Tofutti Brands, Inc. History

Company Perspectives:

If nondairy is your thing, we are the right place for you. Tofutti Brands, Inc. exclusively develops a wide variety of soy based nondairy, kosher parve products. All products are cholesterol, nondairy, lactose and milk free.

Key Dates:

1981:

David Mintz forms Tofu Time, Inc. to market soy-based, kosher foods.

1983:

Tofu Time offers stock for public sale to expand sales of Tofutti.

1984:

Distribution through Haagen Dazs begins; sales hit $2.3 million.

1985:

Sales jump to $17.5 million; Tofu Time stock moves to AMEX.

1986:

Tofutti is patented, and the company changes its name to Tofutti Brands, Inc.

1987:

One-fourth of Tofutti's workforce is laid off; the company moves to smaller quarters.

1992:

Revenues drop to $4 million, but the firm records its first profit in seven years.

1990s:Cream cheese, sour cream, cookies, and egg replacement products are added.

2002:

Rebounding sales top $17.5 million.

Company History:

Tofutti Brands, Inc., sells soy-based, dairy-free frozen desserts and other food products throughout the United States and in more than a dozen other countries, including England, Japan, and Israel. The firm targets consumers who avoid or are allergic to milk, as well as observant Jews who do not consume dairy products and meat at the same meal. The company's product line includes hard-pack and soft-serve Tofutti and sugar free Tofutti, a variety of frozen sandwiches and novelties such as Tofutti Cuties and Tofutti Monkey Bars, and other soy-based products like Better Than Cream Cheese, Sour Supreme imitation sour cream, soy nuts, soy cheese, cookies, candy bars, and frozen pizza and blintzes. Tofutti also markets Egg Watchers, a whole egg replacement product. More than half of the publicly traded company's stock is owned by founder and CEO David Mintz.

Beginnings

The ice cream-like frozen dessert called Tofutti was invented by David Mintz, a caterer in Brooklyn, New York. The offspring of a family of bakers, Mintz had originally worked as a furrier before running a take-out shop in Brighton Beach, which he called Mintz's Buffet. It had become popular after he staffed his kitchen with elderly women who excelled at creating delicacies like noodle pudding, stuffed cabbage, and rugalach, and he later opened a second location in Manhattan to provide dishes for 20 restaurants and 12 catering halls.

Because Mintz's customers were largely Jewish, his kitchens served kosher food. One requirement that particularly challenged his cooks' creativity was the kosher prohibition against serving dairy and meat together. This meant that such things as butter, cheese, milk, and ice cream could not be consumed at most meals. Although butter could be replaced by margarine, Mintz got requests for dairy-free versions of many items that were not so easily duplicated. After reading an article about the nutritional benefits of tofu, the protein-rich food made from coagulated soybean milk that was found in Asian cooking, he began to experiment with it starting in the late 1970s. He soon found ways to use it in cookies, cakes, tuna casserole, and even beef stroganoff, where it stood in for sour cream.

The carefully formulated imitations were readily accepted by his patrons, and Mintz continued to seek additional uses for tofu, with his ultimate goal being a mock ice cream. After many failed attempts, including one in which an experimental batch exploded and left chunks of goo all over his roof, he arrived at a blend of water, corn sweetener, corn oil, soy powder, and flavorings that had the proper consistency when frozen and tasted surprisingly close to real ice cream. He had a hard time coming up a name for the new product, until one night at four a.m. the word popped into his head: "Tofutti." In 1981, Mintz formed a marketing company, Tofu Time, and began to sell a soft-serve version of his creation in the New York City area.

The public response was favorable, and Tofutti soon became a popular treat with people who wanted to avoid dairy products. In addition to those who kept kosher, it also appealed to strict "vegan" vegetarians, persons who were lactose intolerant and could not digest milk, and those who wished to avoid the saturated fat and cholesterol with which ice cream is laden. Tofutti was not strictly a health food, however, and in fact had more calories than ice cream. It also contained fat, though not the undesirable saturated kind found in dairy products. Its actual tofu content was small, and early versions had in fact not contained it at all but used isolated soy protein, a relatively flavorless soybean derivative that was easier to work with and had a longer shelf life. Mintz got complaints, however, and eventually added tofu to the recipe, though it still contained a sizable amount of isolated soy protein.

Public Stock Offering in 1983 Helps Spur Growth

To help expand operations, Tofu Time made a public offering of 500,000 shares of stock in December 1983. In the spring of 1984, a hard-pack version of Tofutti was perfected and offered for sale in two-and-a-half-gallon containers, with pints added later as well. For the fiscal year ending in July of 1984, the company's annual sales topped $2.36 million, up from $329,000 the year before.

