Next foods bringing change by offering the alternative.

When Steve Demos left White Wave in 2005, he didn't leave the industry he loved so much behind, at least in his heart. As he traveled around the world for the next several months, he couldn't stop thinking about where the world of nutrition was headed. What was next?

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Upon Mr. Demos' departure from White Wave--the company he grew from $10 million in 1999 to nearly $400 million in 1999 to nearly $400 million by the beginning of 2005-his friend, and VP of business development and operations at the time, Todd Beck-man, told him if he had any business left in him when he returned then he would join Mr. Demos in the new venture.

After Mr. Demos' non-compete agreement ran its course, the industry veterans came up with Next Foods, a company stacked with many former members of the management team at White Wave, as well as some powerful and influential friends in the natural products industry. Mr. Demos took advantage of the rich relationships he'd forged over the years to secure investment in the new company.

During his sabbatical from the business world, Mr. Demos started thinking more about the over 40 crowd, the largest segment of the population, comprised of consumers with the most disposable income. He realized that this demographic was thirsting for products that could meet their ever-changing biological needs. "As a member of the Baby Boom generation, we thought we were immortal and could eat, drink, travel and do anything we liked," he explained in a press release. "Then mortality showed up in the form of body aches. It changed our consciousness in terms of diet and our perspective on nutrition." As far as a biological need, Mr. Demos decided to focus on the 40% of the population struggling with digestive issues.

Now that he had his target, he needed to develop a product that would marry the worlds of organics and functional foods, where science would be used to verify the function and efficacy of the product.

For the science, Mr. Demos took the advice of a friend from Tetra-Pak and looked into a Swedish company named Probi, which had developed a unique probiotic strain of bacteria featured in scores of products in the European market. As an added bonus, this strain, also known as Lp299v, happens to be one of the most researched strains of probiotic bacteria today. It even has the blessing of the medical community in Europe, where it benefits from a health claim in Sweden.

Scientists at Lund University in Sweden first started researching Lp299v in 1986-it was subsequently patented in Europe in 1988 and in the U.S. in 1991. As researchers looked for ways to reduce the healing time for patients who had undergone gastrointestinal surgery, they ultimately found that Lp299v, when delivered in oats--which is easy to digest--became incredibly well established in the intestine. Lp299v helped restore a balanced intestinal flora and reduce the risk of infections caused by harmful bacteria. Subsequent studies supported improvements in gastrointestinal function, as well as immunity.

NextFoods' flagship product, GoodBelly, was launched this past January. The 2.7-oz. shot features organic fruit flavors, probiotics and vitamins. It is also the only dairy-free, soy-free and wheat-free product of its kind. While a similar product has been sold in Sweden for several years, this is the first time Lp299v is making an appearance in a U.S. food product.

Although Mr. Demos is honest about the obvious advantages of his all-star team of executives, he admits that the road ahead will not be without its bumps. He faces stiff competition from companies like Danone and Yakult, two multinational companies he credits with bringing probiotics to prominence. But for him it is more important to focus on his part of the world right now. "Global mediocrity is not as attractive as dominance in one part of the world," he said.

Challenges aside, Mr. Demos believes GoodBelly will be a blockbuster. "We are offering consumers choice and there is always going to be a sizable portion of the population that is interested in the alternative," he said. Sound familiar? Mr. Demos applied the same theory to soymilk in the 1970s and look where that got him.

Reflecting on innovation over the past several years, Mr. Demos said, "Beyond organic and natural, I think the trends have been fairly vanilla. There wasn't a whole lot until we discovered microorganisms, which offered a whole realm of substances we've never seen before. We've only just scratched the surface of how food will change."

As for why he thinks NextFoods was selected as a "Company to Watch," Mr. Demos commented, "It's not about me. The companies I associate with have a strong history in innovation. It's the roots and leadership of this company that will dictate innovation and success."

Without a crystal ball the future for NextFoods is obviously uncertain, but with a little help from his friends Mr. Demos is certainly off to a good start.

Analysis: Future Issues to Consider

* GoodBelly, although exploiting the rapid increase in awareness of probiotics, is not presented in a format familiar to consumers. Will consumers be able to make the transition from dairy-based probiotic foods and beverages to GoodBelly and still be able to make the health connection?

* The suggested retail price for GoodBelly is $4.49 for a 4-pack of 2.7 fl. oz. juice servings. How will it fare against products like Activia, which retails for $2.49 for a 4-pack of individual 4-oz. cups, and DanActive, which retails for $3.59 for a 4-pack of 3.3-oz. shots? Will the price be too high for mainstream grocery shoppers? Without an extensive ad campaign to help consumers understand why GoodBelly is, well, good for their bellies, how will consumers justify paying up to $1-2 dollars more than the closest competitor for GoodBelly?

--Rebecca Wright, Editor