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Sunbutter: how one Fargo brand is helping to make peanut allergy lives just a little bit easier

Sunbutter Products Packaging logo

August 2009

There’s a middle-aged woman standing in the manager’s office of a Denver-area grocery store and she’s mad.

Not because she found a hair in her potato salad or because there was mold on her blackberries but because her favorite product was just pulled off the shelves.

“A corporate decision, ma’am. We hope you understand.”

But she doesn’t understand. And she didn’t understand the first time she came in to complain about it last week.

This time is different, though. This time she has an army. She’s brought five of her friends, and the six of them are hovering over a man who’s asking that they not kill the messenger. The messenger might be a necessary casualty, though, because they want their SunButter.

“If you don’t get it back on the shelves ASAP, we’re not going to buy anything in this store ever again,” they tell him, as he realizes this is a problem he’s going to be solving in real-time. “And we’re going to tell all of our other friends to stop shopping here, too.”

Things are escalating quickly as he dials the number of the one man who he knows can de-escalate them equally fast.

About 900 miles away in Fargo, N.D., the phone of SunButter Vice President Dan Hofland rings and he’s briefed on the situation.

“…So yeah, can I get some SunButter?” the desperate manager asks the head of the Fargo-based sunflower butter manufacturer. “And can you overnight it?”

“No problem. It’s on its way.”

Sunbutter Products Packaging with snacksSunbutter Owners Dan Hofland Justin LaGosh

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A cult following like SunButter’s is the holy grail in business—a product or service so essential to people’s lives that they’re willing to take up proverbial arms to get it.

Apple, Harley-Davidson, Lululemon. There are plenty of high-profile examples. But a peanut butter alternative made in little, old North Dakota? Unheard of. Until it wasn’t.

“I don’t know if we ever realized that we would become a national product,” says Justin LaGosh, SunButter’s sales & marketing director who’s been instrumental in growing the sunflower spread to new heights over the last decade. “When I came on in 2008, it was one of those deals where we were in 400 or 500 stores and we were selling, but we’d go through these specialty distributors and get a little four-foot table at a show and wear these god-awful yellow t-shirts, stick that spoon out and try to catch someone’s attention. We’ve come a long way.”

A very long way, to be sure, from the early days when Hofland—who headed SunButter from its inception in 2002 until his retirement at the end of last year—would load up the back of his pickup truck with jars of the spread, set out across the state and not return home until they were gone.

SunButter is now in more than 20,000 stores and 12,000 schools across the U.S. and Canada, and they’ve secured partnerships with a number of major global brands.

If LaGosh and Hofland told you the company’s immense success has been the result of executing a 15-year blueprint to perfection, though, it would make for a great story, if a half-true one.

“I think we recognized that we were a national brand when we looked in the rearview mirror,” says Hofland, “It was very organic growth and just a lot of hard work,” he says.

Sunbutter Machine making the sunbutterSunButter Color Knife Spread

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It was late 2000 and SunButter’s parent company, Fargo-based Red River Commodities, was looking for a way to remain competitive in the international sunflower market.

With Chinese producers undercutting prices, the company was looking for a product that would allow them to do something with the excess sunflower kernel they had at the time and that wasn’t making its way to market.

That’s when Hofland and Red River Commodities President & CEO Bob Majkrzak had an idea.

They would bring back to life a product that was first tried in the 1980s, unsuccessfully, by another North Dakota company. A product called…yep, you guessed it, Sun Butter.

The name wasn’t where they were planning on differentiating their new and improved version, though.

“In the past, nobody could figure out how to market it,” says Hofland, who also worked extensively with the USDA on neutralizing the chlorogenic acids that are naturally present in sunflower seeds and that caused the original SunButter to be quite green in color. “What (other companies) tried to do was say, ‘This is a cheaper peanut butter.’

“Everyone else tried to do: this is an average product for an average market. And what we did is figured out how to sell it as a specialty product to a specialty market.”

Just who was that specialty market?

The 3 million American peanut-allergy sufferers.

Sunbutter paste assembly line

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Hofland says that although they knew they’d eventually be concentrating on the allergy market, they first needed name recognition and so employed a different approach initially.

“You don’t use the water you’re going to drink to prime the pump, so to speak,” Hofland says. “And so what we did is we went to North Dakota stores and said, ‘This is a North Dakota product,’ and sold it on an entirely different premise.

“We said, ‘Oh, by the way, we’re peanut-free. But this is a North Dakota product. You’ll love it.’ And all the stores took it.”

