When Retailers And Investors Wish You Said No

0:00What's on the NOSH team's wish list for natural product emojis, more about the recent sale of ice cream brand Yasso, how Stonyfield is catering to the needs of parents, and what topics you can expect to see on the docket at Nosh Live this winter.

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 news from Amplehill Creamery, Stonyfield Organic, and Yasso before hearing more about the key themes that emerged at last week's BevNet Live. Joining us today are reporters Lucas Southerd. Greetings. Greetings, Lucas and Adrienne DeLuca. Hello there, Carol. Hi there. So if our listeners haven't seen yet, NOSH and BevNet launched their revised newsletter formats this past month, and it's a daily briefing of what's going on in the industry as well as information on NOSH stories.

1:10I should mention that insiders get extra special coverage of the news. It's been pretty awesome, if I do say, with my fully biased opinion. But one thing I know the team has been pretty excited about, beyond the content, of course, is that we can now include emojis. But I realize, guys, just how lacking emoji choices are when it comes to food. You know, Carol, I have a love-hate relationship with that statement because on one hand, there's way too many emojis out there. But on the other hand, I actually looked it up and there's no pickle emoji. Given how much we've talked about pickles on this podcast, obviously, you know, they must be popular enough, said someone.

1:54Why don't they have an emoji yet? It might just be confusing with like a regular cucumber, like, you know, a pickle. Is there a cucumber emoji? There is. But there could be like a pickle jar. Like there's, they get pretty detailed in those emojis. Like some of them, I don't even know what they are. Maybe a pickle spear or like one of the ones you get on burgers, like a ruffle cut pickle. How do you call those? Sure. A little pile of ruffle cut pickles. I could see that as an emoji. I was looking for a distributor emoji and there were like six types of trucks. Exactly. Why do we need six trucks?

2:30I think there's like 14 boats, thousands of blue fish, but no other colorful fish. I've had a bone to pick with the emoji developer since I was like 12. Yeah. Like when I write about alt meat, there's burgers, steaks, roast, bacon. I just put a little plant symbol before it and we're good. But there's also like no snacks. Like there's a cookie. Where's chips? Where's dip? Dare I say beef jerky? I don't know how you do an emoji for that. I'd love like a granola bag. That might be asking too much. Is there a candy bar? I feel like that's so small to make it look like just other than just like a bag of anything.

3:13There's also no condiment emojis. There's honey, salt, and butter when you type condiment into the emoji thing. Really? Wow, you guys really delved into the emoji game. Wait, is there no ketchup? I don't think so. I'm going to check. I don't think there's mustard. There's got to be a ketchup and mustard. Come on. I don't think so. I'm going to double check just in real time. For those listeners out there currently. Yes. Ketchup. No, there are no results. No ketchup? No mustard? And no mustard. But there is a hot dog which contains both ketchup and mustard. But I mean, you know. It doesn't count.

3:48I don't put ketchup on my hot dogs usually. I'm a mustard and sauerkraut man. Also, when you type in ranch, you just get a farmer instead of the dressing. Yeah, that's actually, that seems unfair because there's a lot of ranch eaters out there and there's less ranchers left in the world. Okay, fine. Well, thankfully, there is an ice cream emoji because we have been writing a lot about ice cream in the past week. First, news broke that Unilever acquired frozen brand Yasso. And while that deal hasn't officially closed and terms were not announced, this, I think, puts Yasso into a really solid portfolio of brands, including Ben & Jerry's and Magnum.

4:32And for Unilever, it allows them to continue to build out the premium end of their portfolio, which is something they've really widely said was a goal. It's weird what Unilever, Unilever, I should probably know this, but I always call it Unilever. I think I do too, but I'm also not the queen of pronunciation. Pronunciation. Pronunciation. I'm quitting. Anyway, it's interesting because Unilever, Lever, however you want to phrase it, were rumored to be selling their ice cream business. Or at least some of the brands, I think. At least some of the brands. And this was just a rumor. I think it was first reported by Bloomberg.

5:15I saw it in Reuters. And that was in like December of last year, last December. But this also came on the back of Unilever splitting up their business segments and splitting off ice cream into its own segment at the beginning of the year, which kind of was at least laying some groundwork for people to rumor about it being a part of the portfolio that they were going to get rid of. Or perhaps make some adjustments too. Make some adjustments too is fair. I mean, I was looking back on some of their most recent earnings calls and some of the leaders have said in the earnings calls is that in a high inflationary period, people cut down on their discretionary buying of frozen treats.

