The Spotlight Spring '22 - Startup CPG by Startup CPG

SPRING ‘22

SPOTLIGHT DIST RIB UTION 101 Understanding Foodservice, Retail Data, and Managing Distributors

Featuring Buyer Profiles GELSON’S, GOOD EGGS, JIMBO’S AND KEHE

WEB3 + NFTS IN EMERGING CPG

HOW TO USE DATA IN RETAIL PITCHES

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THE SPOTLIGHT SPRING 2022

TABLE OF CONTENTS 03

Letter from the Editor

06 Meet the Startup CPGer Pati Menegoto 08

Buyer Profile: Thuy Nguyen, Good Eggs

10 Building Mosi: The Brand Reinventing the Tea Experience 14 Distribution 101: Understanding Foodservice 18

Buyer Profile: Rich Gillmore, Gelson’s

20 Using Consumer Insights to Drive Retail Strategy with Social Nature 22

Web3 + NFTs in Emerging CPG

26 Category Manager Profile: Cas Relucio, KeHE 28 Using Data in Retail Pitches with NielsenIQ 30 Managing Distributors: Watchouts + Tips 32 Behind Brune Kitchen: From Lawyer Burnout to a Baking Business 34 Buyer Profile: Jason Murrell, Jimbo’s Naturally 36 2

The Startup CPG Microgrant program

38 LA Community Feature: Confusion Snacks

DITOR'S LETTER

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DEAR STARTUP CPG COMMUNITY, After years of ideating, there is nothing more exciting than finally having a product that consumers can incorporate into their daily lives. When it’s finally time to get a finished product into the hands of a consumer, though, it can sometimes feel like ending up right back at the starting line. In this edition, we start the conversation around the ever-changing, complex topic of distribution. Through interviews with retail buyers, category managers and service providers, we begin to unpack the ins and outs of just a few potential channels of distribution. This edition also explores a topic that’s starting to take the emerging CPG community by storm: Web3 and NFTs. Coming into this article, I knew next to nothing about NFTs, let alone how they were being used in CPG. Now, I’m so excited to share my learnings, as well as some insights held by the brilliant, techforward minds in our very own community. I want to offer a special thank you to Dyanna Salcedo, co-founder of Oats in Coats, for not only sharing what her brand is doing in the space, but also taking the time to thoroughly educate me on the topic as a whole. I cannot wait to see how her leadership and mentorship in this space will evolve as the Web3 channel in Startup CPG’s Slack grows.

Jenna Movsowitz Editor, The Spotlight I hope you find something in this magazine that speaks to you. As always, please share any feedback or story ideas with jenna@startupcpg.com. If you’re interested in seeing your business featured in a future edition of The Spotlight, please email partnerships@startupcpg.com

Jenna is the Editor of The Spotlight magazine and works on Startup CPG’s marketing team. She is passionate about emerging CPG, also working as a publicist for Knack PR and a freelance copywriter for several CPG brands.

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THE SPOTLIGHT EDITORIAL TEAM Jenna Movsowitz Editor, The Spotlight Tamara Romčević Designer, The Spotlight Erin Fasano Managing Editor, Spotlight Blog

CONTRIBUTORS Chris Kajander Founder and CEO of Candid Andy Kurtts Creative Director and Founder of Buttermilk Creative

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MEET THE STARTUP CPGER:

PATI MENEGOTO COMMUNITY MANAGER 1

ELL US ABOUT YOUR BACKT GROUND IN 3 SENTENCES. I started my marketing career mostly in the tech industry, but it never really excited me. So when I moved from Brazil to the USA, I had to take a step back in my career and think about what I was passionate about, and discovered the whole CPG world. Since then, I have been helping CPG brands with their Instagram and TikTok video content creation, influencer campaigns and email marketing.

HAT ARE YOU PASSIONATE W ABOUT (IN 5 WORDS OR FEWER)? My family, communities, video content creation, workout and travel.

HAT’S BEEN THE MOST W REWARDING PART OF BEING PART OF THE STARTUP CPG COMMUNITY? That is a tough question! Mostly, being able to learn from and share my expertise with so many amazing brands and the entire Startup CPG team. I see this community as a safe place to ask any question, where there is no right or wrong. I’m also so grateful for being able to be part of this community as a community manager from the beginning and helping it grow. I’m

always amazed by what we have accomplished in such a short time.

AVORITE SNEAK-INTO-THEF KITCHEN-IN-THE-MIDDLE-OFTHE-NIGHT SNACK? I’m more a middle day snack type of person, and for me, it’s Honey Mama’s.

CPG BRAND YOU EAT/DRINK A EVERY DAY? Oh gosh, so many! But one mix that I drink almost everyday is Apothékary & Savorista, looove their Mind Over Matter supplement mixed with my Savorista coffee.

AVORITE PODCAST OR REGUF LAR CLUBHOUSE TO TUNE INTO? I love to listen to Conversations with an Email Guru, Startup CPG’s Podcast and How I Built This with Guy Raz.

EST ADVICE YOU’VE EVER BEEN B GIVEN IN THE CPG SPACE Be curious and ask questions. I found that most of the people in this industry are willing to share their experiences with you – you just have to put yourself out there. But be prepared, study their company and background before the call, and don’t ask basic questions that you can find on the internet.

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BUYER PROFILE

THUY NGUYEN, GOOD EGGS

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Startup CPG WHAT SETS GOOD EGGS APART FROM OTHER GROCERS? Thuy Nguyen At Good Eggs, we are

very focused on hyperlocal products, while also delivering the best produce, everyday staples, prepared foods and meal kits. I don’t think any other company is doing what we are doing at this scale. It’s such a fun shopping experience for our customers to be able to buy things that they could typically only find at their local farmer’s market, but delivered to their door with the rest of their groceries.

SCPG HOW DO YOU DECIDE TO BRING IN AN EMERGING BRAND TO YOUR ASSORTMENT? HOW DOES AN EMERGING BRAND KNOW WHEN THEY'RE READY TO PITCH TO YOU? TN I would say curating our assortment

is more of an art than a science. There are a lot of things I look for in a new brand. We have a highly curated assortment, so even if a brand meets our standards, it’s not a guarantee that they will be on our platform. Taste is key. There have been times when I’ve asked new brands to revisit their formulas and come back to me. Sometimes they do, and it’s great! It’s always exciting when brands can take feedback and improve on their products. In addition to taste, ingredient transparency and a compelling, genuine brand story are essential. Packaging plays a role in my decision as well, but luckily, that can always be improved upon!

SCPG WHAT SETS A BRAND APART IN A PITCH? WHAT’S A PITCHING NO-NO? TN Having a deep understanding of

where their ingredients are coming from and being intentional about their sourcing. We want to know the “why” behind every ingredient supplier – we don’t accept brands that are buying ingredients blindly. Beyond this, we prefer to hear from an informed, passionate founder over a sales team. And even if you’re a tiny business just getting started, make sure you have some kind of data on-hand. A pitching no-no would be ignoring the category review schedule. Pay mind to the

category review schedule, and once you’ve sent your first pitch, stay consistent but not aggressive. Sending a reminder to the buyer once every three months or so can help you stay top of mind without being overwhelming.

SCPG WHAT ARE YOUR MOST COMMON CONCERNS WHEN BRINGING ON A NEW BRAND? TN For an emerging brand, a common

concern is that they won’t be able to meet our demand or deliver products to us when we order it. Consistency can also be an issue; sometimes we will launch very new brands, and the next week they need to rebrand or change ingredients or packaging sizes. We are super flexible and helpful at Good Eggs, but it also takes a lot on our end to launch a product. We do our photography in-house, and this process alone can take 30 days. If there is any change coming up in the foreseeable future, a great brand partner will give us as big of a head’s up as possible.

SCPG HOW SHOULD EMERGING BRANDS THINK ABOUT PRICING? TN A brand should know how they need

to price their product in order to stay in business. But they also need to understand that the MSRP they set won’t always be what a store will stick to. Every grocer has their own margin targets to meet, and they won’t always sell an item that you charge $4 for at $6 retail because that’s the highest you think a customer can handle. If you want the product to retail at a certain price, you need to be willing to be flexible on the cost.

SCPG WHAT ARE THE VELOCITY EXPECTATIONS YOU HAVE FOR NEW BRANDS ON THE PLATFORM? TN It depends on the products, but

generally, after about 6 weeks in our marketplace, we can determine how a brand is performing in terms of traction and sales on Good Eggs. During the first few weeks our buyers are assessing order quantities so we don’t sell out of product too soon or hold onto inventory for too long. We want to be on the same page with the brands – neither of us should expect that we’ll be

Thuy Nguyen is the Forager at Good Eggs. She started at Good Eggs 4.5 years ago as a category manager for bakery and prepared foods and slowly took on new categories like drinks, chocolate & candy, vitamins and supplements, and dried fruits and nuts. Nguyen moved into the forager role about 6 months ago, driven by a passion for product discovery and helping new and emerging brands get started on the Good Eggs platform.

ordering pallets from the get-go. To set us up for realistic velocity expectations, we typically order by the 4-5 cases per SKU to start and build up from there.

