[00:00:05] Melissa Traverse: Hey everybody, thank you for joining BevNET's NonBase webinar. I am Melissa Traverse, Director of Community here at BevNET CPG Media. NonBase is BevNET's platform to help CPG founders and operators build stronger, more profitable businesses with the leader shaping the industry. Visit nonbase.com for podcasts, educational courses, webinars, and more tactical resources to help grow your business. I would also like to thank our sponsor today, CanOneUSA, who is proud to be New England's only aluminum can manufacturer. If you have any questions or you'd like to chat with CanOneUSA at the end of the webinar, stick around and they would be happy to answer those. Building a product with better ingredients is one thing. Building a successful business around them is another. Better ingredients often come with higher costs, formulation challenges, and the task of helping consumers understand why they should choose your product. Today, I am joined by two people who have built brands that have successfully navigated those challenges. Tom First is the co-founder of CulturePop, previously co-founded Nantucket Nectars. We are so happy to have you here, Tom. Heather Wood is the SVP of marketing at Goodall's, one of the fastest growing food brands in the country. Heather, thank you so much for joining us today. Together, they share what they've learned about turning better ingredients into a business. from building a brand consumers connect with to creating products that earn trial, repeat purchase and long-term growth. Tom, Heather, such a pleasure. Thank you so much for joining the non-base webinar today.
[00:01:47] Tom First: Thank you. Good to be here.
[00:01:51] Melissa Traverse: So Tom, let's start with you. You founded Nantucket Nectars. You spent years investing in and advising beverage brands, and then you came back to build Culture Pop from scratch. What did you see in the soda aisle that made you think, there's an opportunity here I can't pass up and I have to do this again?
[00:02:11] Tom First: You know, having been involved in the industry, I guess, for such a long period of time, you know, it was obvious that so many categories were being disrupted by insurgent brands with better ingredients. Obviously, I know the beverage industry really well, and it did surprise me that soda or traditional carbonated soft drinks were a category that was still vastly dominated by the big players with ingredients like caramel color and high fructose corn syrup and whatever it is, 30 grams of sugar, et cetera, et cetera. And I think the thing that made me want to really go after that category was that the category started as a health tonic. It was born in a pharmacy. It was actually a gut health beverage in many respects and functional And I really did think there was an opportunity to bring younger consumers or consumers that were looking for better products into that category if they had either left the category or had never grown up with a two liter bottle on their dinner table. And so, I mean, that inspired me. I will say the kombucha industry had something to do with it. Kombucha proved that bubbles and functionality was something that people really cared about. And I thought that bringing it to soda made it more approachable. And then the question was, could we do it with really great ingredients?
[00:03:43] Melissa Traverse: Well, we're so glad you did. And we're going to get into all of the particulars of how CulturePop works in just a minute. Heather, again, thanks so much for joining us. Goodall's is going up against Kraft and Annie's, you know, two of the biggest companies in the world with massive marketing budgets. You came in as SVP of marketing. What was the brand opportunity that you saw and what made you believe that Goodall's could actually win in that category?
[00:04:15] Heather Wood: Yeah, you know, when I was interviewing with Jen, our co-founder in early days, they were still formulating the product. This was back in early 2021. And I think what excited me the most and felt the most compelling was in how they were formulating. It wasn't based on any specific dietary or marketing trend in the food space. It was very much just in this belief that we could deliver against what those legacy brands were delivering in taste and eating experience. and add nutritive value through better and thoughtfully ensourced ingredients. So rather than going after some sort of niche, maybe possibly fleeting trends we're seeing move through the marketplace, it was really built on a timeless brand promise of delivering against taste and nutrition.
[00:05:01] Melissa Traverse: That's certainly something that both of your brands share, taste and nutrition. And that certainly is a complex set of decisions that gets you to achieve excellence in both of those categories. Tom, CulturePop, you know, as you said, CulturePop was built on better ingredients and CulturePop made some very deliberate ingredient calls early on. organic fruit juice, a shelf stable probiotic, no stevia, no monk fruit, no artificial sweeteners. How did those decisions end up shaping the business? And you know, not necessarily just the product, but manufacturing, distribution, timeline, product, all of it.
[00:05:42] Tom First: I mean, one thing I'll say is that if you don't rely on a sweetener or high sugar content, that creating flavor complexity layers of flavor isn't isn't easy and there we didn't have like an example out there. I mean, there were certainly fruit sodas, but a lot of them were sort of high percentage juice and high calorie. And I think that the unlock for us was using spices and herbs to create flavor complexity. So each of our flavors has a blend of fruit juice, and then we use some combination of organic herbs and spices to create secondary notes. And it was a real challenge from a manufacturing perspective to get herbs and spices into a fruit drink. And bottlers aren't looking to have herbs flowing through their lines. So it's funny, we started off with giant teabags, which were steeping in an organic juice blend and things like you know, chili powder and cayenne pepper and thyme and rosemary. So it took some convincing, and we got bottlers to actually do that. And I think, honestly, that is That is what happens when you're trying to do something that other people aren't doing. It's not only like coming up with the ingredient and then figuring out how to make it taste good. You then have to go to your manufacturer and convince them to actually follow the process. I would say that scaling up was really hard because we had this idea of like the ratio of herbs and spices to the size of the batch. And maybe I wasn't good enough at math, but it wasn't a matter of doubling the spices because of doubling the batch. Because what ended up happening is more spices got into it. We got too many spices. We made one batch of orange manga or maybe a couple that tasted a little bit like a taco early on. Too much chili. But we learned over time, and it was And it was a risk that we wanted to take, and we've created a drink that doesn't have sweeteners, doesn't have stevia, doesn't have that off taste, but still has bright, complex flavors.
