🌾 SUAHN HUR // BARI CO-FOUNDER

24:34Suahn Hur:Yeah, absolutely. And it's not just like, oh, like I want my kids to like more diverse things. It actually has scientifically proven correlation to lifelong health because more diverse textures and ingredients can stimulate your baby's brain. So it actually helps with cognitive development growth as well. And of course, healthier eating habits has implied ties with the way you eat and other lifestyle diseases or chronic diseases that you may develop later down the road. So it really is setting them up for lifelong health from the first step onwards. I think another thing I really have been interested in about your product line is that you're introducing tea for kids, which again, this is like just chalk it up to my lack of education.

25:17education, but that is like such a cool, I don't think I've seen a kid focused tea product anywhere ever other than maybe like sweet boba. Um, but, uh, but like, tell me a little bit more about what brought you to wanting to productize that, um, maybe how your customers have responded. I find it completely awesome. Um, and, uh, my, my children love tea, but I'm always looking for

25:43Suahn Hur:something that's not caffeinated for them but that has kind of these interesting kind of savory tea flavors and that's just not like a you know a chamomile or a mint or something that's purely herbal yeah um but tea is like a very interesting thing because when you think of tea i think most people think of leafy teas which is associated caffeine and then you've got the herbal like fruity teas that grew a lot in the western hemisphere there is a subclass of tea i would say that it's particularly enjoyed in Korea and some Japanese cultures where it's not leafy it's not like fruit or dried herbs but like true just roasted grains and that's so seeped in water to give it more flavor and a lot of households and restaurants you go to they serve them just chilled as a water substitute like on the go and if you go to convenience stores in Korea we don't have a lot of sugary drinks but a lot of options for not like naturally unsweetened like flavored watered with the roasted corn tea, corn silk, other like beans, dried roasted beans, sort of those things.

26:45And the diversity of those flavored caffeine-free tea is so wide.

26:50Suahn Hur:Like there was, I think, like 20 varieties I can think on top of my head. And while we were developing our products for the U.S. market, obviously we've noticed the lack of Asian flavors in the pouches and ready-to-eat meal formats. But in the beverages, there's so many juices and dairy-filled smoothies and whatnot. But I think that that's a problem of introducing too much sugar up front in their life, which we cared a lot about in terms of building a lifelong health from the get go. So we want to incorporate that tea culture, which is associated with caffeine, but we introduce it in caffeine free baby friendly format.

27:28Suahn Hur:So that's how we came up with the teas. and I think it takes a little more consumer education because as you said it's associated with caffeine and it takes a couple more explanation for people to understand like is it safe for babies but I think once you hear it when we bring it to buyers and they sample it they're like oh yeah I don't buy my kids juices because they're even naturally high in sugar but this is exactly you know what I'm looking for what I would love to give them that's still interesting more interesting than water, but it's not sugary and something they can't have too much of.

28:01Suahn Hur:So it's just a great way to stay hydrated with a little bit more fun and some functional benefit also, given that there are actual grains and beans and other vegetables that are dried and roasted. Tell me a little bit about the product development process. I'm happy to linger on tea or whichever of your products has been the most interesting for you to develop. you start with supply chain what happens next yeah so I think we narrowed down the product categories that we want to go into so we first started out with the very pure rice porridges that are currently available on our Amazon plus the teas because I think they're just easier to introduce as Asian profile like products and then from there we moved on to a little more complex the pouch lines like ready to eat meal formats that are just along the way actually so we will be launching four new flavors in August that include kabocha porridge we got the seaweed soup the shrimp porridge yeah we just wanted to experiment with what kind of Asian iconic Asian dishes could be translated into baby friendly format and textures and flavors so So at first, you know, quite frankly, we just sat down one day.

29:15Suahn Hur:We're like, let's list out our favorite dishes, right? That could be translated to porridge format because that's the texture that we would eventually go for. Porridge itself is a category of food on its own in Korea, where it's for people that are sick. It's for when you can't really digest much, but you want to get nutrition-dense food. So naturally, we just thought about like what flavors of porridge we love, what could be translated into porridge. So we started listing out the dishes and then together with our manufacturer plus our team at the food and nutrition department at Southern National University, what are ingredients that we should consider?