At this time, Tofutti was still largely sold in the New York metropolitan area in ice cream shops and via company-owned pushcarts, but a distribution agreement with premium ice cream maker Haagen Dazs quickly brought it into stores and supermarkets in a number of eastern states. Other deals were worked out to bring the product to much of the rest of the United States as well.

In December 1984, Tofu Time, which now had 30 employees, moved its headquarters from Brooklyn to a 30,000-square-foot freezer warehouse facility in Rahway, New Jersey. The new location was closer to the dairies that were contracted out to produce its products and also near Haagen Dazs. Tofutti, which sold for about the same price as premium ice cream, was now offered in a wide range of flavors.

During the latter half of 1984 and into 1985, sales grew rapidly as the rest of the country discovered Tofutti. With distribution reaching more than 18,000 stores across the United States, annual sales jumped more than seven-fold to $17.4 million and profits hit $2 million. The company's stock was subsequently moved to the American Stock Exchange. Tofu Time also opened a store on Columbus Avenue in New York, which led to the firm's first international sales contract when a group of Japanese tourists who tasted the soy-based product for the first time sought out Mintz to let them open Tofutti shops in Japan. Other agreements were made to introduce the product in countries like Canada, Finland, and Australia.

By now, as many as 30 different competitors had arisen, including Ice Bean, which had actually been marketed since the late 1970s, Tofu Dream, Tofree, and Gloria Vanderbilt's Glace. Their introduction served to blunt the impact of Tofutti, as did increasing media scrutiny of the frozen soy dessert fad, which brought to light the relatively high calorie count of products that the public perceived to be diet or health foods.

Sales Plummet in Late 1980s

Though the company fought to stay on top with such measures as forcing one competitor to change a too-similar package design, sales began to fall off. In 1986, Haagen Dazs ended its distribution of Tofutti, leaving the firm scrambling to get its products into stores. New distribution deals were lined up with Steve's Homemade Ice Cream, Inc. for 12 western and southern states and Calip Dairies/T&W Suffolk, Inc. in the Northeast region, among others. Seeking a more seasoned hand to run the operation, Mintz turned to 43-year-old Francis I. Mullin III, former president of Del Monte Franchise Beverages U.S.A., who was appointed president in August. During the year, the company also changed its name to Tofutti Brands, Inc. and announced that it had received a patent on the formula for Tofutti. Fiscal 1986 sales declined to $11.6 million, and the firm reported a loss of $658,000.

Mullin's first move was to reorganize the firm into four units: domestic sales, foreign sales, licensing, and franchised stores.

At that time, 95 percent of revenues were being generated domestically, but Mullin wanted to boost exports and foreign marketing deals dramatically and also generate more sales through franchising Tofutti stores and licensing formulas to other companies to use in their own product lines.

The year 1987 saw the introduction of Lite Lite Tofutti, a 98 percent fat-free version which halved the calorie count to just 90 per four-ounce serving. It was rolled out in several markets in a cross-promotion with Diet Coke. In March, the first franchise store opened in Teaneck, New Jersey. It offered 16 flavors of Tofutti and a variety of baked goods such as imitation cheesecake, which the firm had begun distributing in the New York City area. The company was also actively cutting costs by streamlining its warehousing and shipping methods and decreasing its workforce by 25 percent.

In the summer of 1987, the firm reached agreements with new partners who would handle Tofutti distribution in Canada and Australia. In December, Tofutti bought back its franchise outlet in New Jersey and announced plans to open a second company-owned store in New York City. Sales for the year dropped to $7.7 million, with a loss of slightly more than $2 million.

In 1988, another cross-promotion was launched with Diet Coke and Lean Cuisine, and Tofutti established a toll-free nutrition hot line, which customers could call with questions about cholesterol, lactose, and the company's products. Annual sales rebounded to $9.5 million, though a net loss of $652,000 was recorded.

New Products in the 1990s

In 1989, the company added a new product line, Egg Watchers, which were cholesterol-free egg replacement products made from processed egg whites. A package which yielded the equivalent of eight eggs retailed for just over $2, about twice the cost of fresh eggs. Other new items included Tofutti Cuties and Tofutti Fruttis, which resembled ice cream sandwiches and bars, and soy-based Better Than Creamcheese. In the summer of 1989, Francis Mullin gave up the job of president to Mintz, though he remained on the firm's board of directors. The company also moved its headquarters from Rahway to a smaller facility in Cranford, New Jersey.