6:01But I I kind of feel like it's the opposite. That's what I thought. Wouldn't you just stress eat ice cream? That's what I do. That's what we all do. So I feel like that's just an excuse that they use. Maybe, I'm guessing based on, you said that was December they were thinking of selling this off. And then somehow, turn of the year, they are back into ice cream. I'm wondering if it's the seasonality thing. Maybe they were too cold. They didn't want their ice cream. Maybe they were prepping for a New Year's resolution, cutting back on sugar. I think it's a timing thing, yeah. I feel like a multinational food brand should probably not work in these kind of, well, it's cold outside, so that means no one's buying ice cream.

6:40We should sell off all of our ice cream. Seems like an impulse decision to me, but I'm not a CPG exec. Just an impulse purchase. Actually, that's always my most well-thought-out purchase. I spend so long in the ice cream aisle. Oh, really? Because I always like to try something new. Oh, no, I'm brand only. Like I have my things and I go for it, you know. That, Adrian, that is apparently a common occurrence in the ice cream category. Sorry, Lucas, you're a weirdo. I'm in the minority here. Yeah, is that people hop around at least within one brand and want to try different flavors, which is why we often see a lot of, you know, limited flavors that are just coming out for a season.

7:21I think Van Leeuwen does a lot of these. They had a partnership with Walmart. We see this also with Salt and Straw, I know as well. and Jenny's. Remember that Ted Lasso ice cream? I heard that sold out way quicker than Jenny's expected it to. I never got to try it. I know this isn't like a pop culture podcast, but someday offline, we should really talk about the Ted Lasso finale because I've got a lot of strong takes on that. I still have to watch it. That ice cream flavor actually reminded me I need to get like a free apple tv trial and watch that real quick i really want ted lasso salad dressing given the whole jason sudegas of olivia wilde salad dressing harry styles debacle i want that too that is pop culture news i'm in on anyway you should get back to ice cream talk yep so carol not only is there the you know lever news i'm just going to continue to weirdly pronounce that for the rest of time just fyi um but there was also some news out of uh i believe my former home of new york city in the ice cream world that that you reported on recently yeah ample hills got bought not for a huge amount of money i suspect yasso went for a much higher price point but the indie ice cream brand went bankrupt in 2020 and its co-founders were forced to sell it for one million dollars to a manufacturing company that made like measurement devices had nothing to do with ice cream.

8:50Now that company ran out of capital, bit of deja vu, and the original owners bought back Ample Hills again, spending$150 ,000 for the intellectual property and a few stores. So seems like that value really melted away. Value and that factory that Ample Hills had worked to build before. I think their previous owner, not the now again owners, whatever that manufacturing company was, they sold off a lot of the assets. I believe that was last year. They sold off the equipment for sure. The co-founders have said that they did not purchase the factory back, but that was a big reason for their bankruptcy, they said initially, was that the factory just had tons of overages when it came to building it.

9:45It was delayed, like many building projects. And then by the time it came online, they thought they would have ramped up capacity to fill out all the line time, but they hadn't yet. So they had this factory that wasn't running at full tilt. Didn't it have like a full ice cream museum in it too? I remember reporting on the closure and there was it was more than just a factory adrian you know way more about this than i do clearly considering someone who used to eat ample hills all the time and go to their stores in new york i know none of this stuff i will say i do have one bone to pick with the brand in that i had a gift certificate and they would not honor it at the store and that was very disappointing well let's see what happens maybe we'll find them back in retail adrian to the point you made earlier.

10:40They have to figure out a buffer on the seasonality. That was an issue they admitted they struggled with the first time around. And not to mention, you know, the freezer sets pretty crowded and DTC ice cream, if that's, you know, a consideration, is kind of a pain in the butt to do. So they're starting with three stores. We'll see where they go from there. Maybe you'll be able to use that gift card, Lucas, at one of those three stores. I mean, they make a mean ice cream. I'll give them credit. Like, it's a great brand. I used to buy it a lot. But, you know, just the fact that I went and just wanted an ice cream cone with my kid and they wouldn't honor it.

11:16I was like, come on, guys. Like, I know you're hard fought for some money, but this is like a$10 gift certificate. Well, Adrian, let's keep with the dairy theme we've got going. You sat down with the CEO of Stonyfield Organic to discuss their recent investment into pouches. What were some of the key takeaways from that interview? I would say the main takeaway is CEO Bill Cassidy is very aware of how messy children are. That was my overarching takeaway. Agreed. He's like so in tune with what parents want right now because I think one of his opening lines were, well, I would never hand a cup of yogurt back to a child.