29:53Suahn Hur:What are optimal for the stages that we're solving for? And can we achieve this texture? So it was a three-way street of what the market could work with, what our manufacturer lines could work with, and then nutritionally and scientifically, what would be optimal for babies to have at that stage that we're targeting to bring this to. So it was months long of going back with the samples, with the recipe combinations, and just taste testing ourselves with our babies, nieces, family friends, and their babies. What actually could work and babies actually like to eat? And are there parts of the, so there's the ingredients piece of the supply chain, and then of course there's like packaging and fill and manufacturers.

30:36manufacturers and tell us a little bit about that part of the product development process with ideating packaging and figuring out, you know, pouches as a format are great because they're sort of resolved, right? Like if you want to make something that comes in a pouch, there's a reliable supply chain for that and you don't have to bear the cost of innovating that format. You can focus on innovating basically the design and, you know, and the contents of it. But was there something about the product design process of maybe what that pouch looks like or what were you communicating on it that you guys spent a little bit of extra time on?

31:15Suahn Hur:Yeah, I'm going to talk about something that we focused on plus a problem that we faced that was very unique to us. So first, I think on the packaging material, packaging format wise, I think the pouches were a no brainer option for us given it's such a popular format in the US. And if you're introducing so many things to the market. We want some of the things to remain familiar and then some of the things to be new. So since our flavors are so new, textures are new, we want to have the pouches to be obviously the way we would go about. We consider other options like those vacuum sealed cups where you open and eat right away.

31:48Suahn Hur:And it's kind of like the instant rice format if you are familiar with those. But I think the pouches were a no-brainer given what is popular and arrives well with our consumers. But in terms of the material, right? So we go through a retort process where, you know, after the pouches are filled and sealed, they go through heat and pressure. And we noticed that, you know, talking to different manufacturers and packaging, like the existing baby pouches have a lot of aluminum lining in them for obvious reasons like shelf life extension and obviously saving them inventory costs and whatnot. But we also know that what brands usually recommend to consumers is you can heat them up, you can put them in the microwave, although they're aluminum lined, which is a big safety problem that we discovered that was not being addressed in the market.

32:35Suahn Hur:Because any level of metal in the packaging could seep into the actual food. And we didn't want to compromise any of that, given that we started with the mission to solve, obviously, food safety. so we had to do a bit more research into what kind of material could work in a pouch format but that still could be deemed as foil-free metal-free so it is a costlier option that we have to go for and mind you as a startup choosing a pricey option is not an easy choice but I think we had to just go back to the mission that we started with the problem that we want to solve and the number and value even beyond the whole cultural diversity in Asian heritage is food safety for us yeah and And so we got the samples, we felt them, we tested in the microwave, we put food in them, and we did all of the testing after using different materials to see what actually comes out in the final food after microwaving, how consumers would actually use our product to make sure that, you know, the final end result is what we were happy with, satisfied with.

33:33So that's one of the options that we had to, one of the choices we intentionally made with our packaging.

33:39Suahn Hur:and that's something that also resonates really well with our retail buyers that oh you should add that call out in the packaging because that is truly something different from potentially other pouches that may be using aluminum lining and that is one additional you know design choice we did make now on the problem side right so these pouches at least like the say the material and the sizing was not entirely custom. So it wasn't like we had to do millions of orders or anything. So on the volume side, it was fairly okay. But then there was the war going on in the Middle East that blocked the oil supply chain.

34:21Suahn Hur:And that bumped us our packaging order timing as well as the pricing shock for almost three to four months. So that was a huge headache for us because we want to get the product out, the sample out to bring to buyers and also bring to the show. But then they were suddenly facing like 30, 40 % shock in price, as well as two months delay to even get the raw material to make the pouches. So that was another chaos for us in terms of how are we navigating our product launches and the communication we have with buyers? How would we secure this for future production runs? Because this kind of shock obviously could happen any time again.

