When Is It Time To Kill A Product Line?

0:00This week on the Nosh Podcast, how to evaluate market size, what to do when a product just isn't working in retail, and how to think about evolving your product positioning.

0:21Hi everyone, I'm your host, Carol Ortenberg. On the Nosh Podcast, we go inside the business of natural, organic, sustainable, and healthy food. Now, deciding to say goodbye and discontinue a product is always a hard choice for any founder executive to make. But how do you know when it's the right choice or when you should double down and instead invest more time and dollars into revising product packaging or formulation? This week, I sat down with executives from snack and tea brand Eat the Change to use their own portfolio changes as a case study for when, why, and how entrepreneurs can evaluate their own product mix.

1:02Hi, everyone. Today, I'm joined by two executives from Better For You Snack and Tea Maker, Eat the Change. We've got Seth Goldman, CEO and co-founder, and Sarah Shaw, head of marketing. Thanks so much for joining me today, guys. Good to be with you, Carol. Thanks for having us. I want to set the stage a bit and kind of just dive right in there. This conversation evolved from a LinkedIn post you made, Seth. And the first two products you came out with under Eat the Change was a mushroom jerky and a carrot chew. Right. Kind of a better for you fruit snack is how I described the carrot chew. Let's start with the mushroom jerky.

1:45You launched this product. Why did you think the market needed this and would respond well to it? I'm not saying the market doesn't need this, but I just want to know what's in your mind. I've been intrigued by mushrooms going back to, I'd say, you know, 2015. I had visited an organic mushroom farm as part of my work with Pennsylvania Certified Organic, our certifier, and just was fascinated by this. It's not a plant. It's not an animal. It's fungi. It's its own kingdom of species. and was just amazed by the nutritional properties, how it was really unlike either plants or animals. And then fascinated as well when we set up Eat the Change as an all-around planet-friendly food to learn more about the environmental properties of mushrooms, that they can be grown with minimal amounts of energy and water and land, and thought, wow, it's got so many things going for it.

2:42It would be really fun to bring it to market in a way that made it more accessible. And so, of course, with my co-founder, Chef Spike Mendelsohn, for him, mushrooms are like a blank canvas to create a beautiful painting on with flavor. So there was a lot of appeal from a taste perspective, from a nutrition and environmental perspective as well. Sarah, when you joined, what did you think of the Jerky product and coming in, leading up marketing? How did you evaluate it? So, I mean, one of the reasons that I joined was because of the mission. So, you know, insert product here. I mean, I really loved what the company was doing and what it stood for.

3:23Mushrooms specifically, they're a polarizing ingredient. So I knew that it was going to be an interesting challenge. It's a niche market. Texturally, they're unique. So I think, you know, if you think about that alone is a hurdle to overcome. I mean, I've been around cricket protein and it's a similar type of thing. These are, there's a lot of great benefits environmentally, nutritionally, but they, they're polarizing. And it's similar even to what Seth was saying in terms of flavor. I mean, even bugs, there's, there's not much taste to it. I mean, you can make it what you want it to taste like, but that mental hurdle is, is high.

4:00And I think mushrooms strangely fall into that category and without having a huge functional benefit outside, like personally for the consumer, they're a hard hurdle. because even when you think about like why jerky, like why does jerky even exist? I mean, it's kind of a easy way to get lean high protein and a mushroom isn't a protein snack necessarily. It can be delicious and a nice, enjoyable snack, but it's not necessarily giving functionality. And Seth and I've talked a lot about mushrooms and there's a lot of people who say they will buy mushrooms and you see a lot of data saying that mushrooms are growing and people are asking for it, but somehow it isn't quite converting.

4:41And I think there's a little bit of a difference between the mushrooms that are functional in the industry when you see kind of these ashwagandhas and drinks and beverages different from just kind of a just a delicious, enjoyable snack. So I think that there's there were a lot of things to navigate around that, unfortunately, we weren't able to quite get to. That's another good point is that at the time we brought these out, we were kind of at the peak moment in the pandemic where people were looking. First of all, people were cooking at home more. And so they were doing more experimentation. They were also super focused on immunity.

