Unpacking 'Unfrosted', High Cocoa Prices & Foxtrot Update

0:04Welcome to the CPG Week podcast by BevNet and Nosh, your source for the latest food and beverage industry news. I'm Monica Watrous, managing editor of NOSH, here with my co-hosts Brad Avery and Lucas Southard. If you're enjoying the show, please subscribe on your listening platform of choice. And don't forget to register for BevNet Live happening June 12th and 13th in New York City. We're going to be there. We hope to see you there. You can register at bevnetlive.com. On the podcast today, we're discussing Pop-Tarts, snack trends, and cocoa prices. Lucas, we all know you love your cereal, but how do you feel about Pop-Tarts?

0:43Not a Pop-Tarts fan. I don't, they always, I don't know. There's something about a Pop-Tart that it's not as satisfying as a nice bowl of cereal. I like that cereal has the milk in there. You get some of the quenching of your thirst while you eat. You can add fruit to your cereal, whereas a Pop-Tart, I get it. It's all-inclusive. It's a handheld breakfast. It's just not my thing. Okay. Those are some strong feelings. Brad, how do you feel about Pop-Tarts? I had a Pop-Tart recently for the first time in like 10 years, and it's pretty good. I think they're tasty. Probably not for breakfast. It's really more of a snack.

1:27It's kind of like a dessert now with all the frosting they put on them. Well, you can also get them unfrosted, which brings us to our first topic of conversation for this episode. unfrosted the movie that was directed by jerry seinfeld and debuted on netflix this past week what do we think guys i will say that i enjoyed the movie i grew up on seinfeld as the tv show so i i love the tv show and uh have enjoyed his stand-up over the years i would say unfrosted was a fun watch. I probably won't watch it again. It had some moments in there, but it reminded me of the rather dumb comedies that I grew up with in the 90s, and so I enjoyed it for that respect.

2:15But, you know, there was a lot of misses in some of the jokes that they put in there. There were so many stars in that film. We saw a lot of Saturday Night Live alumni, I, a lot of comedians. And to your point, it was quite Seinfeldian. There were a lot of callbacks to the show. I actually grew up on Seinfeld and Pop-Tarts and I loved it. I thought it was a fun watch, like you said. And I wasn't expecting a lot of substance and it didn't deliver a lot of substance and that's okay. I think I'm now less likely to buy Pop-Tarts purely out of spite for this movie. Wow. Here's my hot take. I'll be the Grinch here.

3:01I also grew up on Seinfeld. I think the show is phenomenal. I think the show holds up. I do not know what the hell this thing was. Okay, there's one joke that got me laughing, which is at one point in the middle of the movie, Kenneth from 30 Rock blows up, and they have a funeral, and he gets full serial honors, and they start just pouring milk and cornflakes into his open grave. And that was the one part that got like a legitimate laugh for me. Other than that, everything else, I was just like, was that a joke? Was that supposed to be a joke? Well, the film got a terrible score on Rotten Tomatoes, but it seems like folks in the CPG industry are appreciating it for what it is.

3:46I saw some comments on LinkedIn from some folks, including a product developer, who said the film did a great job with not only the humor, but insights into the CPG landscape and the constant race for first place among corporate legacy brands, the difficulty of true IP ownership in food and beverage, and using consumer feedback and insight. I think you get a lot of insight into R &D. Sometimes you just put sea monkeys into ravioli, and that's what creates the next great product. That's how it works. No spoilers, Brad. I do think it's interesting and I wasn't quite clear on how involved Kellogg's was in the production of the film.

4:23I do know they're very involved in the marketing. I saw an end cap for Pop Tarts at my local star market that had Jerry Seinfeld on it. So they're clearly promoting around the movie. But I did think it was interesting as a example of a branded movie that we see a bit more of these days. And I think the obvious example is Barbie. And with Barbie, you have a really particular case where Mattel actually set up a production company to make the movie and was incredibly involved from start to finish in building the movie to be a marketing machine for Barbie. I think if you even look at the Barbie movie, you have the Barbies are depicted as this wonderful dream world.

