George Economy, President and founder

Introduction

America’s 25 million small businesses employ more than 50 percent of the work force and generate more than half of the nation’s gross domestic product. Small businesses are the principal source of new jobs in the U. S. economy. However, for a small supplier to compete with big business for space on a grocery shelf remains difficult. Helios Nutrition is a successful example of an innovative, integrated, niche small business in the natural organic beverage segment. George Economy, president of Helios Nutrition Ltd., has worked hard to introduce “Kefir”, an organic cultivated beverage made in Sauk Centre, Minnesota, to American consumers.

Helios Nutrition's organic kefir is a probiotic beverage targeting healthy conscious consumers. Economy’s passion for kefir quickly enabled him to transform this niche organic beverage into a mainstream beverage. His timing also could not have been better. Organic beverages and foods have been one of the fastest growing segments of the food market. Consumer awareness of organic and functional (foods fortified with added health-enhancing ingredients) foods and beverages has increased. According to the Nutrition Business Journal, organic food and beverage sales for 2002 were $14.4 billion, up 9% from 2001. Selling mostly to natural food stores and upscale supermarkets, Helios has increased its sales to become America's top-selling organic kefir. The revenue from Helios has increased more than 30% in the past 3 years. Helios has grown with the introduction of new products and has expanded its capacity, increased its number of employees, and is helping local Minnesota organic dairy farmers.

What is kefir?

“Kefir” is derived from the Turkish word for “good feeling”, Kefir originated many centuries ago in the Caucasian Mountains, which link Western Europe with the former Soviet Union.

Kefir is refreshing fermented milk with a slightly acidic taste. It is made with fermenting cultures obtained from the kefir grain, which is a complex and specific mixture of bacteria and yeasts held together by a polysaccharide matrix.

The Beginning

George Economy, formerly an investment banker and part owner of a biomedical company, discovered kefir during a business trip to Russia in the late 1980s. Kefir was already a popular beverage there, and was a 350 million dollar industry in Eastern Europe. Kefir consists of more than 1,000 times more microorganisms than yogurt, thereby bolstering the body’s immune system by promoting good bacteria in the gastrointestinal tract. Economy saw kefir’s potential, which was served as everyday beverage in homes and hospitals in Eastern Europe. George Economy researched probiotics, which have numerous healthy benefits and are a good fit with his interest in biotech research and nutrition.

In 1997, Economy began developing cultured dairy beverages including Kefir with help from Minnesota state organizations. When George Economy first started his business, Helios Nutrition received a loan from the Agricultural Utilization Research Institute (AURI), which helps Minnesota farmers and entrepreneurs develop products. Helios also got valuable support from Minnesota Technology, Inc., which works with and assists small manufacturers in the state. In 2000, Economy bought the dairy in Sauk Centre.

Helios Nutrition’s mission is to develop scientifically credible food products that promote well-being. It is based on Hippocrates’ philosophy; “Let medicine be your food, and food be your medicine.” In short, Helios believes in the healing force of nature. Helios formulated a product aimed at providing real health benefits to both children and adults. Helios Nutrition introduced its first product, Organic Kefir with FOS, in 1999. Helios Nutrition's kefir contains more than 30 natural strains of seven beneficial bacteria and yeast. Helios's kefir is uniquely fortified with FOS (fructooligosaccharides), a dietary fiber extracted from chicory root. The combination of probiotic and FOS increase the body's calcium and vitamin absorption, provide fiber, and promote a healthy digestive system.

Probiotics are live microbes that have a beneficial effect on human health. In addition to their effects on the gastrointestinal tract, studies also link probiotics to beneficial effects regarding the immune system, allergies, and viral infections. Probiotics such as Lactobacillus acidophilus and bacteria from the genus Bifidobacterium are mostly associated with fermented dairy products such as yogurt. (Products &Technologies)

Managing Business: Technical and local Integration

George Economy has continuously developed to scientifically prove the benefit of probiotic and healing microorganism. To develop scientific and nutritional benefits of functional beverages, Economy has pursued efforts with local scientists. Helios currently is funding two projects with the department of food science at the University of Minnesota. One is to identify the most efficient method of manufacturing Organic Kefir with FOS. The other is to assess the many health benefits of kefir.

Based on research, Helios Nutrition’s Kefir with FOS was found to contain up to 1,000 times more beneficial bacteria than other kefir and yogurt products. These microorganisms are essential to a healthy gastrointestinal tract and strong immune system. Technologically and nutritionally proved benefits have expanded kefir’s market opportunities and sales. The growth of Helios is a result of George Economy’s dedication to the development of functional food products that contain health-promoting ingredients. Also, Economy’s collaboration with local food scientists, dairy technologists, and local organizations have contributed to Helios’s success.

In 2001, George Economy bought Pride of Main Street Dairy, a Sauk Centre creamery, to demonstrate the company’s commitment to the local agricultural economy. Today, Helios employs 20 people. Five flavors of Helios Nutrition kefir are sold in all 50 states in natural food stores and selected groceries.

