The Supply Side: Walmart, Palmetto Gourmet Foods team up to bring healthier ramen to the masses

by Kim Souza ([email protected]) 1,628 views 

South Carolina startup Palmetto Gourmet Foods is focused on making protein-rich ramen noodle products and healthier alternatives to what’s on the soup aisle at Walmart and its competitors.

Reza Soltanzadeh, a food scientist, co-founder and CEO of the company, said 7 billion people worldwide consume ramen, and Walmart sells about half of the ramen eaten in the U.S.

“We knew we wanted to get our protein-rich ramen products into Walmart stores from the get-go,” he said. “We wanted to make Walmart a destination for healthier ramen. A group of food scientists and I started the company in 2019. Our first meeting with Walmart was when we were still developing the plant-based dough.”

Soltanzadeh said the food scientists worked on the dough formulation to trim the fat, limit sugar and add protein while working toward a clean label that would appeal to vegetarian consumers and Kosher diets. The goal was to infuse localized flavors and create low-priced, better-for-you protein food.

“Walmart met with us very early and helped to guide us as we prepared to launch products at retail,” he said. “The buyers liked our ramen product and what we were trying to do, bringing a high protein and flavorful product to the soup aisle at a very low cost relative to other protein sources.”

Soltanzadeh said the price Walmart buyers wanted was so low that the scientists often questioned if it was possible. Still, the retailer continued working with the company on every aspect of the business, from packaging to supply chain sourcing, when the COVID-19 pandemic hit.

“Walmart began to hammer home the importance of the supply chain at that point,” he said. “They audited our operation, and we brought in senior executives to help us nail down the price point we needed to get into Walmart. We scaled up to reduce the cost, going from two production lines to four.”

The scientists also had big ideas to use fancy cups with colorful designs, but Walmart rejected the packaging. Soltanzadeh said Walmart offered expertise about consumers and packaging, such as chicken products are coded orange on the packaging, beef is red, seafood is blue and spicy is dark red. He said Styrofoam containers were also out, and a heavy paper container that is recyclable was used instead.

“What retailer would take this much time with a startup? We met by phone with Walmart each Monday for eight to nine months, getting ready for mass retail,” he said. “Walmart made us better, but some meetings were rough and tough. They wanted to ensure we were really ready to go to the market.”

When Walmart did pull the trigger, it was for an Easter promotion that featured colorful noodles with vegetables in fun flavors. Soltanzadeh said Palmetto got the Magic Ramen product into Walmart stores in 90 days, just in time for Easter, and it sold well. Palmetto now sells plant-based ramen noodle products under the Chef Woo and Ramen Express brands in more than 20,000 retail locations.

Soltanzadeh said Walmart put the Ramen Express in 600 stores along the West Coast. Chef Woo, the high-protein ramen, is in 1,000 Walmart stores in the western U.S. Soltanzadeh said the price at Walmart is between $1.50 and $1.66 for 20 grams of protein. The company also has products on Walmart.com, making them available to consumers in other areas.

Palmetto has expanded sales to include Costco, Aldi, Albertsons and Safeway. Soltanzadeh said Palmetto is coming to Florida with Publix and Winn Dixie, and the products are also sold on Amazon.

In early June, Palmetto announced a $100 million expansion over the next five years to add more manufacturing space and a solar power plant. Soltanzadeh said demand for gluten-free noodles continues to rise, and the new facility will address the need.

“The next phase in growing our successful food technology company will expand our ability to meet a critical protein need for many people in the U.S. and around the world,” Soltanzadeh said.

Since 2019, Palmetto said it has already spent about $100 million growing the company to 300 employees at its 220,000-square-foot South Carolina food plant. He said plant capacity is 600 million meals a year, but the added capacity is expected to push production capacity to more than one billion meals annually. The second plant will grow total employment to about 700 by 2028. The solar power facility will also power both manufacturing plants helping the company reduce Palmetto’s carbon footprint.

“A key part of Palmetto’s success stems from its collaborative relationships with key U.S. retailers like Walmart, who share a commitment to sustainable innovation and U.S.-based manufacturing,” Soltanzadeh said. “The collaborations continue as we expand our range of plant-based, high-protein, low-cost ramen sustainably sourced and made in the U.S.”

Palmetto is one of several hundred U.S.-based small businesses to get products into Walmart partly because the retailer pledged to source more products from U.S. manufacturers. Walmart said its decade-long U.S. manufacturing program extension announced in 2021 and the $350 billion in purchase orders for U.S.-made products through 2030 would support more than 750,000 new American jobs.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.