35:01Suahn Hur:And so I think we just have a calibrated mind of like, what is like the maximum delay? What are the shocks? What is implication of these kind of supply shocks on our future supply chain? So thankfully, we are not in stores yet. So this doesn't affect us too badly. It just delayed our product lunch timing. But when we do go into more stable, like demand and more retail stores, this kind of helped us ground us in like, wow, this is the kind of things that could go wrong that we don't know. foresee particularly. So I think it helped us ground us in the worst end of the spectrum and the chaos of commerce.

35:38Suahn Hur:Yeah. I love that you're saying that. And then also I'm being reminded of your background in consulting and your sister's quantitative background. And I'm like, you know, if there's anyone who can model this problem in the product, it's probably a magazine. the other way. Yeah, that helped. We have a bunch of models running in the background on forecasting and how frequently we'll have to order, how far in advance we have to plan for things. So I think going through these trial and error and random supply shocks, I think only help us have a more robust space for when we do expand further down the road, to be prepared for that, I think.

36:18Suahn Hur:And it sets us a more realistic expectation of what could go wrong. So in the end, it was helpful, but in the moment we're like oh no three months three months feels like infinity doesn't it yeah it really does yeah um how much did you how much experience experience did you have with demand planning and forecasting before you had to do it for your own business um i think honestly in my consulting background as well as the experience in png i i think um it was it definitely wasn't enough to run my own business to be quite honest with you i think it's a different monster because even within different category i would even within the smcpg or retail different categories move so differently and so learning how the baby market moves grounding in the velocity expectations and the production cycles like product development cycles like that was honestly kind of learning everything on new i had some knowledge on other consumer products like non-food But I think for me, doing food from scratch was like learning.

37:21Suahn Hur:It was a new job, I think. But I was equipped with the toolkit and like frameworks, but I had to do a lot of trial and error from like doing our own production runs and just scoping more data from the baby food market through even buying data sets or getting data sets from an industry friend I made, right? Like those things all feed into better calibrating our internal benchmarks and models. It's such a killer capability to, you know, I know so many founders that are very creatively oriented. And if there was one thing I could have wished for my former self as a young operator, or share with, you know, future operators or about to be operators or founders, it's like, just get comfortable with a little bit of modeling.

38:07because even if you do it the level of arithmetic and napkin math, which is acceptable, you know, like it helps you make such better calibrated decisions about the business. And it shouldn't be something that is like an afterthought.

38:20Suahn Hur:Right. Yeah. Exactly. Yeah. We had this is like kind of confidential, but we are going into some national chains next year. Yeah. And thank you so much. and even with that before preparing for the meeting we got like a month notice of oh this is your line review and even for that we had to look up even quick back of the envelope map of how many stores could we target how many products we go into what would be our velocity and then that already spits out like a range of number that we need to commit to in terms of our manufacturing costs and then additionally trade funds promo funds and then probably other external and investment, we're like, oh, wow, this is a huge deal.

39:01Suahn Hur:That kind of sense checking numbers was something me and my sister are both very used to. So I think that honestly, even as an early brand, gave a lot of our partners credibility because we have that kind of muscle of having those numbers in our head, calculating that in advance as opposed to just be like brand driven and only just creative driven for sure. How deep into the supply chain management piece of it do you get? You are buying your raw materials direct from the producer, right? Or is your co-man helping out with that part of it? So we sort some of it ourselves, like specifically rice as our core ingredient.

39:40Suahn Hur:We struck a deal with the Korean government like directly. So we get it at a certain rate, a certain volume. Yeah, it's like, oh, government deal, love it. I mean, as I said, like Korean government, Korean economy is so rooted in exports. So I think once, even though we are a very young startup, because we have some traction, very strong traction going to national and have benchmarks like Amazon's best-selling SKUs, all of those helped us build the credibility for like, okay, these girls can get some rice at good price. so yeah we struck a deal thankfully um and then so that helps us manage some of our actual cogs with our manufacturer better because we kind of help them um in but big part of their production um ingredient sourcing and so we're very like deeply integrated with the supply chain both on the ingredients as well as working with commands on the other ingredient level too and how do you model how do you model that just like broad broad strokes but if someone's sort of looking at this and maybe a little bit intimidated or just curious, like well-oriented, but curious about how they can kind of model this multifaceted supply chain and, you know, taking raw materials and turning them into a finished good or a component of manufacturing.