Similar to yogurt in appearance, kefir is far more complex to produce and contains a wider variety of beneficial microorganisms. The process of producing kefir demands expertise. Kefir ferments for 24 hours, about four times as long as yogurt. During the fermentation process, 30 strains of seven cultures compete for nutrients and the ability to double in number every hour. To optimize taste and probiotic effect, Helios maintains a balance in this system by controlling temperature, humidity and other environmental factors.

George Economy is very proud of buying local organic milk and paying premiums to local farmers. Helios also hires employees with developmental disabilities to work in the dairy plant through a nonprofit program. Helios has supported the local community of Sauk Centre, by buying milk locally and producing locally.

The Internet

George Economy has taken advantage of the Internet as a business tool to expand Helios’ market and to improve its operations. George Economy, who has had 10 years of Internet experience, created a Helios website. Economy created the website mainly to promote his business and to drive traffic to his website. He understands the Internet and his website’s potential to facilitate his business operation and to expand markets, even though he does not currently use the Internet for selling and buying. George Economy uses the Internet for obtaining information, researching, and communicating with both his employees and consumers. He notes: “It (the Internet) makes it; easier to make contact with consumers and retail stores and to support staff; it has been possible to be in different locations, making it easier to communicate with the employees”. Since George Economy lives in a different location than the dairy, the Internet is indispensable for communicating with his employees.

Kefir customers typically fall into two types: one is the consumer who actually drinks the products and the other is retail stores. Retail stores are customers who actually buy the products. The website does not have a transaction function and Helios sells its products only through retail stores. George Economy presents two reasons for that: one is for the freshness of products, and the other is delivery cost. This is understandable because kefir is a perishable beverage and delivery costs through conventional UPS delivery are considerable. Most users of the website are the consumers who drink the products, rather than the retail stores.

The website has clear contents with strong purple colors and convey the company’s mission well. The simple navigation arrangement and tools enhance the user's site exploration. Product information and Q&A pages particularly play an important role in serving the consumers.

The purpose of the Helios website is mainly promotion and education for consumers because Kefir is a new beverage in the U. S. market. The website focuses on product information and promotion of product benefits. Because kefir is currently gaining more consumer attention, the Helios website has received several thousand hits per month and more than 50 email inquiries a week. Helios also uses the Internet and website in response to consumer questions. Questions are often related to store locations; where consumers can buy a product, product recipes and how consumers can use the products. Although Helios does not sell products directly to consumers, communication with consumers greatly impacts market expansion. George Economy estimates that the website contributes to approximately 10% of sales. Besides the increase of sales, the substantial consumer database represents Helios’ potential opportunity to provide consumers with personalized service. Building loyal customers is a critical factor for Helios because a lot of sales will be repeat sales. George Economy saw the potential for doing business from having a website. He said,” I feel we do not use it (website) as much as we could. It could change the way of business much more, in terms of working with consumers directly. If we have a newsletter, and send it out to the consumers, or we can game and contest… ways to involve consumers more”. George Economy knows that through the Internet Helios can differentiate itself from others.

According to McKinsey Co. and Jupiter Media Metrix, regular users of bulletin boards and feedback areas generated two-thirds of sales, although they accounted for just one-third of all visitors.

Similarly, Forrester Research reported 94% of sites that have community features boost repeat traffic and help generate nearly one-quarter of all site traffic.

Well-integrated websites are valuable for small businesses because it makes a business run more effectively with higher consumer satisfaction. While an online presence gives Helios benefits, small business also face difficulties as well. George Economy points out that it is difficult to keep information updated and maintained. Like most small businesses, George Economy takes several roles. It is hard for him to find a time to update and improve the website by adding interactive tools such as chat-rooms and bulletin boards.

Conclusion

Helios Nutrition has been a successful business with niche products and organic cultivated beverages. Starting the business at the right time and the right place were a major part of Helios’ success. There was good market potential for functional foods like kefir and the organic market is one of fastest growing markets in the U.S. George Economy was also able to get help from several local Minnesota organizations.

However, time and place alone do not explain Helios’s success. George Economy’s dedication is also a major factor. Economy has continuously developed technological and nutritional benefits of organic dairy such as kefir. Helios has developed foods that combine the latest findings in nutritional research with traditional foods associated with healthy living.

In addition, George Economy understands the importance of technology, including how the Internet can promote and assist his business operation. The Internet is used to obtain research information as well as communicating with employees and consumers. The consumer database, which was built through e-mail communication with customers, is one of Helios’ most important assets.

The future of Helios Nutrition

As the company’s mission indicates, Helios Nutrition will continue to combine the latest nutritional research with traditional foods for healthy living. George Economy will focus on developing new functional food products, such as kefir, that are targeted at specific health conditions. He will also expand the functions of the Helios website for marketing integration. By promoting the benefits of kefir, George Economy will transform yogurt drinkers into kefir drinkers. In the near future, Kefir will no longer be a niche organic beverage in the United States.