How Mergers Can Help Brands Scale and Survive

0:00How can brands use April Fool's jokes to build their communities? What is the FDA up to regarding the definition of healthy and how emerging brands are partnering up in order to see the benefits of scale? Find out this week on the NOSH podcast.

0:24Hi everyone, I'm your host Carol Ortenberg. On the NOSH podcast, we go inside the business of natural, organic, sustainable, and healthy food. Today, the team discusses a Super Mario mushroom mashup, April Fool's jokes, and movement by the FDA on the definition of healthy. Then we hear from Jeff Triptichin about how merging two grass-fed meat companies is important to surviving in a competitive market. Joining us are reporters, Adrienne DeLuca. Good morning, Carol. And Lucas Southard. Happy day, everyone. And of course, our editor-in-chief, Jeff Kleinman. Great to be here, Carol. Guys, last week was April Fool's.

1:04Did you fall for any pranks by CPG brands? I really liked Super Guts prebiotic toilet paper, which I thought gave a nice nod to their use case. I was laughing at that one too, Carol. And the Chomps and Chubby collab also definitely tripped me up. I think their whole marketing strategy around it on Instagram, they were really hyping it up like a new product. Like, oh, they're just moving from sweet into savory. I could see this. thinking, you know, maybe they forgot about April Fool's and they're actually just launching a new product. So that one totally, totally got me. For those who haven't seen it, it was a chubby snacks cloud-shaped sandwich filled with cut-up Chomps meat sticks.

1:44And I thought the same thing, but then I was like, is this upcycling using extra stick bits? But then I realized that cutting all those sticks into tiny pieces just sounded like too much work and it had to be April fools i think next year brands instead of like actually trying to fool us they should like you know like a reverse april fools joke and actually launch the product and be like no we actually did it that's the joke that's what i want to see unfortunately some brands actually do that the other 364 days of the year and call it their their core product you know what i loved was the the fly-by-jing Sichuan pepper spray, which I would buy if there was a burglar in my house that I might want to eat and use as a numbing agent.

2:36Or you could just spray it on your food too. I mean, that would work. It could actually be a viable product to use the flavor enhancer. You know who would hate that is dogs. If you were to spray that on shoes, you didn't want your dog to go after. That's actually a legitimate product idea. I think that that actually could work. And I hope Fly By Gin is actually listening because it might be on something. With the Fly By Gin pepper spray, I just kept thinking like, what if someone uses it as breath spray? Yeah. I mean, that would also work if you're into having a spicy mouth, I guess. Or accidentally pepper spraying yourself.

3:19Yeah. Or yeah. Well, hey, I did that as a kid. I thought my aunt had her like pepper spray on her like bedside table I think for some reason I thought it was perfume so I sprayed it in the air and then I like stuck my face into it and boy was I disappointed by that that was uh it was like an hour of flushing my eyes out that that's a prized southern family story it is actually it's it's it's been told innumerably at dinners I have to say it was really nice to see brands not just doing the, we took our product and turned it into a water or an ice cream joke. Personally, I think if you're not going to be creative, just skip it.

3:58You don't have to have an April Fool's joke. But if you do, a clever joke can be a good marketing tool to create an inside kind of nudge, nudge, wink, wink with your loyal fans and make them feel like they're part of your brand family for understanding it. A great example I saw was Bowl Cut. They're an Asian inspired condiment line that takes family recipes from their, I believe it's their parents' Chinese food restaurant and tweaks them, bringing together Chinese and American cultures. And so they released a sauce called First Generation Tears. And if you know the backstory of the brand or you are a first generation immigrant, the joke just really clicks, I think.

4:41someone tweeted that if you manage to get more than a hundred thousand likes you should have to make the damn product i agree agree because i'm really upset too that sooms tahini uh latte rdd is is not getting made and i would give it a hundred likes from fake accounts if it meant it was going to get made. So everyone take your wildest like brand line extension idea and go launch it on April Fool's Day. It's perfect testing ground. I'm going to go back to my previous podcast idea, the hydration electrolyte coolicle. It's coming. I'm going to announce it for April Fool's as a co-brand with Liquid IV and Cleveland Kitchen.