40:55Is there like a go-to Excel model that you use or another tool that you found like particularly helpful in kind of going from zero to one on that piece of it?

41:05Suahn Hur:Yeah, I think starting out, Excel is your best friend I think I think spending like money on software before you know what the processes are could be even more complicating to you than like trying out on a building on an Excel and nowadays we use AI aggressively in our company and so using our tools as our friend to back test or like stress it with different variables on like if this ingredient changes by this much like how would that what would that mean for our margins for like actual cogs etc so I think just for me particularly, I just like to have visibility on everything that goes into a product, everything from ingredient level that feeds into the actual cogs of the product.

41:45Suahn Hur:And then for us, logistics is a big piece because we not only have the US domestic transportation, but also the ocean freight and the tariffs and all of those components. So I like to keep a very long Excel of per product, what are the line items that feed into the cost? And then also what is the percentage of our margin that is going into each of the components, like the actual product versus the packaging versus the terrace versus the logistics, ocean freight, all of those cost items just need to be visible, I think. And if something flags higher than other product groups, then you start to wonder, is there a way to bring our packaging proportion down for this product?

42:26Suahn Hur:You just need to understand why the numbers are that way by either figuring out what your manufacturers, like understanding the cost breakdown. And I'm a big believer of you need to know what you don't know in order to succeed versus knowing everything. So I think that's kind of what I do with my limited experience in CPG so far. Just having everything in one place and flagging the irregularities of cost of products is really great to manage your cost and understand your cost. I feel like land the cost of goods is one of those things where like when you get to a place where you can resolve that number that you're confident in, it's such a signal for like okay i've got kind of i've got control of my inputs yes i can also control a lot of the outputs from that and like make decisions around like what my cost to a retailer should be what my lowest acceptable margin is what my you know what my higher optimal margin is and all of that and um it's like the i don't know if it's an unsung hero um it feels very calm when you're like i got it all i got it all mapped you know i got it in one place That's a good place to be before you really scale.

43:30Suahn Hur:You want to know what your numbers are and what are the leverage you can pull to push the numbers around. And for us, I don't think we would have done that this quickly had we not had a retail meeting set up from such early stage. But when we were just doing D2C in the very beginning of our launch, we were just kind of like, yay, we're selling. But then like, oh, we're going to retail. We actually need to get down and understand our cost. You've got to get your stuff together. Exactly, because you have to know what price you're going to give them, what is the acceptable, as you said, price that you're willing to go down and negotiate.

44:02Suahn Hur:And then also, we need to fix our prices because the oil shock, things like that, we can't have a lot of surprises when we go into retail. So we even had a conversation with our packaging and our actual food manufacturers on what is the price they're comfortable locking in as the maximum for the next year, next year and a half. So we were able to bring that actually to our retailer, which I think was a big impressive piece for them as a once again startup to have that level of thinking and foresight into what kind of stability we can provide and bring to the table. And, you know, I think so often the idea of negotiating with a retail buyer inherits a bunch of things that I think we're either like told or just we learn through synthesis about negotiation in general, which is that like information asymmetry is the name of the game.

44:55And you have to hide things from each other in order to get what you want. And I feel like the total opposite is true in the retail conversation. Like the more they can know my margin and I can know their targets, the better we can kind of squeeze each other or collaborate. Because at some point, if they know what my, you know, landed cost of goods, if I feel comfortable sharing or disclosing that information, which is I'm not saying that you need to be comfortable doing that. But we were. And then we'd start to say, look, you know, we're making 17 cents here. As much as I want to give you the cost break that you're asking for, like, I don't have the margin for it.

