Hershey-Backed Blue Stripes Makes Cacao Products From The Shells And All

Upcycling, a sort of culinary alchemy that turns food waste into edible gold, is one of the most encouraging environmental trends in Consumer Packaged Goods (CPG). The enterprising food companies in this space are hoping to make at least a small dent in the massive problem of food waste by making use of the byproducts of food production, as well as leftover plant and animal parts (think crispy fish skins) and imperfect produce.

Since the Upcycled Food Association’s inception in 2019, the trade group reports that its membership has grown to 255 food producers, and its member companies have diverted nearly a billion pounds of food waste.

Not every company’s new upcycled food has tickled my tastebuds this year, but here’s a standout: Blue Stripes Urban Cacao, whose investors include Hershey Co. The startup’s entire product line debuted in Whole Foods in May 2022 and the company is finishing out its first, partial year in business with $4.5 million in sales. Next year, sales are projected to triple, says CEO Oded Brenner.

Chocolate makers typically discard everything but the cluster of cocoa beans (really seeds) that the white pulp encases. About 70 percent of the cacao pod goes to waste—meaning that chocolate makers are typically discarding most of the fruit pulp and the shell, despite all the energy and resources it takes to produce them. Then ,consider it takes roughly two-three cacao pods to make a single bar of chocolate.

That dark secret of chocolate production really bothered Brenner. While chocolate has been processed for hundreds of years, most people have never tasted the cacao fruit.“They don’t know about its incredible hidden potential ,” says the serial entrepreneur.

He founded Max Brenner Chocolate in Israel in the mid-1990s, staying on after its acquisition by Strauss Group in 2001 for $5 million. The chain expanded internationally with more than 50 outlets at its height. While he was still there, he also started a bakery chain. Unfortunately, things didn’t end well. Brenner got sued by Strauss in 2012, which alleged that the bakery chain was a breach of his noncompete clause. After expending considerable resources on the legal battle, he was forced to leave the company and stay out of the industry for five years.

His comeback didn’t disappoint. In 2019, Brenner opened up a new store in Manhattan’s Greenwich Village, which he and his partners called Blue Stripes Cacao Shop. “We created a concept where you could drink and eat all kinds of things made from cacao.”

The store was doing well, but in 2020, as the Covid-19 pandemic shut down retail businesses in New York, Brenner took the opportunity to pivot and rethink his business model. “I wanted to say goodbye to the retail part of my life and move to CPG,” he explains.

Brenner and his team set to work developing CPG products that utilized every part of the antioxidant-rich cacao pod and take advantage of its superfood properties. They cold-pressed the pulp to make cacao water; they ground up the shell into a gluten-free flour and extracted cacao sugar from the fruit; they also turned the fruit into smoothie mixes.

They even concocted a chocolate-covered whole cacao bean dusted with the powdered shell and cacao fruit sugar, instead of powdered cocoa. The variety made with hazelnut butter, Brenner’s favorite, packs three grams of fiber and 11% of an adult’s daily iron requirement, according to the nutrition facts on the package. It’s also rich in magnesium and phosphorous, among other things. Blue Stripes’ tasty granola and trail mixes get their crunch from the ground-up shells and their chewiness from bits of dried cacao fruit. Cacao sugar is used as a sweetener.

Saying ‘yes’

The twists and turns in an entrepeneur’s journey contain moments of pure serendipity. In Brenner’s case, the casual decision to send a sample box to Whole Foods, including a whole cacao pod for dramatic effect, yielded unexpected results.

“They said ‘we want to launch the entire line at one time in all 550 stores,’” Brenner recalls. “We couldn’t say no to this.” That meant ramping up quickly, a task that was challenging, but not impossible.

After the Whole Foods launch in May 2022, other supermarket chains, such as Sprouts and Kroger, signed deals as well. Blue Stripes’ investors include Hershey Co., which took an early strategic stake in the company. To date, Blue Stripes has raised about $16 million and is seeking to raise another $10 to $15 million in the near future.

New upcycled cacao products are already in the works. Since Blue Stripes foods are all vegan-friendly, he wants to make milk chocolate with oat milk. He’s also working on a whole cacao bar with tahini—like a halvah mixed with dark chocolate.

Brenner, who once dreamed of being a novelist before he fell into chocolate, says his career has mostly been about being a storyteller.

“I’m using food as my pen,” he says. Even his cheery packaging tells a story that promotes his upcycling mission with colorful, whimsical pictures of gorillas and tropical birds. In addition to its environmental focus, Blue Stripes aims to help their Ecuadorian farmers by buying the product directly from them.

Brenner is hoping the stories he tells through his cacao products will inspire more people to try upcycled foods and embrace the mission. “I see a lot on social media that people get it. They are echoing our messaging and echoing our mission.”