SCPG HOW CAN A BRAND BE AN AMAZING RETAIL PARTNER? WHAT HELPS THEM STAY ON GOOD EGGS ONCE THEY’RE THERE? TN Successful brands on our platform

amplify Good Eggs on their own social channel; and we generally repost it! Otherwise, brands that do well are those who stay involved. Being consistent with restocking, ensuring that your distributor is well-prepared to work with us, and poking buyers every once in a while to keep their products top of mind are all important to be successful on the platform. Don’t disappear the second you make it through the door.

WWW.MOSITEA.COM

by Jenna Movsowitz

Building Mosi

THE BRAND REINVENTING THE TEA EXPERIENCE

WWW.MOSITEA.COM

aul Davis grew up around tea. His parents were missionaries in Africa, and he spent his life traveling around the Southern half of the continent. As he moved from village to village, one tradition remained consistent: tea drinking. Tea was at the center of the table as he met people from different cultures and backgrounds. It was the connector regardless of race or religion, the universal experience that exposed commonalities amongst strangers. And despite many physical relocations, tea continued to provide Paul with a sense of belonging and tradition; his passion for tea grew with his desire for human connection. Many founders set out on a mission to make an aspect of an existing product better. Whether it’s a nutrition label, ingredient list, functionality or flavor variety, brands often innovate through single-facet improvement. But Paul wanted more than just a better version of a product – he wanted to improve the entire practice of making and drinking tea. It is with this ambitious mindset that he launched Mosi Tea: not just another tea brand, but a brand reinventing the entire tea-drinking experience.

BUILDING COMMUNITY AROUND INNOVATION While Paul knew that his brand would ultimately include a line of teas, he decided to center his Kickstarter around the brand’s most impressive innovation: the world’s first multi-brew infuser. Staying true to his mission, this novel design would marry ease and convenience with the traditional tea practice of using loose leaf tea. Mosi’s tea infuser brews loose leaf tea on-the-go in a leak-proof, double-walled cup made out of Triton: a shatter resistant yet glass-like, BPA-free material used in baby products and medical devices. Its patented, interchangeable design attaches any of their three different sieves (for loose leaf, fine teas or coffee, and cold brew) or their whisk attachment for matcha. This innovation gained impressive traction, landing it among the top 1% of all Kickstarters. “We had a Trojan horse mentality with the infuser. At the end of the day, the supporters of our Kickstarter were looking for a better way to enjoy tea,” says Paul. “And they will be the biggest fans of Mosi as a brand.” To echo the sentiment of the infuser, Mosi launched a tea line that mixed familiarity and tradition with innovation. From Rooibos Lavender to

Rose Black, Mosi’s incredibly high quality, thoughtfully-sourced teas pair age-old tea varieties with an added, unique flavor spin.

MOSI’S APPROACH TO DISTRIBUTION Since launching one of the most successful kickstarters of all time – and later winning Best Tea Making Equipment Innovation at the World Tea Expo – Mosi’s name has become known in countries around the world for their impressive infuser. Paul saw their early infuser success as a potential driver of their future tea line success. He poured this mentality into forming Mosi’s sales strategy.

USING AMAZON TO DRIVE DTC TRAFFIC In short, Mosi’s core strategy is a DTC-Amazon partnership that leverages the infuser as an acquisition tool. Mosi currently only sells the basic infuser model on Amazon, and sells the infuser add-ons (the different sieves and matcha whisk) and all teas on their DTC site. Because tea is an incredibly competitive space, the Mosi team decided to focus on the brand’s key differentiator to draw customers to their Amazon page – and then use that listing, and the box of the infuser itself, to drive further purchases and tea subscriptions through their DTC site. With an Amazon listing set up for success – chock full of educational content, videos, and thoughtful keywords – Mosi has been drawing in new consumers for their infuser. But as any brand on Amazon knows, sales through Amazon sacrifice the opportunity to communicate with customers post-purchase. As a workaround, the Mosi team got creative with QR codes. On each infuser box, customers will find Amazon-specific QR codes on the packaging. Drawn in by the callout to learn more about how to use the infuser, customers will be sent to a landing page with an educational product tutorial, but also to Mosi’s DTC site that houses all infuser add-ons and their tea line. The QR codes also lead to a landing page to collect first-party data from otherwise anonymous Amazon customers. “The infuser box is literally a sales tool for tea,” Paul says. The marriage of the tea line, infuser, and infuser add-ons becomes a fascinating business model. “People like to try new things. If we’ve been able to sell them on the infuser already, we feel like we have a pretty good chance of selling them on our tea. On

WWW.MOSITEA.COM

the flipside, if we can get a customer to sign up for a year-long tea subscription upfront, we may offer the infuser for free as an acquisition tactic.”

MARKETING TO THE LIFETIME CUSTOMER To support their Amazon efforts and stick out amongst the crowded tea and tea equipment space, the Mosi team has been focusing on search-engine optimization (SEO) and pay-per-click (PPC) keyword strategy. For SEO, the team is focusing on publishing upwards of three educational blogs per week, along with a variety of tea recipes that explore new ways to enjoy tea – from tea cocktails to tea lattes and refreshing iced concoctions. At the same time, they have focused on optimizing all site copy and product descriptions. With PPC, Mosi leans into their highly innovative hero product. “We bid on long-tail queries surrounding the infuser,” says Paul. Long-tail queries are searches containing over three words. They are usually highly-specific and rarely searched – something like “matcha tea infuser for on-the-go.” Though these keywords rank low, they target a customer looking for a highly-specific item. With less competition and highly motivated searchers, the conversion rate is higher and the cost-per-click (CPC) is much lower. Plus, customers can easily find exactly what they’re looking for, and avoid the noise

of the crowded industry. This strategy is a great way to drive new traffic to their site. But it’s also yet another embodiment of Mosi’s mission. By avoiding quick-growth marketing tactics like social media giveaways, and instead investing in building out an educational site, the Mosi team is building an approachable, excited tea enthusiast community. “We’re not looking for discount customers. We’re looking to build genuine lifetime customers and community,” says Paul.

LOOKING AHEAD As Mosi continues to draw new customers to their site, they hope to continue sharing educational content, building out a robust tea subscription program, and helping tea diehards and novices alike learn new ways to incorporate the beverage into their daily routines. “The US went through a third and fourth wave of coffee. We want to be at the forefront of the same progression for tea, helping Westerners understand the incredible versatility of tea,” Paul says. By investing in tea education and building up an inviting tea community, Paul believes that Mosi has the potential to reframe the way our society views tea.

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by Jenna Movsowitz

DISTRIBUTION 101, PART 1 An Overview of Foodservice

f you were a CPG brand just a few decades ago, your distribution flow was a lot simpler; you could stock a truck with full pallets, which went from a distribution center, to the retailer’s distribution center, to the retailer. Nowadays, the flow of distribution looks more like a complex web. CPG brands are now selling and fulfilling direct-to-consumer, sitting on fractional shelf space for delivery apps or ecommerce platforms, wholesaling to foodservice, and navigating a new world of brick-and-mortar retailers Before you fall into a thought spiral on how to be (everything) everywhere all at once, we want to help you gain a better understanding of the landscape, starting with one of the most overlooked channels within it: foodservice. I spoke to Matt Cotton, Founder and CEO of Rooted Food Sales, and Kyle Peters, founder of former protein ice cream brand Carver & Oak and current Growth Hacker at Nestle, to gain a better understanding of this channel. This article will be the first article in the Distribution 101 series, published in upcoming editions of The Spotlight and Startup CPG’s blog.

WHAT IS FOODSERVICE? Though not often considered a primary distribution channel, there are more than 15 categories considered foodservice operators, including full-service restaurants (sit-down), quick-service restaurants (your local smoothie shop or salad

joint), hospitals, universities, cafes, sports stadiums, airlines and more – providing endless ways to consistently reach new consumers. Some major broadline foodservice distributors (the foodservice equivalents of KeHE and UNFI) include U.S. Foods, Sysco and Sodexo. There are also smaller distributors and convenience/specialty-specific distributors.

WHY FOODSERVICE? Foodservice is often overlooked by emerging food and beverage founders. Matt believes this may have to do with input from investors, who are looking for quick wins – and traditional retail is undoubtedly a faster process than getting into foodservice. But foodservice accounts are generally much “cleaner” than their retail counterparts. “With markups – foodservice speaks in terms of markup, not margin – averaging around 25%, and no slotting fees, merchandising, or promotions necessary, you make money off the very first case sold,” says Matt. “In Foodservice, the opportunities to enter are wide open. Unlike grocery, you can pitch your product at any given time and are not bound to a rigid, yearly schedule,” he adds. Matt also notes that entering foodservice may help you reach an entirely new market: “You can capture sports fans watching a game in a stadium, or students in their university cafeteria. Diversifying your retail strategy with foodservice accounts may be the factor that sets you apart from competitors.”

