When David Gray joined the Board of FedUp Foods, PBC in 2019, the company’s purpose was already alive and well, but operating, as he puts it, on a “subconscious” level.
When Gray became CEO in 2023, he set out to prioritize the importance of “putting together an employee value proposition within that [purpose], tying it to who we are as a company, and why we do what we’re doing. Then getting it down to the individual level: Why I do what I do and how does that tie to our purpose” for each of FedUp’s several dozen team members.
“The quiet story behind FedUp Foods,” says Gray, “is that we’re the largest private manufacturing platform focused on fermented beverages in North America. We make nutrient dense products with a goal of getting them to as many people as possible.”
“So,” Gray says of the now codified purpose, it is “to craft delicious, high quality, functional beverages,” which in 2021 became the fastest-growing market in the entire food sector. Simultaneously, FedUp’s mission is to “invest in the regeneration of the planet and use our business as a conduit for positive social impact,” he says.
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Those three interlinked reasons for being are “deeply rooted” in the company’s founding, says Gray. It was launched by Sarah Mullins and Jeannine Buscher in 2008. The pair shared a passion for brewing kombucha as a healthful alternative beverage for their young kids.
Says Gray, “The founders’ own philosophy on business and how they want success to be measured, as well as the control they had regarding who their stakeholders were,” developed alongside a three-pronged mantra: People-Planet-Prosperity, all arising out of the concept of nourishment.
Think of it this way, says Gray: Good work nourishes people’s spirit for personal growth. Prioritizing mindful suppliers, partners, and farmers (who all grow, harvest, and practice as regeneratively as they can) provides vital nourishment for the planet we share. And, because “good food is a human right,” he concludes, FedUp contributes vital nourishment for the human body.
FedUp aims to lead a movement that extends beyond its own products and customers: “We want to create a more equitable, accessible, and inclusive food system,” it says.
That’s why the company organized and runs itself as a Public Benefit Corporation. To Gray, that status tells the world, “‘Look, the bottom line’s important, but we also have a choice in regards to what that looks like, and how we use our money to create better impact.’
“And so,” for example, he says, “we would not be penalized because we decided to spend more money in Brazil buying regenerative sugar, which would impact our COGS—because we’re doing it to uplift the local community, bringing more sustainability to the producers and their families, as well as to the land.”
It’s also why the company is comfortable hosting an annual leadership summit, which brings together thought-leader representatives from all stages in the supply chain. The idea is to collaboratively imagine what a truly regenerative food product would look like, says Gray, and how it could be implemented, step by step. Spoiler: It looks like kombucha, and it’s delivered through strategy and operations in place or in development at FedUp and its partners.
Not Yet FedUp: Growth & Fermentation
The fact that FedUp’s talking about regenerative sugar from Brazil and gathering scientists, CPG manufacturers, farmers, and policymakers in sustainability is a testament to the company’s remarkable growth over the past decade and a half.
In 2010, Mullins (currently EVP, People & Purpose), and Buscher (today, EVP Innovation) took their homebrewed, small batch kombucha – “Buchi” – to market through a warehouse on a 180-acre farm in mountains of southern Appalachia. It was the first kombucha brewery in the Southeastern US. That was only two years after the pair of mothers met at a farmer’s market and first bonded over their Buchi in a small, Asheville, NC kitchen.
By 2017, FedUp moved to a facility in Marshall, NC. The goal was to expand market access to more functional beverages (essentially, other kinds of fermented drinks). That same era also marked its shift toward private label kombucha. The company also supports co-packing and other custom solutions, from ideation and testing to packaging, marketing, and distribution. It even has an on-site lab to maximize innovation and ensure certifaction-worthiness.
In 2018, leadership launched a manufacturing facility in South Korea, and two years later, officially founded FedUp Foods, PBC, with Buchi as its consumer division.
Last year, it tripled its production capacity with a second facility in Erwin, Tenn.
All the while, FedUp maintained its founders’ focus on social welfare, environmental sustainability, and economic prosperity.
Gray on Today’s Table Stakes for Doing Business
After getting his MBA, Gray first found himself in the crux of the natural foods, finance, business operations, and sustainability spaces more than 30 years ago. “There was a time where a lot of these sustainability ‘nice-to-haves’ really weren’t measuring sticks yet; people weren’t checking those boxes.” Instead, back then, people were saying, ‘Look, if you don’t have that, that’s okay.’
“But today we are seeing many of our clients – in fact, I would say all of them – with a lot of their sustainability initiatives, find FedUp’s supply chain as well as our values very much aligned with what they’re trying to achieve,” says Gray.
“And then let’s not also turn a blind eye to the fact that we know the consumers want it too, right? They’re making those deliberate decisions now.
“And all that’s what’s making us strong.”
The Sigma-trained Gray looks at FedUp in the context of the likes of Patagonia or Clif or TOMS, “folks that did well and kept reinvesting in sustainability so that they could continue to grow on their mission.”
ESGK (The K’s for Kombucha)
Gray reports meaningful impacts from FedUp and its partners’ efforts toward regenerative fair-trade agriculture. Take its tea supplier, teatulia. Together the collaboration has been steadily converting a barren and overworked tract in Northern Bangladesh into a rich, thriving ecosystem.
“We’re going into environmental situations that were pretty bleak,” says Gray. “Where the land just wasn’t able to [create] the type of resources that would attract animals or vegetation. Now, over the last decade we’ve committed to these producers, we’re seeing real transformation happen. We’re seeing trees growing back up, big cats being reintroduced into the area because there are now more resources for them to eat and live.”
At the same time, FedUp supports the producers “through fair trade equity and raising up villages by the way that we’re investing.”
Closer to home, the company invests in the next generation of corporate leadership. The FedUp Foods Academy, a flagship initiative designed to identify and nurture individuals internally for leadership positions within the company, launched in 2023. It educates, empowers, and equips prospective leaders with the tools, training, and development they need and want.
The Power of Private Label
Gray was one of Big Path Capital’s 2024 Top Impact CEOs, awarded for driving positive social and environmental change through FedUp’s dynamic enterprise.
Private label has been a reliable growth sector across Europe for a long time, Gray says. “In fact, in Europe if you go into a consumer’s grocery basket, more than half the products that they’re buying will be private label. It’s only in the US where the market is dominated by brands.
“But what we’ve seen over the last multiple decades here is a transition to growing more private label, and moving away from all the ‘fast followers’ [imitations] and ‘dupes’ [generic versions] into this situation that retailers find themselves in: ‘We’ve got this massive investment with assets and people, marketing infrastructure—now how do we control it?’
“So,” says Gray, “many of the larger traditional retailers over the last decade have seen that they've been losing shares to these more efficient private labels like Whole Foods., Aldi, Costco ... “
“And as a result, many of them have recognized from the competitors that if they don't change, they’re going to continue to lose … market share.”
This economic shift has forced forward-thinking companies to look for partners that can help them innovate, Gray argues. “You’re seeing it with Kroger, you’re seeing it with Aldi, Whole Foods, Wegmans... If you look at every retailer, they are really working on growing their private label and taking more control of their shelf-space than they ever had before.”
It’s in this shift to private label that FedUp Foods found its niche, with kombucha. “It’s a premium product,” says Gray. “Not easy to make, certainly not inexpensive to make.” But FedUp is dedicated to building relationships, to scaling, and expanding its customer base with availability in a wider range of stores.
With each new store relationship, Gray and his team ask, “How do we take the science, the supply chain, and the human capital [and catalyze all that] in a way that allows us to help our customers, the retailers, expand on their investment thesis around growing more market share with their private label?” All the while better serving the people and planet that make it possible.
