What Will It Take To Raise The Stakes For National Distribution?

0:00What condiment can help you get more matches on dating sites? what constitutes a container copycat, why Whole Foods is redrawing the map, and what are the best practices when growing your distribution? Find out this week on the NOSH podcast.

0:26Hi, 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 if mayo might result in more people swiping right before turning our attention to a LinkedIn dust-up and changes in the retail industry. Then in our featured interview, we hear from Chris Kirby and Aaron Wallace about Ithaca Hummus' strategy when it came to moving into national distribution. Joining us today are reporters, Adrienne DeLuca. How are you doing, Carol? Good. And Lucas Southerd. Bonjour. Bonjour, Lucas. Also joining us is Jeff Kleinman.

1:07Buenos tardes. I feel so global right now. But to start, I think I owe Lucas an apology. Last week, you shared that Trader Joe's had a popcorn mix of cheddar and caramel corn that they dubbed the Chicago popcorn. Adrian and I, I think, doubted you on the podcast. Hadn't heard of this nomenclature before. I had to do some digging into it. Turns out Lucas is kind of right. Apparently, this is a thing. There is a great debate regarding the exact creator of this delicacy. But Garrett Popcorn Shops, which was founded in 1949, saw their customers were mixing together the company's caramel and cheese flavored popcorns.

1:50and started mixing it together for them and selling it as Chicago-style popcorn. So, Lucas, I officially apologize. Vindication. There are so many Chicago popcorn companies, and that stuff is just like catnip to kids. I mean... Do they call it Chicago-style? I mean, I have never really taken note of it, But I can tell you that at birthday parties and such, my kids, when they were a certain age, would always request, you know, this big tin bucket of popcorn. And it would usually be caramel, butter, cheese. And one kid would beaver through the caramel. one would absolutely crush the cheese that's me and and then you've got like this sort of stinky butter kind of sitting around so i can easily see the mixing though because the like the the divider is pretty flimsy and and that's a good tasty snack well we had heard of taking these tubs and pulling the divider out.

3:08Lucas actually purchased from the store a pre-mixed bag called Chicago Style Popcorn. And I had never heard of it being sold in that fashion. But they also changed the branding a couple of years ago. And for a long time, it was Chicago Pop was what it was called on the label. And then it suddenly became like cheese and caramel popcorn, like much less uh you know catchy and and i wonder what happened because i can't imagine they made the choice to to switch it because it sold better i would imagine the chicago pop would be more you know mysterious and interesting to people but maybe maybe not well i mean either way it's it's a it's a it's a killer uh stoner snack for all those uh people out there looking for a good munchie and it's i'm telling you i could blow through a bag by myself pretty easily watching basketball game well yeah you should google this lots of options online lucas apparently and lots of debate over who uh is the forefather of chicago style popcorn but i think i interrupted your your apology carol yeah please continue i want more apologies on this podcast all of them directed at me preferably here lucas i'm sorry i interrupted carol's apology to you it was so good and carol i'm sorry i interrupted your attempts to apologize to lucas perhaps you should do so i mean i had a song prepared but i don't know if we have time for that anymore so uh lucas i'll just send you an mp3 of that one well it's interesting talking about this uh chicago pop because it became a part of the early years of my now marriage, my relationship to my now wife, in that it was something that we would enjoy together.

5:02And it reminded me of something that I think you stumbled upon this past week, Carol, revolving around dating and eating trends, specifically in the condiments aisles, shall we say? Lucas, if you're setting this up to tell me that you actually did this in your dating profile and that's how you found your wife. I'm just going to be overjoyed. Unfortunately, or actually, no, I shouldn't say fortunately. I somehow dodged a bullet with the dating app trend and my wife and I were, we were introduced together organically by a mutual friend. So I didn't have to swipe anywhere. I didn't have to go through profiles on my phone, thankfully, because it seems like a lot of work these days.

5:46so you guys were set up is that what you're saying we were set up my my roommate uh in in new york it was a co-worker of his and uh he thought we would we would do well together and like caramel and cheese popcorn you that you nailed it swish ready to go well for those who are still online dating i think craft is going all in on matchmaking so first there was their just crack an egg and only farmers dating campaign. I know I've hit this too many times, but I just love it. Now they've launched Swipe Right for Mayo. In New York, LA, and Miami, they AB tested identical dating profiles, one which featured Mayo and one that didn't.