CRAFTING YOUR FOODSERVICE STRATEGY Your point of contact for pitching foodservice is the key decision-maker at your target operator, not the distributor; in other words, foodservice initially requires a “pull” distribution. Determining where to pitch for foodservice is similar to determining where to pitch for retail – it all comes back to product-market fit. For Carver & Oak, for instance, Kyle wanted to reach end users who needed an extra dose of protein and a nutritionally-dense treat. He focused on three target operators: healthcare, sports teams, and universities. He crafted his pitch around these target demographics, and got scrappy with discovering the point of contact for each account. Kyle mostly used LinkedIn to connect with key decision-makers in his dream accounts (Foodservice Director or the dining program’s Executive Chef for healthcare and universities; Nutrition Coach or Strength and Conditioning Coach for professional sports teams). Rather than approaching them immediately with a pitch, he spent time engaging with their content and building up a natural relationship. Eventually, he would find a natural reason to approach with a pitch. To build trust with these accounts, Matt suggests that you take the time to understand the segment you are pitching to and demonstrate your fit: “Become familiar with what these operators are looking for by attending national trade

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shows like National Association of Convenience Stores (NACS) and National Association of College and University Food Services (NACUFS).” He shares the following as important callouts for foodservice accounts (especially if you have the corresponding certification): l Gluten Free l Allergen-friendly l Vegan/Vegetarian l Local (this is especially important!) l Women- or minority-owned l Sustainable l Clean label l “Better for you”

After a successful pitch, the operator will ask their distributor to stock your product, so they can purchase it. “While someone like the Nutrition Coach of an NFL team may start out by purchasing your product with their own card, eventually, these decision makers will want to get the ordering process out of their hands,” Kyle says. “They’ll become your passionate salesperson, so you don’t have to be.” Matt recommends focusing initial efforts on large operators, like a coffee shop with multiple locations or a major university: “Your target operators should be large enough to ‘force distribution,’” Matt says. “With larger operators, distributors will be forced to stock your product in their warehouse. Distributors aren’t going to bring in your product unless they’re confident they can move at least five or more cases per week.”

COMMON FOODSERVICE MISCONCEPTIONS You Can’t Build a Brand or Expand Retail Through Foodservice Contrary to what your hospital cafeteria’s half-chocolate-half-vanilla ice cream container with the sad wooden spoon may have made you think, you can still build a brand through foodservice. If anything, Kyle notes, having a solidified brand before approaching foodservice could set you apart in both your pitch

and your ultimate sale to a consumer. For instance, a college student may be more likely to pick up your protein bar brand in their university’s convenience store if they recognize it from their local grocery store. Similarly, a recent college graduate may nostalgically seek out new ways to purchase and support the protein bar that got them through their studies. In other words, foodservice is a way to expand your brand without risk of cannibalization. By catching a consumer and building brand awareness in a non-retail environment, you’re driving trial that could support retail accounts.

You Need a Broker

Matt, who is the CEO of his own brokerage, is the first to admit that you do not need a broker to start your foodservice journey. “A brand who is still in farmer’s markets or in under 100 stores should start pounding the pavement themselves. Identify channels that make sense for you, get in your first few doors and key distributors, and then bring a

broker on board when you need more support and connections to drive national accounts.”

You Need a Different Pack Size

Apart from back-of-house foodservice accounts, many foodservice accounts look similar to retail accounts. For RTD beverages and most snacks, you do not need to change your pack size to succeed on shelf in foodservice.

CONSIDERING FOODSERVICE MAY BE YOUR SECRET WEAPON “Foodservice is more about planting a seed, growing, and ultimately becoming a much larger tree,” says Kyle. While the turnaround for traditional retail is much faster, foodservice is known as a “cleaner” business that lends itself to much more stable growth, with fewer accounts purchasing at a higher volume.

WWW.GELSONS.COM

BUYER PROFILE

RICH GILLMORE Senior Director of Center Store at Gelson’s

WWW.GELSONS.COM

Startup CPG WHAT SETS GELSON’S APART FROM OTHER GROCERS? (ANYTHING FROM VARIETY TO MERCHANDISING TO CONSUMER EXPERIENCE) Rich Gillmore We are really different

from pretty much every other retailer in Southern California. We have the highest quality Fresh products and an unmatched assortment in the Center store that ranges from Coca-Cola to imported balsamic sold by the ounce and first to market launches on innovative items like Impossible Burger.

SCPG HOW DO YOU DECIDE TO BRING IN AN EMERGING BRAND TO YOUR ASSORTMENT? / HOW DOES AN EMERGING BRAND KNOW WHEN THEY’RE READY TO PITCH TO YOU? RG We search food shows and industry

periodicals to find new trends, but most brands come to us because of our reputation in the industry for launching brands. Once we find something that we feel has real potential, we will work with the brand to see if they are ready or not. The first thing emerging brands need to learn is that it doesn’t matter how cool, unique or high quality a product is unless a customer tries it. The brand must do everything it possibly can to get the word out and educate the consumer with a reason why they should buy it. The best way to do that is through in-store displays, demos and advertising. Too often a brand says “I can sell a pallet in 4 hours at a farmer’s market”. That is great, but at a farmers market, you are standing there, grabbing every customer that walks by and offering them a sample. When you are sitting on the shelf next to 30,000 other items, you won’t get noticed without a lot of work.

SCPG WHAT SETS A BRAND APART IN A PITCH? RG Being on trend, with solid packaging

design and a realistic plan to promote and

get the consumer to try their product. The most important consideration though, is what void in the Customer Decision Tree you fill. Are you filling a true need that is in the market, or are you just another “me-too?”

SCPG WHAT ARE YOUR MOST COMMON CONCERNS WHEN BRINGING ON A NEW BRAND? RG We need to be confident that the

brand is going to follow through with their commitments and do everything they can to get their product to sell. It is not the retailers job to sell your product, it’s the brand’s responsibility. It’s way too competitive in today’s market to not be looking for the next great thing continuously.

SCPG WHAT VELOCITY EXPECTATIONS DO YOU HAVE FOR EMERGING BRANDS WHEN COMPARED TO ESTABLISHED BRANDS? RG It really varies widely by commod-

ity. Beverages, snacks, yogurt… all have extremely high velocity compared to more specialty items. We give a brand 6-9 months to gain a foothold with the consumer, so it is important to come out strong.

SCPG ARE THERE CATEGORIES WHERE YOU’RE MORE LIKELY TO TAKE A RISK ON EMERGING BRANDS? RG The most competitive categories are

the hardest to take risks in. For a retailer, it is difficult to justify discontinuing something selling thousands of dollars a week in order to take a chance on a new item in its space.

SCPG HOW SHOULD EMERGING BRANDS THINK ABOUT PRICING VS ESTABLISHED BRANDS (GIVEN THAT THEY LIKELY HAVE LESS FAVORABLE COSTS)?

Rich Gillmore is the Senior Director of Center Store at Gelson’s. He oversees a team of Category Managers and support staff that manages the assortment, promotions and merchandising for all Grocery, Dairy, Deli, Frozen, Nonfoods, Liquor and Specialty Cheese. He loves finding new trendy items and being first to sell them in the region.

RG For our consumer, pricing is dependent on quality. If your product provides a quality or benefit that the national brand does not, then pricing is not as critical. A brand needs to ask themselves, “why would someone pay extra for this product?” If they don’t have a quick answer, they are likely to fail. SCPG WHAT ARE 3 CATEGORIES YOU’RE EXCITED ABOUT? RG Plant-based: This ranges from

dairy products, to the meat replicants popping up all over the place these days Snacking: Whether it is salty snacks, or sweets, the innovation is accelerating Mixers: High quality, innovative flavors for mixers

WWW.SOCIALNATURE.COM

by Jenna Movsowitz

USING CONSUMER INSIGHTS TO DRIVE RETAIL STRATEGY

Social Nature

Social Nature is a community of engaged consumers who discover, try and share feedback on natural, betterfor-you CPG products. Their shopper communities span all major retailers and natural accounts across the country – driving retail foot traffic and trial for their partner brands

Jessica Malach is the VP of Marketing and Insights at better-for-you sampling company Social Nature, leading its consumer insights and brand partner programs in both Canada and the U.S.

WWW.SOCIALNATURE.COM

THE IN-PERSON LANDSCAPE Throughout the pandemic, Social Nature has continued to connect with their 800,000+ natural shoppers to understand their new habits. “Our particular segment of shoppers tends to be heavily concentrated around women aged 25 to 45, and 60% have kids,” Jessica Malach, VP of Marketing and Insights at Social Nature, reports. “Before the pandemic, we saw an average of about 2.5 trips per week – during 2021, that went down to 1.5 per week. They were going less often and increasing the basket size.” But in 2022, Malach predicts that in-person shopping trips will return to normal levels, especially for weekly items like perishables, produce and beverages. At the same time, Social Nature anticipates some behavioral change around purchasing items like supplements, skincare or haircare, which are purchased less frequently and often have unique formulations. During the pandemic, shoppers have been leaning into the subscribe and save model on Amazon or DTC for purchasing in these categories; Malach anticipates this will continue. While the click & collect and grocery delivery models were popular in 2020 and 2021, Malach predicts that the massive growth in these services will slow. “Some people want to pick their own products, and not need to be home for delivery. We’re returning to a more spontaneous world, and shopping behaviors will begin to reflect that.”

