The Organic Baby Formula Empire Setting Its Sights on the Free Market

Mar 7, 2017

This article was written by Tracey Wallace from BigCommerce. Their narration of our company's founding and success story is phenomenal. It captures the heart of this company and it's mission.

Before he would take on big Pharma, well-known celebrity-endorsed brands and a legion of pediatricians, Peter started with a simple search.

It was 4 a.m. He sat slumped over his computer, fingers lightly resting on the keyboard, eyes red from staring at the screen much too long –– the letters G-O-O-G-L-E staring right back at him.

One of the boys lets out another cry.

He wakes his sister. And then –– all three of the newborn triplets are screaming. They’d only been silent –– asleep, Peter assumed –– for 30 minutes. He and his wife both head to the room –– for the sixth time that night.

Four adult arms to deal with three distraught babies isn’t enough. The colic-derived cries echo even after they subside.

Peter’s back at the computer. The clock is ticking. Any moment now, one of the babies will wake –– and like a siren, the siblings will bring their new, sleep-deprived parents back to their bedside.

He slowly types “baby formula and colic” into the search bar and hits enter.

He can’t believe his eyes.

When “Doctor Recommended” Goes Awry

Weeks earlier the babies had been in the NICU. Babies born as part of multiple birth pregnancies are common patients there. Peter’s children endured a three week stay.

Having used a gestational surrogate for the pregnancy, breastfeeding was not an option. Instead the babies were fed donated, banked breast milk and were later sent home with a special preemie formula that only hospitals receive.

That formula quickly ran out –– and the triplets were transferred to their pediatrician- recommended formula.

“We found when we got home they were constantly gassy, fussy, colicky in general,” says Peter. “They just didn’t seem happy. Their intestines made these monstrous noises which made us think something was definitely wrong.”

Peter and his wife lead an active and relatively healthy life. They have not been immune to the U.S.’s shift in nutritional trends –– from Hostess-wrapped goods to sustainable kale. This shift is what led him to even considering the formula as a possible cause to the fussy effect.

That “colic baby formula” Google search he performed late one night brought up dozens of articles –– many of them pointing to organic European formulas.

“The formula,” he thought, piecing together the dots. It was a subdued Eureka moment.

He ordered some of the formula for immediate delivery and within 24-48 hours, the babies did a 180. Everything was gone. The house fell silent. The family slept.

The next day, Peter started to do the math. He’d need a box a day to feed the three babies. Calculate that by price of the product plus international shipping, he and his wife were looking at an expensive solution to getting everyone more shut eye.

To pare down the costs as much as they could, Peter ordered the formula in bulk.

Almost immediately, he was out grabbing beers with friends again. His mood lifted. Their sleep problems relatively solved –– overnight.

That’s when people started asking questions, recommending friends of friends and family over to Peter to find out where he got this magic formula.

Soon, he was giving away his own product as samples when an idea struck him. He began contacting sellers in Europe. He put to use his importing experience (his family were importers of Greek foods), began working from his home basement and, once that overflowed, rented a climate controlled warehouse (the formula required a temperature controlled room).

Organic Munchkin was born.

How Baby Formula Became a Grey Market

At first, the goal was to import the goods and sell them, make a little money off his discovery and save U.S. parents some much needed sleep, while having happier babies, too.

But Peter’s mission quickly expanded.

It was obvious his family wasn’t the only one to suffer from doctor recommended formula. Formula that was FDA approved. Formula that was supposed to help, to heal, to nurture newborns as naturally as possible in place of breastmilk.

Peter just couldn’t let it go.

“I don’t know why they don’t connect the dots. I don’t know if these companies, the Gerbers and the Similacs, I don’t know if they’re,” he pauses, thinking. “I just don’t know why nobody is connecting the dots.”

One reason could be that the European formula isn’t FDA approved. Peter likes to say that it’s “not FDA disapproved, either.” The product has never been considered by the FDA for approval because it isn’t sold in the U.S.

“It’s like buying a vitamin,” says Peter.

The lack of FDA approval, however, does make the selling of organic baby formula a bit of a grey market. Peter is the only seller in the U.S. to distribute the German-made 100% organic formulas.