[00:08:11] Melissa Traverse: You know, certainly with your background and your, you know, history in the beverage business, I can see why a manufacturer would trust in you and the brand that you're building. But how do you build that kind of trust with a manufacturer? If maybe you don't have a history with them, maybe you don't have a history in the beverage business, and it might've been difficult for you to build that kind of a relationship with the manufacturer anyways, to get them to work through you with all those iterations.
[00:08:41] Tom First: Honestly, I think it is really important to have a two-way street of communication and some flexibility to get better over time. And the reality is like manufacturers need efficiency. They need to run at speed. And we worked really hard hand in hand with our manufacturers to come up with efficient ways to batch and run our product. And so we made sort of thoughtful changes over time to make their process more simple as we scaled up, understanding that where we started from wasn't sustainable. And they were. They were willing to trust us and have things take long or make mistakes early on, as long as we were willing to work with them each time. we ran to improve the efficiency of our process, which we did. We found ways to bring our spices in a better way that made it easier for them to run. There was some pre-blending of base batches that took the heavier spices out of running through their pipes. Ultimately, we've gotten to a really efficient way of doing basically the exact same thing at high speed.
[00:10:01] Melissa Traverse: I have a question that just popped up in our Q and a, and I'm just going to answer these as they come in. So please everyone throw your questions right in the chat. Heather Wood loves CulturePop and she wants to know, as you're fighting the fight of a challenger brand, what are two to three things that keep you up at night? If you can keep it down to that many.
[00:10:20] Tom First: I think one I'll put it as one thing, balancing your, your pace of growth. with your level of patience. I mean, when you're an emerging brand, you always want growth. And we're looking to have a bigger share of the marketplace because we have big players in our category. Brands like Poppy and Olipop go out and raise tons of money, and we didn't do that right away. And you're always compared to them. But balancing, looking for growth, But investing appropriately over time so it's healthy growth, taking the next step of the right place to go to where the brand belongs, it's going to do well, and it's going to set the table for the next phase of growth in your business. There are brands that take off right away, just immediately do well. I mean, I watched Arizona Iced Tea when I was at Nantucket, and actually I couldn't believe what was happening. I was so jealous. And Tom and I at Nectors took a very patient path and we compounded growth over many years and it paid off. So I think when you're in our shoes and you're looking at bigger brands above you and newer brands coming into the space, thinking about an appropriate pace of growth that you can invest in and the company can handle and shows progress in your category.
[00:11:39] Melissa Traverse: Heather, I saw you nodding over there. You must have a number of things that are keeping you up at night with the kind of growth that Goodall's is experiencing, but something that keeps you up at night.
[00:11:51] Heather Wood: Making sure my team is happy. I want to make sure everyone's having fun while they're doing this work. I think it's super crucial, especially on the marketing side. It shows in the work we put so much of our heart and soul into everything that we do that. you know, I think especially making sure that people aren't getting to a place of burnout or, you know, that we're losing kind of the magic as we scale, you know, that people were resonating with in the very beginning. But so definitely people's, you know, just culture and general employee satisfaction, I think is really important, especially for what we do.
[00:12:26] Melissa Traverse: Well, we certainly worked with your team before and their work ethic and responsiveness, everything just so impressive. So that makes plenty of sense. Heather Wood's is the first box to mac and cheese to earn the clean label project certification. You have amazing macros. I think, you know, high protein, plenty of plant-based nutrients, but it still tastes really good. It still tastes like mac and cheese. As a marketer, how do you take a product that's built with such strong nutritionals and uses those strong nutritionals as a differentiator to beat other folks in the category, but in a way that feels like exciting and craveable to consumers rather than medicinal?
[00:13:12] Heather Wood: You know, I think I mentioned it earlier, the importance of delivering on the taste experience alongside the nutrition. I think we prioritized that information hierarchy early on. So take our pack design, for example, you know, we wanted to disrupt, we made the choice to break some rules with color and instead of owning a single color own color in general pulls the eye in, but then the first thing we want them to see is obviously the logo and then right down to that product image. We made some choices there to invest early in an incredibly talented food photographer and stylist to make sure that the yum was coming off the box. We were, I was so excited to get spot gloss on the box despite the impact to margin early on because we knew that was a worthwhile investment. Can you explain that spot gloss? Spot gloss is that lovely little shiny finish put over the image. You'll notice it's only on our logo and on the product itself. And that's to really make that shine, makes it look juicy, delectable, it was like the best way to get the yum across on pack. But the nutrition, rather than making health claims or bold statements or anything based around trends in the marketplace, those tend to be so fleeting nowadays with social media and the internet. But for better or worse, people have access to information as it pertains to them for their personal health and nutrition is, super nuanced for everyone. So just stating what value they're getting on pack, I think focusing on making sure that we're pulling through the nutrient density, right? I love to hear you say that we have great macros, because I don't love to hear people say we're just a protein Mac and cheese, our fiber content is excellent. That fat that's in the cheese is lending itself to make this product low glycemic index as well. It all works together as you're digesting. So You know, I think there's a lot of, I've always say focus on the nutrient density and just show what's in pack for consumers so they can make those decisions on their own. And then it makes our marketing timeless in that way too. We're not always having to keep up with the latest greatest that's going on in the marketplace.