From there, the strategy was to target only larger commercial clients, as Majkrzak, Hofland’s boss, was adamant that it wouldn’t be a retail product.

There was only one problem: everyone liked it too much.

“When we started out, I went to schools and I said, ‘This is for schools,'” Hofland says. “And they said, ‘Yeah, I know, but where can I buy it?’ And we said, ‘You can’t.’ And they said, ‘No, I do want to buy it. I have a peanut allergy’ or ‘My grandparent/niece/neighbor has a peanut allergy. I have to get it for them. They’ll love it.’

“So we started taking it to a bunch of shows and giving it away. We also gave it away on airlines for a while. And people wanted to pay for it. So we finally decided, ‘Okay, we’re going to retail.'”

It was an instant hit, and over the course of the next couple years, Hofland drove around North Dakota and Minnesota going to food shows, home-and-garden shows and wine tastings, developing a fiercely loyal SunButter following and more importantly, learning the ins and the outs of the allergy market.

“I went to allergy shows and just talked to people,” he says. “‘What do you need? How do you need it? How do you use it?’ And I kept asking all those questions.

“And I actually think this is one of the reasons big companies do such a poor job of introducing new products is they don’t have one person going out and dedicating their professional career to, ‘How do you market it?’ and ‘Okay, this is what I’m going to learn to do and all the nuances that come with it.'”

Something Hofland learned very quickly was how uniquely involved and passionate the parents of kids with allergies are.

“If you have a real severe anaphylactic child, mom and dad turn into advocates at the highest level,” says Hofland, who heard countless stories from parents about carrying their unconscious kids into the ER or a child being bullied at school over their allergy. “This is the highest level of emotion, protecting your child. And we started using that motivation those parents had to get them to spread the word on and on.

“And word of mouth is really the way anything gets transferred into somebody’s thinking. You can do all the advertising you want, but if you don’t get word-of-mouth, it’s not going to do any good. And that’s what we did is provide a way for moms and dads to move the message for us.”

Sunbutter Haley DeibertSunbutter Haley Deibert eating

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If the typical allergy parent moves the message, Cindy Deibert sprints with it.

Deibert, who lives in Perham, Minn., is a mother of two, and if her son ate a handful of peanuts, he’d get nothing more than a healthy dose of protein and Vitamin E. But if her daughter, Haley, did? Well, she could die.

“The hardest thing about being a parent (of a peanut allergy sufferer) is when I go and speak to other parents,” Deibert says. “And I say, ‘For my child, sitting in a classroom can be like being in a room with a loaded gun.’ Because, at any time, if something is cross-contaminated or she puts something in her mouth, it could be deadly.”

If that sounds like hyperbole, Deibert would invite you to hear about the first time they discovered 12-year-old Haley’s condition. Haley tells the story.

“I was 11 months old,” Haley says, recounting the day 11 years ago that her mom would rather soon forget. “I was eating Reese’s Peanut Butter Puffs, and I was a little baby so I was just playing with them. I got it on my hands, touched my eyes, and 15 minutes later, my eyes were swollen shut.

“My dad was at work, and it was just my mom and me. She called Dad and said, ‘Haley’s eyes are swollen shut! I don’t know what’s going on!’ So she rushed me to the hospital, and they figured out I was severely allergic to peanuts. And ever since then, I’ve been reading labels.”

“She had to have amphetamine shots that day,” Cindy recalls. “And then we went to a specialist right away the next morning, and they did the prick test. And the minute we did the peanut, her whole back broke out.”

For years, the Deiberts have held out hope that Haley would outgrow the allergy—only 20 percent of those allergic to peanuts actually do—but it’s only gotten worse.

Haley’s so allergic, in fact, that if someone with peanut residue on their fingers were to touch her skin, she’d likely break out into hives. And if she consumed it in any way? They don’t like to think about that.

“We go in every year and get tested, and every year, she’s gotten severely more allergic,” says Cindy, adding that Haley’s doctor says Haley has the worst peanut allergy he’s ever seen. “A 5.7 was like the most severe, and Haley was like an 18.9. Those aren’t exact numbers, but he had never seen anything like it before.”

Often lost in all the talk about anaphylaxis, EpiPens and hospital visits is the fact that people like Haley miss out on the daily peace of mind that comes with not having to approach every place you go like it’s a minefield.

So when Haley and her mom discovered SunButter, it was about much more than Haley enjoying her first-ever PB & J. It was an acknowledgment that the condition she and millions of others have matters and that someone is doing something about it.