5:30It's coming to market next year. looking forward to the launch carol be sure to include you in a new product gallery in addition to april fool's launches there were some brands with notable new products last week jeff i know there was one that caught your attention yeah i i mean so trough is doing something in in line with the super mario movie because of course uh mushrooms and truffles are this the you know truffles are mushrooms and the super mario brothers of course are dependent on mushrooms for their supply unfortunately like i i'm informed by by people in the know i.e my son no one is looking forward to the casting of chris pratt and charlie day as mario and luigi and a lot of the reviews around this movie have been pretty crappy, and it does offer the Truff guys the opportunity to say April Fool because they may want to.

6:38You think they're going to pull the product if the movie doesn't do well is what you're saying? I think it's probably an LTO anyway. Jeff, you're right. It is an LTO. I talked to them at Expo West about it. I have to say it's a cool unboxing experience and does not feature Chris Pratt on the packaging. As someone who grew up on Nintendo and was an avid player of Mario, I got to say I am equally not as excited to watch this movie. Maybe I'm really putting my age out there, but I remember the live action version of Mario that came out in the 90s, which was equally as bad. But I feel like it has now come around and now it might be good again because it's so bad.

7:20So maybe they should have released their trough sauce in conjunction with or, you know, posting the pictures from the original Super Mario movie. Yeah. I mean, if you could get a license from the estate of Dennis Hopper for trough sauce, I think that he was a very creepy bad guy in that movie. And that movie was very strange and had really nothing to do with Super Mario Brothers. but it was an interesting experiment in live action video game movies. So what I think we're learning is that Lucas and Jeff are not going to be joining R &D teams or marketing teams anytime soon. I think that's what I'm picking up here.

8:01I think that's clear, Carol. Yeah. Creepy guy hot sauce really sounds appealing. As opposed to plumber hot sauce. all right divided team on this one i think we'll have to save the debate for later but adrian switching total gears um i know you love a good fda update and there was some news coming out of the agency this week what did they announce yeah this is just as fun as nintendo hot sauce i swear the fda it is for some of us it is can you hear the excitement in my voice yeah This is where the wonks on the podcast really go to town. The FDA released their draft guidance for voluntary dietary nutrition statements and graphics.

8:52That has a catchy name. Oh, yeah. It flows right off the tongue. I'm on the edge of my seat. I'm so excited right now. Hold your applause till the end, please. So the FDA released their voluntary front-of-pack dietary nutrition statement graphic draft guidance, which is meant to differentiate between front-of-pack health claims and instead help consumers make better dietary pattern choices. so products with these graphics or statements can exceed certain amounts of saturated fat sodium and added sugars but the real focus is to bring light to foods that have meaningful amounts of said food in them so for example one of the one of the images they put alongside this guidance was you know make half your grains whole grains which was on a cracker package whole grain crackers of course, and eat a variety of vegetables.

9:53That just came on a bag of broccoli, which seems fairly straightforward. But they're hoping that these small call-outs will help Americans become more aware of exactly what's in the food versus what they think's in the food. Because a lot of times we claim it has 10 blueberries and an apple in there, but it might just be the vitamin and mineral content that is being made up for with that claim. I'm really concerned Americans don't know broccoli as a vegetable, though. FDA, I think we need to back up and solve this problem first. I would have loved a little bit more complex examples through the 42 pages of guidance, but those were the best that they provided in the meantime.

10:38It is open for public comment, though, so everyone go out there. So, I mean, from from your perspective, is this because the FDA thinks that food companies are taking advantage of the American consumer by by claiming health, you know, the healthiness of their products? Or is it that the FDA thinks that Americans consumers are not very smart? Yeah, I'm leaning towards the latter. I guess that's what I'm kind of feeling as well. But, you know, I don't want to I don't want to pass judgment. I don't want to make assumptions here. I think the parameters keep changing and they're really over a half blueberry or a small stalk of broccoli.

11:25So much of it is not determined by the agency, but by the courts right now and by the sort of fear of litigation or the ability to believe that they can win litigation. I do like the symbolism aspect of it, though. One of the things that I always thought was most impressive about a brand like Honest Tea was their caffeine counter, which sort of used the equivalent of a cup of coffee, actually, to indicate how much caffeine was in a particular tea variety. So I think people get the symbols. The question is, how clear is it that you're getting all the nutrition of a stalk of broccoli or just the core minerals and vitamins and fiber that might be in that stalk of broccoli?