Even I was originally turned on to Peter and Organic Stby a BigCommerce co-worker who knew firsthand the impact of Peter’s products –– the father of a newborn.

“Tracey, you have got to reach out to these guys,” a colleague said. “I searched forever online for a solution, for something, for anything. This was the only stuff I found –– and it works!”

Indeed, it does work. So well, in fact, that Peter swears by them –– providing customers a guaranteed 24-48 hour turnaround time in the improvement of their baby’s health.

“I stand behind that 100%,” says Peter. “Most parents are shocked by my confidence, but it never fails. We’ve had customers call it the miracle milk, liquid gold, the lifesaver. It’s a joy to open up our emails every day.”

“Every email is a positive review –– every one.”

“There’s hundreds of stories of parents who were told their baby is acting like that because they have a milk allergy, where they simply just changed to one of these European organic formulas, and the doctor was wrong. They didn’t have a milk allergy. What they had was effects from the chemicals and the sugars.”

What Jessica Alba and the FDA Have in Common

This is what motivates Peter on a daily basis: the ousting of chemicals and sugars in the food we feed our newborns.

It’s a segment of the industry that is hotly debated, and long been hockey sticking in terms of revenue and growth potential.

It started, perhaps, with stores like Whole Foods –– promoting more organic goods and greens for a healthy, more conscious lifestyle. Millennials quickly bit at the bait –– and soon, they were having children whom they wanted to raise within the same cultural context.

So brands like The Honest Company sprouted, backed by celebrity parents promoting the benefits of going organic. Even larger brands have hopped on the trend. Gap now sells organic baby clothes. Toys R Us has a dedicated organic toy section. Johnson and Johnson manufactures an entire natural line of products.

But like in the earlier days of organic goods and education for adults, many of these products don’t live up to their marketing hype.

Lawsuits continue to hammer away at The Honest Company, a brand headed by Jessica Alba, which gets quite a bit of attention and financial backing because of its star-powered, “all-natural” branding.

In fact, the co-founder of The Honest Company says he and Alba want larger brands to follow suit –– removing some of the “120 chemicals in their products not found in ours.”

And yet, as CNN and plenty of The Honest Company’s customers have found, the brand only excludes about 40 chemicals –– leaving a long line of disgruntled parents feeling misled.

Watch the video below from CNN to learn more about The Honest Company

The irony isn’t missed on Peter, who explains that the difference between organic and non is simple: the ingredients.
“The [organic formulas] obviously work better because there’s no corn syrups. There’s no corn solids. There’s no sugars,” says Peter. “The milk source itself is of higher standards in Europe. They want quality over quantity. That’s a big factor. But it’s mostly the ingredients. There’s no chemicals. It’s a real organic formula.”

That’s when Peter asks if I’m familiar with The Honest Company. I clearly am.

“They just got sued about a month ago for them not really being organic. That’s all it is; it’s just the ingredients. That’s what makes it better. It’s a simple thing. Why isn’t [European formula] allowed here? I think it’s because the corporations don’t want them here. That’s all it is.”

And Peter’s on the fast track to changing that.

Babies, Bulk and Bridging Ancestral Lineages

Jennifer Hyman, CEO of Rent the Runway, often gently explains that she does not run an innovative fashion company, as many may think. Instead, she heads up a dry-cleaning company –– the largest in the world.

Peter understands this sentiment well. His own business, though primarily an organic baby formula reseller, is more about importing than it is about retail.

The ability to bulk import is an important one. It allows for lower cost on the items he sells so parents don’t have to pay an arm and a leg for a formula he strongly believes they deserve access to from day one of their newborn’s life.

“We’ve been able to –– through our new importing process –– drop our prices significantly,” says Peter. “We offer free shipping on every order, whether it’s one box or twenty boxes, and we’ve been able to bring down prices to where, if you buy in bulk from our site, you’re basically paying the same or a couple of dollars more than an organic formula here in America.”

Of course, bulk importing also comes with its fair share of challenges.

