How three brothers turned a fermenting hobby into a thriving business

As a four-year-old boy in 1995, Mac Anderson spent his Saturday mornings helping his mom get ready for the weekly farm market.

“He lifted and helped set up the farmers’ table,” recalls Donita Anderson, founder of North Union Farmers Market. While Mac may not have realized at age four that he was being groomed for entrepreneurship, Donita always saw an enterprising streak in her son. “One year he set up a table and sold all his old toys,” she recalls. “He’s just really a people person. He just loves talking, he’s just an engaging person.”

Mac also remembers “schlepping produce” with his brother, Drew Anderson, at the Shaker Square market back when it was first getting started. But he also remembers the opportunities it offered to early entrepreneurs trying to sell their products.

“Some smaller ones would fizzle out after a year or two, and some would end up on grocery shelves,” Mac recalls.

Many years later, in 2014, the Anderson brothers and their brother-in-law Luke Visnic would be back on Shaker Square—this time selling their Cleveland Kraut to the bustling crowds at the North Union Farmers Market.

Today, Cleveland Kraut is projected to be a $5 million to $7 million business in 2019, with sales growth expected to be as much as 500 percent. The company has been deemed one of the fastest growing businesses in the fermented food industry—Cleveland Kraut is now available in 3,500 stores across 40 U.S. states, including Whole Foods Market, Meijer, and 350 Sprouts Farmers Market stores, as well as local grocers and restaurants— and this year opened the Cleveland Kraut Haus at Progressive Field, and even was featured in 2017 on the “Tonight Show.”

In 2018 the natural and organic industry organization SPINS called Cleveland Kraut “THE brand to watch in fermented for authentically growing the raw kraut category” and the company has shown the highest year-over-year growth in brands with over $1 million in retail sales.

“If you told me when I graduated from college that I’d be selling sauerkraut for a living, I’d think you were a little crazy,” says Mac, who studied finance and was considering a law degree before starting Cleveland Kraut and becoming the chief marketing officer.

“We were really impressed with Cleveland Kraut’s management team, product, traction and Cleveland roots,” says Chantel Moody, who is part of the investment team in Cleveland Kraut’s most recent fundraising round. The company has received seed funding in the past and is about to close on a higher level of financing, called Series A fundraising. “The co-founders are first and foremost incredible operators and marketers. They have developed a best-in-market fermentation process, positioning their product at the top of the fermented probiotic market. They run a lean manufacturing facility and have built a robust online presence.”

And things aren’t slowing down for three brothers who turned a fermenting hobby into a thriving business.

Savoring a sample given by Drew Anderson at the Shaker Square Farmer's Market in 2014A humble start

The interest in sauerkraut started back in 2013, when Visnic, an architect with Bialosky, and Drew, a credit risk analyst with SunTrust Mortgage in Richmond, VA, each independently began playing around with fermentation and making their own sauerkraut. Visnic hoped to explore his German and Slavic heritage with homemade sauerkraut, while Drew was looking to capture his hometown flavors by making his own sausage, perogies, and sauerkraut.

“He was missing that great Cleveland fare,” recalls Mac of Drew’s motives. “Then we found out our brother-in-law was also making sauerkraut and thought, this is weird.” Drew moved back to Cleveland and Cleveland Kraut began to form.

Soon, Visnic and Drew brought in Mac (who was working in finance at Jones Day) and perfected their recipes. By 2014, Cleveland Kraut was making its sauerkraut in the Cleveland Culinary Launch and Kitchen (now Central Kitchen).

When it came time to start testing their product, the starting point was obvious—The North Union Famers Market. They opened their first stand at the market in March 2014, handing out samples and educating customers on the benefits of the probiotics found in fermented foods (they aid in digestion, improve overall gut health, and boost immunity).

Growing up at the Market, the Andersons knew it was a good place for food entrepreneurs to get a start and gather product feedback. Many local brands, like Hiram-based artisan goat cheeses Mackenzie Creamery and Highland Heights-based The Dairy Free Company (formerly Red Lotus Foods), which makes vegan spreads, dips, and toppings, got their start at the Farmers Market.

After more than 25 years running the nonprofit Farmers Market, Donita Anderson has seen many small businesses get their starts from having a stand there. “I see the market as an incubator,” she says, adding that she has seen at least 30 companies launch into their own brick-and-mortar shops. “You have these customers who are so helpful in the [entrepreneurs] growth. Some of our shoppers have invested in them. It’s more than buying produce and going home.”