CONVERTING ONLINE DISCOVERY TO RETAIL PURCHASE If you are a brand who launched exclusively on e-commerce or DTC during the pandemic, the idea of launching into brick and mortar can be daunting – but you’re not starting from scratch. In-person retail purchase often stems from behind-the-scenes, online demand generation (the process of driving customer awareness and interest throughout the lifecycle). For instance, Malach notes that there is a major opportunity in strategic email acquisition. A solid email strategy can provide key information on the casually-aware potential consumer. “I would

create a landing page that invites people to share this information. Something like, ‘Thanks for visiting us! We’d love to stay in touch and let you know when we’re in a store near you,’ and ask for their zip code and favorite retail stores,” Malach suggests. “Once you have that data, you can geo-target those shoppers once you get that new listing.” You can also use this data as part of your sales pitch to a retailer to demonstrate that you already have an eager consumer base among their shoppers. Apart from demand generation through email strategy, Social Nature often works with clients to promote product trial vouchers as an incentive to draw in new consumers. They share a VIP, free product trial voucher to bring people into specific retailers. Other promotions, such as BOGO offers, can be used as a follow up. “Across almost all US target demographics, people are using coupons for food and grocery products. We see redemption rates as high as 50-70%.” In fact, 43% of Social Nature’s shoppers mentioned that digital coupon offers are how they learn about new grocery products. These trial opportunities are immensely helpful both in introducing the product to consumers and gathering data around potential customers.

USING CONSUMER INSIGHTS TO INFORM RETAIL STRATEGY While getting on shelf may feel like an endpoint, in reality, it’s only the beginning. The new challenge is a fight to protect your shelf space – there is always the risk of getting knocked off. “You may have data that indicates successful movement off of shelves. But POS data doesn’t help you understand the why behind your success,” Malach notes. “You need to understand what’s driving your velocities so you can improve your products. When consistently adapting to consumer feedback, you can meet current customers’ needs and secure their loyalty.” Social Nature works with brands to drive trial for grocery products at key retailers like Whole Foods, Sprouts, Walmart, Kroger, Target, Publix and more. They also facilitate direct to home sampling for higher SRP items like supplements and skin care in trial sizes. This process generates product reviews and

provides feedback to validate product demand – both of which can be incredible supporting data points in a retailer pitch. For example, Social Nature conducted digital demos for sauce brand Haven’s Kitchen to drive in-store trials and collect consumer feedback. While feedback can easily get lost in the shuffle of an instore demo, this opportunity allowed for simple post-trial survey responses and product reviews – 74% of shoppers filled out a post-trial survey sharing how they used the product. In reviews, shoppers reported that they wished the product came in a bigger sauce pack. Haven’s Kitchen adapted their packs in response, and were able to bring this data to Whole Foods markets (where, as Social Nature revealed, the majority of their customers were shopping) to justify product expansion with the bigger pack. Beyond digital demos, Social Nature encourages brands to explore other methods of receiving consumer feedback where you’re already sold. One example is utilizing QR codes on-pack.”QR codes are a great way to connect with the consumer better.” Simply dropping a QR code onpack without any context, though, will not lead to consumer adoption, Malach adds. “The QR call-to-action needs to be engaging, like ‘leave a review to be entered into a giveaway’ or an explanation of how the consumer’s feedback could inspire the next big innovation.” After brands have secured their new listing, Social Nature can be used to support in-store discovery and trial. “We will be able to give you predictable instore discovery in a set amount of time, because we can target people who fit your target audience and are already shopping at your new retail location,” Malach says. “This will help you build an engine of new customer acquisition – if they loved your product, you can provide them with another coupon. We’ve seen incredible post-trial conversion rates.” In summary, aligning your product marketing and retail strategies with the voice of the market – consumers – is a winning and necessary strategy to succeed in today’s hyper-competitive and ever-changing marketplace. Social Nature is a proud partner of Startup CPG. If you are interested in partnering with Startup CPG, please contact partnerships@startupcpg.com

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by Jenna Movsowitz

WEB3 + NFTS IN EMERGING CPG

(No, seriously, what the heck are NFTs and what do they have to do with CPG?)

f you’ve been blocking out the blockchain, you’re not alone. With all of the moving pieces that a CPG founder has to keep track of at any given time, adding another channel, let alone dabbling in an entirely new technology, is daunting to say the least. But before you rule out participating in the world of Web3, we want to arm you with the basics. In this piece, you’ll learn the basics of Web3 and NFTs and hear from three founders who are redefining the universe in which CPG brands live: Tyler Phillips of Hummii, Jake Karls of Mid-Day Squares, and Dyanna Salcedo of Oats in Coats.

POINTS! — Hummii’s newest candy launch + NFT project

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Mid-Day Squares Launches “Chocolate Gone Crazy” Music Video as an NFT

WHAT IS WEB3 AND WHAT ARE NFTS? (EXPLAINED IN A WAY EVEN A BOOMER COULD UNDERSTAND) Breaking Down the Phases of the Internet

“Web 3.0 is the next evolution in how we use the internet,” Dyanna Salcedo, co-founder of Oats in Coats, explains. This is how she breaks it down: lW eb 1.0-1.5 (~ 1990-2004): Read-only. Consumption-based. There were web pages you could read, but not interact with. lW eb 2.0-2.5 (~ 2005-2012): Read-and-write interaction. Emergence of mega tech companies like Facebook, where users can share photos, videos and words and interact with the community. Centralized under a few major companies: Facebook, Google, Twitter, etc. These companies own your data. lW eb 3.0: Read-and-participate. Ownership. Instead of just interacting with an internet that’s owned by a few major companies, a new technology has arisen (blockchain; we’ll get there) that allows the average internet user to actually own their data. Key word: decentralization1.

original holds a unique value thanks to its scarcity. The “token” part of the acronym represents a number of different kinds of digital assets, from digital artwork to articles or videos, which act like physical collector’s items. Put simply, an NFT is a claim to a unique digital asset: a public indication of private ownership. Sure, someone else can still see that piece of artwork, or even download it, but only one person will have the exact original copy — and that ownership authentication is literally coded into the NFT’s data on the blockchain. This data can never be changed, reducing the probability of fraud by making it possible to verify ownership throughout the transfer of tokens between owners. NFTs are purchased with cryptocurrency (the currency that operates through the blockchain, and thus is not owned by any authority), most commonly Ethereum.

Who makes money from an NFT?

The blockchain is the underlying technology which allows for the decentralization of information. Essentially, blockchain acts as a distributed database; it stores information and shares this information among an entire network of computers. The computers then verify the information without the need of a third party. Equally important, blockchains are “immutable” which means that all data entered is permanent. This makes the blockchain a trusted record for transactions – which is key to understanding NFTs.

“For me, the a-ha moment was thinking about NFTs as a contract. There’s only one deed to your house, only one royalty deal for an artist. An NFT is essentially a contract, and in the contract, you can build royalty for the original creator into the metadata of the NFT,” says Dyanna. When you think about buying a van Gogh, for instance, a painting that has been sold over generations, the wealth accrues for the people buying and selling the art. In the case of an NFT, this wealth accrual still exists, but a royalty also kicks back automatically to the original creator over the lifetime of these transactions. “As the value of a token goes up, the creator is able to capture that value back themselves, which is really powerful,” Dyanna explains.

So what’s an NFT?

NFT Utility

How does this work?

NFT stands for non-fungible token, which likely means little to nothing to you. Fair. Let’s dissect: Where “fungible” means that something can be traded in equal value, like a dollar for a dollar, “non-fungible” translates to oneof-a-kind – one NFT is not equal to any other. The most basic tangible example for a non-fungible item is a baseball trading card. There can be copies made of this baseball card, but the

Beyond the claim to a piece of artwork or a collectible asset, NFTs’ values may also be dependent on the “utility” they offer. Utility means the unique access, perks, and opportunities provided to holders of an NFT. Platforms like Novel, which integrate Web3 and NFTs into ecommerce, even allow for exclusive URLs that can only be unlocked with certain NFTs. These URLs could house an opportunity to book a one-on-one chat with a founder,

1 Web3 is controversial. Like, dinner-table-blow-up controversial. I will not be taking a moral stance on Web3 or NFTs in this article, just providing basic information to help you form your own opinion.

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Emerging brands are thinking about NFTs as a way to build IP and engage their community Tyler Phillips explores the “Hummiiverse”

access exclusive events or merchandise, or join a chat group with other NFT holders. Though it’s tempting to liken the experience of a utility NFT to that of a traditional membership model, there’s a clear distinction; the mere fact that NFT membership can be sold or traded (and royalties are typically involved) changes the game. This means that there is always an incentive to improve offerings on the creator’s end, and incentive to be an engaged member on the NFT holder’s end, because the price of the membership is increased with its perceived value.

