Daily Harvest wants to make eating nutritious and sustainably grown fruits and vegetables easier — and a bit tastier too. While the company’s expansive menu of frozen, ready-to-eat items has its fair share of uber-health staples designed to satiate one’s hunger (think harvest bowls and greens-laden smoothies), it is also venturing into more mainstream, family-friendly territory by offering dishes like butternut squash mac and cheese, fried rice and yes, even popsicles.
“One of the things we learned from a recent customer segmentation study is that we have a very active consumer who is seeking solutions that are pleasing for the entire family,” explained Annie Streit, Chief Commercial Officer of Daily Harvest, in an interview with Retail TouchPoints. “These are just two product innovations that we are directing toward that insight because they are done in an upscale, healthy and delicious way.”
But this is just one piece of Daily Harvest’s much longer pipeline for growth as it transforms from direct-to-consumer (DTC) upstart to an omnichannel household brand. This holistic strategy encompasses product innovation as well as wholesale distribution and reach. Streit sat down with Retail TouchPoints to revisit the company’s progress shortly following the one-year anniversary of its launch into physical retail, as well as share what’s next for the brand.
Retail TouchPoints (RTP): With such a strong online, direct-to-consumer (DTC) business, why did the company feel it was important to venture into brick-and-mortar?
Annie Streit: With our DTC model, we can only reach the 16% of people that are willing to subscribe to food delivery services online. DTC will continue to be a really important part of our business model because that’s where our brand loyalists can get the deepest variety, earliest access to innovation, and get a lot of value. But evolving into [physical] retail provided an opportunity for more consumers to try us with one item; whereas online, you are usually checking out with a minimum of $50 or a larger-size box. Retail trial is very low risk.
RTP: Now that the brand is one year into this expansion journey, what does your partner mix look like?
Streit: Some of our premier partners are national footprint retailers like Kroger, Target and Costco, but also a handful of incredible best-in-market retailers like Wegmans and other natural grocers. That is a very targeted audience. We have been really intentional in our retail strategy to find places that we can play and where we know we’re going to be additive to the category. We have deep partnerships that allow us to test and learn and iterate to get our foundation ready so we can accelerate our velocity.
RTP: How do you choose the retailers you want to partner with? Or are retailers primarily courting Daily Harvest?
Streit: We had both outbound and inbound interest as we were choosing our retail footprint over the last year, but something we really look for is customer alignment. As we decided to evolve into retail, we thought about our core belief system, which is that our food is an excellent nutritional solution, because it’s built on organic fruits and vegetables, for a wide audience.
I can’t share any agreements that aren’t public yet, but I will share that we’re really expanding our distribution through UNFI, which is a natural and organic distributor, so we’re now available across most of the country. That opens the opportunity for a lot of the truly local natural and organic retailers in specific regions to have access to our product. It’s obviously a narrower subset of product, but they are our best and brightest, so we are really excited about the opportunity that that opens for us to meet even more consumers in the preferred local places where they shop.
RTP: Are you finding there is a lot of crossover where shoppers are buying both online and in stores?
Streit: As we’ve been in more channels, there has been this incredible halo effect where we’ve had a ton of consumers who are mainly DTC say, “I was so happy to be able to pick up my smoothie on my Target run.” We’ve also had some consumers say, “Gosh, I love your brand so much. I did subscribe, and now I pick up certain SKUs at Target and certain SKUs DTC.”
I think about it the same way that I would think about it as a consumer, which is, the more touch points we can use to engage consumers with the same great brand proposition, the better. But I wouldn’t say our goal is to necessarily get an in-store shopper over to the digital side. Our goal is to offer them opportunities to try Daily Harvest and to repeat on Daily Harvest using their preferred shopping method in the easiest way possible.
RTP: Has your move into retail inspired any tactical changes, especially when the goal is to capture eyes and drive conversions in the aisle?
Streit: Our core value prop is very much the same, but the one place where retail has had a material impact on our strategy is packaging and what we expect it to do.
With DTC, you’re engaging with the site and you can get a ton of information about the item. You can read deeply about the benefits and our sustainability approaches. Packaging has to carry so much of that weight in a retail environment within the 60 seconds that you might stand at the freezer aisle. That has been an evolution for us, especially in terms of our look and feel.
We also have found that marketing in one channel or even in one tactic has a material halo across every other channel. Even as we’ve been thinking through our podcast strategy, radio strategy or digital strategy, we’ve really been thinking about, how we can reach the right consumer at the right time with our core message, and then how might that halo across wherever the consumer actually decides to transact?
RTP: To that end, have you done more localized digital marketing and advertising to drive retail sales?
Streit: Because it’s only our first year, a lot of our focus has been on driving trial, so a lot of our activities are more toward the conversion. We’ve done a lot of digital retail-specific activities as well as retailer-specific initiatives. We’ve also done some great partnerships with Instacart. We have found that to be an especially effective tactic for us because our audience does tend to be digitally native. Part of the benefit of being a DTC brand is that our brand awareness runs in the 40% range, so before we entered retail, we already had a larger natural halo than perhaps a smaller, less-established brand might have in terms of consideration.
RTP: Are you finding that your “core customer base” is growing or evolving? Usually with grocery there’s a “Chief Purchase Officer” for the household.
Streit: We just finished a deep body of customer segmentation insights. When we did that work, we very intentionally kept it to a broad universe of people who were shopping for frozen food and were interested in ready-to-eat meal solutions. But outside of that we didn’t narrow the universe, and this process confirmed that our total addressable market is pretty broad.
One of the things that came out of that research that we saw as an opportunity was addressing a male audience that has very specific needs around protein consumption and satiety. We would not necessarily see that in our DTC data, where we’re largely tying to a “Chief Purchase Officer.” But as we think about our total addressable market, that feels like a material opportunity that we’re really talking about addressing in real time because we already have so many items in our portfolio that are nutritionally dense and protein-forward. We just hadn’t necessarily communicated about those products in that way.
RTP: How are you continuing to invest in the Daily Harvest ecommerce experience?
Streit: We recently launched on Shopify from our homegrown ecommerce site, which is going to be a really exciting enabler for us. Imagine things like a limited-time offer strategy that’s specific to seasons. We haven’t had the capability to do that on our own site before.
RTP: After all the big moves the company has made 2024, what’s in the pipeline for 2025?
Streit: We are just kicking off our 2025 planning process, and we have really been thinking about how we get hyper-specific on customizing our approach by retailer. When we launched in retail our first year, we were using a lot of our DTC data to inform our product approach and we would lean on things like satisfaction rates, or an indication of satisfaction through repeat purchases or high velocity within the portfolio.
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What we’ve learned is there are some items that are tried and true and beloved across the country. For example, flavors like strawberry and peach. But some items are performing at the tip-top of the list in certain areas — for example, mango and papaya are big in California. That’s why we’ve been talking a lot about how we can take this new learning into a retail environment that has some uniqueness by geography, then tweak our assortment to make sure that we’re doubling down on the things that work specific to that customer base.
And of course, we’ve been chatting about the role each channel plays within our strategy. How do we make sure that we’ve got the right omnichannel marketing pressure so that we are raising all boats? And then how do we think about the ways that we spend each and every one of our marketing dollars to meet the customer in the best way, depending on which channel they choose?