In early 1992, Tofutti added a new line of fruit-juice-sweetened non-dairy frozen desserts called Land of the Free. Sold in vanilla-apple and three berry flavors, pints were priced at under $3. Sales for the year declined to just over $4 million, but earnings of $56,000 gave the company its first annual profit in seven years.

In 1993, Tofutti re-signed with Haagen Dazs for East Coast distribution to supermarkets, convenience stores, and restaurants, as well as to food service operators. The company also added a low-fat yogurt substitute called Better Than Yogurt in a variety of flavors, a sour cream substitute called Sour Supreme, and contracted with Papetti's Hygrade Egg Products, Inc. to produce and distribute its Egg Watchers line.

The year 1994 saw the firm introduce Tofutti to the United Kingdom, where it offered the Tofutti Supreme and Lite Lite varieties in a number of flavors. Products were imported from the United States at first, but manufacturing was later set up in the United Kingdom. Sales inched upward to the $5 million range during the middle of the decade as the company expanded its U.K. lineup to include a new fat-free chocolate fudge product along with Better Than Cream Cheese and Egg Watchers.

In 1997, Tofutti brought out several varieties of nondairy cookies and fig bars, added new flavors to the Better Than Cream Cheese and Sour Supreme lines, and introduced Dairy Free Ice Cream Cakes. By this time, the U.K. subsidiary was also exporting products to France.

In 1998, the company added a line of Soy Lavasch Flatbreads in a variety of flavors, imitation cream cheese filled crepes, a soy beverage, honey-sweetened Tofutti desserts, and a Tofutti Italian Style Cannoli, among other items. Sales were growing and rose to just under $9 million with earnings of $560,000 for the year.

New products for 1999 and 2000 included frozen novelty Tofutti Too-Toos and Tofutti Monkey Bars, as well as imitation cheese slices, soy nuts, soy protein powder, and frozen veggie burgers, pizza, bagels, and potato pancakes. The company's fortunes were continuing to improve, with sales for 2000 topping $13.3 million and profits reaching $956,000. Distribution now extended to 15 countries.

In late 2000 and early 2001, Tofutti bought back nearly 300,000 shares of the 6.1 million it then had outstanding. The firm's best-selling product at this time was Tofutti Cuties, bite-sized frozen novelties which had recently ranked 18th out of 124 ice cream sandwiches sampled in a taste test conducted by A.C. Nielsen.

In 2002, growth continued, though higher raw material, freight, and packaging costs, as well as "slotting fees" paid to supermarkets to insure product display, cut into earnings. Sales for the year topped $17.5 million, and earnings approached $940,000. The company's stock price was also rising, and rebounded to nearly $3.50 per share by the spring of 2004.

Approaching a quarter-century in business, Tofutti Brands, Inc. was making a strong comeback after years of rebuilding. The company had an established brand name and a loyal base of customers with special dietary needs for whom it was happy to supply a variety of soy-based desserts, snacks, and other food items.

Principal Subsidiaries: Tofutti UK Ltd.

Principal Competitors: Turtle Mountain, Inc.; The Hain Celestial Group, Inc.; The Whole Soy Company; Double Rainbow; Galaxy Nutritional Foods, Inc.

Further Reading:

• Alson, Amy, "This Slick Executive Says He'll Save Tofutti," Crain's New York Business, November 10, 1986, p. 1.
• Belsky, Gary, "Tofutti Trims to Fatten up Lean Earnings," Crain's New York Business, August 31, 1987, p. 7.
• Bennett, Bev, "Imitation Ice Cream Is Hot--Tofutti Creator's Success Recipe Is Down Cold," Chicago Sun-Times, July 27, 1989, p. 16.
• Eftimiades, Maria, "Tofu Innovator Dreams of New Creations," New York Times, February 19, 1989, p. 14.
• Geist, William E., "About New York: High Hopes for Pushcart Sales of Frozen Tofu," New York Times, June 20, 1984, p. B3.
• Hall, Trish, "Tofu Products May Be In, But Its Fans Wonder If There's Tofu in the Products," Wall Street Journal, February 27, 1985.
• "'Sleeping Giant' Tofutti Wakes up in the U.K.," Grocer, November 12, 1994, p. 45.
• Snow, Jane, "Shoppers with a Sweet Tooth Warm up to Tofu Frozen Desserts," Seattle Times, June 12, 1985, p. E14.
• Stepneski, Ron, "Tofutti Maker Moves Its Headquarters to Rahway," Record, Northern New Jersey, January 4, 1985, p. B12.
• Winerip, Michael, "Our Towns: Tofu Wars--Battling For the Suburban Palate," New York Times, November 15, 1985, p. B3.

Source: International Directory of Company Histories, Vol.64. St. James Press, 2004.

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