SO WHAT DO WEB3 AND NFTS HAVE TO DO WITH CPG? (BESIDES AN ABUNDANCE OF ACRONYMS…) Contrary to the only thought that popped into my mind (a holographic bag of chips, obviously), CPG brands are using Web3 and NFT technology in a number of different ways – spanning far beyond digital artwork. For some major CPG brands, NFTs are being used analogously to a baseball card. Brands like Coca Cola are creating collectibles, like selling an entity of the sound of opening a can of Coke. This works because Coca Cola already has an incredibly strong IP and thus inherent value. But emerging brands are thinking about this differently; rather than thinking about NFTs as a way to capitalize upon an existing IP, emerging brands are thinking about NFTs as a way to build IP and engage their community.

Emerging Brands Using NFTs to Create Community Mid-Day Sqaures: MTV-Era Music Video Meets Web3

When the Mid-Day Squares team was served a cease-and-desist from Hershey’s over their use of the color orange – just one month after they were in talks around potential acquisition with the same BigCo brand – they responded in the most Mid-Day Squares way possible: by launching a diss track. “Chocolate Gone Crazy” is a full-blown, MTV-style, MDS-level “bold” music video… turned NFT project. The music video will be converted into

500 unique snapshots and sold as NFTs to the Mid-Day Squares community. “We’ve been interested in Web3 for a while, but never wanted to jump on the hype train before we had a genuine reason to,” says Jake Karls, one of the co-founders and “Chief Rainmaker” of Mid-Day Squares. “This music video is representative of a pivotal, clearly-defined moment for the company on our journey to building the next Hershey’s.” The Mid-Day Squares team doesn’t just want their community to be part of that moment – they want their community to literally be able to own it. And with NFTs, they can. “We think of an NFT as a reward to our community. If the NFT holders believe in our brand, and we continue to grow, their NFT will be worth more and more down the line. There will be an added value just for having believed in us,” Jake says. Beyond having verified ownership of their music video moment on the blockchain, NFT holders will receive physical memorabilia tied to the project: a MTV-era VHS tape. The company has also chosen to add a 10% royalty to each transaction, which will be poured right back into the NFT project in the future through opportunities like private events for NFT holders.

Hummii: Customer Acquisition + Building Brand Loyalty With NFTs

Because Hummii, the brand building a “healthy and yummy snack universe”, is still so new, founder Tyler Phillips sees NFTs very differently to Mid-Day Squares. Rather than an opportunity to reward an existing fan base, he sees NFTs as a customer acquisition opportunity — a chance to build a new, incredibly loyal community — at the same time as he builds his brand. In the real world, Hummii is in the process of creating delicious, vegan, low-sugar mini muffins powered by chickpeas. Hank, the chickpea mascot, brings a sense of nostalgia to the brand, as does the company’s dedication to gamification. “I’m a big fan of making your company purely fun for the customer,” says Tyler. In an effort to “gamify” the brand, Tyler is launching POINTS! – low-sugar, vegan, candy-coated chocolates – which are a physical asset tied to a set of NFTs. Tyler acknowledges that NFTs are still a “scary” investment for the average consumer, which is why he will be gifting NFTs to early believers in his brand. The first 500 customers to pre-order their POINTS!

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Taika’s Newest NFT Project in Partnership with Friends With Benefits

product will get a free, claimable NFT. The NFT will provide a lot of great perks down the road, like merchandise, early access to the muffins, and even involvement in coming up with future flavors or product launches for the brand. To make the world of Web3 even more approachable for his early customers, Tyler is working with the company Novel to generate the different NFTs in the “Hummiiverse.” Novel seamlessly integrates with Shopify, so consumers can checkout using their debit or credit card, rather than needing to purchase cryptocurrency to get on board.

Oats in Coats: Creating A Community of Creators

Dyanna Salcedo, co-founder of Oats in Coats, is the first to admit that her target audience of Millennial moms likely is not adopting Web3 into their digital diets just yet. “For us, we’re actually not looking at a consumer-facing NFT. Instead, we’ve been talking to investors about building a new way to engage creators to help build our brand.” Oats in Coats is just the first “chapter” of what will be a series of “Grocery Stories”, which will be a family of brands inspired by the prompt: what happens at night at the grocery store? “The grander vision of Grocery Stories includes collaborating with a community of illustrators, copywriters, animators – who work with us to take the stories in all sorts of directions that we could never imagine on our own,” Dyanna envisions. Ultimately, Dyanna hopes to incentivize the best-of-the-best creators to help build her brand through use of NFTs – which will allow them to earn royalties on the work they’ve done for the brand.

Other Applications of NFT x CPG

This year, we’ve also started to see several new CPG brands launch as NFT-native companies (ex. Leisure Project, Chatty Matcha). These brands originated as NFTs before creating a product, and the brand’s decisions — from packaging to flavors — are partly informed by their community of NFT holders. Taika, an RTD coffee and matcha brand, pulled inspiration from the NFT-native brands to launch their most recent NFT project with Friends with Benefits (a Web3 community): the “mateverse.” Holders of the Taika Yerba Mate NFTs will be able

Oats in Coats; Oatis and his oatmeal pals

to vote on beta versions of the new yerba mate product that Taika is creating – which will be entirely funded by the NFT drop. “Taika is solving a cash flow issue that typically comes with a new product release, while bringing together a community of people who are passionate about the brand,” says Roger Beaman, co-founder of Novel. He anticipates incredible success with this launch: “When brands like Taika pack utility into their NFTs, we’ve seen conversion rates as high as 50-70%.”

SO DO I NEED TO BE ON WEB3/SELL NFTS? All interviewees agreed: you need to find a compelling reason to justify incorporating NFTs into your brand. And in the world of CPG, product always comes first. But they also agree that, if you can find an appropriate product-Web3 fit, and have the time or interest, it may be worth getting ahead of the tech curve: “You can build a brand without being on TikTok. But if you’re building a brand that you want to speak to Gen Z, you definitely want to be on TikTok. I think where NFTs are right now is maybe where TikTok was three years ago.” Tyler says. His personal philosophy is to always be an early adopter of new technologies. “If we can be early to testing, by the time of mass adoption, we will have experienced and be able to foresee some of the challenges that come with any new technology.” Roger believes that Web3 is still in its “awkward teenage transition.”: “The guts of Web3 are exposed right now, which makes the consumer feel like they need to be highly educated on the topic to participate. But in the same way that I use a computer every day and have no idea how it actually works, Web3 will one day be the mainstream.” With platforms like Novel, brands and consumers will never have to understand the backend of Web3 to participate in it — and the mitigation of the learning curve may just be the starting point of the newest tech curve. If you are interested in getting started in NFTs, Tyler recommends getting involved in the founder x Web3 space. Startup CPG has created a Slack channel specifically dedicated to the topic of Web3, where you can explore the topic with other emerging CPG brands.

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Q&A WITH CAS RELUCIO CATEGORY MANAGER AT KEHE Startup CPG WHY IS IT IMPORTANT FOR AN EMERGING BRAND TO WORK WITH A MAJOR DISTRIBUTOR LIKE KEHE? Cas Relucio For an emerging brand,

ready to apply to a large distribution network when they have a strong presence within their region. This tells us that the brand is growing organically and has been listening to their loyal followers. They’re also ready for large distribution when they understand how retailers vs. distribution deductions work. This is a huge differentiator for me; most of the time when brands present to me, they don’t understand what slotting fees mean or even manufacture chargebacks.

SCPG HOW DOES AN EMERGING BRAND KNOW WHEN THEY'RE READY TO APPLY TO YOUR DISTRIBUTION NETWORK? CR An emerging brand knows they’re

SCPG WHAT SETS A BRAND APART IN A PITCH? WHAT'S A PITCHING NO-NO? CR The best pitches I’ve seen come

working with a large distributor can open so many doors. Whether it’s in a local region or nationally, large distributors have greater access to a wide variety of retailers, ranging from mom and pop shops to ecommerce to large chain retailers, like Walmart and Target.

from the founder themselves. They know

the brand inside and out. In most cases, I also look at their team. Sure, I can read the brand decks and listen to the pitch, but how strong is the brand’s team? How excited are they? How invested are they in the brand? A huge pitching no-no is not having a brand deck. This is a rookie mistake. It shows me how unprepared some brands can be when they meet with a buyer for the first time. You’d be surprised to know that some brands ask for a meeting, yet do not have any deck prepared. Another one is not being cognizant of time. It’s important to be respectful of a buyer’s time and give them at least 5 minutes towards the end to ask questions. Most importantly, be respectful and kind.

