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Taste of Nature Inc.

Year Founded: 1992

Core Business: Candy wholesaling

Sales in 1992: $35,000

Sales in 1997: $2.5 million

Employees in 1992: 2

Employees in 1998: 5

Goal: To have Taste of Nature snacks carried by 50 percent of U.S. movie theaters by the end of 1999

Driving Force: Moviegoers’ desire for healthier snacks

By FRANK SWERTLOW

Staff Reporter

When consumer advocate Ralph Nader began attacking movie-house popcorn several years back as unhealthy too much saturated fat and salt Scott Samet and his partner Douglas Chu got an idea. Why not create low-fat, no-cholesterol munchies for health-conscious moviegoers?

Offering trail mix, dried apricots and yogurt-covered pretzels in a world long dominated by giant candy companies like Hershey, Nestle and Mars was a gamble.

But the two, who had been classmates at the University of Pennsylvania’s Wharton School, decided to roll the dice. They scraped together $15,000, quit their jobs as financial analysts at Banker’s Trust and launched Taste of Nature Inc.

“We saw a niche,” said Samet, sitting in his cluttered Culver City headquarters. “At the time, all that was really available was hot dogs, buttered popcorn, nachos, candy, or you could bring your own.”

The two twenty-somethings decided to sell their snacks in bulk. All a moviegoer has to do is reach into a plastic bin with a scoop and fill a bag.

“Customers love bulk,” said Samet. “You can take as much as you want or as little as you want. You can mix, too.”

Revenues for the first year were a mere $35,000. But this year, Samet anticipates $5 million in revenues, double the $2.5 million generated in 1997.

While the partners have broadened out from their original health-oriented concept by offering candy as well as the healthier snacks, they have stuck to their bulk plastic bin format.

Then late last year, the company further broadened its offerings by adding its first packaged candies Cookie Dough Bites and Fudge Brownie Dough Bites. With 12 and 8 grams of fat, respectively, the new offerings are hardly health food. A peanut butter line is coming soon.

“We are not abandoning the health-food line,” Samet said. “We simply want more than one concept under one roof.”

Among Taste of Nature’s local clients are Mann’s Chinese Theatre in Hollywood, AMC Century 14 in Century City, all General Cinema theaters in its Western region, Laemmle Sunset 5 in West Hollywood and Mann Del Amo 9 in Torrance.

Nationally, Taste of Nature’s client lineup includes United Artists Theatres and Regal Cinemas. The company’s candy, Samet said, is currently sold in 20 percent of all domestic movie houses, and the two partners anticipate reaching 50 percent by the end of 1999.

Taste of Nature buys its snacks from a variety of suppliers; during the company’s early days, Samet and his partner actually went to convenience stores, found the names of snack-food companies, and contacted them directly. In the case of its new packaged product line, the candies are made and packaged by a company outside Chicago.

To further minimize overhead, Taste of Nature keeps its staff small. When it opened its doors, there were two employees Chu and Samet. Today, there are just five, including the founders.

While the U.S. candy market is huge, generating $16 billion in annual sales, capturing even a small piece of the pie is daunting because of such well-entrenched favorites as M & Ms;, Hershey bars and Raisinettes.

“Very few make it,” said Teresa Tarantino, editor in chief of the trade journal Professional Candy Buyer. “The big players control the market. If they get out and are doing well, it’s a good sign for the long term.”

Taste of Nature had an edge coming out of the chute in that a family friend of Chu’s is Bruce Corwin, president of Los Angeles-based Metropolitan Theaters Corp., which operates 125 movie screens in California and Colorado.

“Doug Chu played on my Little League team,” Corwin said, “and I knew his father from City National Bank. They have great creative juices and are two guys who have old-fashioned business ethics.”

Rob Del Moro, senior vice president for Knoxville, Tenn.-based Regal Cinemas, said Taste of Nature’s health-food line fit with his company’s own strategy.

“We have a health-food line in all new (movie theater) constructions and we have been building cafes inside our theaters since 1993,” he said. “They hit a niche before anybody else. They were the first ones out there.”

For the first nine months after launching their company, Sameth and Chu went without salaries. Strapped for cash, they personally delivered their snacks to local theaters.

Even today, they run a lean machine. Sales, marketing, advertising and promotion are all handled out of a small office in a warehouse area of Culver City. The atmosphere is more like that of a fraternity house than a business. A pair of skis rests in one corner of the room, and the dress code is strictly denim.

“What I like about them is they are a very small operator and can concentrate on the bottom line and quality and can focus on what the customer wants,” Del Moro said.

And clearly, what the customer wants is more than healthy snacks. That led Taste of Nature to introduce its Cookie Dough Bites and Fudge Brownie Dough Bites this year.

“We wanted to broaden our reach,” Samet said. “This was something we could launch nationally and appeal to a wider demographic, including kids, teens, adults and all ethnic groups.”

The new offerings are packaged in small boxes and soft packs. Taste of Nature created the candy bite formulas with the help of market research and a cookie dough expert. The formulas were recently tweaked, with less chocolate and more cookie dough.

“It tastes better, now,” Samet said.

The packaging allows the items to also be sold at convenience stores and supermarkets as well as movie houses. Blockbuster Enrtertainment begins carrying the candies in 3,400 video stores nationally this week, and Tosco Corp. plans to begin carrying the candies in its 2,500 Circle K stores by year-end, Samet said.