11/22/2011 11:47 am ET Updated Nov 22, 2011

Nora Schultz, Naturally Nora: Mom Starts All-Natural Cake Mix Company

The way to the heart may be through the stomach, but this New Jersey mom wasn't very happy with what her store-bought treats were packing. A mother of two, Nora Schultz often found herself hunched over the handmixer late at night, answering her children's call for cupcakes with a boxed cake mix. It wasn't long before Nora began to wonder what those curiously colorful dots of confetti sprinkled throughout her kids' favorite yellow cake actually were. A quick scan of the food label was the only "aha" moment she needed before deciding to start her own all-natural cake mix company.

Just over three years into the highly competitive food business, Nora has successfully navigated the hot real estate of store shelves, often relying on her past job experience in marketing for Campbell's Soups. Naturally Nora products can be found prominently displayed in nationwide Whole Foods markets and other local retailers. Her cake, cookie and frosting mixes -- packaged in the non-threatening cardboard box we're all accustomed to -- may look similar to other brands, but it's what's inside that makes Naturally Nora a bit sweeter.

We're all guilty of indulging in the convenience of boxed cake mixes, so what got you thinking about alternatives?

When my children were young, I used to do a lot of baking with them. Every time there was a school party in class, the cake that all the kids wanted was Funfetti, which is the white cake with the colored sprinkles in it. I took a look at the label and thought, "Oh my goodness, there's stuff in here that I really don't feel good about serving my kids," and I wanted an alternative. I took a look at the category and realized nobody had a baking mix that I felt good about, particularly one that was colorful. So that's what did it for me. I wanted it for my own children and I didn't want to have to bake from scratch all the time, especially now that my kids are a little older, and they'll come to me at 10 at night and say, "Hey, mom, I need cupcakes for school tomorrow." There's a real need for it.

Luckily, you had worked in the food industry before. How did your experience help get the project off the ground?

I knew that since I couldn't find the product on shelves, it likely didn't exist. I did my research and talked to a lot of other people, especially grocers, and figured out what was going on in the category. I knew from my experience at Campbell's Soups that it would be really difficult for the big players to do this, because they've kind of gotten themselves into a tough situation. The category itself has a very tight margin. I had past experience in a similar category from Campbell's Soup that let me know there was room for a company to come in and put a better product out there. I knew from the beginning that I didn't want to keep these recipes to myself, and that I wanted to grow the line.

I would think a perk of starting a cake company would be the taste-testing. How did you develop the final recipes?

Well, as a startup, you clearly don't have a budget for tastings, so we relied on friends and family and had as many people try the products as possible. I had block parties where I'm embarrassed to admit what I served them, and then found out later people were thrilled! I developed the recipes by using the best from-scratch recipes I knew and then I found some terrific suppliers to help me tweak the recipes and get them to a point that made sense. It was a long process -- about a year and half to develop all our recipes, particularly our "Alot'a Dots," which is our yellow cake with colored sprinkles. Natural colors don't hold during the baking process and they typically turn brown, so it took us a long time to find the right colors that would do what you wanted them to do when they were heated up.

Technically, your product is still a boxed mix. How did you incorporate the all-natural ingredients while keeping the convenience of a prepared product?

All our ingredients are minimally processed and all-natural. We use unbleached, unbromated wheat flour, non-alkalized cocoa, natural vanilla flavor and natural gums (carob bean and guar) to retain moisture. Our sprinkles aren't dyed -- instead, they're colored with ingredients like spinach and paprika. I didn't want to change consumer behavior -- if people were used to using oil, eggs and water, I didn't want them to do anything differently. So, in our mixes, you still use oil and eggs, but we took the milk out of the product, so when you add liquid, you can use milk or soy milk. For people with allergies, it makes things a bit easier.

Going all-natural is great, but it can be very expensive to go straight to the source. How did you balance cost and sourcing your products while you built this business?