6:30It looked like mostly in the pictures. And they claimed that the profiles that featured Mayo had 74 % more matches and 16 % more messages. i've expressed my thoughts about mayo on this podcast before and now i guess i just have to continue with that horror like why are we bringing that onto a dating app dating apps are not no one probably wants to be on them in the first place i don't know which way they're swiping these days but whatever way is no is which way i would go on that i just feel like if i saw mayo in someone's profile. Like I'm, I'm down with mayo on a good turkey sandwich, but it would creep me out why it was in their profile photo.

7:15That that's like a bridge too far. But this goes with what you're saying, Adrian, it is, mayo is one of, it's this weird condiment. It's this weird food item that people have very strong opinions about. And if you're a mayo, a mayo file, a mayo-aholic, then you probably want to share that with your prospective partners and hope that they are too. Because if they aren't and you start dating and then you start whipping out the miracle whip like on date three. That would be bad. You don't want to have that. You don't want to have the picnic peril where you've made a sandwich assuming the other person liked mayo.

7:57Or just get up and leave the picnic and never to be seen again. Yeah. I mean, on the creep factor, the pickup line that Kraft provided was yogurt, cereal, mayo, you, all things I want a spoon. Like, again, beyond the picture, that is horrific. That's just a concoction of products we didn't need in the same sentence. Yeah, I think everyone swiped and laughed on that one. Yeah, that's a bridge too far, I'd say. They called it one of the smoothest pickup lines ever. I was like, I don't know about this crap. Yeah, no, there's too much imagery that comes to mind thinking about that. My question was like yogurt, I use a spoon.

8:41Cereal, I use a spoon. I like mayo. Still not using a spoon. Like I'm not like eating spoonfuls of mayo and putting that much on my sandwich. So I just, yeah, not on online dating, but just was highly confused with this. But moving to the opposite end of the emotional spectrum, there was a little dust up on LinkedIn this week with Graza Olive Oil claiming fellow olive oil brand Brightland had copied them when it launched its flavored pizza oil in a squeeze bottle. Now, for those of you who don't know, Brightland launched in 2018, and it was one of the first brands in what I'd call like pantry porn.

9:20They were these gorgeous staples you'd be happy to have on your countertop. Pineapple Collective, I'd say as part of that group, Fish Wife. Brightland since partnered with artists on limited edition packaging and moved into other categories like vinegar. But the pizza oil, which launched last week, was their first squeeze bottle product. Now, meanwhile, you've got Graza, which launched its single origin olive oils in 2022. And its point of differentiation, besides it's kind of like kooky, creative branding, was that it was sold in a squeeze bottle. Now, the founder is saying, you know, you stick olive oil in a squeeze bottle.

9:59That's that's straight up copying. Lucas, what do you think? Are we calling foul here? I don't know about calling foul. What I find to be interesting about this, and it was, I think, really well put in a New York Times piece about it, came out last week, was they talked about LinkedIn as being an online haven for startup feuds, oversharing, and mythologizing, odes to founder culture. I think, at least in my opinion, it seemed like this was a case of someone jumped a little too quickly onto the keyboard to make their feelings heard and then found themselves in a bit of hot water from other founders who were saying, hey, you know, you're not the first one to use a squeeze bottle to put oil on your food, basically.

10:46I think there was someone who said their grandmother had been using squeeze bottles of olive oil for years. Yeah, I can remember reading about that in Kitchen Confidential in 1999. Well, to be fair, the founder of Graza did eventually apologize and admit he felt a little heated in the moment. And after, you know, I think numerous people pointed out restaurants had been using that tactic for years. What a sizzling controversy. I mean, I will say like the press around Brightlands pizza olive oil, I was like, they couldn't have almost asked for a better way of gaining eyeballs on that product. It's this this little olive oil feud has been covered by a ton of major publications.

11:37What else qualifies as pantry porn, though? That's that's what I'm interested in. Like Pineapple Collective? is acid league. Do we call that pantry porn? Absolutely. Absolutely. What about what can you define pantry porn for me? I don't quite think about it for a minute. It makes sense. It's like a status symbol to have on your countertop that you've got this product. Think like anything almost sold in the condiment aisle of air one, probably. Or anything sold in air one. Are we sure it's not like a home edit kind of thing where like you have this gorgeous, beautifully arranged pantry? I mean, there's that too.

