Neal St. Anthony: Hot Dang, other Minnesota firms at center of healthy food trend

Tim Murphy quit a good marketing job several years ago in the Yoplait business of General Mills to lead a two-employee "grain burger" outfit called Hot Dang.

"We're after what's called 'flexitarians,' " said Murphy, 35, a Stanford MBA who quips and laughs a lot. "People who do eat meat, just not all the time.

"Our brand is our product, and we're trying to bring better taste and fun to the veggie-burger category … that typically is promoted as meat-free, dairy-free, gluten-free, egg-free, this-free-and-that-free. And we would say it's also been taste-free."

Murphy, backed by family and friends, bought the majority stake in the fledgling company that was first developed by a friend, Martha Pincoffs of Austin, Texas, She's a farm-fresh food devotee.

The adventurous chef and restaurant veteran launched Hot Dang in her kitchen on April 1, 2011. Her husband challenged her to develop a good-tasting, meatless burger with ingredients in the kitchen.

Murphy's investment helped the company develop three additional flavors, including Southwest and Italian, made from barley, wild rice, olive oil, cheese, assorted nuts and beans, sea salt spices and more.

Hot Dang, which uses an Austin food manufacturer and an independent distributor as well as several contract employees, is sold locally at Lunds and Byerly's, and Whole Foods and other stores in the Southwest and Rocky Mountains.

I'm not a big red-meat eater, and Hot Dang burgers, 3.2 ounces apiece, worked fine for me. Tastier, crunchier than chicken. But a little pricey for this cheapskate.

"We need to just 'crush it' right where we are now this year," Murphy said of his short-term objective. "Because if we can prove we're crushing it and we're the bestselling veggie burger here and in Denver … then we should be able to do it anywhere."

And if the company can achieve that within a couple of years, Murphy knows that's when a larger food company, or independent investors such as a private equity firm, will buy some or all of Hot Dang and provide expansion capital.

Murphy represents not only one small business, but a big-wave trend of specialty health foods. Minnesota is a hub for them.

Just as the big banks, insurers and finance houses of the Twin Cities spawned money management firms and community banks, the likes of General Mills and Land O'Lakes and the former Pillsbury led to new products and businesses.

"Food is particularly interesting because a lot of these businesses start in the kitchen. Most people have access to ingredients and a kitchen to play around."

Boulder, Colo., is considered the epicenter of health food companies. The Twin Cities is a player. And its cheaper to run a business from here.

The only real growth in food sales has been in the growing "health" category and specialty foods that occasionally have been acquired by the likes of General Mills. The big food companies have been troubled by competition from generic brands and sluggish sales of their cornerstone brand cereals and other staples.

Here are a few upstart-to-established independent food companies that pretty much started in some entrepreneur's kitchen:

• Jim Breen, a veteran executive at Creamette and Hain Celestial Group, started Live Better Brands, maker of Way Better chips, in New York a few years ago and moved it in 2013 to a renovated building in the Minneapolis Warehouse District. The chips are sold at Whole Foods, Lunds and Kowalski's locally and other stores across the country.

• Angie's Artisan Treats, maker of Angie's Kettle Corn and Angie's Boomchickapop, last fall pulled in investment from TPG Growth, a unit of the world's largest private equity firm.

The healthy-snack company was founded by Angie and Dan Bastian in North Mankato in 2001 as an outdoor vendor of kettle corn. The Bastians and existing management will remain with the company. Angie's Artisan has grown from an outdoor vendor at local fairs, festivals and sporting events into a national brand. Its Boomchickapop popcorn is sold in natural food, grocery, club and mass retail outlets in 50 states and Canada. The company has about 150 employees.

"Our team is … delighted to join with a strong partner like TPG Growth who can help us as we scale the business," Angie Bastian said at the time of the TPG investment.

• A northern Minnesota family is behind Locally Laid Egg Co., which buys eggs from farmers who actually let the chickens walk around the farmyard.

The company has won several entrepreneurial awards, including runner up out of 15,000 small businesses in the Small Business Big Game contest sponsored by Intuit, and second place in the food division of the Minnesota Cup. Proprietors Jason and Lucie Amundsen called the second-place award "being the underchicken."

In February, the Minnesota Cup featured a food entrepreneur forum of about 30 young companies with names like Alemar Cheese, Bare Honey, Buddy's Nut Butters, Jonny Pops, Trovita Health and WholeMe.

Neal St. Anthony • 612-673-7144 • neal.st.anthony@startribune.com