11:59What do you think is going to happen? It's going to end up over your back seat. and I agree. I think that's a horrible idea, but you know what? It's propelled Stonyfield's business because once they launched pouches like 10 years ago, pretty much their sales have shifted to that's like the main format driving growth and especially, you know, kid-focused products. They have like a baby line, they have a kid-focused line. They're trying to, you know, help those products, you know, continue to age up with those consumer groups. Obviously, there will not be like a shortage of young kids anytime soon i hope so that shouldn't be too bad of a problem but you know they're hoping to like grab that was very doomsday have you been watching children of men recently or something yeah i don't even know actually i was reading a horrible book about the 1800s um but you know they're trying to also you know make these products appeal to parents and, you know, caregivers, anyone else who might be, you know, actually purchasing the pouches for their child.

13:04Their whole thing is it's such an easy and on the go format that especially for a snack like yogurt, it makes that, you know, able to be consumed on a car ride or wherever you are. Adrienne, what about the environmental impact though? You know, I think one of the arguments I hear often is that you can't recycle pouches. And that's a question I asked you, you know, when I saw this story, I was curious if you had gotten the details. As you know, Carol, anything sustainability related is near and dear to my heart. The plastic impact of this, you know, it's, you could look at it two ways because on one hand, you know, plastic cups, tubs, the typical yogurt containers, yes, they can be recycled.

13:51But as we know, over 90 % of plastic does not end up getting recycled because people don't rinse it out, especially a yogurt container. It ends up contaminating the other plastic or it's not a high quality enough plastic that it ends up in a landfill anyways. So these packages are technically lower material, like it uses less physical material per weight and a small plastic cap, which they'll actually explain that they've been consistently researching how to make not only the pouch itself a more sustainable material, but also shrink the size of that cap over time. So it's just less plastic being produced in the first place.

14:30It's kind of a similar argument. I know we've talked about this in the past between, I don't know if we talked about on the podcast, but between us, Carol, you know, with Tetra Pak, it's kind of a similar discussion where, you know, the package can't be recycled in all municipalities, but, you know, you're not creating extra plastic, letting it end up in a landfill, and then adding those microplastics back to the environment. It's a bit of a double-edged sword, but it depends how you look at it. I remember talking to CocoJune at Expo West this past year about their very sustainably minded company.

15:08CocoJune has great packaging. They have good packaging. I was talking to the founder about how they're now using like 78 % less plastic in their pouches than they were in their, their goal is to make a totally plastic free package eventually. And they were like, we're, we're close, but we haven't, you know, we're not ready to announce it. So, I mean, it does seem like this is not, it's not something that brands are not aware of and aren't aware of. I mean, as someone who has two kids who go through pouches, it's staggering how many, you know, how much plastic is. happens in one plastic trash happens in one car ride basically i mean they'll go through three pouches a piece if they're hungry and you know it's a lot of plastic you're throwing away you can go in through like a box or two of these a week it's it's a lot so it is kind of interesting to see that they're the brands are thinking about that and trying to find ways around it adriana i'm pretty sure instagram was listening to us have that conversation because i opened it this morning and my suggested ad was like a fun craft to do with the tops of your pouches.

16:21Apparently you can like make an ice cream cone art project out of them. I don't know, but maybe that's the way to go. Other things you can do with the tops. Repurpose the pouch. Oh, I think you found a slogan. I did. Stonyfield, feel free to take it. You're making plenty of pouches. Well, guys, this has been an enlightening conversation. Lots of dairy news, lots of new things. But it's time to move on to our featured interview with someone we all know well, our editor-in-chief Jeff Kleinman. Now, Jeff is out of the office in Greece, very jealous. But last week, before he departed, he and I sat down and debriefed about the themes, brands, and executives discussed at BevNet Live, both on stage and just in networking.

17:15There were certainly some takeaways for any brand in CPG and topics that I'm sure we're going to look forward to continuing covering at NoshLive this winter in California. So let's get to it. Hi Jeff, welcome back to Boston. You spent the last few days at BevNet Live in New York and while that's a lot of liquid, I wanna chat with you about the buzz at the event and takeaways that food brands should also be thinking about. It is a very beverage-specific event, but one of the cool parts of it is you do get a pretty good look at just what investors who think about consumer are considering. We hear from a lot of retailers and, you know, look, people hop in and out of beverage and food all the time.