45:35But what I can do is if you're willing to place an order for 10 ,000 units, I can go back to my supplier and negotiate. And that's where growth came from. And it was so awesome because the second that I got comfortable with the type of negotiation where I wasn't like imposing that information asymmetry on myself, the better, I mean, my business grew because I like I got the 10 ,000 unit. They were like, okay, well, we could do that. Then we went back to the supplier and we made 23 cents. Oh my gosh, yeah, absolutely.

46:06Suahn Hur:Yeah, I think I learned that it was always told to me in consulting and big corporate that if you have to win together with your supply chain, your partner, your selling partners, your vendors, you have to succeed together to grow. I was always told that, but I don't think I truly felt it on my skin until I entered my own business. Because just like you mentioned, being more transparent about volume expectations, what can we do together if we go to a new retailer? What could you possibly bring to the table? What's the lowest you could go with us to grow this volume? I mean, that was a very candid conversation that I think I wasn't expecting to have.

46:43Suahn Hur:but then when we did that it actually unlocked as you said a lot more room for margin cushion and like also growth potential because now we could push up more volume at a more comfortable like cash flow so yeah I think the information symmetry is truly the win yeah I see what you did there yeah the other the other place I felt that always created a lot of you know just business horsepower for us was back to the cost of goods conversation. Like I always kept a breakdown and I would always ask our suppliers to give us a breakdown of like each of the components of cost, which I think in CPG is maybe more common than in like consumer durables.

47:27But if I had, you know, a widget and it's packaging, sometimes my supplier would just be like, okay, that's a buck 50. But wait, what component of cost is that packaging itself? Because then I can have the conversation of, well, actually out of that buck 50, like if 27 cents is going to the packaging, like maybe I need to use a different substrate or maybe I need to plan for a different kind of ink or a different print process or whatever it is. But that also allowed me to kind of, you know, engineer up flexibly if I wanted to have like, well, for this product, I want to create a more premium buying experience because I have more overall, you know, pricing power on it.

48:06And so So I feel like creating a relationship where you are asking your suppliers to meet you where you want to be, but also maybe giving them the framework for how you think about your, you know, total cost of goods and how your billed material stacks up allows you to make those very incremental, like teeny tiny, like micro adjustment decisions around what is going into the product. So that like, like if you need to get the metal lining out of the out of the plastic, that's going to like increase your cost. If they only ever just gave you the final cost of the thing, you wouldn't be able to make that calculus as knowledgeably.

48:45Suahn Hur:Yeah, absolutely. I think in the in the beginning of our stages, I think we were a little careful about sharing our sort of goals too deeply. It felt like we were spilling some trade secrets and whatnot. But like at the end of the day, like if they succeed, we succeed and vice versa. So I think we were also growing more transparently as we were talking to different suppliers for a longer period. Like, hey, we need to leave X percent margin when we go to retail. That leaves us with this much squeeze. Is there any way you can work around it? That kind of conversation, I think we were more starting to be comfortable to start having the longer we were talking with them, these different manufacturers.

49:22Suahn Hur:So I completely, completely agree with your point. Information symmetry for the win. yes that's uh that's the takeaway that's the subtitle of this episode the title of the episode transparency even to consumers just let them know i mean there are brands who do that right like their whole thing is like this is our literal margin to you this is why we bring value so like it is you know when done right the right right choice yeah yeah thank you for being so generous with your knowledge and allowing us to have a little bit more symmetry with the information and get some of your head. No, I love sharing my knowledge.

49:57I love learning about the brand. And I wish I had little ones, but I have nieces and nephews. So I will be evangelizing in our household. And I can only assume the same of a bunch of people listening. Thank you again.

50:10Suahn Hur:Thank you so much, Sam. It was so nice talking to you. And thanks for having me. Thank you. Take care. Bye. Thanks for joining us for another episode of Commerce is Chaos. If you're listening, I have a feeling you know just how much good at leaving a five-star review can do for a team. Drop us a review on Apple Podcasts and subscribe to Commerce's Chaos wherever you get your podcasts. Don't forget to subscribe to our sub stack, also called Commerce's Chaos, for more good stuff and actionable tools to build your business.