Other players in the field have come and gone — looking at you Clif Bar and PowerBar — but GU’s founder says they’ll stay in Berkeley as long as they can.
July 17, 2023
BERKELEYSIDE – Hidden away in industrial West Berkeley in a nondescript building is a multimillion-dollar international sports nutrition company called GU. Just like energy bar makers Clif Bar and PowerBar, GU’s products were originally developed by a Berkeley resident keen to develop easily digestible fuel for endurance sports enthusiasts. All three companies launched their manufacturing operations in the city. But Clif Bar and PowerBar both left more than a decade ago, while GU is proud of its Berkeley location and intends to stay put.
“Berkeley has this reputation of innovation. Being born in Berkeley has value,” said GU founder and owner Brian Vaughan.
Clif Bar, now a major industry player that was purchased for $2.9 billion in 2022, ran out of space and moved to Emeryville in 2010. PowerBar moved to Nestle headquarters in Glendale after being acquired by that company in 2007. GU, the only one to remain independent, says it is staying in Berkeley for several reasons.
First, the company’s main product, a gel, needs less space to manufacture than a bar. Also, GU’s west Berkeley plant has a number of small machine shops nearby that have helped keep GU’s production equipment running. Another factor: the company has taken advantage of innovations in machinery and robotics to streamline operations, said Vaughan during a recent interview at the facility on Fourth Street, four blocks south of Gilman.
“Typically, as operations grow, more human resources and space are required. But we were able to grow at a measured pace [due to these innovations],” said Vaughan, who founded the company in the 1980s with his father, William, who died in 2019.
Vaughan cites as an example the fact that, at first, employees hand-packed boxes for shipping. Then, the company switched to robots, which take up less space and work faster, making it possible for the company to grow in a small space without spreading out or adding more employees.
More than any other factor, however, “It’s this melting pot of ideas and culture that keeps us in Berkeley,” he said.
Berkeley is a hub of innovation for food
Jerome Engel, Founding Executive of the Lester Center for Entrepreneurship at Berkeley Haas, and editor of Clusters of Innovation in the Age of Disruption, echoes Vaughan. “Berkeley is a cluster of innovation for food,” he said “The fact that PowerBar and Clif moved away when they scaled only makes the case, rather than the contrary. They emerged in the Berkeley ecosystem and only moved when the scaling costs, such as real estate, compelled them to.”
“And of course, University of California plays a big role in making Berkeley a micro-urban environment inclined toward innovation,” he added.
Both GU and PowerBar have strong connections to UC Berkeley. Brian Maxwell, founder of PowerBar, was a track coach at Cal when he invented his bar. Vaughan was a UC Berkeley biophysicist when he developed GU.
An industry expert said that in their own way, each of the three companies was a pioneer.
“PowerBar is the OG sports bar,” said Bill Giebler, content and insights director for Nutrition Business Journal. While granola bars came first, “PowerBar was the first bar significantly associated with athletics, almost to the point of becoming the Kleenex of the category.”
Then Clif came along, “famously saying ‘We need a bar that tastes good,’ so they get credit for turning it into a snack category,” Giebler said.
“GU gets credit for leading the gel category, essentially inventing the category,” he said.
GU and PowerBar both began in their creators’ Berkeley kitchens in the 1980s. In fact, Vaughan worked with Maxwell in creating the PowerBar.
Clif began in Emeryville in 1992, moved to Berkeley in 1996 and returned to Emeryville in 2010.
In contrast, GU’s only locations have been in Berkeley, starting with one facility on Gilman Street that grew to three.
In an interesting twist, when, in 2010, GU decided to consolidate its locations, Clif Bar was moving to Emeryville, nearly doubling its footprint to 115,000 square feet. Taking advantage of the move, GU took over Clif’s former digs on Fourth Street.
The industry has come a long way since then.
“Sports nutrition has been growing significantly over the past few years, and energy gels/bars are a category that many brands are starting to enter and innovate to meet demand,” said Haleigh Resetar, spokeswoman for research company SPINS.
The overall sports nutrition sector had revenues of $23 billion in the 52 weeks ending May 21, up 13% over the same time period a year earlier, according to SPINS. The energy gel and snacks subcategory had revenue of $10 million, up 8.4%, while energy bars pulled in $3 billion, up 6%.
GU’s market share is dwarfed by that of Clif.. On the other hand, “PowerBar is not in its heyday,” Giebler said. Nestle sold PowerBar to Post Holdings in 2014, and Post Holdings has since spun off BellRing, PowerBar’s parent company.
GU’s goal is to remain independent — and, at least so far, the company is committed to Fourth Street.
In the open-floor-plan office, flags inscribed with the company’s core values — athleticism, accountability, collaboration, innovation, longevity and love — hang from the high ceilings; commuter bikes are stored on a rack; the exercise room features weights and exercise balls, and over it all is the company’s pride and joy, its solar roof.
Circumstances may be beyond its control
“We make our gels with solar-powered energy,” were almost the first words out of Magda Boulet’s mouth as she greeted Berkeleyside in the office foyer. Boulet, who competed at Cal in track and field, has been at GU since 2000 and rides her bike to work from Oakland.
Boulet’s title is “president of GU labs,” but she refers to her job as “fueling peoples’ adventures.”
GU gels come in flat packets that fit in the palm of the hand, in flavors including Chocolate Outrage and Birthday Cake. The company’s name is pronounced “Goo,” after the gooiness of the gel.
“We love being in Berkeley,” Boulet said. “There’s no better place.”
Whether the company remains, however, is dependent on circumstances that may be beyond its control, said Vaughan. Rents have been going up in West Berkeley for some time, and many fear that manufacturers who need warehouse space and production space might move to cheaper digs in areas like the Central Valley.
“In general, as real estate prices increase, it’s harder for support services to survive,” Vaughan said.
“If the cost to occupy manufacturing space triples and you are in an industry that has limited growth, you have to find alternatives. Let’s hope there will be enough small machine shops to keep us running.”
Like Clif and PowerBar, it’s possible GU might have to move in order to scale up as the company continues to grow.
“At some point we might reach a level where we can’t expand further than the space we have,” said Vaughan.
The longtime Berkeley company hasn’t reached that point yet, however. While Vaughan isn’t ruling out the possibility of moving some day, he said, “I would love for the company to be here for decades to come.”