You need space for the inventory, and with baby formula, it must be climate-controlled. Plus, dealing with international sellers to place bulk orders and negotiate rates is no simple task given the language barrier and the difference in time zone. Finally, there are bigger names he’s competing with, ones that aren’t having to handle bulk inventory and international ordering –– or at least have the headcount to do it for them.

Peter is used to struggle though –– and he isn’t afraid of a little hard work or competitor pushback. After all, he was born and raised in New York to immigrant parents who worked hard and instilled in him a strong work ethic as well. He struggled to start his own business and shared years of struggles with his wife trying to start a family.

“My parents moved [to the U.S.] from Greece, a classic immigrant story with a penny in their pockets,” says Peter. “I know what it takes to work hard because my family has been working hard since day one. I got married young, at 26. Struggled for 10 years with infertility to have a baby. We were blessed at the age of 36 with the triplets.”

This family dependency added an even thicker layer to an already expanding business agenda:

Feed children healthy formula from day one
Save parents additional nights of unrest
Educate the U.S. on current formula issues
Do it all while building upon his family’s importing legacy
From New York to Germany and back again, Peter’s story spans Europe and the U.S. both in geography and generation –– adding only additional flames to his passionate fire.

His mission is a personal one. And he’s set his sights on infiltrating the very system he felt betrayed him: pediatricians.

Using a Pharmaceutical Sales Model to Grow Organic

It’s a point of confusion for Peter. I can hear it in his hesitation every time I repeat the question –– asking, as interviewers do, the same thing in a slightly different way.

“Why aren’t other people and businesses doing this? Why don’t pediatricians know? How did you connect the dots, but no one else?”

It’s a question Peter can’t answer –– but one he’s dead set on solving. After all, in the famous words of Maya Angelou, if you don’t like something, change it. If you can’t change it, change your attitude about it.

Peter’s doing both, and having honest talks with pediatricians who have seen flabbergasting results in their patients from his product. It’s opened a new line of communication as well as a sales channel.

“I have a lot of pediatricians who’ve started to contact me through customers because they’ve seen the changes,” says Petter. “What I’m trying to build now is a network of pediatricians who will give this a chance and who tell their patients to try this formula.”

But breaking into the medical field is no easy feat. Pharmaceutical companies have long held domain expertise in this arena –– and it’s rare for an outsider to make their way in.

Then again, doctors deal with people. And nothing is more powerful than word-of-mouth, especially with educated, well-traveled parents already up to speed with the benefits of all-natural foods and diets.

“This doesn’t happen in Europe, but here in the U.S. when a baby gets constipated or colicky, many pediatricians will automatically recommend parents use baby Zantac or just use these horrible formulas,” says Peter. “The more specialized the formula, the worse the ingredients. There are some formulas where the first couple of ingredients are corn syrup and corn solids. You don’t want to feed that to your baby. We find that most kids just have a cow’s protein breakdown problem, so by switching to a goat’s milk, which most people were raised on in the early 1900’s, that resolves the problem instantly.”

This is the type of information Peter is bringing to pediatricians, urging less immediate use of pharmaceuticals and more flexibility in formula makeup. It’s a grassroots movement, but he’s heavily supported by families across the country who are discovering all on their own the benefits to an alternative, all-natural method.

The Future of a Free Market Organic Formula

Organic Munchkin is coming near full circle in only two and a half years in business. Peter has solidified a stronghold in a niche market. He’s avoided fraudulent lawsuits his competitors typically handle by remaining true to his core mission. And now, he’s bringing pediatricians along with him, altering the medical recommendations of baby formula one doctor at a time.
It’s a lot to accomplish in just two years –– and yet, the next two look equally bright.

Peter has already begun bringing on products outside of baby formula. The brands he imports offer additional goods –– cereals, snacks, juices and baby care. As his business grows, so do the children of his first customers, parents who are as loyal to German brands like Holle and Lebenswert as older generations were to Gerber.

And soon, Peter plans to launch his own line, staying ever true to all-natural ingredients and working hand-in-hand with U.S. regulations. He’ll be one of the first to bring an organic line of baby formula before the FDA.

And by then, he’ll have thousands of supporters –– well-rested and fed, newborns to grandparents –– backing his name.

The power of parents will soon turn this grey market free.