Marshmallows hit the sweet spot for small business with Costco deal

From a refugee camp in Thailand to the shelves of mega-retailer Costco, this Aussie mum’s story is the ultimate rags-to-riches tale.

From a refugee camp in Thailand to the shelves of mega-retailer Costco, the story of May Pike, founder of gourmet marshmallow maker Cloud Theory is the ultimate rags-to-riches tale.

But far from being over, Ms Pike told news.com.au her story is just beginning.

“I envisage Cloud Theory to be a global brand,” she said.

“I dream big and take small steps to get there with a lot of hard work sprinkled with a little luck.”

The idea of dreaming big is something that was instilled in 41-year-old from childhood.

The daughter of Cambodian parents fleeing the Khmer Rouge genocide, Ms Pike’s family moved from a Thai refugee camp to the US when she was three, dreaming of a better life.

Eventually settling in California, they opened a doughnut store, Doughboy Donuts, and at the age of nine, Ms Pike found herself immersed in the family business, learning invaluable lessons about entrepreneurship, responsibility, and the power of seizing opportunities.

After working in commercial property development in Los Angeles, Ms Pike moved to Adelaide in 2012 after meeting her Australian husband.

May Pike is the founder of Cloud Theory.

Cloud Theory has just struck a lucrative deal with Costco.

Ms Mike said the only brand of marshmallows available in the local market at that time was Pascall, while the US was streets ahead selling larger, fluffier and gourmet marshmallows.

But it wasn’t until five years later — for her son’s first birthday party in 2017 — that Ms Pike decided to make her own marshmallows using a fresh raspberry puree, which were an instant hit.

Far from a children’s treat, Ms Pike said Cloud Theory’s gourmet products, which come in flavours such as lemon meringue, cherry delight and peanut butter chocolate, are designed to appeal to adult palates.

Having grown up in a small business, Ms Pike said she’s always been entrepreneurial and marshmallows ticked the boxes of what she was seeking in a business venture by using low ingredient costs, having low barriers to entry, having a long shelf life, being suitable for shipping and being scalable.

“I immediately thought, I’ve got something here, so I booked myself into a farmer’s market,” she said.

What ensued were years of proving the concept, experimenting with flavours and testing – followed by Covid.

The company makes gourmet marshmallows.

It’s been an instant hit with Australians.

With markets shut down she pivoted the business into an online retailer – something Ms Pike reflects was a “blessing in disguise”.

It enabled Ms Pike to use the commercial kitchen of a winery cellar-door that was unable to operate during lockdown, which meant she was able to scale the business up to handle online orders.

“It opened me up to all of Australia instead of just Adelaide,” she said.

Her pretty products quickly gained a following on social media, enabling Ms Pike to quit her job in property development and focus on Cloud Theory full time.

Before long, Cloud Theory caught the eye of Adelaide retailers Foodland and Tony and Mark’s, leading to Ms Pike’s marshmallows being stocked on their shelves.

She said that revenues grew by over 100 per cent from 2021 to 2022 and in October Ms Pike sold a minority stake in the business to a silent partner, which gave her a cash injection as well as access to warehousing, coolrooms and a state-of-the-art commercial kitchen.

More growth followed, with revenues leaping again, this time by 175 per cent from 2022 to 2023.

Her new business partner was also able to provide a network of industry contacts, through which Ms Pike secured national distribution with Costco.

Her products are stocked in 14 Costco stores.

The Costco deal launched last month.

A party-sized mixed assortment box of 24 Cloud Theory marshmallows began to be sold through Costco’s 14 Australian warehouse stores from August, providing another 75 per cent boost to revenues.

Ms Pike said beyond gaining national distribution, 2023 will mark another milestone for the business – the first time its turnover will crack $1 million.

But beyond the financial success, selling in Costco has a special significance, thanks to childhood trips to the store with her parents to buy supplies for their doughnut shop.

“Costco truly holds such a special place in my heart and my childhood. My weekly shopping trip with my mum is etched into my memory and I will always associate it with the success of their business. To now showcase my marshmallows in Costco nationally and hopefully globally one day, is a pinch-me moment.”

Costco has already tripled its initial order and discussions are currently underway about new themed flavours such as classic Aussie desserts.

As for the future, Ms Pike is gunning for more retail distribution in Australia with boutique grocer Harris Farm Markets and David Jones on her wishlist, while “the ultimate dream” would be for Costco to rollout Cloud Theory marshmallows in its US stores.