5:10It's exciting. It's feminist. And then you have Mattel playing the heel in their own movie as the evil corporation. They're cold. They're soulless. And what they're doing from a marketing perspective is very deliberately divorcing Barbie, which is liberatory, fun, exciting, from the corporation you don't really feel great about supporting. And I thought that was kind of interesting approach that they did that with the movie, because I think you have to look at the Barbie movie as one big advertisement. Well, I'll be curious to see how this affects the earnings for Kelanova in the coming quarters.

5:40I do know that the company wasn't directly involved in the production of the film. In fact, Steve Callahan, the president and chief executive officer at Kelanova, posted on LinkedIn that Jerry Seinfeld made a movie about Pop-Tarts without telling us. but we also saw that some of the top executives at Kelanova attended a red carpet screening of the film and were very excited about the exposure so I think in all in all it was positive I also it reminded me of when the movie Flamin' Hot came out last year about the creation of Flamin' Hot Cheetos and Doritos and I'm wondering if we're going to see more films romanticizing the development of iconic food and beverage brands.

6:27That got me thinking, what other food and beverage brands should get the Netflix treatment? It's gotta be Bang, right? We all wanna see the Bang Energy movie. I think the only question is who gets cast as Jack O 'Walk. That's the only thing I'm not sure who can capture that energy. As we were discussing this in our editorial meeting yesterday, our colleague Adrian DeLuca suggested Coca-Cola, the movie, and I would love to see that. They used to put cocaine in that stuff. How was that a thing? How is it not still a thing? Good point. Well, Adrian also wrote a really great review of Unfrosted. Insiders can check that out on nosh.com.

7:08And speaking of snacks, the Sweets and Snacks Expo is taking place this week in Indianapolis. Our colleague Shauna Golden is there on the scene reporting on some of the trends and new products that she is seeing. The National Confectioners Association, which produces the show, also released a list of trends that folks can expect to see at the show. Some of those include multi-sensory experiences like unique textures and flavor combinations. Think freeze-dried candy, puffed snacks, things like that. There's a lot of attention on seasonal occasions and not just the traditional ones like Christmas and Halloween, but also Super Bowl, summer barbecues, s'mores season.

7:53And then also some social media attention being paid to a lot of these new products and creating buzz on TikTok and Instagram. So check out Shauna's coverage of Sweets and Snacks Expo at Nosh. I've attended the Sweets and Snacks Expo a number of times in past years. There's a lot of chocolate at that show. And the future of chocolate appears unclear given the shortages of cocoa. Lucas, you've been following this. Tell us more. Yeah, to review, cocoa prices have been going cuckoo recently. The price of cocoa peaked in mid-April to over$11 ,000 per ton, which is markedly higher than the$2 ,500 to$3 ,500 for the average price of cocoa since the 80s.

8:47So chocolate micers have been enjoying lower prices for this commodity for almost 30 years now. And in the last year, the prices shot up. Now, a little background on this, the high prices derive mostly upstream from cacao farmers in West Africa, where about two-thirds of the world's cocoa comes from. A perfect storm of aging trees, tree disease, and not enough rain has lowered yields and pushed prices up. So once the prices started to rise on the back of this poor supply, futures traders in the markets started to notice, and that's when the market went really bonkers. Prices have subsided slightly since last month.

9:33They're hovering around$7 ,300 per ton. Executives at large food and sweets makers like Mondelez and Hershey's have remained, I'll say, cautiously optimistic that their respective size and scale will help them weather the cocoa pricing storm that we've seen. But as Mondelez CEO and chairman Dirk Vandeput said in the company's most recent earnings call, they're playing the long game. So in hopes that the late summer and fall when the harvest season comes, prices will have subsided even further and they can enjoy better margins. We're seeing some new solutions emerging that can help with this cocoa crisis.

