White Wave, Boulder, CO, was founded in 1977 by Steve Demos, president, with just $500 in startup capital. A couple close bankruptcies and a challenging merger later, the company today stands as a wholly owned subsidiary of Dean Foods, Chicago, IL, with over 100 employees and nearly $185 million in revenues. Since the introduction of its Silk® brand in 1996, White Wave has grown 1850% as a company. It is an understatement to say that the company has come a long way in a short time. Even more remarkable is that the company got its start by promoting the food everyone loved to hate-tofu.

Mr. Demos discussed the company's modest beginnings. "In 1995 we decided to focus on building a national, refrigerated distribution system around our tofu product via the natural and whole foods industry. Once that was accomplished we were in a position to launch Silk. The original insight into the opportunity was that soymilk products were classically mispositioned," he said, adding, "The reason the category was mispositioned was primarily manufacturer driven. The emergence of the market back in the 1980s among natural and health food consumers was present but very small. Because it was small, shelf stability in packaging was required to prove there was a market opportunity."

Mr. Demos went on to say that most soymilk products at that time were packaged aseptically, which meant those companies were committed on a debt structure to go forward with this offering until someone proved that there was a bigger opportunity out there. As a company, White Wave noticed there was a value proposition to the consumer that it could challenge. Recognizing this, White Wave deviated from the aseptic package and committed to the gable top package, which sits on store shelves today. "When you put a package like the gable top carton in front of consumers and place it next to the shelf stable brick package, which is essentially a foreign package that you typically see in Europe and South America, you have a competitive advantage over anyone else in the field," said Mr. Demos. "Clearly, that is what happened."

Preparing for the launch of Silk in 1995 was difficult, as the company was on the brink of bankruptcy for the second time in its existence and it seemed to be underestimating consumer expectations. "The one piece that we didn't understand was that no one else besides the natural foods consumer was looking for this product in the refrigerated section. We underestimated how long it would take to gain the consumer's attention even though we thought we had the better 'mousetrap' so-to-speak," said Mr. Demos. "Once we got the consumer's attention it started taking off like a rocket ship. All of this, however, preceded any inkling that FDA was going to acknowledge soy as a cholesterol reducer. Our whole mission was simply based on soy being a complete protein that was more environmentally sensitive. We saw Silk as an opportunity for us to complete a mission of introducing people to products that are lower on the food chain and based on sustainable agriculture."

As FDA came forth with the soy health claim in 1998, White Wave was poised to be the first movers. "We had been waiting for soy to come of age for 20 years. So we made a move by taking the product to the mainstream grocery trade," Mr. Demos explained. "Our timing couldn't have been better." At the same time, the company took on a large financial partner-Dean Foods-in order to finance the placement of the products in supermarkets as well finance the fulfillment on the manufacturing side. But things did not run as smoothly as expected in the beginning.

The only wrinkle in the relationship between Dean and White Wave had to do with the "old" Dean Foods, Mr. Demos explained. "The old Dean Foods got themselves into dire financial straits by missing its numbers for three quarters in a row, which put them in a position as an acquisition target. Eventually Suiza Foods, Dallas, TX, became the large player to come in and acquire them," he said. "Effectively, even though the company still holds the name Dean Foods, it is an entirely new company managed by an entirely new group of people, which has made all of the difference in the world. They are the strategic partner and marriage that we were looking for and now we are in their factories as well as in cooperative development of the products and strategy. I think it is an excellent relationship because we both bring value to the party. Dean Foods brings financial resources and infrastructure that would take decades to construct, and we bring them a unique brand opportunity."

From tofu peddler to soymilk behemoth, Steve Demos does not seem the least bit jaded. In fact, he sees the Silk brand as being a billion dollar opportunity. And for companies that face similar situations as White Wave, Mr. Demos offered this advice, "Pay attention to cost of goods sold, it is your goldmine and everything else is just an expense. Nobody is right except for the champion; follow your gut. And you have to believe in what you are doing. Times get tough. You have to know your product and believe in your product because if the world is better off WITHOUT your product you should probably get out of your business. If the world is better off WITH your product than WITHOUT your product, don't ever quit."-R.M.