12:21That is certainly a thing. But usually that is actually about removing the packaging and putting everything into clear plastic containers, which upsets me to no end. Like I just, it makes me twitch. Whereas this is the opposite. This is like, you need the branding. You need the packaging. Fly by Jing would be another good example, I'd say. Yeah. The question is, though, if it's out on the counter, how is it pantry for? Well, it's like pantry staples. I think she's using a broad brush. The alliteration doesn't work if it's on the counter. I'm painting with a broad brush. But to go back to this controversy a little bit, I do think, as you were saying, Carol, Brightland's kind of handled it pretty well because they haven't responded to anything.

13:06They haven't commented on it. They haven't responded to any of the stories in Fast Company or New York Times or any of these different reporters who've reached out to them. And they're just kind of, I think, basking in some unintended good publicity for them. Yeah, a nice reputation can be super inoculant against bad press. And in this case, they've had people stepping up everywhere to say, oh, look at Brightland. They've done such a good job. Why are you picking on poor Brightland? This guy just stepped in a puddle of mayo, I think. Jeff, what do you think, though? I mean, you've seen trends come and go in CPG.

13:50What's your thoughts on knockoffs and if brands need to really concern themselves with them? Brands absolutely need to be concerned about getting knocked off. They get knocked off all the time. Usually it's not by a smaller competitor. It's often by a larger competitor or, you know, someone will private label what they're up to as well. I just, you know, I can't remember which person I heard say this, but basically their whole thing was to be in CPG is to be expecting to be knocked off. Patents, intellectual property, you know, really important. The other thing I think a lot of people have been discussing around this is the sort of importance of container or package right now and whether you can actually say that's the unique part about it is that you're the one who took precious olive oil and put it in a squeeze bottle and slapped a label on there.

15:03I don't know. I mean, it's kind of practical. Actually, this makes me think of the very first Nosh and BevNet event I went to before I even worked for the company. Jeff, you had an FBU, Food and Beverage University, presentation in Boston on when you should invest in custom molds and custom packaging. At what point is this investment actually worth it? Because this is how you really could define your brand and stand out on shelf. Yeah. And the answer is way, way down the line. Unless you got money to burn, you want to make sure that the product is really resonating with consumers. And eventually you can go with that kind of unique package to sort of codify a lead, unless there's a gimmick attached to the package.

15:58And there is one here, I guess, but it's again, it's not like they invented the squeeze bottle. I hate to take too strong a position here, but I mean, they're in every restaurant. Well, let's move on to the retail landscape. About a week and a half ago, Whole Foods announced layoffs and changes to its organizational structure. But what captured my attention was a line in the team member memo about going from nine regions to six. But I wondered what this meant for brands. So I went to Whole Foods and basically the answer is that at least as of now, the stores you're sold in are the stores you're sold in.

16:43And even if they're in a new region where you currently aren't sold, you're not going to get dropped. And what that means in terms of your growth is still kind of to be determined because it does shake up, you know, what's a local brand going forward. It was interesting the way they restructured these regions because the North Atlantic now incorporates Canada and the UK. So I don't know like how local you can keep things if you're talking about that whole region. And by redrawing the lines here, they're going to have more stores evenly allocated throughout each region while also maintaining that local forager relevance to their whole structure.

17:24I mean, it'll be interesting if brands are able to sort of grow within a region, you know, by the time they've sort of reached the full store count of that region, they should be a pretty formidable presence. You know, I don't know if you can take it slow, though, and gradually expand throughout the region. I think hasn't the move at Whole Foods been to look for, you know, local products that they can see filling up a full region profile? So wouldn't that raise the bar for the capabilities of the brands that are going into bigger regions? Yeah, completely. I could see this playing out for perishable products in particular.

18:18I mean, you've got Texas all the way to Washington in the same region. You might not have your cold chain distribution totally figured out where you can support that wide a swath of the U.S. Yeah, or even Maine to British Columbia. I mean, as you're pointing out, that's a big jump to go all the way across Canada. It also stood out to me and says a lot about Whole Foods that these are divided equally by number of stores. And California is its own region. There's just the market is so saturated in California. It gets to be all by itself. It used to be too, didn't they? It wasn't that part of it that they condensed?