10:16Can you tell us more about that? Yeah, so food tech has been kind of working on this for years. So one solution, you might say, to high cocoa prices is take the cocoa out of the equation. One company we've seen making big moves is Voyage Foods. They're a food tech company based in Oakland, California. Shout out to my hometown, Oakland. Go Warriors. Voyage makes cocoa-free chocolate and has recently signed a deal with ingredient supplier Cargill. When I talked to Cargill and Voyage last month when the partnership was announced, the two companies insisted that the deal wasn't about replacing cocoa in Cargill's supply chain or in their portfolio, but more about adding options for Cargill's customers for allergen-free or more environmentally sustainable products.

11:07Yet, it seems like Voyage is preparing for a future where commodity prices for agricultural products like cocoa remain volatile. Voyage announced last week it had secured$52 million in a Series A-plus round, led by Level 1 Fund and Horizon Ventures. The company had originally reported a$22 million raise in December, and this extra$30 million is an add-on to that. Voyage also makes a coffee-less coffee alternative and nut-free spreads that use sunflower seeds instead of peanuts. We're also seeing another food tech startup, WinWin. They're working on bringing a cocoa-free alternative to Big Chocolate.

11:52after refining its approach during the Mondelez collab program earlier this year. So we'll be keeping an eye out and seeing how these companies are going to help keep the chocolate industry flowing. Another development we reported on this past week revolves around the ongoing Foxtrot saga. Brad, what happened there? So it just keeps getting weirder. So about three weeks ago, Foxtrot abruptly closed all stores and announced they were going bankrupt. Everyone was pretty shocked by that. Now, this week, there was an asset auction hosted by JPMorgan Chase via Microsoft Teams to auction off Foxtrot and DOMS.

12:34and it very quickly opened and closed with a$2.2 million bid from FurtherPoint Enterprises, which is an investor in Foxtrot. And then they very quickly offered a lot on DOMS for about$200 ,000. There was no details given. And then after 30 seconds or less, they said, okay, never mind, and concluded the auction. It was a very strange ordeal according to the people who were present. Some people on the call thought that this was just a compliance issue and they only hosted an auction for the show of it so that the preselected buyer could acquire it. This is all speculation because we haven't heard much after this.

13:20It was a rather strange ordeal and it was a very low bid for the assets as well. Now there's talks that Foxtrot may be coming back perhaps in a smaller capacity under this new ownership. But overall, I think there's more questions than answers here. And a lot of those questions involve how former employees and suppliers are going to be paid. Will those outstanding invoices be paid? Will anyone want to go work at Foxtrot again after this happened? There's now lawsuits for back pay happening because it turns out if you lay everybody off without any notice, it runs into some financial issues. So there's a lot of learnings to be had here.

14:05What exactly those learnings are are still developing, but we certainly haven't heard the end of this story yet, and who knows what is on the horizon. Right. To sum it up from a former employee of Foxtrot who posted on LinkedIn, she said, as a laid-off Foxtrot employee, how dare they? Well put, I would say. Yeah. It's messy. From the brand perspective, like you were saying, Monica, I don't know who would want to work with Foxtrot at this point from some of these emerging brands because along with the employees, they also really lost out on how quickly this all unfolded and the lack of transparency from before they closed through now through the auction.

14:54And so like, why would anyone want to want to sell to to a Foxtrot if it did come back? A lot of the chatter I saw on LinkedIn was pretty mixed, and there was a kombucha brand that said, hey, I would do it. Shelf space is shelf space. There you go. I guess that's what it all comes down to. And from the consumer side, they probably just see, oh, hey, that store that I like to close is back. It's true. You're reminding us that we follow this way closer than a lot of other people. Yeah. Here are some other notable bits of news from the week. Laird Superfood Q1 earnings marks return to growth story.

15:30Not another keto product. Ketone's RTDs seek place within emerging functional set. And Meaty raises$100 million and locks in Kroger deal as path to profitability accelerates. For these stories and more, become an insider on BevNet and Nosh. That wraps up this edition of CPG Week by BevNet and Nosh. Thank you to our audio engineer, Joshua Pratt. Our director is Mike Schneider. and our designer is Aaron Willett. If you enjoyed the podcast, please subscribe on your listening platform of choice and we will see you next time.

16:14I really want a Pop-Tart now. I'm going to have a bowl of cereal. You would. Fuck Pop-Tart.