5:17And so to the extent there had been a mushroom boom, and we heard this from our mushroom farmer partners, they were seeing unprecedented growth. So I don't know if you would call it the mushroom spike, but there was definitely a point where it was peak mushroom interest. And that was just around the time we were gearing up to launch this. So that has since waned. We hear from our same mushroom farmers that their sales have been really challenged and people aren't buying mushrooms the way they were. There were other mushroom products on the market. So I'll push back a little. What was going to make your mushroom product different?

5:52And did you think about those or? We did, you know, maybe it's arrogance or hubris. You know, there were other iced tea products on the market too. And we thought, well, if we could do it differently. And so, first of all, being organic is an important quality, especially with mushrooms, because most of the mushrooms that are sold in the United States in package form are grown overseas. So then, again, you don't know what conditions they're grown under. The other thought was we had a chef, you know, crafted approach. So for taste, we were sort of leading. And then even the branding, we thought we'd be creating a stronger branding approach.

6:29And look, we did a million dollars in the first year. That's not bad for any startup company. And so we were off to a good start. It just, as we looked ahead, we saw if we were super successful, maybe we would get to$5 million in sales. And that just didn't on its own feel compelling enough. And I'll say that thing that contributed to this decision, and Sarah joined us just as we were starting to see the iced tea take off as well. Wow, we've already, you know, sold$12 million of tea just this year. And so that's, it makes the mushrooms look that much more of an uphill climb. So we've danced around it.

7:10The mushroom jerky officially, let's state it, is no more. Of blessed memory. Yes. I guess one question that I had, though, was why not update it? Why not try to rebrand it or reformulate it? Well, it's a good question. And Sarah will talk about the carrot juice because they're two that we've chosen to rebrand, redesign. Right. But ultimately, when we did demos in stores, and I saw this back in the Honesty days, if you really aggressively support something and you don't see a material growth in it after the demo, It's not hard to sell something when you're in a demo, but if afterwards you don't see a lift, a meaningful lift, we just felt like it was going to be too much effort to get people on board with it.

7:56And that's not the case with the tea. What about e-com? Did you think about that? Because sometimes when people have a product that requires a lot of storytelling, they say, okay, I'm going to make this an e-com-only product, especially when it's as light to ship as mushroom jerky. No, there's no question that e-com does. I mean, mushrooms do lend themselves well to e-com. They're lighter. And I'm confident there is a community of mushroom lovers around the country, but it's super dispersed. So while it may not make sense in a bricks-and-mortar retail, it could make sense online. But our whole business, our whole training and background and team is much more oriented to retail, bricks-and-mortar.

8:36And I believe someone could make it work online, but it takes a different kind of resources and investment. that just didn't make sense for us. We are going to grow, and especially when we saw the tea growing in retail, and that's not a business that does lend itself to online. So we said, we're going to go. Well, I've used this analogy before that it's a little bit like water flowing down a hill. You got to go where the market is leading you. Now, if you follow that to its logical conclusion, that means we'd all be selling sweet, cheap stuff. That's not what we do. Yeah, I think, what's the difference there?

9:09The difference is that we know what direction we want to go, but we're going to follow whatever path the market leads us to get us there. We're not going to change our direction, but we're not going to follow a preset course. We're going to have to let the course evolve as we grow. What if the tea wasn't panning out and it wasn't doing as well? Would you scrap it all and come up with a new idea? Well, we might have to. It's challenging. We are, and we had this conversation with our investors. I said, look, and I mentioned this in my LinkedIn post, if we were a mushroom only company, we'd be wrapping it up.

9:47We did not have the revenue or the margin to make it make sense. But we're not that. We're a company of entrepreneurs who are recognizing and hopefully directing health and wellness trends and capitalizing on them as appropriate. And that's a much broader charter. And I would say that we are successfully doing that and have been able to continue to generate investment dollars to support our journey on that. Also referencing the LinkedIn post, you said, as a friend of mine from Coca-Cola liked to say about small categories, it was going to be a long walk to a small house. I think that's kind of a little bit could tie back to that water analogy.

