03-Sep-2014 at 13:41 GMT

BreaDr wants to target the 25m US diabetics with low-GI breads, rolls and bagels Photo Credit: MRosen814, The Fresh Loaf
BreaDr wants to target the 25m US diabetics with low-GI breads, rolls and bagels Photo Credit: MRosen814, The Fresh Loaf

Low-GI bakery specialist BreaDr wants to secure co-manufacturers to drive US expansion and hit annual sales of $20m within five years, its CEO says.

The sister company of Hungarian firm Kohl’s Kitchen finalized its bread, bagel and roll formulations around six months ago and was now working on developing multi-grain varieties and pizza dough.

BreaDr owns Kohl’s Kitchen’s intellectual property (IP), manufacturing and distribution rights for North America, developing its own mixes in Maryland using locally-sourced ingredients.

Speaking to BakeryandSnacks.com, company CEO Robert Kovacs said the company already supplied to three or four local manufacturers but it wanted to expand further over the next five years.

“We don’t necessarily want to grow too big, too quick, because that’s a good formula for disaster. But, our primary aim is to have a very strong local, regional base of bagel stores and sandwich shops in three years," he said.

BreaDr was looking for co-manufacturers to assist growth, he said. “What we’re looking for right now is manufacturing partners that want to either have it under our own BreaDr brand, or want to white label the products.”

Over the next three to five years, the goal was $20m in sales. “It’s a very ambitious growth expectation, but having said that, if you really think about how diverse the product line and possibilities are there’s really no reason to not achieve it.”

BreaDr wants to make $20m+ in annual sales within five years

Packaged baked goods for retail was a long-term target, Kovacs said, but wasn't the company's primary focus because of expenses associated with retail slottings. "That’s the next stage – we want to have a certain cash flow first.”

BreaDr was in discussions with several investor groups to secure capital investment, he said.

Untapped diabetes target market

Kovacs said BreaDr had huge growth potential in a US market where around 25 million Americans had diabetes.

“The market is immense… In the US on a federal level, a full 10% of healthcare expenses go to the treatment of diabetes or diabetes-associated illnesses. The cost is staggering,” he said.

“We don’t believe this is a niche market. I think that this is a huge market with untapped potential. Obviously you know the low-carb products are in a roundabout way going to include this market as well, but the problem with low-carb products is that lower carb does not necessarily mean it’s good for diabetics.”

BreaDr had bakery mixes that were low-carb but more importantly ranked low enough on the GI (Glycemic Index) to be suitable for diabetics. The mixes are made using patented flour replacement technology Glusar that sees wheat flour completely replaced.

“We don’t look at our product as a low-carb product because that’s not the audience; it’s not what we’re after. Low-carb is really for everybody – the health conscious consumer, for example. For us, it’s too wide an audience and too big a target market…That’s why we’re really going after the diabetic market; it’s a well-defined, easily accessible market.”

Kohl's Kitchen retailed its products in specialized health food sections across Hungary

Premium, specialized product

The BreaDr products were specialized baked goods, Kovacs said, and so if stocked in retail stores, would be best-placed in a specialized health section of the store.

“In Hungary, for instance, all the supermarkets are displaying this product in their health section and the products are selling really, really well.”

The ‘Holy Grail’ would be to get into Whole Foods, he said, which could happen if BreaDr started working with manufacturers that supplied to the retailer.                                          

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1 comment

Fantastic innovation

It's fantastic to see American companies being at the vanguard of innovation in food sciences - too often forgotten as investors chase the technology bubble. Here's a company making real stuff that people genuinely need -not some stupid app. In my view, this has the potential to really take off - presumably if they make bread, their 'secret ingredient' can be used in anything such as cakes, cookies etc etc? that's a huge market! Best of luck to them. Definitely one for the VCs to watch!

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Posted by Kenneth O'Keeffe
03 September 2014 | 15h58

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