[00:15:23] Melissa Traverse: And how do you balance the design, the fun, the excitement of the brand with the nutritionals?
[00:15:31] Heather Wood: All of us are, I mean, I'm equally passionate about both. I studied nutrition, but I've always worked in marketing and I worked at a design agency. So my love for graphic design has influenced some of this work as well. You know, I think it's really important to understand how people's eyes track over packaging. So you always have to be aware of what you're giving up in hopes to get more story across. Sometimes if you make something a little too cluttered or a little too much going on, you end up losing an audience or they're not taking anything away. So it's really about ruthlessly prioritizing what you want people to take away and then designing to that priority.
[00:16:07] Melissa Traverse: I have a question here from Andrew Green. He says, awesome content and perspectives for Heather Wood Tom, please. What's your approach when trying to win Gen Z consumers on campus early in their habit forming years? He is with True and they are a digital on-campus organization. Heather, let's start with you. How do you win Gen Z consumers on campus? I'm sure that's an important part of your demographic, right? It is.
[00:16:32] Heather Wood: I think we intended or expected a lot more millennial age demographic consumers, which we do over-index in millennials, but we were really surprised at how much we over-index in Gen Z already. Authenticity always first in our marketing comms. A lot of that doesn't It means it frees us of shackles of always being really, you know, focused on the business of everything we're doing and much more than just authentic engagement with consumers. We also design products that we know will be relevant to them. So in early years, you know, we launched our microwave cups last year, and that was a massive, you know, really important strategic choice for us to reach a younger demographic that's maybe in dorm rooms. It's just designing the experience for them to be able to enjoy our product in a way that's most convenient for them.
[00:17:21] Melissa Traverse: I definitely wish I was eating Goodles in my dorm. Tom, how about you? How do you win Gen Z consumers on campus? How much of a part of culture pop strategy is that?
[00:17:34] Tom First: It's funny. I would say our target, we think of our target a bit more millennial, but I mean, it's sort of like a similar story where we do well with Gen Z. I think that from a marketing perspective, we just try to be real people and speak to people. like their friends and without a lot of BS. I think, you know, we've got a bunch of people that love what they're doing. They care about the product that they make. And we all make together the story that we're telling and then going out and selling it. And I think like connecting with a smaller company and a group of people that are passionate about what they're doing sort of resonates really well with younger people who are they're in school, they're thinking about careers, they're looking at companies, they connect with these brands in a really emotional way. And rather than like marketing at people, we try to speak to them like, you know, their contemporaries, their friends or their human beings and bring them into the world and into the company, into the process of building a brand. I mean, I'll be honest, I'm not, 27 years old anymore. During my days at Nectar, Nectar was very easy. I think Tommy and I felt like we were just speaking to our friends and they were our contemporaries. We knew exactly how to market to them. I'm not that young anymore. My marketing team is made up of mostly 20-somethings and 30-somethings. I think they enjoy making fun of me. Apparently, I guess on social, I'm like the dad guy or something like that, which resonates with Gen Z. But we do, we love our product. We're really proud of what we make. We want people to read our ingredients. We like telling our story. And so that content is fun if you're bringing people inside the process of building a business in the food industry, which is really relatable. We're not selling software or nothing against that, but we're selling things that are fun and people can relate to, and they actually make a part of their healthy lifestyle.
[00:20:01] Melissa Traverse: And you know where you're selling those things is so important. And there are so many decisions that go into that. You actually mentioned as we were getting ready for this call that your ingredient philosophy influenced your channel strategy almost more than your geography or geographical strategy. And it wasn't necessarily about what region you launched in. It was about which channels made sense first. Can you talk us through a little bit through that and help us explain how you thought about that?
[00:20:30] Tom First: I mean, it was a little bit regional because we're from the Northeast. And actually, I started selling it out of the back of my car. So I was driving around during COVID just finding stores that would allow me in the back. So it was regional a little bit, but it was really you know, natural and specialty locations that came Tom First that pay attention to products like this. It was a relatively new category and we got the opportunity to get into the North Atlantic Division of Whole Foods and then found our way into Whole Foods and other natural channel markets a lot through CAHE and UNFI. And we didn't really touch much traditional grocery early on. We wanted to build that marketplace where we felt consumers would really appreciate what we were making. Honestly, Whole Foods is a big influence on how we thought about ingredients. They have some interesting qualifications to be a functional soda. We talked a lot to Whole Foods about how to formulate the product and ultimately led to the decision to not use any sweeteners in the product and not to use refined sugar and to sweeten with real, you know, juice and just concentrate. So that was a big decision-making process. But, you know, I think both things are important. I think geography and investing, you know, to go deep in certain geographies is important for us. The Northeast is where we started and we built that. And I think channel strategy is really important. Some retailers are very open to you're not going in across an entire big chain and doing it regionally. And I think that can make sense for a lot of brands. But if it's a big chain and you're all of a sudden going to be in four corners of the US, that can be a challenge for smaller companies.
[00:22:33] Melissa Traverse: I spent a good chunk of my earlier CPG career at Whole Foods Market, and I remember the N.A. buyer showing me a culture pop and saying that they really loved it, but it had allulose in it, and that, is this right that you, no, was that not it?
[00:22:48] Tom First: No, we didn't have any allulose.
