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American Halal, Saffron Road

Adnan Durrani of Saffron Road

In 1989, Adnan Durrani started a company called Vermont Pure Spring Water when he was just 26 years old. He took the idea, along with a business plan predicting quickly rising U.S. demand for bottled water, to Coke chairman Don Keogh, a man Durrani regarded as “the God of beverages.”

To his credit, Keogh had an inkling that Durrani was onto something. Keogh even agreed to take the idea, along with Durrani’s business plan, to his nine corporate presidents. “They think you’re a certified lunatic,” recalls Durrani of the response Keogh got when he floated the idea that consumers would pay for unflavored water in a bottle.

That’s when Durrani took a hard look in the mirror. He believed that bottled water was going to hit in America, as it already had in Europe. But if Coke executives didn’t see that, then maybe he was a certified lunatic. Still, he decided to stick it out and push forward. “Six months later, Coke signed a distribution deal with us,” says Durrani. Through the deal, Vermont Pure and Evian became the only water brands that the powerhouse beverage maker would distribute.

The bottled water market has since peaked and plateaued, with Americans spending a whopping $21.7 billion in 2011.

Around the same time that bottled water started to hit in the U.S., yogurt was catching on in Belgium and France. Durrani connected with Gary Hirshberg, who was betting that the U.S. was the next hotbed for yogurt. Soon, Durrani became a principal investor and financial partner in Stonyfield Farm, Inc., helping to build it from $25 million in sales in 1994 to over $70 million.

The two went on to sell 85% of Stonyfield Farm to Group Danone, becoming pioneers in both organic food and socially responsible business circles. Stonyfield today generates over $300 million in sales annually.

Those are two of his biggest wins, but Durrani has spent the last 26 years investing in and starting natural food companies, most recently through Condor Ventures, the venture firm he runs that’s devoted to strategic investing in companies like Stonyfield and Vermont Pure.

After an admittedly harrowing start, Durrani’s commitment to values and market opportunity have kept him on a winning streak ever since. “I’m the kind of entrepreneur that doesn’t chase something that’s hot. I look for dissonance between common thinking and reality – if you dig deep into the research,” he says. “I tend to look at Europe as my model. When I see it over there, I dig in to the research and see if it can do well here,” he says.

Fast-forward 20 years to the mid ‘00’s. Durrani was looking for the next European-grown idea that he could import to the U.S. Himself a Pakistani Muslim, Durrani took a hard look at Halal food, whose European market had grown tenfold in an eight-year span.

There had been some Muslim migration from Algeria, India, and Pakistan into Europe, but not enough to explain the 10X growth, he says. When Durrani studied the market, he found that the markets and traditional food distributors had been ignoring demand for Halal food. “There was 30 years of pent-up demand,” Durrani explains.

At the time, 9/11 was still a relatively recent memory and the War on Terror – and discrimination against Muslims – were at their peak. “I didn’t think [Halal] was ready for prime time. The last thing I wanted to do at the time was to get into a religious business,” he says.

But a half decade later, the data convinced him to go for it.

Given some surprising demographic differences between Europe and the U.S., Durrani predicted he’d find an even stronger market for Halal here at home.  The average French Muslim has an education level 60% below average. In England, it’s 30-40% below. Not surprisingly, income levels reflect education levels in those countries.

In America, however, the Muslim demographics are completely different, says Durrani. “Many U.S. Muslims emigrated as computer engineers, doctors, or professors. One out of five American Muslim families has an MD or PhD in it. On average, the second most educated woman in America is Muslim,” Durrani adds.

But there was still a considerable disconnect between purchasing power and what was actually available in the marketplace.

There are around 100,000 kosher products in the U.S., compared with 1000 Halal products. With only around 5.3 million Jews in the U.S., kosher food is a $12.5 billion market.

The U.S. Muslim population was only half the Jewish population in 2010, but some studies project that there will be 6.2 million Muslims in America by 2030. To address that growing market, Durrani launched the Saffron Road brand, which sells the first Halal-certified frozen entrées available in mainstream supermarkets nationwide, including Whole Foods.

Since religious dietary laws like Halal and Kosher are often confusing to Americans, the Saffron Road packaging speaks in more general terms to the consumer – think “certified humane,” “antibiotic free,” and “gluten-free.” “It’s not the 2000 miles it takes to get the food into the store,” says Durrani. “It’s the 18 inches the customer has to reach to pick it up.”

That’s why 90% of Saffron Road’s marketing budget goes into packaging. The messaging is intended to signal Saffron Road’s commitment to humane animal treatment and slaughtering processes, antibiotic-free, gluten free, organic, natural, sustainable farming on family farms.

That approach – marketing a specialized product to a larger audience – is positioning American Halal to be more than a fringe player. American Halal had retail sales of more than $4 million in 2011, driven largely by Whole Foods Market. Through larger distribution to more mainstream grocers, along with additional product introductions, Durrani forecasts sales hitting $50 million within five years.

With such ambitious growth plans, how will Durrani manage to maintain such high quality standards? “It’s a huge challenge,” he admits, but a key lies in following the lead of Durrani’s “Jewish cousins,” who have developed Kosher processing facilities around the country.

Another key? Building the right team and strategic alliances. A member of Durrani’s board of directors is the head of one of the largest Kosher poultry operations in the country. And his investors are all long-term oriented. “This is a 10-15 year project, so our investors have to be very patient, cause they understand what we’re trying to do,” says Durrani.

In taking the long view, Durrani says Stonyfield offers a proven model – paying top dollar for organic products, giving good wages, health insurance, benefit plans, and equity sharing. “It’s not what they teach you at business school. In fact, it’s the opposite of what an MBA would tell us what to do. But it just takes more time when you’re building a progressive company,” says Durrani.

It’s that blend of social ideals and keen eye for business opportunity that will no doubt help Adnan Durrani continue his winning streak in the food world.

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