It's a challenge, and because of it, our product is a bit more expensive than the competition, but I think it's important and you get what you pay for. With food, we've been trained to go cheap, cheap, cheap, but truthfully, you get [lower] quality when you go cheap, so it's worth paying a little more for the quality. Pretty much all our ingredients are sourced locally except for our cocoa, which is brought in internationally. Everything else is regionally based. I have a terrific partner who is phenomenal at sourcing. He's looked into alternatives, he does fantastic buying and we work hard to make sure the costs are going to work for the products we're coming up with, and sometimes that's really hard. The number of cocoas we went through was incredible until we found a good one we could afford and could do all the things we wanted it to do.

How did you go about convincing retailers to place an unknown brand on their shelves?

You have to prove yourself, and in the food industry, it's all about data. Also, the food industry requires you to pay. They literally sell shelf space like real estate, so that's been a huge challenge for us. I'm too small to have the budget to walk in and say, "Here's a million dollars -- please put me on your shelf." Even to go nationally in Whole Foods, you have to give them free product for every store in the country, and it's a lot of money. I've been working very carefully with retailers who are willing to say, "I know you can't afford to give me that much money so we'll put you in these hundred stores here and see how it goes, and if it goes well then we'll expand it." It's tough, but certain chains are really receptive. We're based in New Jersey, and the chain King's is terrific.

Our very first store was a local retailer who runs a fantastic market. He has three stores locally and loves to bring in products that the community is going to like. So he basically agreed to a trial to see how it was going to do. The first week we put it on a shelf, then he moved it to the aisle, and now we have a huge setup in his section because it worked! And they say once you have a date, it's easier to get a date, so today you can find us in several divisions of Whole Foods, and also divisions of Kroger, Meijer, Wegmans and Target. We're in about 30 states and online -- Amazon is terrific.

Naturally Nora came out of baking treats for your kids, especially school functions. How do you feel about the growing health movement that has caused a lot of schools to ban sweet treats, alter their cafeteria menus, empty their vending machines and allergy-proof their classrooms? How does Naturally Nora fit into this new trend?

I think the whole movement is great. I'm thrilled about it. I have young kids and I'm so happy they have a healthy lunch menu. What I make are treats and they are not meant for every day -- they are meant for indulgences, so I totally believe in moderation. However, I believe that when you are going to indulge, it doesn't have to be bad for you. I believe that everything you eat should be worthwhile. I don't necessarily think that banning the bake sale is going to solve all your problems, because people are going to have treats. But when it comes to the everyday lunchroom, the vending machines, get the treats out of there, absolutely. They don't need to be there every day. More and more people are reading food labels, which is great. Dessert is a little different. A lot of times people think, "Well, it's just dessert -- I'm going to be bad," but sometimes you should wonder, what does "bad" mean?

I've always thought of our brand as allergy sensitive. I don't consider us an allergy brand per se, because everyone with food allergies all have different levels of tolerance, as to what's okay and what's not. Our products don't contain any soy or dairy or nuts, but they are produced in a plant that every now and then will handle some of those ingredients so it depends on how tolerable and comfortable you are with a shared facility. I'm pretty comfortable where we are right now, but at some point I would love to move to a facility where I could say, "look, absolutely no nuts, no soy, no dairy." The gluten-free thing is a little different, in that there is a lot of competition in that space now. There is a lot of attention on it and we've had a lot of people ask us for it, but there are already a lot of alternatives out there.

What's in store for Naturally Nora?

Very few people have heard of us, so I want to spread the word about our products, because I feel that people don't even know what's in the other cake mixes and people need to look at their labels and see what they're eating. We're using a little bit of social media to get the word out. We were partnering with organizations in places where it makes some sense, and we have a great relationship with Ben & Jerry's -- we've done some joint promotions with them -- so we're really just trying to build it where we can.

We're constantly trying to get new accounts and new distribution, and we certainly have new products in the works. Our line will continue to grow. When we started, we had just cakes and frostings, and then we launched brownies and cookies, with 10 products total. So there are more treats to come!

Name: Nora Schultz
Company: Naturally Nora
Age: 41
Location: Princeton, N.J.
Founded: 2008
Employees: 3
Revenue: Undisclosed