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SCPG WHAT ARE YOUR MOST COMMON CONCERNS WHEN BRINGING ON A NEW BRAND? CR I’ve got a few. First one is worrying

whether a brand can support a large distributor through off-invoice allowances or manufacture chargebacks. If a brand has a robust promotion plan with retailer and distributor support, that gives me confidence that the brand is willing to invest in their growth. Second is if the brand has a competitive pricing model, which ties to the above. It’s important for brands to do their research and understand their competition’s pricing. It’s also important to research retailer margins. Last but not the least, due to COVID, I’ve been paying closer attention to production capacity. We all don’t want to face stock issues, so brands should try to forecast ahead of time when working with a large distributor and keep track of their inventory level in each of their distributor’s warehouses to avoid OOS.

SCPG WHAT ARE SOME OF THE FACTORS THAT GO INTO DETERMINING A BRAND'S LAUNCH STRATEGY? CR I think my best answer for this

would be the classic 4 P’s of marketing: Product, Place, Price and Promotion. I’ve shed some light on price and promotion to the previous question. Product tells me most of the things I need to know about the brand. It can tell me if it’s premium packaging, specialty-oriented, natural, organic, fair trade, plant-based, free from xxx, regenerative, upcycled, etc. These things tell me how

you compare to the rest of the competition, and can help inform who your customer is and where they’re shopping. Place is one of the biggest strategies to highlight when you’re working with a large distributor. You can’t introduce yourself to a buyer and say you want to be everywhere right off the bat. For an emerging brand, I always recommend to focus on growing a certain region (and channel) first before going all out.

SCPG WHAT ARE SOME UNDERRATED ALTERNATE CHANNELS? WHY DO YOU THINK THESE CHANNELS ARE SECRET SUPERSTARS? CR At KeHE, I would say it’s the

ecommerce channel. There are so many opportunities that can be explored within this alternate channel and it’s still being developed in the industry today. They’re already superstars, like Good Eggs!

SCPG WHAT IS YOUR BEST ADVICE FOR EMERGING BRANDS LOOKING TO EXPAND THEIR RETAIL FOOTPRINT? CR My best advice would be to look at

the whole category and highlight your point of differentiation as much as you can in all the ways you can think of: clear and bold packaging on shelf, pricing, or having a rockstar team. At the end of the day, just be yourself when you’re pitching.

Cas Relucio is a Category Manager at KeHE and has accumulated a vast background in supply chain and category management since she started working at KeHE in November 2019. She went from Supplier Analyst in November 2019 to Associate Category Manager in November 2020, handling baby products and functional beverage brands. Recently, she was promoted to Category Manager in March 2022. She is a BIPOC Network Leader in the B Corp community, and a Naturally San Diego liaison. She is also a huge Marvel fan and has a strong passion in helping entrepreneurs, especially diverse founders, within the food industry

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by Jenna Movsowitz

USING DATA IN

RETAIL PITCHES With NielsenIQ's Byzzer Platform

itching to retailers is a daunting task. While you have all the confidence that your brand is worth their precious shelf space, for every brand that comes in, a retailer is taking a major risk. Naturally, the buyer is risk-averse – so beyond wooing them, it’s on you to reassure them that you are a good bet. This is where data comes in. It’s no secret that proving yourself is a numbers game. But the true challenge comes in knowing which numbers truly matter in the eyes of the buyer – and how you can source this data. We’ve partnered with NielsenIQ to help you understand these essential data questions. Their new tool, Byzzer Stories, takes all of the guesswork out of data and pulls the most important data in minutes to impress your retailer during the next review.

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Category Management Example: POS Data

UNDERSTANDING THE DIFFERENT TYPES OF DATA

What is Retail/POS Data?

POS data, or point-of-sale data, is transaction-level data collected at a retail store. You may recognize the word “POS” as the electronic system we often call a register. As the customer checks out, the data from each item scanned is logged into the retailer POS system and the retailer then sends that data to NielsenIQ. NielsenIQ then categorizes products and assigns attributes to provide you category benchmarks, competitor visibility, and item rankings. Learnings you can gain from retail/POS data include:

l Price l Quantity sold l Seasonal sales changes l Whether a product was purchased on promotion l Where product was purchased What is Panel Data?

Panel data, or household data, is self-reported purchasing data collected by third-party companies like NielsenIQ. NielsenIQ tracks consumer behavior for more than 250,000 households in 25 countries and gathers data through scanning the barcodes on products purchased. Members of the panel also indicate where they bought each product. This data offers a wide look at sales trends and allows brands to get information from the consumers themselves. Learnings you can gain from panel data include:

l Customer loyalty l Consumer demographics l Purchase cycle of a given product

UNDERSTANDING HOW TO USE DATA

Both panel and retail/POS data can answer questions that will likely arise in retail pitches. While each offers its own unique perspective on the product’s performance, using the two in tandem can make all the difference in your pitch to buyers.

Panel Data

Panel data shares insights surrounding household usage of your product. This data unpacks the household penetration, frequency of shopping trips, and spending per trip of your consumers. With an insight like “the average household spent $94.93 on dog treat 52 weeks ending 1/1/2022 across 8 trips with an average spend of $11.81 per trip.” Using this insight, you can help frame your category at the consumer level and demonstrate an understanding of your customer’s shopping habits in your pitch. You’ll be able to answer

Category Management Example: Panel Data questions like “how often do shoppers purchase the category?”, “what are the demographics of shoppers who purchase my category?” and “what percent of shoppers at retailer X are purchasing my product?” To further exemplify your dedication to success in any given retailer, you can explain how these insights will inform your marketing tactics with this new retail partner.

POS/Retail Data

POS data reveals the tactical levers of the “4 P’s” (price, promotion, product and place). POS data reveals both non-promo sales and promo sales, which will help you demonstrate knowledge of your promotional tactics in a retail pitch. As for non-promo sales, POS data will help you answer questions about distribution and velocity of sales. These will help you prove your top-line growth, as well as demonstrate why you’re in a place to further your distribution with a new retail partner. When it comes to promo sales, POS data will help you understand your promotional performance. Data points like incremental vs. non-incremental sales will help you understand how much product you sold due to promotion vs. how much you would’ve sold without a promotion. Demonstrating a clear understanding of your promotional performance in your pitch will show that you are prepared financially and strategically to launch in a new retailer.

WHY YOU SHOULD USE DATA IN YOUR PITCH

Both panel data and POS data will help differentiate your brand from the competition, highlight major successes in previous retail partners, and demonstrate that you have a clear path forward to overcome challenges you’ve faced in the past. If you feel overwhelmed by the amount of data digging necessary to pull together a retailer pitch, you’re not alone. That’s why NielsenIQ built Byzzer Stories: an AI-powered tool that takes all the work out of pulling data and creating a retailer pitch deck. Buzzer Stories ...

l Automatically populates a category management presentation l Pulls actionable data that puts your brand in the best light l Highlights points to impress your retailer l Saves time and money spent sifting through data points l Combines POS and Panel Data for maximum evidence of value NielsenIQ is a proud partner of Startup CPG. If you are interested in partnering with Startup CPG, please contact partnerships@startupcpg.com

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By Chris Kajander

MANAGING DISTRIBUTORS Watchouts + Tips Chris Kajander has been working in CPG for nearly a decade. He is the cofounder and CEO of Candid and a founding member of Broadleaf Digital. He is passionate about sustainable sourcing, sustainable packaging, and food justice

orking with a distributor can be confusing and sometimes frustrating. But good distribution can lead to new doors, new consumers, and increased revenue. While there’s not necessarily a “key” to working with distributors, knowing a few of the “watch-outs” and building good relationships with distributor reps and category managers can lead to fruitful business.

BROADLINE DISTRIBUTION If you have ambitions of working with Whole Foods and other big natural retail-

ers, you’ll likely need to work with UNFI and KeHE – two of the top natural and organic food distributors in the country. Both UNFI and KeHE are known to present a unique “chicken or egg” scenario; while you need to work with them to get into many online and in-person retailers, you often need to be in a few initial doors for them to consider distributing their product. UNFI’s UpNext program and KeHE’s elevate program are workarounds for emerging brands facing this dilemma. These programs are designed to ease upand-coming brands into the system with hands-on advising at a regional level. But even after securing one of the big guys as a distribution partner, there are still risks worth watching out for as you navigate business. In this article, I break down some of the major watchouts.

