You may be familiar with the adage, "Build a better mousetrap and the world will beat a path to your door," but have you ever heard of someone building a better mousetrap? Mark Sisson and Morgan Zanotti have done exactly that. They co-founded Primal Kitchen in 2015 by selling avocado-oil-based mayonnaise for $10 per jar. Four years later, they sold the company to Kraft Heinz (NASDAQ: KHC) for $200 million.
CNBC profiled their journey from startup to multi-millionaires, and there is a lot that everyday investors could learn from their story. Building a better mousetrap begins with the belief that there is a way to improve a product already on the market. In the case of Primal Kitchen, the product was mayonnaise. The popular spread is tasty, but notoriously high in fat and other ingredients that make it unhealthy to eat in large quantities.
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Sisson and Zanotti decided to change that. "At the time we launched Primal Kitchen, every condiment in the grocery store had either soybean, canola oil, sunflower seed oil, and or sugar," Zanotti told CNBC. Their decision to go with avocado oil made sense from a health perspective. Many nutritionists regard avocado as a "healthy fat," and a better alternative to saturated fats and oils, but avocados are expensive. That meant Primal Kitchen mayonnaise was going to be expensive.
"We launched in a category where the closest price competitor was probably like $3 per jar," Zanotti said. Sisson and Zanotti's avocado-oil-based mayonnaise would have a price point of $9.95 per jar, which is more than triple their most expensive competitor. "So many of our advisors in the food space said, ‘you're crazy, no one is going to spend $9.95 for a jar of mayonnaise,'" said Sisson.
The conventional wisdom that most consumers won't pay that much for mayonnaise is basically correct. However, Sisson and Zanotti did have a few factors working in their favor. First, there is a large contingent of consumers in the "better for you" segment of the food market. More importantly, they are willing to pay the price premium for healthier alternatives to everyday condiments like mayonnaise and salad dressing.
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"We thought, look, we want this product. We're going to test the market and see if other people want it, and if they do great, we have a business. If not, we shut it down," Zanotti explained. That's where Primal Kitchen's other built-in advantages came into play. Sisson already had a successful supplements business that was generating enough revenue for him to divert profits into developing Primal Kitchen.
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That also gave him a customer base with an affinity for health-conscious products. According to CNBC, Sisson invested $2 million in profits from his supplement business to start Primal Kitchen. It was a risky gamble, but CNBC pointed out that the global condiment business was worth $31 billion annually and expected to continue growing in the years to come.
The CNBC profile noted Sisson's exploits in the food supplement and health industry included a successful blog with 3.5 million views per month and a book. "I spent ten years building a platform before I had a product," Sisson said, "It made it a lot easier to launch a product into that space." Ironically, Sisson met Zanotti in 2013 at an event for his fitness blog, and the two hit it off immediately.
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She had an extensive marketing background and a genuine commitment to Sisson's vision. After an initial attempt to launch Primal Kitchen with a professional chef failed, Sisson offered Zanotti the chance to bring her marketing expertise to the table and become his partner in Primal Kitchen. In addition to investing his own capital, Sisson also personally guaranteed a multi-million-dollar line of credit.
It was a risk, but Sisson and Zanotti believed in their vision and pressed ahead. The cost of buying enough avocados to supply Primal Kitchen was intense, and Sisson said the amount of credit he guaranteed often ran into the millions. "It was a combination of naivete and hubris that made me think we could launch this expensive mayonnaise," said Sisson.
Primal Kitchen introduced its avocado-based mayonnaise to the market in 2015, and it was a hit with both the health-conscious and paleo-diet community. According to CNBC, the company sold its first 12,000 units within one week. It went from there to high-end grocery store shelves and became a nationally known product within a year. The company broke even in year two with $26 million in sales and was doing $50 million annually by 2018.
That's when Sisson and Zanotti began looking for buyers. "I had always planned on growing this business to sell," said Sisson. "I was in my early 60s when I started the company." Kraft Heinz was immediately interested and put in the winning bid of $200 million before sealing the deal in 2019. All parties involved in the transaction were thrilled with the outcome. According to CNBC, Primal Kitchen did nearly $250 million in sales in 2024.
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