12:29I think that's what they're trying to figure out currently. And, you know, especially with, like you said, the symbol aspect of this announcement, it does seem like a somewhat low lift way for brands to promote some of these objectives of the Biden administration and the FDA generally, as well as others involved, you know, in this dietary health, hunger, nutrition space. It kind of goes alongside that definition that the FDA released for healthy earlier this year. It's all contributing to the goals of the health hunger and nutrition conference the Biden administration hosted last fall, which they're slowly making some progress on.

13:14But, you know, it's all aimed at reducing this risk of diet related chronic illness. And it seems like they're testing out all different ways to help consumers understand what a healthy diet is. I might be a pessimist, but I just get worried with the logo soup that the front of pack is right now, that some of this is going to get a little buried. And if you're putting it next to a bunch of buzzwords, how does the consumer determine, you know, is this marketing or is this an actual scientific definition when it's right next to a call out like keto? That was something that I was wondering throughout reading this guidance, especially because there wasn't set claims or graphics that they were recommending.

14:01There were a few, but it was very broad and generalized as to like what they're trying to get brands to begin promoting on their front of pack. And it's, you know, contrary to those other nutritional statements, like it has X amount of vitamins or X amount of minerals. It's less health focused and more like diet leaning. I know at the same time, they also put out sort of, I don't, I'm blanking on my FDA terminology, Adrian. So correct me if I'm wrong, not a guidance, just sort of a post advising brands on how they talk about supplement health claims or functional nutrition health claims. And they sort of said, you know, we've let food brands slide on this a little, but we're going to start being much more strict with them.

14:50You're going to have to follow the same rules that supplement producers have when it comes to functional foods. So the two could tie hand in hand, I think, going forward. Lucas, you know, I'm curious to get your take. Why do you think defining some of this is important? You know, what I found was interesting in looking at the redefinition of calling something healthy on on food labels and stuff. It was originally set in 1994. So just in saying that, I mean, we're talking about something that's like, what, 30 years old at this point, almost. a lot has changed in the food industry in those 30 years.

15:29And, you know, I was kind of reading through some of it and they said, you know, under the, so this is, you know, from the document, but they said under the proposed definition, raw whole fruits and vegetables would automatically qualify for healthy claim. Well, that kind of makes sense to me. I mean, I guess it's good to consider that, but then they went on to say that examples of foods that are currently ineligible to bear the healthy claim would be stuff like water, avocados, nuts, seeds, salmon, and some certain types of oils. Like these are all things that we now, and at least as far as I can tell, as a 38 year old man, like I've always considered those things healthy, like water always kind of seemed like a healthy thing to me, avocados.

16:16And then, you know, some of the things that they are now going to, that don't qualify for being healthy would be white bread, highly sweetened yogurt, or highly sweetened cereal. And again, these are, from my point of view, seem like they make sense and were kind of just assumed. But I think actually having some stipulations in how food makers are able to label stuff as healthy would possibly reduce the amount of confusion that consumers have when they go shopping for products. As you said, Lucas, I mean, these things are 30 years old. And I think this is, if I'm not mistaken, there's been a big push to update them, the avocados, oils, salmon, suite of things in terms of fats being healthier.

17:04But we are sort of dealing with trailing science and trailing regulations based on that science when industries push to innovate and innovate in its marketing can lead to claims that are based on trends rather than scientific fact. All these things are marketing versus consensus. And as we know, when money's involved, consensus can be bought. And that's, I think, why we have such slow progress toward real definition on a lot of these topics. But I think to an extent, not allowing certain products to label themselves as healthy is almost more important than the call outs themselves in that I know part of the Biden administration's food goals is nutrition equity.

18:16and I recognize I'm, you know, operating from a place of privilege where I know a high sweetened yogurt is perhaps not the healthiest option. But I recognize there are many consumers who see this messaging every day, have limited food choices because they are in a food desert and, you know, don't necessarily know which way to go. And I do think, Jeff, to your point, some of these marketing terms can make it even more confusing. But, you know, stopping some of the call outs that brands are putting on their packaging could go far. And I think, you know, also what you're saying just now, Jeff, about marketing plays a big role.