The Risk of Bridge Buying

Working with distributors can create lumpy sales patterns (high one month, low the next). You may have great sales in March when you’re offering a promotional discount, but then don’t get a reorder until June. Some sales lumpiness is unavoidable, but this is a common result of how promotional planning can be both a blessing or a curse depending on how the

promotion is executed. Bridge buying, which is when a distributor uses one of your promotional periods to over-buy your products at a discount, is one of the potential risks of OIs1. There are a few things you can do to mitigate this risk: 1 A high off-invoice discount (usually over 15%) can trigger a bridge buy. Keep your OIs between 10-15%. 2 Stack your promotional planning and leverage it with distributors and retailers so your discount really moves the sales needle. Say you’re offering a 15% OI to the distributor. They will (hopefully) pass some of that discount down to retailers to buy your product – but a 15% discount may not be enough for the retailers to pass on a deal to their customers. So, while you’ve incentivized the distributor and retailer to buy your product, there isn’t anything in place for the end consumer. This is where you might line up an MCB2 or a scan-back to move the needle with both retailers and consumers. 3 If you’re lining up an MCB with retailers to coincide with your OI, try to leverage that big promotional push to get a secondary or tertiary display in-store, promotional signage,

1 OI = Off-Invoice When a discount is deducted straight from a brand’s invoice from a distributor 2 MCB Manufacturer Charge Back: When a retailer buys a product, at a discount, from a distributor and the distributor deducts the amount from a brand’s invoice. Distributors usually charge a fee/upcharge for this

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or get moved to a better (more visible) spot on-shelf. The point of a promotion is movement at every level: the distributor buys more product, retailers buy more product or try your product for the first time, and consumers take a chance on your discounted item. It takes a coordinated effort to pass a discount down through the food chain. The key is to communicate with all partners and make sure it’s executed properly at each point: from retail buyers knowing the deal is coming, to having proper signage on shelf letting customers know your product is on sale. That will hopefully prevent distributors and retailers from having a surplus of product that takes a while to sell-through, leaving you without new POs for many moons. 4 With many distributors, you can push back and revise POs if you’re concerned with the amount they’re ordering. This can be a way to avoid bridge buys.

Avoiding Free-Fills

Because MCBs are between a retailer and a distributor, you as a brand are not involved. You may be “encouraged” to offer up free-fills3 to open up accounts. If you can, avoid free-fills. Unfortunately, they’re not always avoidable, especially if a larger

chain demands them. Just be aware that you will be charged back the “listing price” to retailers for your product, not your wholesale price to distributors. So know your list price, and don’t authorize blanket freefills.

Managing Case Size

Velocity will be measured at the store level by units sold, but distributors (and retailers) will often measure success by cases sold. If your master case has twelve retail case packs in it, and your retail case packs each have 24 units, then it may take a longer time to get a reorder than if each master case had two retail cases and each retail case had twelve units. If possible, it’s better to have a smaller master-case pack size and/or retail case pack size. It helps with both velocity and perceived velocity.

DSD (DIRECT STORE DELIVERED) DISTRIBUTION DSDs are local or regional distributors that service smaller accounts and sometimes larger chains as well. There is a lot of variance in DSDs, who they service, how they work, and what kind of margins they take.

Offering Incentive to Move Product

It’s been my experience that managing through the distribution reps and offering good incentives (usually a SPIF4) can help move product. DSD reps often have 100+ brands they’re working with, so you’ll need to communicate effectively and make it worth their while to sell you in and keep the reorders coming.

Beware DSD Contracts

Pay attention to what you sign. A lot of times a DSD will try to lock in the exclusive rights to distribute your brand and charge you a large fee to break that contract. It’s important to make sure they’re the right fit, and if you have other distribution already in place, carve that out and make sure they can’t claim it (unless you want to hand that business over).

CONCLUSION Supplying to a distributor comes with opportunities, but many risks. Knowing what to watch out for and how to best make use of your partnership can make or break your distribution strategy. I hope this article will help you navigate challenges as you expand your distribution footprint.

3 Free-fills Products given for free (or “sold at no charge”) to retailers – usually to encourage distribution and future sales with a specific store. 4 SPIF Sales Program Incentive Funds; Monetary bonuses (paid by manufacturers to sales representatives) to reward success.

WWW.BRUNEKITCHEN.COM

By Erin Fasano

BEHIND BRUNE KITCHEN

From Lawyer Burnout to a Baking Business

Tania Sweis and Jahan Shahryar have known each other since law school where they bonded over their love of baked goods and late-night nachos. It wasn’t until they entered a big law firm in LA after graduation that their shared love of food would blossom into a burgeoning cookie company on the brink of breaking out. As one of the top three fan-selected winners of Favorite Brand at the Startup CPG Alley Rally at Expo West, we talked to them about their founding experience and building their company, Brune Kitchen

WWW.BRUNEKITCHEN.COM

hen Tania and Jahan moved to LA, they worked for the same law firm in a high stress, long hour environment, and quickly found themselves eating “quick fix, processed, packaged snacks” that they could chow down on in between meetings. But after a while, the grind of the job paired with the processed foods they were eating started to take a toll on their physical health. After researching online, the duo decided to go paleo and clean up what they were putting into their bodies. At first, they felt isolated from the eating occasions in the firm (good-bye 3pm birthday cake), but they persevered. In their free time, they scoured online forums for clean products and recipes that would fit their new lifestyle, but it was hard to find good options. They kept finding products that felt like imitations of what they wanted to eat, falling into what some call the “good for” category – like a cookie that’s good for being gluten-free, for example. As they continued to research, they found tons of people online trying to make the same lifestyle shift who were also disappointed with options. To fulfill her own cravings, Tania took up baking in her free time, experimenting with “cleaner” ingredients to try to make copycat recipes of their favorite indulgent treats. She began introducing new ingredients into her experiments – like tahini, an staple item in both Tania and Jahan’s Middle Eastern upbringings. What started out as a first stab at a tahini-based cookie led to the birth of Brune Kitchen: paleo, vegan, gluten free, and actually delicious soft-baked cookies that set the precedent for clean, sweet snacking.

Tania and Jahan launched Brune Kitchen direct-to-consumer in August 2021, and just a week or two later, had retailers knocking on their door to carry the brand. After the early hits, they got scrappy with sales and started driving around to local stores to pitch the brand, selling it in door-by-door. Brune can now be found in about 30 doors, including California’s retail darling, Erewhon. They’ve launched into a distributor and are now working to scale their retail distribution. As a small business with limited resources and a quickly scaling presence, it takes a lot of (wo) manpower to manage retail locations. They find themselves frequently communicating with retailers, often in person, to ensure that their products are being displayed and stored properly and that they are keeping up with demand. Their distributor has been immensely helpful in this effort, but they have found it best to remain involved as much as possible. They are still learning from their early accounts, but are ready and excited to scale at both a local and national level. Persevering and learning every step of the way has been key for the duo from Brune. They know there is no textbook for CPG, but they rely on other founders, communities like Startup CPG, and trusted peers for invaluable advice – and advise others in the industry to do the same.

WWW.JIMBOS.COM

BUYER PROFILE

JASON MURRELL, JIMBO'S NATURALLY Jason Murrell is Director of Grocery at Jimbo’s Naturally, a premier Organic and Natural Foods Grocer in San Diego, CA. In his role, he is proud to lead the team that is responsible for programming, strategy, product assortment, merchandising and financial performance for the Dry Grocery and Perishable Departments for the 4-Store Chain

WWW.JIMBOS.COM

Startup CPG WHAT SETS JIMBO’S APART FROM OTHER GROCERS? (ANYTHING FROM VARIETY TO MERCHANDISING TO CONSUMER EXPERIENCE) Jason Murrell Our teams set us apart

from every other grocer, there is absolutely nowhere else that you can get the level of service, dedication and care that our teams give each and every day. We also have a very strict ingredients standard that ensures we are putting truly amazing, innovative, industry driving products on our shelves. There are so many brands that have products that we sadly have to say no to, however we always leave the door open to them for if/when they desire to become compliant to our strict standards. When you shop at Jimbo’s, you are getting to shop at a store where you don’t have to worry about what is on the shelf, you are shopping a very carefully curated selection of some of the best products available, and it is always changing and improving.

SCPG HOW DO YOU DECIDE TO BRING IN AN EMERGING BRAND TO YOUR ASSORTMENT? / HOW DOES AN EMERGING BRAND KNOW WHEN THEY’RE READY TO PITCH TO YOU? JM First and foremost, products need

to meet our ingredients standards, and sometimes, beyond that as we continue to drive for cleaner and higher quality ingredients in specific categories. If there are similar products with all-organic ingredients, the minimum expectation becomes all-organic. We then look at how the product will drive the category -- and even the industry -- forward, how it has innovated and solved a unique problem for customers. The ethos and culture of the brand also plays heavily on whether or not a partnership will be successful. A brand will know to pitch to us when they know that they have a complete package, ready for retail, and ready to set a new standard for the industry.

SCPG WHAT SETS A BRAND APART IN A PITCH? WHAT’S A PITCHING NO-NO? JM Being an authentic, honest, real per-

son is what makes the difference. Passion, love even, for their product that shines

through in every interaction. You don’t have to have insanely high energy, you just need to love what you have created and believe in it, because that love will come through to us and will be part of the story that we will tell our customers. That connection is what sells a product and gets customers to keep coming back. We also love hearing about sustainability efforts that the brands are taking part in and that factors in when we are determining if the product and brand aligns with our brand. Nothing is off limits and we are always humbled by brands that present to us, even if it means that ultimately it will not be a proper fit. Just be honest and make sure you truly are passionate about what you’ve created. Though not necessarily a “no-no” we aren’t huge fans of “cold-calls” as we find that the resources are better spent submitting products via our established New Vendor Submission system.

