Sharon Spielman, Food Engineering (SS): Tell me briefly about Intermountain HPP and its place in the HPP marketspace.

Thomas Kreitlow (TK): Intermountain originated for two reasons: to service the HPP needs of my juice company, and to toll for other manufactures as a way to utilize excess capacity and to offset the expense. There was definitely a void in this market (the nearest machine was in California), and the Utah economy was booming, especially with small-scale food production companies.

SS: How many HPP machines do you have at Intermountain and when was installation?

TK: One, in November of 2019.

SS: When and why did Intermountain decide to purchase its HPP machines?

TK: I researched the HPP process and tolling for about a year prior to obtaining our machine. The primary driver was necessity. In order to scale my production operations (juice and hummus), I needed to improve shelf-life and to create a safer product. My only option would have been to ship the finished product to California for HPP processing and then have it shipped back, or dive in and bring HPP to the Intermountain West.

SS: Can you tell me about the cost analysis that helped when choosing which HPP machines to install.

TK: I think it’s kind of a catch-22. A company would either need to be at a sufficient volume level to justify the expense, or they would anticipate an increase in volume in the short run where it would no longer make sense to outsource their HPP needs, or they would need to supplement their revenue to justify the expense by taking on tolling customers as a means to fill capacity. Companies who choose the latter, like Intermountain HPP, are essentially taking a leap of faith that other manufacturers in their area will embrace the technology. Intermountain HPP had conducted some market analysis and had even approached potential clients to gauge whether a hybrid tolling model for the Utah market was sustainable. We determined it was.

SS: If you were to make lists of the pros and cons for both using a toller and owning HPP equipment, what would those lists look like?

TK: I think it depends on your market. If a toller exists in your area, then I think you would use them as long as their rates were something you could absorb into your pricing model. HPP equipment is expensive and operating it is essentially a whole other business. My other companies, which use Intermountain for their HPP services, did not have an alternate option. Intermountain was the only game in town and unless a company can transport goods to another market cost-effectively they must utilize their local provider.

Using a toller is always the best option unless it isn’t an option. Then a company must decide whether the expense of owning the equipment is justified. It’s a huge commitment, and unless a company is certain they can make a go of it they should avoid the endeavor. Most tollers (and this is my experience as well) will tell you that it takes a year or two to just break even. Like most things in business, it’s simply about numbers.

One con, at least for Intermountain, was that few producers in our market had knowledge of HPP or had embraced the technology. We essentially had to walk potential customers through the whole process, including compliance, packaging, logistics, etc. Getting folks onboard has been a challenge.

SS: What features were you looking for your HPP equipment to have?

TK: The only feature most companies are concerned with is vessel size. Does the machine have enough capacity to process specific demand for their company (and others, if they’re going into the tolling business)? Intermountain made mechanical and other improvements to their facility in case a larger machine at some point was needed.

SS: How did Intermountain choose the equipment they ultimately purchased?

TK: Intermountain chose to start small to allow the model to prove itself. We were actually looking for a used machine and it so happened Hiperbaric had a small machine available, so that was the direction we went. We are not at capacity with this machine yet.

SS: Did Intermountain install HPP exclusively to become a toller? Please tell me about how Intermountain got its start in HPP.

TK: Intermountain did start out to exclusively toll for local companies, but two of its customers were companies I owned with other individuals. The fact that I had involvement with two other companies which would (and did) benefit from local access to HPP did play a role in the decision. Given the production levels of those companies at the time of opening Intermountain, I knew there would be immediate revenue, which would minimize first-year losses. At that point it was just about getting word out that HPP was now available in Utah.

SS: Can you offer any stats (financial, efficiency-wise, production-value, etc.) for using a toller vs. installing HPP equipment?

TK: Not really. It’s honestly an economic decision and each company’s circumstances will be different. They will need to determine what makes sense for them.

SS: What were the biggest challenges when installing your HPP machines? How were these overcome?

TK: For us, the biggest challenge was location. Since we did not want to build we needed to find an existing industrial building with easy freeway access (since companies would be transporting to us) and some existing infrastructure. Heavy power supply is also important. We wanted to minimize our startup costs since in our market the model was unproven, and any capital costs we could divert could be utilized as working capital. We must have looked at 50 locations before we found our spot.

SS: If you had to do it over, would you change anything?

TK: I would try harder to line up more customers prior to launch. I was somewhat naive in thinking companies would flock to us since we were the only tolling company in the Intermountain West. Sort of “if you build it, they will come.” It hasn’t worked out that way. We’ve had to work just as hard for customers as anyone else.

SS: What advice might you offer other companies that are thinking about purchasing their own HPP equipment vs. using a toller?

TK: Make sure you do your homework, and make sure you understand what you’re getting yourself into. Also, make sure there’s enough support in your market. If there’s a toller available, use them for as long as possible before going out and purchasing a machine.

SS: Anything else you’d like to share?

TK: I would say that in most situations anyone thinking about obtaining a machine will probably weigh whether tolling, as an additional revenue stream, might make sense. A lot start out this way and at some point move in one direction or the other. By that, I mean they either focus more on tolling (and maybe even some co-packing or private label), or their own demands fill capacity and they no longer need the additional revenue, essentially cutting off their tolling customers. I know this has happened in at least one market. In addition, there may be some compliance regulations which could dissuade someone with a machine from allowing another company to bring their products into their facility just for tolling. That could get tricky too. FE