10:31what does that mean to you and what's your advice to brands on determining that for themselves so on the one hand a nice long walk and a beautiful trip through the woods could be you know meaningful and enjoyable for us and then a lot of effort to get to you know a success that wasn't meaningful enough and so we decided rather than do that we're not afraid of a long walk or a long journey. This is a marathon. It's not a sprint. So we're not trying to race anywhere. But if we're going to put in the work, if we're going to really engage deeply with consumers and try to shift their habits, the prize has to be big enough and meaningful enough that when we succeed, it becomes meaningful to our investors and to our impact.

11:18You have a McMansion a little bit, not cottage. I'd like to think of it as a leading edge, environmentally friendly, you know, fully self-sustaining house. Passive. Yeah, that everyone admires and wants to emulate. Let's switch gears a little bit. The Carrot Chews, however, you're not discoing. You're just making some adjustments. What's going on there? Yeah, so the Carrot Chews are a really fun project. So right when I started, we were kicking off an evaluation of the packaging to say, okay, is there something here that isn't sticking with the consumer? We were able to get it on shelves when we described it to retailers.

12:01So we would have some initial success in getting it out there, but we weren't transparently seeing that kind of pull through on shelf. So we wanted to understand more about what we could do to impact that. So we did focus groups. We've gotten the packaging in front of a lot of consumers. And one of the biggest takeaways, and for me, this was, it seems so obvious, but it was a real eye opener, was we didn't give people a frame of reference. Like this is a brand new product in a brand new category. Sure, people are familiar with carrots. They're familiar with fruit snacks, which is now what we're anchoring in.

12:39But we weren't making that connection for them. And so they're looking at our packaging and thinking, well, what is this? And you've got, you know, out there, you do have veggies that are mostly either savory or crunchy when you look at them and snacking, but they're not sweet and chewy. So this was a really unique proposition. And so we wanted to really make that very easy for the consumer when they look at the packaging to say, okay, I get what the expectation is when I open this. And now that makes it that much easier for them to try it and understand that it is better. You also removed a lot of the kind of cartoon imagery.

13:16It's very text heavy as well. What was the goal on that? And what were the learnings that led to that? Yeah, so one of the big pieces of feedback that we got initially was that the packaging was a bit young. And so, you know, talking to some buyers, even they said, you know, I want this product. I want a product where, you know, a kid has this in their lunch and they feel cool. that they're eating it, not embarrassed that they're eating this kind of young kid snack. And so we really, you know, tried to take some inspiration from some of the brands that are out there that are very, you know, cutting edge and, you know, a badge of honor to carry and not obviously from we're thinking just on packaging and design, but, you know, Prime and Liquid Death.

14:00I mean, they've done a great job creating buzz around the brand. So, you know, we took that as inspiration to be edgy and really stand out on shelf. The other thing too, as much as it was a little bit younger, it was also very dark. And when you put the packaging up against the other brands on shelf, it just gets lost. And so with something new, we really wanted to make it pop. So we've leaned heavily into this white background with very comic looking typeface. And, you know, hopefully it's, I feel like, yeah, exactly. Exactly. Maybe even share, Sarah, just a little bit of the messaging on the front, how we sort of raffled with the key message on the front.

14:44Yeah, that was another very fun conversation and a lot of back and forth where we actually leaned heavily into, um, there's a statement on the bottom that's in, as we go back to this frame of reference that says it did say before, this is not a fruit snack. And the thinking there was that it's not a fruit snack, it's a carrot. So just from a statement of identity, that was a very accurate thing to say. And we also thought that it would be very provocative and get someone to pick it up and say, what is it then? But we did have, you know, some healthy conversation with consumers, with board members to go back and forth and say, you know, do we want to have this negative, big negative word on the front of pack.

15:31So what we ended up landing on - It's also confusing, right? Like if it's not a fruit snack, what is it then? And that's something a lot of brands struggle with. Well, we even wrestled one thing we considered was this is not just a fruit snack because it has fruit juice, but it's more than that, but keep going. Yeah. So we landed on more than a fruit snack. And then we, that facilitates the conversation as to why and all the things that are different from what you would see in an average fruit snack on the shelf. And it really, you know, we, again, we were very scrappy with this. We talked to our friends, our family, sent out emails, we brought it to demos, asked for consumer feedback, you know, before it hit the market.

