Supply Chain
Tractor Beverage Co. Offers Living Case Study in Linking Regenerative Ag to Large-Scale Foodservice

With the “healthier” beverage industry’s explosive growth largely confined to the “ready to drink” (RTD) and retail categories, the options in foodservice have remained largely stagnant.

The USDA estimates that as of July, the overall foodservice industry (restaurants, cafes, colleges & universities, etc) is a $978 billion industry; and much of that business is driven by a few key players. Many of those vendors are rooted in old-school food-growing and distribution tactics, not optimized for the climate and global needs of a rapidly warming world.

It’s what makes Idaho-based Tractor Beverage Co. such a fascinating endeavor. Founded in 2015 by farmer Travis Potter, the drink brand is setting the tone for regenerative agriculture and organic farming as a pathway to rethinking the soft drink lineup at some of the country’s largest foodservice accounts.

“There are all sorts of things you can sell to people, but I saw the biggest opportunity in beverages,” Potter told Sustainable Brands™. “People are buying organic on purpose now; and, if anything, it’s cheaper than buying conventional in the long run.”

According to new CEO Kevin Sherman, Tractor is on pace to meet a $40 million run rate by the end of year — considerable growth for a six-year-old company. They’re pouring in 2,800 Chipotle stores across the US along with Veggie Grills, a number of colleges and universities and other outlets. Sherman says they’re the only certified-organic, non-GMO drink brand operating in US foodservice.

An ongoing problem with regenerative farming methods largely revolves around scale — the ability to grow and harvest produce in large enough quantities that the sales and distribution at the level needed by a Chipotle-sized restaurant chain is both viable and profitable.

Image credit: Tractor Beverage Co/Facebook

Tractor’s solution revolves around not only using organic and regeneratively farmed produce from its Idaho farm, but also sourcing produce from around the world that meets its high standards and would have otherwise gone to waste. To date, the company has processed more than three million pounds of produce either blemished or deemed “not suitable for table fruit.” The company says it’s bought and used 2,050 acres of organic, regenerative land so far this year; and as its need grows, so will the farms switching from conventional.

Through the pandemic, Potter says that the issue isn’t so much the produce itself, but finding people to pick it and to get to the US.

“Some things were stuck out on the high seas,” he added, noting global supply chain issues.

Of course, all of these efforts don’t mean much if the product isn’t good and marketed well. Tractor’s keen approach using novel flavors such as Mandarin Cardamom and Blossom ‘N Spice brought something new and different to the lineup at the soft drink counter (Tractor is quick to call their beverages “softer” drinks). The company also uses as much of each individual ingredient as possible — so stems, seeds and the like don’t go to waste.

While Sherman is quick to call Tractor a “disruptor” in the beverage business, the company feels more like an evolution of where the industry was going anyway. Traditional carbonated soft drink (CSD) sales are down, consumers have been shifting towards less processed drinks for some time; and generally speaking, the latter is less environmentally impactful — another consumer demand.

Tractor sends beverage concentrate to its accounts and has helped key outlets integrate new water filtration systems, ensuring consistency in flavor and profile no matter where the drink is poured. This is key as demand for its product range continues to grow and the company works to expand into more foodservice outlets across the country, such as hospitals.

Tractor’s business model shows that regenerative and organic farming can be done at scale and in a sensible way that really links the farmer to the cup. It’s a major opportunity to reduce food waste at key points within the farming cycle and get more consumers aware of and contributing to more conscious purchasing decisions at lunchtime.

“We’re using ugly fruit to make people healthier and the world a better place,” Potter says.