In fact, Anderson hosts an annual conference, A Time to Grow, to help both farmers and food entrepreneurs alike learn how to manage and grow their businesses. “Some farmers are great at growing, but don’t really know what to say across the table,” she explains. “We bring in grocery stores, business planners, big farmers, and national leaders. We try to help people as best we can.”

Cleveland Kraut Gnar IngredientsTaking off

Like most startups, the Cleveland Kraut team first operated on a lean budget—they lived in a small apartment above their factory on Lakeside Avenue and each member earned $300 a month. But the three focused on getting their name out there.

“Once we explain the products and explain the benefits of fermented food, it can become a daily deal,” says Mac. “Now consumers are not only willing to pay $6 for great sauerkraut, they are educated.”

With the Andersons and Visnic handselling the product, Cleveland Kraut took off quickly. “We were selling out every week,” recalls Mac. “We noticed a lot of great chefs on the local food scene were taking home bags of Cleveland Kraut.”

In fact, Mac says celebrity chef Michael Symon is a big fan of Cleveland Kraut— incorporating it at events and his barbeque trays and has it at his restaurants. Symon even promoted Cleveland Kraut on the Tonight Show with Jimmy Fallon a few years ago.

The Andersons and Visnic offer seven varieties of Cleveland Kraut—from Classic Caraway, spice Gnar Gnar, and Beet Red, to Cabbage & Cukes, Curry Kraut, Roasted Garlic, and Whiskey Dill. Today, the team produces close to 60,000 pounds of kraut each week, including about 1,500 pounds of Mac’s personal favorite—Gnar Gnar—alone.

“All we’re doing is adding fresh vegetables,” says Mac of the different varieties. “We’re producing a clean, safe, healthy product that is something crunchy and has great flavor.”

The team operates in 20,000-square-feet within Food Hub in Central Kitchen (7502 Carnegie Ave.) where they will process more than two million tons of cabbage this year. The business employs 30 full-time workers, another 11 part-time employees and interns in Cleveland, and close to 100 part-time brand ambassadors around the country.

Moody says the Cleveland Kraut team works hard to make their brand a household name. “We were most impressed with their reach outside of the region,” she says. “They’re on grocery shelves all around the country, distributed to restaurants around the state, and in the homes of most Clevelanders. We’re very excited to watch their platform grow.”

Cleveland Kraut Beet Red Summer SaladWhole Foods takes notice

By March 2017, Joanne Neugebauer, associate buyer for local Whole Foods Market’s mid-Atlantic region in Rockville, MD and Cleveland native, had taken notice of Cleveland Kraut’s success and offered to carry their products in all three of the Cleveland Whole Foods stores, in University Heights, Orange Village, and Rocky River.

Soon they were in additional Ohio stores and in Pittsburgh and by 2018 Cleveland Kraut was in all 56 regional Whole Foods stores, covering seven states.

“We hustled into every store we could,” recalls Mac. “Regional took notice and rolled us out to all 56 of their mid-Atlantic stores in mid-2018.” He says they are working with the grocery chain on an even broader relationship for 2020.

Neugebauer, who often hits farmers markets, food halls, watches social media, and relies on local staff for tips for new product leads, discovered Cleveland Kraut at the Shaker Square market and was impressed with their hustle.

“They have that passion every day—getting [customers] to fall in love with their food,” she says. “It speaks to the marketplace and makes us glad to be one of their partners.”

Neugebauer recalls one of her favorite pitches by Mac when he’s on the store floor. “His pitch was, ‘when I started this company, I was five feet tall and look at me now that I started eating Cleveland Kraut’ And he’s like seven feet tall.”

Although the story was an obvious ruse – Mac confirms he is 6’8” and he credits genes with his height, rather than from eating his sauerkraut – it worked, helping them get in front of customers and educate them about the potential uses and benefits of their product.

Moody says Cleveland Kraut’s focus on customer service, getting out on and interacting with customers, and listening to customer feedback has been stellar. “Their customers love being creative with their products, and Cleveland Kraut’s Instagram is proof of their loyal following,” she says.

“They have a great future ahead of them,” Neugebauer says. “They’re passionate about their brand and that’s what makes me excited.”
 

Read more articles by Karin Connelly Rice.

Karin Connelly Rice enjoys telling people's stories, whether it's a promising startup or a life's passion. Over the past 20 years she has reported on the local business community for publications such as Inside Business and Cleveland Magazine. She was editor of the Rocky River/Lakewood edition of In the Neighborhood and was a reporter and photographer for the Amherst News-Times. At Fresh Water she enjoys telling the stories of Clevelanders who are shaping and embracing the business and research climate in Cleveland.
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