16:15And, you know, overwhelmingly people picked more than a fruit snack that it really just felt more positive. It spoke to them. And so that's the direction that we went with. How did you decide this was going to be a bigger house? Because jerky as a whole is not a small category. Right. So here the ambition was, we modeled this whole product line very much after Honest Kids, right? So Honest Kids, almost every kid's lunchbox has a juice drink and or a drink. And we thought that's a big market and Honest Kids could and actually is, you know, capturing a significant percentage of people for parents who want a healthier product for their kids.

16:58And so again, we think about the lunchbox market, obviously meaning mostly kids. A lot of parents want to put something in their lunchbox that has calories for the kid, you know, that sort of, and ideally has some redeeming elements to it. So we thought, okay, well, if we think about that fruit snack category and we can get a portion of that for the healthier parents, or what we always used to say about honest kids is, you know, the best marketing for honest kids are soccer games and birthday parties. You know, it's the halftime and no parent wants to be seen giving their kids the super sugary drink.

17:31They want to be the healthier one. And you don't want to be the parent that gives like water and orange slices. Yeah, something a little more fun. Yeah, yeah. So, and what's neat about, we heard this and it's anecdotal for sure, and it's still small, but we definitely hear from parents who, I love this and I'm, you know, I give it out whenever my kids have friends over or they want to show it off as a thing. So we saw that opportunity. And by contrast, jerky is much more fragmented. It is a much less rapid occasion. There's fewer occasions for jerky in the same way. And then, as Sarah said, you know, mushrooms are polarizing.

18:07So there just wasn't going to get that widespread embrace for this. I will say, when it comes to aversions, my father-in-law hates carrots, hates them. And I made him eat one of the carrot chews without telling him what it was. And he was like, I don't know what this is. I'm kind of okay with it. And as soon as I told him it was carrots, he was like, I knew I didn't like it. But we almost got there. We almost got there. I do know, Seth, from talking to you that you've iterated on the flavor and texture of the carrot chews. This was something you said you had to do with the mushroom jerky as well.

18:45How do you go about conveying that to consumers? Because I think we're so used to new and improved on packaging. Right. You know, and we've gone going back to the earliest honest tea days where we used to have an inch and a half of sediment in our bottled tea. If you're really bringing something out different and disruptive, the consumers will be willing to go along with us on that journey. And frankly, our carrot chews, when they first came out, were made in a very different process and much cruder and much drier. So we've improved there, too. And part of that is, you know, innovation. And I think the challenge with the mushrooms is that minimum viable product with the mushrooms.

19:25It was acceptable in the market, but it just it was not good enough to bring in new people. And so, you know, we didn't see the expansion. We think with the carrots, especially as we continue to improve on the formula and now the packaging, we do think there's a wider market opportunity for us. How do you go about conveying, though, that to customers who maybe weren't fans, right? You talked about super fans. Yeah. But how do you tell the folks who are like, send an email in and are like, I got to tell you, I did not like these carrot chews. So there's a few things. So we do have a history of, you know, all the outreach that we've had in the past.

20:05So that is part of our plan is to, you know, communicate to through email or either through social channels, however they reached out to us initially and let them know. I mean, we're very hands on. We have our customer service team that's, you know, every single consumer matters. And, you know, if we can bring that person back and get that, if they were willing to try us in the first place, they're a valuable consumer for us. So we do plan to reach them. But at the end of the day, I mean, there's this was a very small launch. So I think that, you know, we're hoping that this is going to be really almost a new product for everyone to get out there.

20:42And the opportunity to reach new consumers is so much bigger. And we always our largest marketing investment still is field marketing. So it's getting people in stores to explain it, introduce it, share their passion for it. And if there was a product that needed explaining, this and less sweet teas are among the top. It's funny you mentioned field marketing because I feel like when I look on LinkedIn, I often see people posting that they're open to work because the field marketing team got cut back. What's your advice to brands on if you should decide to lean into it or that's a good place to make trim things?