See, the thing about SunButter is that it’s much more than just a product. It really is a kind of implicit promise.

“We’re the only peanut-free butter in the country that brings in a farm crop and exits a finished good all under one roof,” LaGosh says, adding that every ounce of SunButter is made from sunflower seeds sourced in the tri-state area. “And that’s a big message we want to get across. You see peanut-free almond butters, peanut-free this, peanut-free that, but we’re the only ones who do it all under one roof.”

Cindy Deibert says that really left an impression on Haley after the Deiberts got their first tour of the SunButter facilities earlier this year.

“That made a big impact,” she says. “Because Haley noticed it, and it made her comfortable. For her, understanding the process gave the whole family confidence, and now we are thrilled to have this alternative in our lives because we love it on so many different things.”

SunButter’s Fargo plant follows all GMPs and is SQF Third Party Level Two-certified, which, in English, just means they abide by very strict, third-party-approved procedures that ensure that not a single molecule of peanuts will ever come near the production line.

“We completely eliminate any cross-contamination from the offices, from the warehouses, from the facilities,” says LaGosh, who adds that he doesn’t even allow peanuts in his own house. “And before everyone goes in, it’s hand-wash stations, hand-sanitizing, hair nets and smocks, and either shoes you wear only in the manufacturing area that stay there or booties to go over the top of them.”

Hofland says they’re also the only peanut-free company he’s aware of that tests for peanuts every shift.

“If we ever did have a positive, it would be very expensive because we’d have to stop production and bring back all the product since the last test,” he says.

Sunbutter Assembly LineSunbutter Assembly Line JarSunbutter Stock Palettes

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Never before has a product like SunButter been more necessary, with peanut allergies afflicting millions of Americans and the number of children suffering from the condition tripling between 1997 and 2008, according to Food Allergy Research & Education (FARE).

And while the peanut allergy epidemic has been an essential part of SunButter’s growth, LaGosh says they also want to be a part of the long-term answer.

“As a brand, because we are providing a solution, part of that is finding the answer to the question and solving the allergy,” he says. “We promote food allergy research and education organizations at a very high level year after year to help find cures to food allergies and help support groups’ education of food allergies. That’s part of our cause and our brand’s message.

“So don’t think for a second that SunButter will say, ‘Well, if somebody cures peanut allergies, then no one’s ever going to use our brand.'”

The main reason SunButter doesn’t need the allergy market to remain prosperous is that the product has a great deal of mass-market appeal, according to LaGosh and Hofland.

“There’s about four or five percent of the general population who just love the taste,” says Hofland, who estimates the figure based on years of attending food shows and handing out samples of the spread. “When they taste it, they go, ‘Oh, this is so great.’ And the next person will look at them and go, ‘Eh, it’s okay.’

“But there’s something about it that some people really, really love.”

LaGosh says that according to independent consumer research they’ve gathered, the number actually might be much higher.

“In peanut butter-using households with kids age 5-11, they tried SunButter versus Jif creamy, and 31 percent preferred the flavor of sunflower butter,” LaGosh says. “It shows the potential in other markets.

“Peanut butter is a $2 billion/year market. So if 31 percent prefer the flavor of sunflower butter over peanut butter, well that says there’s room.”

Cindy Deibert can confirm.

“We have friends who, when they saw that Haley was involved with SunButter, tried it and just love the taste,” she says. “And they’re in Omaha (Neb.) and all over and they’re health-conscious and just like it as an alternative.”

Sunbutter seeds conveyer beltSunbutter PackagingSunbutter product packing

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SunButter is one of those rare instances in business where a product meets demand meets a larger public issue. A win-win-win, if you will.

“We created a product as a solution to a growing problem,” LaGosh says. “And it was different, but it wasn’t things that could be easily mimicked with low barrier to entry like packaging or taste or nutritive value.

“It was high barrier to entry because we invested in our process: where we got the sunflower from, where it’s stored, how we clean it, how we produce it in a closed system. That’s a major, vertically integrated proposition for anyone to mimic.”

Hofland says he believes SunButter ultimately succeeded because they approached it like it was more than just a product.

“We weren’t trying to get to know a group who’s eating Doritos or a group who goes to football games,” he says. “We were getting to know people with peanut allergies. And when you got to know them, the other things came out naturally.

“Also, of all the people we hired, they all had empathy for kids. That was a big deal for us. If they didn’t have empathy, we weren’t going to hire them. The message of SunButter is: trust, love, taste. But we didn’t go around saying, ‘You should love us.’ We put the message together and that ended up being what people said about us.”

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