[00:22:51] Melissa Traverse: Okay, okay. Then I'm making that up in my head.
[00:22:53] Tom First: The first formulations that we did before we launched, we were trying it with cane sugar and then we decided not to do it. And Whole Foods pushed back on us and said, don't use refined sugar, go with all fruit juice. And we listened.
[00:23:08] Melissa Traverse: Well, you were talking a little bit about spreading to all four corners. Heather, this actually sort of dovetails into something that Goodall's has done so well. So you guys went into conventional retail almost immediately, right? Which most brands wouldn't attempt that early. From a marketing standpoint, what did that decision require of the brand? And what did you learn about reaching a mainstream consumer that maybe you couldn't have learned any other way?
[00:23:36] Heather Wood: We decided early on to put our stake in the ground as sort of a mass consumed mac and cheese and force the issue. But Tom, similar to you, we actually utilized Whole Foods guidance in a lot of ways to make sure that that formulation would meet all the standards across natural grocers. But we wanted to go national right away. We had to make sure our ducks were in a row. We had to staff up. We had to make sure we had the capital. But in reaching that mainstream consumer, You know, we learned very quickly that our hypothesis was correct that we were skating into the right white space that there was a need for it in the market. And I'm really excited that our hypothesis was proved correct that we would bring people back into the category. So early on. We discovered that 80% of people shopping for Goodall's had never shopped for mac and cheese there before. And so we were 80% incremental to their category. So it was just really great to be affirmed quickly in that scale. Obviously you're taking, as Tom mentioned, a bigger risk. It just depends on how you want to scale your business. But, you know, we kind of, I was here the day we were all saying, like, are we putting all of our chips in? We got to go or no go. Are we doing this massive run? taking, you know, those big first POs, let's do it. So we, we did it and it gave us great access to information very early on by having such a wide net for sure.
[00:25:03] Melissa Traverse: And you know, Heather, being able to tell a buyer that, that you're adding incremental business to a category like, I mean, 80% is an insane number. How do buyers must just love that, right?
[00:25:16] Heather Wood: Yes, they're definitely not mad at it. This hypothesis being proven correct was, it's very exciting. It's definitely shaking up the category and it's, it's giving us a lot of room to play and launch new products and test new things. And it's, it's just a rocket ship that we're building as we're flying it, but it's a blast for sure.
[00:25:40] Melissa Traverse: Well, we have another question from Kelly Criswell. Hi, Kelly. Kelly wants to know from you both, if you were starting all over again, what would you do differently? Is there anything that, you know, looking back, knowing what you know now, that you would change? Because you could sort of hit the ground running. Heather, let's start with you. Is there anything that you'd do differently with all of the information that you now have about GOODLS?
[00:26:09] Heather Wood: I can't think of anything specifically that I would do differently to be honest, I feel like we have, you know, such a champagne problem of just keeping up with the growth here that it's hard to imagine or scary to think about have like changing something. You know, I think I would allow myself to be more steadfast in my beliefs on the marketing side and challenging some of the assumptions in intelligent marketing strategy. I think I would probably spend less time chasing down the latest, greatest technology or taking so many demos to hear how someone can help with, you know, make everything more efficient, bring down our GAC. Like I would probably be a little more confident in knowing where to focus my energy and spend a little less time um, wondering if I'm missing something or I'm not keeping up with the latest critis, which I think is a really easy trap to fall into on the marketing side. I would probably go a little bit easier on myself, but from a business standpoint, you know, it's hard to imagine doing anything differently from marketing. I think narrow the focus, be proud of what you're doing, be steadfast in what you're doing and keep, keep leaning into what makes you uniquely you on the marketing side.
[00:27:20] Melissa Traverse: I have another question I'll ask of you and then Tom, I'll ask you both questions after this. So we have another question from the audience wanting to know if you could talk about how you approach that relationship with Whole Foods Market and other retailers about getting that feedback that helps you put together a product that, you know, will work almost anywhere. How do you balance keeping them in the loop and taking feedback versus not letting them fully define your brand and your product?
[00:27:46] Heather Wood: You know, we meet with them often several times a year, but obviously we're always keeping in touch. We are pretty steadfast in how we do what we do, especially in formulation. I would say that we just considered those standards for a retailer like Whole Foods and Natural Chain Grocers as part of sort of industry leaders in the Better For You movement. So it's always a consideration in how we formulate our products. But once we hit that formula early on, we've stuck with it. I think we have some collaborative approach in some flavor development, some consumer insights, but really we want to bend the category, we want to make it different. So it's really an approaching that partnership with buyers, bringing them along for that ride, being able to tell a data story, even if a little bit theoretical to prove a point that we think we should go in a certain direction in the MAC category. So it's collaborative, but we stay focused on what we know is right for the company for sure.
[00:28:52] Melissa Traverse: Tom, how about you and CulturePop? You worked with Whole Foods Market to put together the formulation. Is that ever an issue, sort of writing that line between getting the feedback and incorporating it, but also staying true to what you know and you want as a brand?