19:01It used to be NorCal and SoCal. NorCal contained or SoCal contained some other states, parts of other states. But now it's just one state. You know, I I got to go back and count how many Whole Foods are in California. I'm curious. It's interesting, though, because you're wondering, like, OK, regionally, yeah, they had like the southern part of the country all in one group and then the northern part like that. intuitively makes more sense to me than just sticking all of California in a bubble. California is a bubble. Like you said, there just must be. You're right. There's just enough of California for its own bubble.

19:38Careful. I mean, you would think actually Maine and British Columbia do have some things in common in terms of the kinds of food stuffs one might consume. I bet both of them eat lutefisk. I would like to know what lutefisk is, but I don't want to know. I'll pass. It's a Norwegian fish, I believe. Are there a lot of Norwegians in British Columbia or Nova Scotia? Look, it's cold, rocky terrain. I'm an American. I know nothing of geography. Well, all this talk about regional growth at Whole Foods, I think, sets up our interview perfectly. Like we almost planned it. Lucas, tell us a little bit about what we're going to hear today and who we're going to hear from.

20:31I talked to Chris Kirby and Aaron Wallace at Ithaca Hummus, and they told me about how they strategized the brand growing from regional to national distribution. And the two of them kind of walked me through both the experience of building Ithaca Hummus' move into larger distribution, while also giving me some insight kind of broadly looking at how emerging brands can strategize growth better and kind of the areas of the business that they should focus on when dealing with larger distribution and making that big jump. Well, I'm excited to hear this story. Let's get to it. Hi, I'm here with Ithaca Hummus' president and founder, Chris Kirby, as well as his natural channel sales manager, Aaron Wallace.

21:22How are you guys doing today? Doing great. Doing really well. Happy to be here. Happy to have you guys here. So we were hoping to learn a little bit more about how Ithaca Hummus kind of made the big jump from being basically a regional brand and regional distribution into a national brand. Chris, I'm going to start with you being as you're the brains behind the brand. How did you kind of initially envision Ithaca's distribution growth when you first launched the brand? And when did you realize it was the right time to expand out of a regional and into a national distribution model? When we first launched, we had kind of a blessing and a curse in our shelf life was very short.

22:03And so there was only so far we could safely distribute the product without running the risk of spoils because the shelf life was so short. And so from the very beginning, it kind of got me into the thinking of you've got to kind of grow in these concentric circles and do it in a very incremental way. That was the case for our first couple of major retailers, which were Wegmans and Whole Foods. We started in our local home market and, you know, did everything that we could to make our local stores successful and own the distribution in our backyard. I certainly wanted to grow faster than I was able to at that point in time.

22:50It'd be great to sit here and say like, yes, I wanted to make sure that we were at 20 units per store per week per item before we went from, you know, one store to two and then two to four and four to eight and then region wide and then nationwide. I think that's really the advice that I would give to entrepreneurs is to look at it at that scientific level. But I wouldn't be honest if I was to tell you that that's exactly how I was thinking about it in the beginning. Yeah, yeah. I'm sure it's easier said than done. What did you do to get the company ready for that kind of move and bring in folks like Aaron to kind of help you do this in the most efficient way possible?

23:32Aaron has been super helpful in managing all the moving parts that now we have as part of our business, now that we're a national brand. And with Whole Foods and UNFI and KD and Sprouts, there's a lot of moving parts. The distribution system and the channels that you have to go through to make it to the shelf in multiple regions for both of these retailers and the natural channel, as well as the rest of the natural channel, is a very complex puzzle that requires work every single day to get right. But we went from one region of Whole Foods to four regions of Whole Foods to eventually about a year and a half ago global with Whole Foods.

24:20So again, that was from start to finish a six or seven year process. So there was a lot of time in our history where we weren't quite ready for someone with the bandwidth, capacity and horsepower that Aaron brings to the team. But now that we're national and the puzzle has gotten a little bit more complicated, that's when it came time to bring on a team member like Aaron. So Aaron, when did you join Ithaca and kind of what were some of the things that you initially saw that were the areas that were kind of most pressing for you to focus on when you began in your role? Well, I started in August of 2022.