18:59I mean, I had a source tell me, you know, not related to any of this FDA news, but when we were talking and he mentioned how like the subset of dark chocolate industry had done a really good job a couple of years ago in convincing consumers that dark chocolate was so much healthier than milk chocolate. And although that's not untrue, it doesn't mean that dark chocolate is necessarily like a fully healthy product or, you know, item that you should be eating. They just kind of were able to utilize the healthier claim of dark chocolate over milk chocolate to boost dark chocolate sales. And I don't think that's like consciously fully taking advantage of consumers, but it's utilizing the claims of healthy in marketing material to at least somewhat trick consumers and boost sales.

19:56Is it a trick though, or is it marketing against a consensus-based benchmark. Well, Adrian, I think what you were saying was that if products exceed certain ingredients like added sugar, you won't be able to make those clams or certain clams anymore. So if you have a dark chocolate bar filled with a ton of sugar, you may no longer be able to say certain things on your front of pack. Definitely. And alongside that, there was this focus, as I said, on like meaningful amounts of that food that they're calling out. So the whole grains, at least, you know, they're hoping half of those crackers will be made from whole grains.

20:37I think the minimum amount is a quarter of the daily value of said food, vitamin, whatever it may be you're calling out that food has to provide, you know, at least a quarter. Well, I think it's time to get to our featured interview and this sets up that conversation nicely as, you know, over in the grass-fed beef space, there's a lot of discussion about claims and what's marketing and what's actually healthier for consumers or more sustainable. Lucas, what are we going to hear about today? I talked to Jeff Tripishin, or Trip as he prefers to be called, who was brought into grass-fed beef company Teton Waters Ranch with the intention of leading it through at least one, but in hopes of a series of mergers of other smaller pastured meat companies.

21:30And he explained how mergers can be a necessary tool to scale in this larger industry and bring products that are maybe somewhat niche into price parity with conventional competitors. So he talked to me, Trip talked to me about how the intention of the merger was to prove that grass-fed meat can eventually become as ubiquitous and in demand among consumers as organic foods is today. Lucas, that sounds really interesting. Let's get to that interview. Hi, I'm here today with Jeff Tripashin. He's the CEO of Grass-Fed Foods. Jeff, how are you doing today? Very good, Lucas. I appreciate the time. Thank you.

22:16Yeah, we're really happy to have you here on the NOSH podcast. You know, Jeff, you've been in the meat business for a long time. I'm sure you've seen a lot of kind of swings of consumer trends in the meat industry over the years. I'm wondering, you know, what you see as the opportunity in a grass-fed meat product, both financially as well as like a global impact scale. When I came to Teton in May, it was with the intention of taking several small grass-fed beef companies, putting them together so that we could really start to prove that this is not a very regional, niche-y type of business. This is something that can be scaled as demand grows, just like organic started as very regional.

23:13And today is coast to coast. There's not a city in this country that doesn't have a reasonable base of demand for things like organic. So it's with the idea that can it be scaled, which addresses, Lucas, one of the two big drawbacks for grass-fed. One is its price. it costs more than commodity or conventional beef. And so as you scale, you become a little more efficient. And so you're able to be able to push price down because nobody wants to pay for inefficiency. You do want to pay for attributes. If I said, this product is going to be organic, everyone would say, well, I expect to pay more for that because you're associating organic with higher costs because it's something you want.

24:10Pasture raised, antibiotic free, any of those types of claims usually have an increase in cost and so an increase in price. And that's fair. and consumers expect that they're smart. What you have to drive out is the fact that you go, well, we're small and so we're inefficient, but we'd like you to pay for that. Consumers shouldn't have to pay for that. So by putting two companies together and soon we'll address a third company or a fourth company so that we can push the inefficiencies aside and just let consumers pay the real value or pay for the real value they're getting. So the reason small companies merge is to become more resilient, de-risk their businesses so that they can survive and try to do some good.

25:08And we're no different than that. We put two meat companies together. Both of them are dedicated to grass-fed beef. One is a fresh domestic company, Sunfed. Teton is a processed products, the hot dogs and sausages and hamburgers. And so together, they're just stronger. They're more resilient to an economy that often is changing. As far as the trend part of it, I think we're at the right moment. I'm biased, obviously, because I bet the balance of my career on this is that consumers across the period of time, be it 10 or 20 years, take that time period. You've seen them take food and instead of having it have just functionality, calories, protein, fuel, and had it become more important than that.

