Misfits tasting success in US after switch to chocolate bars

Henry Sether and his business partner were considering throwing in the towel on their protein supplements business, Misfits, when they decided to pivot to selling chocolate bars instead. Until that point they’d been selling protein powders, but progress was slow.

“We have big ambitions and we weren’t that interested in a lifestyle business, doing sales of £1 million or £2 million, with maybe 10 per cent profit, which is what that was heading towards,” said Sether, 32.

Having seen the success of Grenade, the protein bar company founded in 2010 by Juliet and Alan Barratt that was sold to Mondelez, the US food giant, in a deal worth £200 million in 2021, Sether set about creating a chocolate-flavoured protein bar.

It launched in January 2020 and found a place in the market with health-conscious, young consumers. Misfits expects sales of £15 million this year.

“We thought, ‘How can we build something that is protected for the future? Something plant-based, high protein, low sugar that isn’t what I call gym for him, that a Grenade might tick? Grenade is a phenomenal business and a phenomenal audience but a different occasion. We wanted to be seen more as everyday confectionery, more of a lifestyle brand.”

Misfits is one of a growing number of “functional” brands that aim to increase consumers’ intake of protein.

Sether says it’s a misconception that only weightlifters need to increase the amount of protein in their diets. He explained: “Every man, woman and dog needs protein. Increasingly there’s evidence to show that protein keeps you fuller for longer and the recommended amount is around one and a half to two grams of protein per kilogram of bodyweight, depending on your lifestyle.” He says that a Misfits chocolate bar contains the equivalent of “two eggs’ worth of protein”.

Consumers seem to be on board, as are investors — Misfits has raised £12 million of venture capital and in 2021 launched in the US, which is now its biggest market with 80 per cent of sales.

“The unique thing about the US and our category is that you can have freakish growth. You don’t go from zero to $3 million to $7 million to $10 million. If you’re well-liked you can go from zero to $10 million to $30 million to $100 million,” said Sether.

For him, the challenge has been finding a manufacturer with ambitions to match his own. A previous factory had “a ceiling in terms of their capacity” and Sether recently found a new one after an 18‑month search. It is “capable of scaling to £200 million [in annual sales] plus” and has the added benefit of a site in the US.

Sether is hoping the move will help him keep a lid on rising manufacturing costs as he is reluctant to pass on increases to customers. “In the UK they’re very price sensitive. In the US there’s a little bit more scope but no one’s going to buy a $5 chocolate bar so there’s only so much you can move prices,” he said.

“By moving to a bigger [factory] who has bigger negotiating power with their supply chain, and who forwards orders and hedges and all that kind of stuff in a turbulent market will just help secure our pricing.”

Having begun life as a largely online brand, with Sether focusing on Amazon as a key sales channel, he has since changed tack. The brand’s rapid growth in the US has been driven predominantly by bricks-and-mortar store sales, he says, with Misfits bars sold in around 1,100 stores including the national retailers Whole Foods and Trader Joe’s, and regional coffee chains such as Gregorys and Blank Street.

Sether said he wasn’t put off by stories of UK businesses that have failed to realise their American dreams and then retreated with their tails between their legs. One of the most well-known examples is Tesco, whose Fresh & Easy venture is thought to have cost the company some £1.8 billion. But others including James Averdieck, founder of Gü and The Coconut Collaborative, have also talked about finding the US a difficult nut to crack.

For Sether, entering the US has been a breeze so far and he urged other entrepreneurs to consider making the leap.

“The UK has been a tough market for us. In a weird way, it’s more competitive and there’s less shelf space and fewer consumers. It’s really difficult building a business and a brand so I might as well do it in a country that has scale and can reward you,” said Sether, who has travelled to seven US states in the last three months.

He says one of his team is moving to New York in the coming weeks and that there’s a good chance he will follow suit. “It’s on the cards but I have to check with my wife first,” he laughed.