25:01And right off the bat, I was really grateful. One of the things that Ithaca was doing well or was utilizing was data and access to data. I think that's a wonderful tool to have for brands at all stages. But understanding, like Chris said, your velocities, how you're doing, and as you're a younger brand, knowing that you can typically have those relationships with the retailers, well, they'll give that to you. Then as you scale, you're going to have to purchase some data and purchasing some packages. But I was really happy to come on board and excited to come on board to a wealth of data and have insight to the business on a national level.

25:42And quickly looking at that, I was able to determine some opportunities and areas of focus. And immediately we got into really managing the distributor side of the business. There was, I think, a little apprehension on our part previously to be a bit aggressive with them because of perception of chargebacks, of how much you're going to, what that can do to the bottom line of a business. I mean, if you're not managing it effectively, it can be overwhelming and scary. And sometimes you don't know what's going out. So that was really where we started working internally of setting up a plan to manage all deductions well that were coming in, knowing everything, what's expected, what's not expected, what's disputable and what's not.

26:33And as well as orders, going through the orders with the fine tooth comb, knowing like what customers we have coming on board, what promos we're going to have running, making sure we have the right product and the right warehouse at the right time and the right quantities. So we're not dealing with issues of spoilage because we are a perishable product, as Chris was alluding to, and some more shelf-stable brands might not have to deal with some of those challenges, but there are other challenges that shelf-stable brands, forward buying, etc. we'll have to deal with. But immediately that's where we started.

27:06And I think we're seeing the benefits to the bottom line through our distributors, as well as it helps retailers. When you have fresher product in the warehouse, that trickles down to the retailer. So the retailer has more shelf life. They have less spoils. It looks better for your numbers, your contribution margin to the retailers. And it's all, ultimately in the end, it's all a data game and making that work for all. It's got to work for Ithaca. It has to work for the distributors and it has to work for the retailers. And most importantly, it has to work for the consumer. You know, it's interesting, Aaron, because you recently posted on LinkedIn kind of about this need to micromanage.

27:50As you put it in the post of this, you said, don't hate the player, hate the game. To go along with that analogy, that metaphor, how do you play the game better when you're working with larger distributors? How do you maximize this data to really be advantageous to a brand? It's a great question. I think, well, I play poker. It's been a big hobby of mine. So that's your game that you play. So I'm fairly successful. But when it comes to poker, as you scale up, and I see a lot of correlations between poker life and business. And as you scale up in poker, meaning go to larger stakes, you're playing for larger amounts of money, the margins and the edges become thinner.

28:33And you have to find them in different areas, in different ways, and you have to evolve and do your research and your study and all of that. And I think there's a big correlation to that with our industry of, you know, as you scale from a local retailer to a regional to a national, like, it's going to get harder and it's going to get more difficult. And you've got to search for them where you can find those thin margins or those thin edges to be had. But they are there to be had. But I think the most important thing is empathy and understanding that those are people that are working at UNFI and KEHE.

29:14And those buyers have a lot of brands on their desk. And it's not just Ithaca Hummus or your brand. They have a lot. And because of that, they don't have the attention to spend on your business like you should and you do. Ultimately, the key word in that is it's your business. It's our business. We need to own it and not them. And understanding that they have a lot on their desk and their plate and building a relationship and an understanding of that and where they're coming from. Like they report to shareholders and that's the game. Like that's what you're up against. and it's not because they're doing something personal against your brand.

29:57It's they're spread thin and make friends with them, try to help them where you can and they'll help you when they can. In saying that, you know, were these things that you were aware of, you know, in the early days of Ithaca or before you brought Aaron on, was this kind of attention to detail something that you were already aware of and that you knew you needed to have someone who was kind of solely focused on managing these things? Or was this, did this come out as you, as you expanded the brand, in a much bigger distribution model? I would say that there was some awareness to what Aaron's talking about, but there's certainly, if there was less awareness than we have now, there was certainly a lot less bandwidth to do the work that's actually value added for the person who's sitting on the other side of the desk, right?

30:45We knew that the more we knew about our business, the more we could be helpful to our distributors and our retailer partners for that matter. But there just wasn't really bandwidth to dive in and comb through order by order and match things up with promotions versus base weeks and do the handholding that Aaron does now. Your natural instinct as a brand owner, at least, is to see the bigger orders coming in and just be excited and want to fill those orders and not want to challenge, You know, why did my orders double from one week to the next? I don't care. I'm just glad that our business just got bigger, you know, and I can speak from personal experience, have been short-sighted in that way in the past.