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CircleUpMarch.19.20156 min read

Cream of the Crop: Smári Organics is Using a Thousand Year Old Yogurt to Revolutionize Healthy Eating

Yogurt may have originated as a way of preserving milk, but today its appeal is about fast, easy nutrition. Packed with protein and calcium, the cultured dairy product is big business, with Euromonitor recently estimating the 2014 US yogurt market to be over $8 billion and growing.

But not all brands are alike. Smári Organics has tackled the industry from a unique perspective: Their goal is to make it easier for families to eat healthy. With that in mind their product is low in sugar and high in protein — 20 grams in a single cup. Smári Organics’ founder, Smári Ásmundsson, didn’t begin to look closely at nutrition labels until his son was born in 2008. “I started noticing the food marketed to kids,” says Ásmundsson. “It was all sugary crap.”

Once a photographer in advertising, Ásmundsson started to think about the snacks he grew up with, including skyr, a strained yogurt that’s been made in Iceland for over a thousand years. “I just wanted to feel good about what I was feeding my son every day,” Ásmundsson says. Skyr was the closest thing he had to fast food as a child — after all it was an instant, no-cooking-required snack — and it was what he missed most about his home. So he teamed up with a master skyr maker (a family friend from Egilsstaðir near the eastern shores of Iceland) to create the perfect, scalable recipe for the new brand.

Skyr is a unique yogurt — the easiest way to describe it is to compare it to Greek yogurt, though yogurt makers will tell you there are big differences between the two styles. Skyr is thicker, creamier, and fluffier than Greek yogurt, and takes anywhere from 50% to 100% more milk to make a single cup, resulting in the highest protein content in any yogurt in the market today.

Less than a decade after Smári’s idea to bring Icelandic yogurt to the US, Smári Organic is in natural food stores across the country, and growing fast.

Enter CircleUp. Aggressively expanding a food brand requires cash. Smári Organics raised their Series B with CircleUp in February 2014, enabling them to expand their market and extend their partnership with Whole Foods. Now they’re back for another round, looking to repeat their previous success and raise additional growth capital.

We sat down with Ásmundsson to talk about the company’s first experience funding with CircleUp, the particular challenges inherent in the yogurt industry, and where they’re headed next. (Hint: Probably to your corner store.)

Can you give me some background on Smari’s origin as a company?

We were founded in December of 2011. It took us about a year to get the investment going and we launched our first product in December of 2012. We were in stores nationwide a month later. From the get go, we were in Whole Foods locations across the country.

How did you get into so many stores so fast?

Whole Foods was very supportive from the beginning. When Smári was still just an idea, I reached out to the Nothern California dairy buyer at Whole Foods, and asked if he could meet with me. The first thing he told me was, “You know, you’re not going to believe this, but I think I’m more excited about this idea than you are. We need something like this.” Here I am, this stranger with a weirder, more expensive Greek yogurt, and this guy is already sold.

What is it about skyr that had him so excited?

To make skyr, it takes four cups of milk to get a single a cup yogurt. Greek yogurt is about half the amount of milk — but then our yogurt has the highest protein content of any yogurt made in the U.S. It’s also creamier than Greek yogurt. It’s fluffier, and not chalky all. We’re also the only company in the U.S. to make it the way they make it at home, in Iceland. It was immediately apparent that there was a market for an organic high protein product.

Did you launch with plain as well as flavored?

Yeah, we started with four flavors. We launched with strawberry, blueberry, vanilla, and then pure — We call it “pure” because there is nothing plain about it. This year we added coconut and peach, and we’re the very first to make whole milk skyr with pure vanilla. After a thousand years, we have revolutionized Icelandic yogurt.

Friends and family were essentially our series A. Series B was CircleUp, and now we’re on series C.

You did your first round of funding with CircleUp, correct?

Friends and family were essentially our series A. Series B was CircleUp, and now we’re on series C.

What came out of your series B funding with CircleUp?

We did that round of fundraising to increase our market share, hire more, and upgrade our equipment. This time it’s the same, we want to repeat the success we had last time. We’re improving our manufacturing and increasing distribution. It’s very expensive to increase distribution for a food product. Our volume is not that high, so we lose for a while every time we add a new distributor. It takes a little time.

What’s the biggest challenge you’ve faced so far?

There are a lot of challenges. Selling it, certainly. Especially launching nationwide from the start has its own challenges, especially in finding manufacturing facilities. There are big obstacles everywhere you look when you start up a company making food, and especially packaged foods. Though reaction has been just incredible and really encouraging. And compared to advertising, it’s easy.

How so?

Advertising is difficult because you’re dealing with something that’s very hard to measure. So in that way, it was a good training for this. This industry is easier to measure. And I have all my ad experience for the marketing side of the business. The co-founder I brought in, he used to run an organic ice cream company. He knew manufacturing and production like the back of his hand. Between the two of us, he is very good at finance, he is very good at production. Then sales and branding and marketing is my expertise. We have it pretty well covered. We’re both in our 40s, so we have quite a bit of work experience between the two of us.

How do you position the Smári brand?

We price the product as cheap as we possibly can because it’s a very competitive market. We are more expensive than almost any yogurt in the market and that’s just because we use organic milk from grass fed cows on small family farms. We keep our margins as tight as possible. Advertising is minimal at the moment. We do social and we do Facebook and we some guerrilla advertising. Everything is on a shoestring budget.

Right. You’ve had an impressive amount of press though.

We have, yeah. We have been getting a lot of great nationwide press. We’ve been getting incredibly strong. I think it’s the best yogurt in the market and people respond well to that. We have more protein per ounce than any other brand, we have less sugar than almost any other too. We have a great tasting product that is incredibly healthy, loaded with protein and there is a huge need in the marketplace for that.

What advice would you give new entrepreneurs?

Don’t worry about everything you have to do. Just worry about what you have to do today. If you really think about everything you need to accomplish, it’s too overwhelming. It’s like you don’t even know where to start. So just do one thing today, and then do another one tomorrow. You just keep moving forward.