Alan True knows how to spot great investments.
“You always want to be in front of big trends,” he said. “Most of my life is about trying to find very big trends and getting in front of them so that when the trend actually materializes, you get a tailwind.”
True did it in China, where he started a company that became by far the largest office chair supplier to the U.S. retail market. This decade, he’s built a company with 1,000 single-family home rentals for working-class people.
The next big trend, according to True, is what at first glance looks like an old industry—food processing.
He wants to catch the fresh-food wave by using a relatively new manufacturing technique called “high-pressure processing” to extend the shelf life of fresh products without adding preservatives or flavorings.
To prove his point, he started True Fresh HPP, the acronym standing for high-pressure processing, and has self-invested about $30 million in a Buena Park factory.
“We’ve built here the world’s largest high-pressure processing plant,” True said while giving a tour of his 60,000-square-foot refrigerated facility, which includes a 20,000-square-foot freezer kept at minus-10 degrees Fahrenheit.
“This is the latest generation of technology.”
87,000 PSI
The former pizza distribution facility was completely rebuilt to hold four 97-ton machines costing $3.5 million each made by Hiperbaric of Spain.
High-pressure processing is cold pasteurization, through which products, already sealed in final packaging, are subjected to hydrostatic pressures up to 87,000 pounds per square inch, or five times the pressure in the deepest part of the Marianas Trench, True said.
The process destroys pathogens, such as E-coli, salmonella and listeria, while retaining the properties of fresh foods, he said. The process is U.S. Department of Agriculture-certified and allows labels to indicate the product is free of artificial preservatives, flavors and colors.
The machines are now processing 2 million pounds a month for a variety of companies that make salsas, dips, hummus, meats and other products that typically have short shelf lives. The four machines are capable of processing 100 million pounds a year, True said. Revenue will be “shy of $10 million” this year and reach up to $15 million in a couple of years, he said.
True recruited as president Grant Lorsung, who’s been making food for 35 years, including owning a manufacturing company. True Fresh HPP now has 60 employees and plans to triple that to 180 by 2020.
After high-pressure processing, products are shipped directly to retail outlets, including Trader Joe’s and Whole Foods. The process adds about 10% in cost per pound.
“That 10% buys you clean food with no preservatives and a longer shelf life,” Lorsung said.
True Fresh’s market range is 300 miles, and if the first factory goes well, True may replicate it in other major markets. He’s already leased a facility in Indianapolis.
Ready-Meal Kits
True said he sees other revenue streams, such as the ready-meal kit industry.
He’s watched some companies, like Blue Apron Holdings Inc. (NYSE: APRN), make a splash on Wall Street before fading. He said such companies may not succeed because consumers don’t like food subscription models; marketing costs are high; retention is low; and retailers are chipping away. Above all, those companies’ products can turn bad within two weeks of manufacture.
He began a separate unit to compete, True Food Innovations, and hired as president Robert Jones, who previously managed development at online meal-kit firm Chef’d. True Food launched its True Chef Meal Kits this year at stores of Bashas’ Supermarkets in Arizona and Costco Wholesale Corp. More than 1,000 locations now carry the products, True said. The unit also provides turnkey, white-label products.
“The challenge for the retailer and the supplier is how to get enough time on the shelf without it expiring,” he said.
“We’re now in the market with a 45-day meal kit. Our nearest competitor is 13 days.”
True also sees an opportunity to build an ecommerce business for companies that want to sell their fresh food products online; he’s projecting he’ll eventually ship 20,000 to 30,000 boxes of fresh food a day from the Buena Park facility.
The business-to-consumer fresh food model is about $5 billion in annual sales with a potential total addressable market of $20 billion.
“If we just take $1 billion of that, we’ll have a pretty nice little business,” True said. “That business is a definite big trend.”
China Trend
The graduate of the University of Colorado worked on the Mercantile Exchange in Chicago and with Drexel Burnham Lambert in London.
In 1986, he decided China was the area of the world that would offer the most opportunity during his lifetime. He traveled to Taiwan on a round-trip ticket with $700 in cash, passed out his resume and picked up jobs at Chinese trading companies. He established his own inspection company to help buyers ensure they were getting the quality they expected before shipments left factories in Taiwan. With outsourcing beginning to emerge, True recognized an opportunity in furniture, though he knew nothing about the industry.
“If you’re in front of the trend, you don’t want to be choosy about which part. You try to be opportunistic.
“Furniture found me. It’s where I made my mark.”
True, who’s fluent in Mandarin Chinese, also saw a chance on mainland China when it began its famed opening in the 1990s.
“I decided that if I beat the Taiwanese to China, I’d be able to get the cost down in advance of them coming to China. The Taiwanese going to China was probably the most meaningful trend to get China engaged in world trade. I was able to front run that.”
True converted dilapidated Chinese factories into quality exporters. He won exclusive licensing of famous brands, like La-Z-Boy, Serta and Thomasville. At one point, he had 6,000 workers at three factories shipping 1,000 containers a month. True said he “owned most of the industry” by selling to Costco, Sam’s Club and other big-box retailers.
Annual sales reached $250 million. In 2011, True Innovations was acquired for an undisclosed price by Hong Kong-based Li & Fung, the world’s biggest supplier of goods to retailers like Walmart Inc.
Entrepreneurial Family
Afterwards, True and his wife, Twila, established their family office, True Family Enterprises, which has grown to 100 employees. It invests in a wide variety of companies, such as real estate (see separate article). The couple owns the family office and each venture; it sometimes provides equity to employees.
Twila has been involved in almost 50 businesses, such as beauty care products and an upscale nail design studio; she won a Business Journal Excellence in Entrepreneurship in 2016. Alan and Twila live in Newport Beach with their four children.
He was looking for investments in the food industry when he came across the cold-press juice business, which was enjoying a “hockey stick” type of sales increase. The sector includes fast-expanding Santa Ana-based Nekter Juice Bar.
True was surprised to see a lack of research in food processing and thought the high-pressure method could be expanded beyond juice to other foods. He spent four years developing the Buena Park factory.
True points to the emerging trend of dry foods and freezer sections of supermarkets declining, replaced by fresher foods and more restaurant-style offerings.
“The grocery store of the future will be ready-to-eat, ready-to-cook, grab and go.
“We’re in front of the trend. We’re laying the groundwork. We have the only long shelf-life product out there.”