26:06Now it has to, for many, many people, it has to align with their values, things they believe in, and also the opposite, to push back against things they don't believe in. And so we've seen this looking back. The word natural came up with meat around 2000. And then the word organic, and then pasture raised, and crate free. All of those claims had both human health implications, planet health, livestock or animal health, rancher and farmer health. Going back a little bit, but before the merger, when you signed on with Teton Waters, what did you initially see as the struggles to achieving some of those goals that you just laid out to kind of bring in grass-fed meat into a more mainstream kind of consumer appeal?

27:09What happens, Lucas, is I think that as you become more educated in the health, either yours, a family member, younger, older, there are things that challenge people. For childhood obesity in this country is at a near epidemic level. And so what role does food play in that activity and other things? Well, I'm in the food business, so boy, grass-fed can help in that area. And so, gosh, that's better for people to address that issue by feeding, in essence, children products that help push back childhood obesity, which in 80 % of the case turns into type 2 diabetes. If you're older and you have rheumatoid arthritis or some of the other just aging challenges, there are certain products that help.

28:09Grass-fed happens to be one of them. So I look at this as there is an opportunity to use food beyond its basic value of sustenance and fuel and have it start to improve quality of life of certain target groups, consumer groups. and some raise the bar very high. How is the animal raised? How does the animal's quality of life other than one bad day, that's much enhanced when you let them be raised on a pasture in their natural environment at their own pace. And that's what we're talking about here. Do you think that there is more opportunity in a value-added product when it comes to grass-fed meats Is the bread and butter going to be in more of what Teton Waters kind of built its brand on or in that fresh product?

29:07Look at what people buy today. They buy a hamburger, buy a hot dog. You buy things that are, you know, tacos, burritos, breakfast sausages. those things that whether it's grass-fed or conventional those are big businesses those are a lot of business and so i think grass-fed will follow the same relative development as those categories so teton makes hamburgers hot dogs and sausages breakfast dinner sausage so those are easy because those have flavoring systems seasoning it's really when you get the Where you cook it, it doesn't have much of a flavor system. It's just the inherent taste and quality of that meat.

30:04And so that's the one where you have to go, if the genetics and the stress to the animal and the quality of the land is good, that'll be a great steak. If not, especially at the cost of steak, you're going to go, that was a lousy experience. I don't want to spend a lot of money on that. So if you don't have very good quality grass-fed, make hot dogs and sausages. If you have really good quality cattle and land, it's going to be a great eating experience. That's why we acquired SunFed. In arriving at the decision to make the merger with SunFed, and you were kind of just diving into this a little bit.

30:50Was there other ways that Teton Waters could have grown a larger market share without acquiring a different business? Yes. Yeah. There's lots of ways people can engineer a business to be successful. Fortunately or unfortunately, the ownership of Teton were some people that wanted to prove something, which is what attracted me, is they said, look, we believe that grass-fed cattle improved the land and regenerative agriculture is central to their investment thesis. So pretty heady approach to running a meat company. They looked at cattle as a way to improve quality of land. And they wanted to see if that's true, can it be expanded so that it's not a little hobby, but something that ranchers could make more money, everyone, consumers, cattle, everyone benefits so that it isn't a 1 % of an industry, it becomes 10 or 15 % of an industry, not unlike antibiotic-free or ABF chicken is about 23%, that and organic, about 23 % of that industry.

32:21Produce is about 12 % organic. Those have proven that they can become big as a percent. So ownership wanted to see if a grass run beef company could actually improve land on a significant scale or at a significant scale. So what I said to them is then you have to have the ability to sell all of the animal, all of the meat that's fresh and processed. So put together two companies that do that. And then we'll prove it. And we'll try to expand that to include a third and a fourth company, continue to grow that. And then other people, competition will do this. If we prove this some number of years from now, the leaders of the beef industry, which are not us, will say, this is a good idea and they'll do it.

33:24And then we will have truly improved that whole spectrum of people from a consumer to the livestock, to the land, to the rancher. And going along with that, you keep kind of talking about that there's the possibility of other acquisitions down the line as the business continues to scale. You know, feel free to break any news here on the podcast. But, you know, in a more general sense, like, how do you reach those new consumers by, you know, more acquisitions maybe? Or is there another way to bring in new shoppers and new consumers to the grass-fed meat model or the pastured animal protein model instead of just kind of catering to that subsection of consumers that are already shopping for that product?