As the foodservice industry’s first and only certified organic, non-GMO drink maker, the Tractor Beverage Company is shaking things up in what has traditionally been a fairly sedate corner of the American restaurant scene. Recently I had the opportunity to ask its CEO, Kevin Sherman, a few questions about the company’s efforts to offer diners a choice when it comes to refreshment.
Gary Drenik: Why is it important for your beverages to be non-GMO and certified organic?
Kevin Sherman: We want to produce drinks that stay as close to nature as they possibly can because in our experience that’s when things taste best and that’s what food is all about. Saying no to synthetic inputs of any kind whether it happens on the farm or in our recipes makes sure that every drink we pour is as perfect as it can be. And it’s what people want—according to a recent Prosper Insights & Analytics survey, over a quarter of all adults are purchasing organic juices, and the numbers are even higher for emerging consumer segments like Gen-Z.
It’s all part of what we see as the need to completely rethink how we produce our food and get back to more natural ways of growing. For us, that means organic and non-GMO crops and things made from them. We think they’re better for farmers, consumers, and the planet, and at Tractor we want to propel that idea forward. I don’t have any interest in doing things the old way, and I can see how important this work is every time I look at our Organic Impact Tracker, a tool we created to show our customers the difference they’re making. Last year alone, it tells me we kept almost 26 tons of pesticides out of the food system. That’s a big deal.
Drenik: How has the landscape of consumer demand changed?
Sherman: Between Millennials and Gen-Z, there’s a whole new kind of consumer starting to dominate out there. Thanks to the internet, they’re a lot more aware of the issues around food, and they’re trying to replace the synthetic ingredients and conventional products in their lives with cleaner choices.
As just one example, according to a recent Prosper Insights & Analytics survey, 44% of Gen-Z consumers and over half of all Millennials say non-GMO foods are very or somewhat important. And around two-thirds of both groups now regularly or occasionally choose organic options. That’s a huge shift away from business as usual, and it’s the future of the industry.
Drenik: What led you to choose foodservice over retail?
Sherman: We did consider retail, but the beverage cases were already really crowded. Too many start-ups fighting too many legacy brands for too little space. That wasn’t the case in foodservice, where there were really only two players, and the options were extremely limited. In my past career as an educator and advocate I’ve always been about giving people choices, and in foodservice, the beverage station was the place where they had the fewest, so it made sense to go in that direction. Those drink stations have been stuck in the 1970s, and they’re where we knew we’d stand out the most. It’s the last frontier in a way, and there was no one else in foodservice trying to explore it.
Drenik: Why has there been a monopoly in the soda fountain in fast-food?
Sherman: It really boils down to money. Big Soda has a lot of it to spend acquiring customers. They offer restaurant operators free equipment and product discounts in exchange for an exclusive contract, and that’s an offer that’s hard to refuse because that equipment is expensive to buy on your own. It’s basic math—beverage income is central to restaurant profitability, and every penny you can save matters. Free gear and lower purchase costs add up quick, and the soda companies can afford to keep it all going because they’re guaranteed volume in return. Put it all together and you’re pretty much guaranteed a system with no real choice.
Drenik: How did Tractor break in as a new brand?
Sherman: It wasn’t easy. The legacy brands’ grip on the foodservice industry is fierce and has been for a long time. They’re really good at protecting their market share, and we knew that breaking into the big leagues as a tiny start-up wasn’t really a viable option. The odds of succeeding were almost nonexistent and even if they hadn’t been, it would have taken time and money we just didn’t have.
Instead, we started by appealing to independent eateries one at a time—your mom-and-pops, chef-driven restaurants, etc. We were a good fit for local places looking for something new and exciting to offer their guests, and we offered a way they could set themselves apart. Once we’d established a solid presence in these venues, we took this idea to larger partners and channels that were looking for the same sort of differentiation, which we now had a track record of providing. Today, you’ll find Tractor beverages in 6,000 locations in all 50 states, including one near you.
It helped that the Gen-Z and Millennial consumers we were talking about were ascendent at the same time. It was demand we could leverage, and it fueled our growth. This summer, in fact, we launched our first consumer ad campaign to encourage these consumers not to accept the same old tired drinks.
Drenik: What is the legacy you envision for Tractor?
Sherman: I’d like us to ultimately be thought of as the company that disrupted the foodservice beverage industry for good and brought new choices and organic options to the table. For too long, the industry has been part of the food supply problem, and our goal with Tractor is to make it part of the solution. I want to be a catalyst for the democratization of organic food so that it’s not just the province of older, wealthier, relatively elite consumers but available everywhere at a price everyone can afford. If Tractor could be remembered for that, I’d be a happy man.
Drenik: My thanks Kevin for taking the time to share Tractor Beverage’s story and tell us a little bit about how the company is transforming the foodservice beverage space with some new ideas about choice and options when it comes to the beverages they drink when dining out of home. The company is one to watch, and I look forward to seeing where the Tractor team takes it next.
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