[00:29:08] Tom First: I think the baseline standards, as Heather Wood saying, are really important. And then to be a strong product in the natural channel, Whole Foods is very important. Getting there is essential and that but it's a whole separate piece of work to build a product that tastes great that that you can develop new products off of a platform, sometimes you learn that early on with. a flavor that you get right, it really gives, I mean, for me, like throughout my career, it's always given me an indication of how to construct the other flavors. You learn along the way, and so it sort of leads to my answer to the other question. I think that, you know, I don't have a ton of regrets, but sometimes you learn about you can't really learn about what your flavor ranking is until it's out there. And we've come up with some great flavors sort of later in the game. And I guess I wish we had done a few of them earlier on, but that's just how it works out. So that would be one thing I would love to have known, you know, the top three flavors a day I was starting. And, and, but it's funny, cause like some of the flavors that aren't on the top that we launched with are actually, you know, these solid, maybe fourth or fifth place flavors that I actually love. And it's a, you know, important flavor for us, but the heroes are, you know, getting a hero flavor that performs really well on the top of its category is a great thing to have.
[00:30:43] Melissa Traverse: What is your top three? I'm curious.
[00:30:45] Tom First: Number one right now is our Black Cherry, which you talked about. So good. Number two, Raspberry Lemonade, has risen so quickly to number two, which Heather brought up. And Orange Mango, those two flavors are two of our newer flavors, but Orange Mango had always been our top-selling flavor across the country and still really solid, but those are our top three flavors.
[00:31:13] Melissa Traverse: Heather, now I have to know what Goodall's top selling flavors are. What are some of the standouts?
[00:31:18] Heather Wood: Definitely Chedimac by far and away. Shallow Good is not far behind. Most everything is always up in the top two quartiles. Twist My Parm is a big one. Let's see, our latest, we launched two last year, Dreamy Creamy, which has cream cheese in it and Thrilled Cheese, which is a grilled cheese inspired mac and cheese. So it sort of has those like golden toasty notes. Those two have picked up steam really quickly as well, but Cheddy and Chella always by far and away.
[00:31:48] Melissa Traverse: Thank you again to CanOne USA, New England's only aluminum can manufacturer, delivering high quality printed 12 ounce and 16 ounce cans with exceptional service. They're more than a can supplier. They are a trusted partner for growing brands. And if anyone in the audience has any questions for the CanOne USA team, they'll stay on for a Q&A at the end of the webinar. So throw any questions you have for CanOne right in the chat and we'll get to those at the end. of the webinar. I do have more questions from our audience, so I'm going to get to those. We have a question from Lauren Pena. Lauren wants to know, since you both have Better For You brands, how are you working with health professionals like dietitians and other allied health leaders as influencers? Heather, can you speak to that one first?
[00:32:38] Heather Wood: Sure, we have a registered dietitian program as we call it, but really it's just a channel opened up to registered dietitians to request free product. You know, we don't approach it like paid sponsorship or anything of the like. I think in that territory specifically, I'm really happy for those connections to be real and authentic endorsements that they've, you know, reached out to us about. So we'll always seed free product. I have I've developed a specific collateral that tells a little bit more of the clinical story, as we were talking about it earlier, for that audience. The collateral they receive with their free product is a little bit different and deeper on that side, but we don't utilize them so much as influencers in that regard simply because we want them to be able to talk about the story on their own if they feel compelled to share, not a ton of paid partnership there. One other interesting area I would call out that's been a great opportunity for us is that a lot of retailers, have registered dietitians in that work for their company. And so there's a lot of work you can plug into even with retail partners in their registered dietitian programs. And they do a ton of work to market at the retail level for better for you products.
[00:33:54] Melissa Traverse: Tom, does CulturePop use any health professionals, any sort of collaborations with health professionals in that regard?
[00:34:01] Tom First: It's almost the exact same answer. We collaborate with a bunch of dietitians. A lot of it's through free product or people that reach out directly to us. And then we work with a lot of dietitians that are helping promote the products in their retail establishments. So we've done a bunch of that. I mean, the third thing I would say is that we've actually done a lot of outreach to dietitians to understand more about the impact of these sweeteners on gut health because it's important to us. We're a gut health product, we have a live probiotic, we have a bunch of human studies that show efficacy of our product and we do a bunch of testing on it. There are a lot of studies around stevia in particular, which isn't great for gut health and And so we've done a lot of work to try to understand and make sure that our sweetener profile and the ingredients that we're actually supporting gut health and not, you know, giving something in our ingredients that help it and something that hurts it. And I think there is a lot of research going on because stevia has become like a, you know, people are trying to cut sugar. And so, so many products have filled that void by making things as sweet as the sweetest product they drink and doing it with some sort of sweetener. And we took a real stance not to do that. And a lot of times when you drink something, Or when you drink something that isn't as sweet, you become accustomed to things that are less sweet and actually things that taste overly sweet don't taste as good to you anymore. So I think that sort of impact on the brain is very important to us as well.
[00:35:47] Melissa Traverse: You know, that question makes me wonder, Tom, there's so much noise in the probiotic and the gut health category and area. How do you combat that noise and help your consumers understand the value of what you're doing?
[00:36:03] Tom First: You know, it is a balancing act. I mean, we do I mean, our probiotic, which is Bacillus subtilis, is one of the oldest known. It was actually a supplement for a lot longer before it ever found its, it got GRAS certified to be in food. So there's a lot of research on it. And we're really, we're confident in our probiotic and we know that it survives the intestinal tract, which is really important in probiotics. So we talk about that, but we also, it is a bit of a balancing act because we're not medicine and we don't try to talk to people like they're taking our products or medicine because, again, going back to what Heather's talking about in terms of like you care about taste and joy and flavor diversity and fun with these products. So I don't know, we're not trying to preach too much But we do care a lot about the fact that our product does support gut health, so it's a bit of a balancing act.