21:25I always lean. I mean, you can look back at 25 years of me doing this, and I've always leaned into field marketing because when you're for brands that are bringing out products in new categories, right? So carrot chews, you can't put that on the shelf and say, oh, go buy a carrot chews. You know what? No one knows what it is. and even with a tea, first a less sweet tea. For 20 years, people had no idea what that is. And then now it's like, okay, well, if you liked Honest Tea, you'll like this and helping them explain it. And we've got new innovations coming and we're going to want to continue to be the storytellers.

21:59And I just think, especially the way our economy is evolving and people get so disconnected from personal interactions that you really can provide a totally fresh, literally a fresh face and a fresh way to interact with people if you're doing your field marketing right. So it's hard for me to imagine doing the work we do without continuing to invest in field marketing. And I fully support everything Seth just said. To me, field marketing is one of the greatest tools if you have great products. And so what I would say is if you're seeing a lot of these brands cutting field marketing, that should be a real sign to them that they need to look at the product that they're selling.

22:44Because if that isn't working, then something else might be a deeper issue that they need to investigate. And field marketing is not cheap. So obviously, if your product isn't moving, you may not be able to invest in that anymore. It also, and I'll just brag a little bit about our team. Like when you have amazing people, that's the energy for the brand. they're people who are passionate ambassadors for not just a package of something, but for a whole mission. And so to the extent we're more than just products, it's about these people being our emissaries to the world. And it really resonates with people.

23:23It's interesting you said we're more than just products, because that was something else you posted on LinkedIn, right? Was that you defined your enterprise, not by a product line, but an approach to food, which was planet friendly and chef crafted. Right. I think that is a misstep that some small brands make is that they narrow things in. But the flip side is I hear from brands when you go too broad, it's really hard to figure out where to start. So what's that balance? Well, look, we're still exploring it ourselves, right? We, we, we, for us, it was all about that planet-friendly, chef-crafted approach.

24:01And it has to make sense. And even when we thought of it before we entered tea, we said, does that still fit our definition? And it's like, yeah, because tea is an incredibly planet-friendly crop and we can use Chef Spike's recipes to elevate what we're doing. But then I think the other filter that maybe we didn't have in the beginning is market opportunity. They call total addressable market. And for mushroom jerky, it was just too small, even with it, even though it checked so many boxes. And we were on the way to Expo. Spike and I crushed a bag of mushroom jerky on the drive. We're like, this is so good.

24:39It was so like we're almost crying. It's like when you hear a record and it's so good, you get emotional. We were like eating the mushroom jerky like this is amazing product. And we're just continuing it. It's so sad. But maybe it's like a season or a series finale of a TV show sort of situation. It could come back in a reboot. Hey, we're getting Frasier for the third time, I think. Sarah, what's your advice to brands on finding that balance, you know, where it's there's flexibility, but it's also gives you a starting point. Yeah, I mean, I think, again, going by, I mean, Seth said it so well.

25:19I mean, it has to be a real business opportunity. At the end of the day, you have to have that addressable market, but you also have to have that great product and that fit. And so it's, you could, you know, theoretically, as even as Seth mentioned, you could have just like launched this one product and it was a little engine that could on that, you know, long path to the small house. but that might be a two, three person company. And that's fine for some people. But for us, you know, the goal was bigger. So I think in terms of advice is think about where you're trying to get to. And, you know, we, one of the pillars of our business is democratization of organic and really bringing this to as many people as possible.

26:06And I think with, with mushroom jerky, it's a product that was talking to a very small audience that already understood the benefits and it wasn't able to cross that threshold to really reach more consumers and start to educate and bring better for you to the general population. And that's really what we're trying to achieve. And it's okay if you're not trying to go bigger and it's great to have a small business with a great product. And I think it's just understanding what's right for you. And it is, you get so emotionally invested in these things. By the time it's come to market, You've put all this thought and lost sleep and just sort of slugged it out with everybody about different language and tastes and everything.