SCPG WHAT ARE YOUR MOST COMMON CONCERNS WHEN BRINGING ON A NEW BRAND? JM We truly just want to be a support

system for the new brands and we want to ensure that every brand we bring in will be a true partnership. We want to be sure that scaling is considered and that proper distribution, whether direct or through a distributor is established. Nothing is worse than bringing an awesome new product on board and not being able to have product available consistently for our customers to enjoy.

SCPG WHAT VELOCITY EXPECTATIONS DO YOU HAVE FOR EMERGING BRANDS WHEN COMPARED TO ESTABLISHED BRANDS? JM This is specific to the category that

the product would be in, but overall, we are looking for an average of 1/2 case per SKU per week per store within the first 30 days of introduction. With promotions and demos, along with active participation in our partnership we expect that to triple or quadruple within 6 months of introduction. Again, this is dependent on the category, but on average, these are our expectations for new brands. This is a relationship, though, and when we see that a

brand is struggling, the participation from both sides is increased and we always do what we can to support the brands and ensure success on both sides.

SCPG ARE THERE CATEGORIES WHERE YOU’RE MORE LIKELY TO TAKE A RISK ON EMERGING BRANDS? JM Yes, any categories that have been

steady or even in a slight decline -- we love introducing innovative ideas to shake up the mix. Also, across all categories, any brand that is completely different, doing something that no one has done before, whether it be with better-for-you ingredients, or introducing a previously under-utilized or newly discovered ingredient. We love getting behind these products. We also love our local businesses and want to support with product placement, as long as the product and brand fits in with what we are trying to accomplish at Jimbo’s.

SCPG HOW SHOULD EMERGING BRANDS THINK ABOUT PRICING? JM For us, it is a consideration, but not

as a detriment. If a product costs more to produce, it is typically with very good reason and we will make every attempt to shout out what those reasons are, and customers will be willing to pay it, knowing they are getting quality ingredients and that they are supporting emerging brands that help drive our mission. We typically look to establish a regular retail based off the cost, then once the product is introduced and established in our sets, we then work for promotions, demos, marketing, etc. to support the brand and speak to the qualities of the product. The pricing becomes less of an obstacle when this approach is taken and also creates trial and gains repeat customers.

SCPG SOME EMERGING BRANDS AT JIMBO’S TO LOOK OUT FOR? JM There are so many brands we are

really excited to bring on. Some brands that we are really pumped to introduce in our stores would be; Madley Hadley (coconut bacon), Gear Hugger (alternative household lubricant), and lastly, Miso Good (organic miso broth concentrates and miso-based sauces).

WWW.STARTUPCPG.COM

By Andy Kurtts

THE STARTUP CPG

microgrant PROGRAM

tartup CPG’s mission is all about giving small food & beverage startups access to resources, information, and a network to help them scale. And since its inception, Startup CPG has made part of that mission to give back to communities through the Revenue Grant Program. This quarterly program offers the opportunity for brands to donate product to a local food bank, but at full revenue. While sales of food and beverage grew $12B vs prior year, we are all too familiar with the challenges for small brands starting up - distributors focused on existing brands, buyers hesitating on resets, and supply chain issues that can freeze out small brands, so it is exciting to help brands in our community with these microgrants, while also helping the community at large. This past Spring, the Startup CPG Microgrant program awarded 5 microgrants to founders from our community, delivered nearly 1500 servings to Food Bank for Monterey County, and provided help to at least a few brands who have been adversely impacted by COVID. The 5 microgrants were awarded to Startup CPG brands from a variety of categories:

Winner 1 Kekoa Foods is the first organic baby food with herbs, roots, and spices, helping the next generation of parents create healthier eaters from Day 1 “I resigned from a 20-year career in January 2020 to dedicate myself fully to launching our business. COVID hit and our co-packer stopped returning calls. We moved production from east to west coast then our pouch manufacturer horribly underdelivered citing labor shortages. January 2022 we’re finally live on Amazon.” https://www.kekoafoods.com/

Daniel P. Auld, PhD Co-founder & President Education & Research

Winner 2 Piedmont Pennies is a handcrafted snack company whose goal is to help the world “Stay Cheesin,” one snack at a time “Our commercial kitchen in Chapel Hill, NC closed for a month during our busiest season due to COVID. We had over 300 orders to fulfill in one month, but weren’t able to find space. We pivoted, opened our boundaries, found a new kitchen in

Charlotte, NC, and hired more help. Also, we were not able to attend any wholesale trade shows due to COVID, so we leveraged social media and sent individual emails to retailers and delivered samples all across NC to save on shipping. COVID has made entering food CPG difficult, but a fun challenge, made better by communities like Startup CPG.”

Becca Jordan Wright CEO, Head Penny Pincher

Winner 3 Chedz is an all-natural baked cheese snack that is keto, diabetic and gluten-free friendly that is loved by kids and adults “Covid has made our sales very sporadic and new sales have been challenging. Many of our retailers were shut down periodically during Covid which hurt our sales. We pivoted into launching cookies for private branding and that has helped keep us afloat. However, the rising inflation is really impacting our margins.”

Susan Hall, Hall Brands LLC CHEDZ

Winner 4 Founded by a pastry chef, Nana Joes Granola makes

WWW.STARTUPCPG.COM

kekoafoods

piedmontpennies

Newark, New Jersey, USA

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chedzsnacks

Charlotte, NC

Portland, Oregon

7.002 likes

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14 hours ago

1.247 likes

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organic, gluten-free granola by hand and believes in providing great manufacturing jobs right in San Francisco

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nanajoesgranola

overnightoats

San Francisco, USA

New York City, USA

“Our cost of goods are up 52% in the last two years - here’s our feature in the SF Chronicle! We also lost several food service accounts. It’s forced us to shift focus to DTC, but the rising freight costs make it difficult to keep our margins to cover our overhead.” Tali Perelman, Marketing

Winner 5 Every bag of ONO has 20g of protein, to keep you fueled. Our base ingredients are organic oats, chia seeds, flax seeds and lions mane mushroom for a fully balanced meal

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“We launched mid-pandemic so our entire business model and strategy has been curated to go with the flow of the pandemic, starting off with really high costs for ingredients, supply chain issues, having to launch DTC only... I could go on haha. But it’s been an awesome journey nonetheless.”

Nilou Shahryari, Founder Overnight Oats

WWW.SHOPCONFUSION.COM

#COMMUNITY_LOS_ANGELES BRAND FEATURE

CONFUSION SNACKS 38

WWW.SHOPCONFUSION.COM

adit Patel, founder of Confusion Snacks, is a child of the Indian diaspora – who “grew up confused.” Growing up, Patel lived at the intersection of his Indian roots and American culture. “What began as confusion between my Indian and American identities eventually blossomed into a unique fusion of the two cultures,” he says. “Whether it’s accenting my western-influenced palette with traditional Indian spices or shuffling between Bollywood music and American pop, I found ways to preserve an authentic connection to my immigrant roots while embracing the cultural influences of growing up in America.” Patel founded Confusion to celebrate that fusion. “The market today for ethnic food and beverages is polarizing. The options out there are either too Indian – unhealthy snacks and distant flavors – or too westernized – authentic Indian flavors stripped down in favor to appease consumer palates.” The fusion market didn’t exist. Patel was looking for a snack that felt like a representation of himself: not 100% American, not 100% Indian, but somewhere in the middle. “That confusion is where the fun really starts.” Confusion brings Patel’s identity to the snack aisle with unique bites that fuse bold Indian and American flavors. Their three SKUs are Black Truffle Masala Popcorn, Mint Chaat Popcorn and Chili Chaat Popcorn. Patel is grateful for the LA Startup CPG and the unconditional support he’s received from fellow community members. “There’s a strong comradery and acknowledgement shared around the hustle and challenges that come with building a successful brand, which is both humbling and motivating. When you’re launching a CPG brand, it’s easy to feel like you’re on an island alone — this community has reminded me that there’s a family of amazing people from all walks of life on that island with me.”

Marketing services for startups at prices anyone can afford. The only catch? No Revisions. Copywriting starting at $125 TikTok videos starting at $200 Brand photography starting at $600 Full social media management starting at $2k

The Spotlight Spring '22 - Startup CPG

Articles inside

The Startup CPG Microgrant Program

Building Mosi: The Brand Reinventing the Tea Experience

Editor's Letter

Buyer Profile: Jason Murrell, Jimbo’s Naturally

Behind Brune Kitchen: From Lawyer

LA Community Feature: Confusion Snacks

Web3 + NFTs in Emerging CPG

Buyer Profile: Rich Gillmore, Gelson’s

Distribution 101: Understanding Foodservice

Managing Distributors: Watchouts + Tips

Using Data in Retail Pitches with NielsenIQ

Category Manager Profile: Cas Relucio

Buyer Profile: Thuy Nguyen, Good Eggs

Using Consumer Insights to Drive Retail Strategy with Social Nature