[00:37:11] Melissa Traverse: Heather, I have a question from our audience that I would love to hear your thoughts on. They want to know if you have a framework that you use to evaluate innovation opportunities. And I would also add collaboration opportunities to that because that's something that the Google's team does so well. So do you have a framework on how you evaluate those things to understand whether it makes sense to pursue them or not?
[00:37:35] Heather Wood: It came up early and often on the innovation side for sure. I think there's a lot of excitement in early days. And it was really popular at the time to see two brands collaborating on innovation products. And we toyed with some ideas. But in the early days, it just felt I'm more comfortable with it now. And I think our team would be more comfortable to it now. But in the early days, it felt really important to just focus on what we were doing and make an impact in the market and make sure that our brand stood on its own, had a life of its own and didn't sort of have to pull those levers so early on for hype or anything of the like. I think I'm a little more open to it now if it would be net positive for both partners. It enhanced the experience somehow for consumers if it really delivered on some sort of experience if it's eating or nutrition or both. I would be focused on making sure it really truly delivers something rather than falling flat and being a shtick. On the marketing side, we always let the idea drive the collaboration rather than force a, you know, square peg into a round hole. So we don't collaborate for the sake of collaborating or checking off a box in a marketing flywheel. You know, I don't just say, oh, you have this much budget, you must work with five collaborators this month or something of the like. I'm much more You know, for example, we're launching a new product line next week, and we just wiped our Instagram feed in hopes to build a little buzz. And you're going to see some content collaborator posts go live that have absolutely nothing to do with mac and cheese. They are not talking about product at all. It should just be fun and joyful and a great lead up into launching a new and exciting product line for us. But that's driven by the idea always first. I think otherwise it. Especially as we were talking about Gen Z earlier, they can smell bad marketing from miles away. So you really have to be, you know, steadfast in what work you're creating and it feel good to you and have fun while you're making it. Otherwise it could fall flat for sure.
[00:39:43] Melissa Traverse: Tom, I have a question from Jeanette. It's a technical question. She wants to know what do you look for in a good beverage co-packer when you're using fresh juice?
[00:39:55] Tom First: We use concentrates. We don't use not from concentrate juice. I will say you need a co-packer that is willing to handle like a bunch of ingredients like drums and bringing, you know, frozen storage and bringing stuff in. It's, you know, we're a carbonated drink and there are manufacturers that don't want to handle anything but like a syrup and a and water and a collar or something like that. I remember the old days when I took my wife to a copacker for the first time for Nantucket Nectars, this particular place was running Gatorade on one line and running us on another line. And in our mixing room, there were, it's sort of like culture pop. There were like tons of ingredients and they're like chopping, you know, acerola, frozen acerola with an ax to try to get into the drum. And then on the other, the other line, they'd take like this little blue jug and pour it in and run it. And my wife was like, oh my God. So it's similar. You need someone who's, caters or are willing to cater to products like this. We have a great manufacturer that does. There is a lot of pressure on speed when you start to do big runs, so you do need the right partner, but they're out there.
[00:41:30] Melissa Traverse: Heather, I want to go back to a comment you made a little bit earlier in the conversation, and it's still blowing my mind. It's that 80% of Google shoppers that major retailers have never bought mac and cheese at that store before, or have never bought mac and cheese before. So again, you're bringing in an entirely new group of consumers into the category. You're not just stealing market share. What is the strategy? What is the strategy you've built to achieve that? How do you do that?
[00:42:01] Heather Wood: I always come back to this, our Jen, our co founder and CEO is a really great motivational speaker for our team and she one year at our homecoming gave this really incredible talk about how we're kind of like this amazing you know slot machine where If you're playing the slots in Vegas, for example, you have to get cherry, cherry, cherry, cherry, cherry. If you get one banana, you're getting nothing. If you get a cluster of grapes, you're getting nothing. You have to have all cherries. So, you know, we didn't rush to do anything. We actually made sure that the product we launched We didn't plan on reformulating after we launched, we wanted to make sure that people's first experience with the product was the best experience possible. We wanted to make sure that we didn't struggle and repeat purchase and say we'll just formulate later just get it in the market, we knew that first impression was me super important so product. being that first cherry. We have an incredible team of experienced professionals. If we didn't have this team of people that all knew what they were doing and all put in lanes of their strengths and what they love to do, we would not be able to pull off the feats that we've pulled off here. The brand world, you know, we, I consider it a luxury. This is the first company I've worked at where our founding team and our leadership all have brand building and marketing backgrounds. So I feel really lucky to have that sort of belief and support behind us in our leadership team. And so there was a lot of work, a lot of Zoom hours put into every decision we made in building all the tiny details in the brand world. So that's another cherry. Our partners, similar to what Tom First saying, it's so important that you find the right manufacturing partners for your product. A lot of them are just as excited to grow with us, and they're willing to work with us even when things can be a little bit more difficult to figure out in early days, but work together as partners. If you don't have all of those things, if you think you can get away with Not focusing on one area of that business and it'll all work out because all these other things are great. You're wrong. You get nothing. You have to have all those cherries to, to hit the jackpot.
[00:44:09] Melissa Traverse: I have another question from the audience. Um, I would love to hear from Tom on, on this one. So as you're expanding culture pops retail footprint, what's one of the biggest fulfillment or distribution challenges you've encountered that you didn't anticipate and how are you approaching it or how did you solve it?
