Minnesota food company's need for cold storage spawns $40 million warehouse
Needing to secure its own cold chain, JonnyPops develops Vortex Cold Storage at Albert Lea, Minnesota.
ALBERT LEA, Minn. — If you’re a growing frozen foods company, reliable, large-scale freezer space is a must.
Minnesota-based JonnyPops ended up creating a spinoff company to build a nearly $40 million freezer and refrigerator warehouse in southern Minnesota.
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Connor Wray, one of the founders of JonnyPops and Vortex, said as they started talking with other businesses needing cold storage, the project grew by about 50% from the original concept.
“We were able to facilitate a number of those conversations to take the temperature of industry as a whole,” Wray said. “We certainly found enough similar feelings to ours, that there was a need for additional capability and capacity and competition within the marketplace.”
At the intersection of Interstate 90 and Interstate 35 at Albert Lea, Vortex Cold Storage opened a 170,000 square foot cold storage warehouse in 2022.
The project is an example of the importance of refrigeration and freezer space in the food supply chain.
“In terms of the demand for the finished product or ingredients, cold chain, this concept of refrigeration or freezing, I'm only seeing an increase over time, while not necessarily seeing an increase in cold chain availability, or accessibility, particularly for the smaller players,” said Jason Robinson with Minnesota’s Agricultural Utilization Research Institute.
Also, about half of existing cold storage facilities in the United States were built before 1980.
“Not only are we short, but what we have is old,” Wray said.
Robinson said AURI is working with the U.S. Department of Agriculture’s Agricultural Marketing Service to research and quantify demand for cold storage in Minnesota, Wisconsin, North Dakota, South Dakota and Iowa, and the feasibility of building more facilities.
Robinson says AURI and the Minnesota Department of Agriculture field a lot of questions from food entrepreneurs and mid-size businesses looking for refrigerated warehouse space.
“AURI and the Minnesota Department of Ag are continually trying to find solutions where the state might be able to provide some relief and or some support,” Robinson said.
The Minnesota Department of Agriculture, through its Good Food Access Program , in fiscal year 2022 provided grants to 19 small retailers, with their improvements that included cooler or freezer space.
Vortex Cold Storage is a result of the JonnyPops, which not long ago was one of those smaller players Robinson refers to.
JonnyPops started out just over 10 years ago as a project of what Wray calls “college buddies” at St. Olaf College in Northfield, Minnesota.
Wray, the chief financial officer, and Erik Brust, JonnyPops CEO, ran with the idea of building a better popsicle.
Wray says JonnyPops are “best described as a smoothie on a stick,” using real fruit and cream among the ingredients. It started as a part-time business selling at farmers markets.
JonnyPops became full-time careers in 2014 working with about 50 local grocery stores.
Since then, Twin Cities-based JonnyPops has expanded to selling in more than 15,000 retail locations in all 50 states and has grown into some other novelty foods.
“And we've expanded significantly in size, which has been a lot of fun,” Wray said.
But that expansion meant trying to secure its own cold chain, which is why it branched into Vortex Cold Storage.
Vortex serves companies who need storage for finished retail products such as JonnyPops, partly-processed items on their way to a final processing facility, and raw ingredients, such as frozen fruit, vegetables and meat.
Vortex provides three temperature zones — a refrigerated area, minus 5 degrees and minus 20 — and can load and unload and manage thousands of pallets of food products.
Vortex is on the cutting edge of refrigeration technology, using carbon dioxide instead of freon or ammonia for a greener, safer refrigeration system.
“There has been a lot of evolution in the underlying technologies,” Wray said. “CO2 provides a higher level of efficiency than freon so closer to ammonia, without some of the significant compliance and health and safety risks and costs that can come with running an ammonia plant.”
That, along with energy efficient building materials and design helped the project win an award from C-PACE (Commercial Property Assessed Clean Energy) , which helps finance energy efficient, renewable energy, or other projects through the federal Department of Energy. It recognized Vortex Cold Storage for reducing carbon emissions by 1,500 metric tons annually.
With several tenants lined up early on, Wray said the project was a fairly easy sell to lenders.
“When you bring all the right pieces together, you know what the bank cares about is, do you have the support? Is the project economically viable? And we put a lot of work into ensuring that we had that confidence up front,” Wray said.
Wray said the other businesses appreciated that the project was being approached from the operations mentality of someone needing cold storage, as opposed to a Wall Street real estate developer mentality.
Financing and construction partners included Essex Capital in Bloomington, Minnesota; JCW Development, Horicon Bank; and WDS Construction in Wisconsin.
Ground was broken on the Vortex project in 2021. It began partial operations early in 2022 and has been fully operational since June.
The facility has 12 loading bays and a break room for truck drivers but does not own trucks. It employs about 30 people on two shifts.
“It takes the right person to be in a 20-below environment for 10 hours a day,” Wray said. “That, on top of the ongoing challenges everyone has (in hiring), we’ve got to find those individuals who appreciate the unique challenge that comes with working in a frozen warehouse."