[00:44:30] Tom First: I mean, I won't say I didn't anticipate it, but I'll give you one of the big challenges and I think beverage. For those in the audience that are building beverage companies, beverages are unique, and they're such high-velocity items that a lot of us end up navigating from primarily UNFI and KEHI or direct to a retailer, to a DSD network for beverages, carrying a lot of our brands and helping merchandise that shelf. deal with the pace of this industry. And it's an expensive build. So, you know, all of these companies, and it was true in the Nantucket Nectar's days, I was on the board of essential water kind of from the beginning. And as you build across the country, it isn't just expanding your retail footprint, it's expanding your distributor footprint, and then it is supporting that distributor. And it's sales reps that are helping merchandise that shelf and create a partnership with the distributor. And it requires a lot of capital, it requires really good leadership, requires great team building. And that's what makes beverages tough. Beverages can become huge companies and with really high velocities, but the build-out of a DSD network is expensive. I've known it. I would say in today's world, it's more expensive than ever, costs are higher. Luckily, the non-alcoholic side of the industry is growing so much as people have shifted from alcohol to products like CulturePop, it certainly helped these categories grow quickly. But it's a big team to build. And just like Heather is saying, you need great people and great leaders and people that have high standards. And they are really driven to build something special and support the growth of your company.
[00:46:36] Melissa Traverse: So that actually touches on another question I have for you, Tom. It's from Matt McPhee, who wants to know when you were in the midst of formulating, how did you balance the quality, the cost of the ingredients, other costs and margin? Did you find yourselves having trouble finding the right balance?
[00:46:56] Tom First: I think what we did, to be honest, early on, our margins weren't great when we started because we were committed to the way that we wanted to construct the product. I did a lot of work early on to try to understand that in three years, can I get to a gross margin profile that is healthy and compelling? And I think, you know, we were willing to make ingredient choices with sort of subpar gross margins in the first couple of years, because I knew that within three years I could be either buying or running at speeds where we would have really healthy, compelling gross margins. So I knew a lot of information. I've been doing this for a while. I know I have, maybe that was a little bit of an advantage, but in the first couple of years, we didn't have great margins. You know, we were in the twenties or something like that. Um, but I had a plan that we were going to get to very healthy gross margins. And it took us a couple of years and we got there.
[00:48:08] Melissa Traverse: I have a question for you, Heather, from our audience. It's from Janali Rodriguez. Janali wants to know, if you were launching a startup today with a limited budget, what cost effective marketing strategies would you use to gain your first customers and build brand recognition. You have so much experience as a marketer in this industry. Are there any tips or any understandings of marketing that you can share with our audience so that as they're bootstrapping their brands, they might be able to benefit from what you know?
[00:48:40] Heather Wood: Sure. I think, you know, we definitely started with little to no budget on the marketing side. So I remember those days fondly. In some ways, they're simpler. So that's really to your advantage at that early stage. We invested early where we knew it would have the highest impact at conversion. So anywhere where you can shop, right? So anywhere we could hop on. First of all, hop on every opportunity you can while your buyers are excited about your success in their category. If they offer you off-shelf placement, Take it, don't be afraid to negotiate a little bit, but invest early obviously in any off-shelf sort of exciting placement in-store as those opportunities are often for you I think in the early days. Things like Instacart have been really great for us for two reasons. It is pretty efficient for us in those dollars, but also we can run sampling programs with them and we always say tasting is believing. The more you can get products in hands for people to try, that goes a long way for us. One of the earliest things we did was I shipped, I think, like five pallets of product to Rent the Runway because they reached out and said, we'd love to put a sample of our product in our monthly boxes. And to this day, I still get women coming up to us saying, I found you because you were in my Rent the Runway box. And I tried it and I loved it. It was the most random thing, but it was a great opportunity and it got people trying the product. So wherever you can get your product in hands of people, I mean, depending on obviously how much cost goes into your product. But for us, it was really cost effective to just get the samples in hands of people. And we knew once they tried it, they'd be hooked.
[00:50:26] Melissa Traverse: Tom, I think you were talking about how CPG and food is like fashion, but I couldn't think of a better example than Rent the Runway and Goodall's. They want to know when culture pop first became an idea. You talked a little bit about team building and how important and crucial it is to have the right team. How lean did you stay in the early days and how did you decide who was going to be on that core team?
[00:50:55] Tom First: I mean, Heather just said it was like nostalgic to think about the days when you're not spending any money on marketing. And we kind of feel the same way. It is nostalgic thinking about the early days. There were a couple of us driving around and our cars delivering. And I hired Naomi, who I always say I went to high school with, but she's like 20 years younger than I am. But she happened to go to the same high school, but I'd like to say that we went to high school together. And she took on the role as director of marketing and did everything. I mean, she built the website, she ran direct to consumer and Amazon. She made stickers. She was, you know, at spin classes on the weekend, setting up tables and sampling. And I mean, that's how we ran the company. And Ned, who had been at Nantucket Nectars, was out delivering. And I was probably doing a bad job on QuickBooks, which my current VP of finance can't even believe that I did that. But I mean, that's how, yeah, we were very lean and mean and doing whatever it takes. I mean, I'll say a funny story. We set up Shopify and direct to consumer and this was sort of during COVID and we hadn't quite gotten an office yet, but I was so excited to get orders early on, and I would kind of finish every day by printing out all the labels, going downstairs. I had basically a UPS store built in a closet in our house. I would pack all the boxes, pile them on the front porch, and drive to the post office and drop them off on the back dock. I knew everybody at the post office. And it kept getting bigger and bigger. And I think like two years in, when I one day had like 400 boxes stacked in our front hall, my son asked me when the CEO is supposed to stop doing this. And I said, I think right now I should stop doing this. Yeah, I mean, it's a small lean team and you try to stay lean as long as you can, but you kind of understand when you need to professionalize a team and get better in key functional areas. And we did that sort of year two and three, we really built out the team in a really professional way.
[00:53:32] Melissa Traverse: Well, I hope all the founders out there have a little skip in their heartbeats and are, you know, so inspired to hear these stories from both of you. In closing, Tom and Heather, what's one piece of advice that you would give a founder who's just starting to build a brand around better ingredients today? There are so many challenges, you know, we've talked about them, there's cost, there's marketing and education, there's the competition. What's one thing that you've learned as you've built your brands that you would give another founder who's building a brand around better ingredients to help them, you know, maybe skip a mistake or find themselves a little bit ahead of the game?
[00:54:16] Heather Wood: I feel like there's a lot of different things. If I could narrow it, I think Tom touched upon it earlier in a really thoughtful way about how they decided to plan out their growth. I think however you decide to plan your growth, we made an intentional choice to go big, fast, and early. I think I never had a stage, Tom, where I was shipping our orders from my porch because we had a 3PL set up the moment we launched that website. So I think it's being intentional in that growth and being aware of the trade-offs. Don't ignore or just hope for the best. Be aware of what those trade-offs can be or what risks you're taking and keep your eyes open and your ears open. You'll start to feel and hear the dissonance of the pain points in your business where you know you need to lean in. So where you know you need to staff up. I think just Being super aware, head on a swivel, don't get so myopic and narrowly focused on what you're doing or the results and you're not paying attention to, you know, what's all the factors going on around you. As you mentioned, Melissa Traverse's so many things to consider. So I think just staying open, listening, learning, and being ready to, you know, pivot.
[00:55:33] Melissa Traverse: Is there anything you do to keep yourself honest? I mean, Goodall's is such a fast growing brand. You've had so much success. You put so much of yourself into it. Do you ever, is there, is there a way that you position yourself so that you can understand some of those signs when they come up that help you understand that maybe you need to take a different direction, that maybe this thing isn't working, but that one could, does that ever come up?
[00:55:58] Heather Wood: I think surround yourself with the right people and encourage them to be able to communicate with you. clearly, openly, not be afraid to raise issues, you know, really foster a culture of being able to speak transparently and directly. And sometimes you just have to get everyone on the call to get to the bottoms of things, and that's okay. You know, it's a safe space, and we're all working together with Arms Linked on this to build a successful business. So surrounding yourself with the people that are passionate and letting them know that it's okay to call out anything that's going on issues it's not a failure it's not a reflection of their performance there so it's Murphy's Law every day something is going to go wrong so let's let's just foster, you know, a culture of being able to work together really openly and and address things as they come. I mean, otherwise I would tell you, like, I think I just might be the most self-critical person there is, but I'm always thinking that way. That's what my husband would say if he was here, that I'm my harshest critic. But I think making sure you surround yourself with people and let them feel comfortable, to be honest, for sure.
[00:57:03] Melissa Traverse: And Tom, what's a piece of advice from you for those folks who are trying to build better for you products with better ingredients?
[00:57:14] Tom First: I mean, something I'd say is that I, getting to a point, like if you take Goodle's, for example, you've got a brilliant name, really dynamic, fun packaging, and a indulgent, delicious product. And I mean, I'm using that as an example. I think we worked really hard to have a great name and great packaging and a differentiated ingredient and flavor profile that really resonates with a consumer that appreciates what we make, I think that's hard to do. I talk to a lot of founders and brands where product and packaging and feel and messaging and consumer connection all happens. For most brands, it doesn't happen right away. And then people work really hard on selling and marketing. It's like getting that balance and that feel right and knowing that what you've built is working and connecting with your consumer. I preach to people that if your packaging tells the right story, and the product is inside it, it will sell, it'll move. And if it isn't, you can sell as hard as you want, or you can market as hard as you want, and it may not get you there, and you've got to fix the first thing first before you start. pushing too hard. And it is like for most people who are building these products, they're taking a risk and they're trying to disrupt incumbent players or they're making something that hasn't been made before. It's an ingredient stack that's different. And so you don't know until you get there. And, you know, I have so much respect for people that are challenging these categories, because really these brands are changing the food industry. When I started doing this, there weren't many young people going out and starting food companies. It was all like big companies. And now it's people like the ones that are listening to this call that are designing the future of our food system. So it's good that they're doing it.
[00:59:33] Melissa Traverse: Well, certainly hearing from two leaders like yourselves makes this business, makes CPG feel a little bit less riskier. So thank you so much for joining us on the non-base webinar today. Tom First of CulturePop, Heather Wood at Goodall's. I can't thank you enough for sharing all of your advice and learnings. Thank you to our audience for all of your great questions and for joining us and we will see you next time. That concludes another episode of the Nambase podcast. If you enjoyed the show, please leave us a review and follow us on your listening platform of choice. You can also watch and listen to past episodes on nambase.com. And don't forget to join our Nambase Slack at slack.BevNET.com for company updates, industry networking, and community discussions. See you next time.