18:01So overall, what was the general sentiment at BevNet Live? There was a tone of enthusiasm there. And I think we have a good event and a great team. And there were an incredible number of entrepreneurs there, incredible number of suppliers. And I think people were pretty enthusiastic. It is an uncertain time. It feels like we're sort of all dealing with this macro economy and all the sort of creepy uncertainty in the air and divided country, but people are there because they love beverage. Something that can unite us all. I would think so. Well, to that macro environment you're talking about, we've heard a lot about concerns around cash and investments.

18:56What were your takeaways for investors? Do you feel like they're still putting money into brands? I think investors are still putting money into brands. I think they're looking for ways to put money into brands. And I think they're looking for really solid brands and solid founders to put money into. But it's one of these times where they're looking really carefully at capital efficiency and at the owner's sort of sense of responsibility around total addressable market and how these brands will get there. We kept hearing again and again that growth at all costs is really not in vogue right now.

19:43And I think that's something that we've been talking about across the industry for about 18 months. When you talk about total addressable market, you know, I go to functional foods and there are certainly lots of functional beverages. How are they thinking about that segment of the industry? You know, making sure certainly functional products are popular right now, but at times that can really narrow in who you're appealing to. Yeah, there was an interesting note from Whole Foods on that. We actually had a discussion about, you know, are you a beverage or are you something that belongs in the, you know, sort of nutritional or whole body set?

20:27And one of the insights that came out is the way that they look at one of their customer group, which is sort of a, they're looking sort of for a cheat code to nutrition, right? $100 ,000,$120 ,000 income, really interested in fitness or being healthier through some kind of elixir shortcut, you know, give it to them quick. And I think that for these fast-turn products, food, snacks, there is a sense that you need to be simpler in your message to get it across more quickly than there is if you're, say, in the supplement aisle and your ingredient might be really specific and well-known. I think that's something brands struggle with though, right?

21:25Because once you cross over into that supplement set, you're narrowing the percent of consumers who are going to walk past you. I remember there was a chocolate brand that had caffeine in it. And originally they were stocked in the whole body section. Later they managed to move into chocolate. And the problem was when they were in whole body, people weren't looking for chocolate necessarily. I think the point that they were making was that if you're going to be in these faster moving categories in beverage and in snack, then your message does need to be a little bit simpler. Got it. Your chocolate keeps you awake.

22:04Now your chocolate has X grams of caffeine and theobromine within a gram to bricks ratio or whatever you would say about chocolate. It's yummy and awake is sort of closer to what that particular consumer is looking for. That leads into the retailer side of things. You had some one-on-one conversations that were happening between Sprouts and Walmart and brands. What were the takeaways that you gathered from that? Are retailers still looking for new brands on the shelf? I don't think that they would have had all of these one-on-one meetings if they weren't. I think Walmart met more than 40 brands.

22:53I think Sprouts met with more than 20. And the reason it wasn't bigger is because they'd already met with so many of them. they're not just looking for new products for the shelves. They're looking for innovative products for the shelves. They're looking for products that they can debut on the shelves, but they're also, and this is the big divide is, yeah, they're looking and yeah, they're looking to share the knowledge of how you succeed in that particular class of trade. Sprouts in particular, sort of put out a bunch of information about partnerships that they might have with someone like LA Libations or with the TIG group that are kind of designed to teach brands capital efficiency, help them work and market to the best of their ability and get merchandise to the best their ability.

23:53But the basics remain, which is that if you don't have the ability to do these runs of product, and I'm sure this goes for food as well as Bev, if you don't have the ability to do the runs for product and you're going to have out of stocks, no one's going to be happy and you're not going to last very long. The Walmart buying cycle is really pretty long. So, So they expect you to come in with the ability to nurture a brand from a supply chain standpoint, even if they're looking to get you into a much smaller number of stores than they might have in the past. You're still dealing with Sprouts. You've got about 400 stores.

24:43With Walmart, you've got about 4 ,000. Now, they can cut it down to a more bespoke amount. and they're really trying to do that. But it comes down to those sort of basics of, are you able to provide a steady stream of product? And are you able to afford promos? And are you able to support the brand in the store with demos? And if you can do that, I think there's a much better opportunity for you than there may have been in the past. There's a lot more openness to innovation at a lot of these companies. It's just that the dilemma is as much as it always has been, which is that innovative products sometimes operate on a shoestring.

25:36And right now, that's a hard position to be in because there's so many innovative products. There's so much competition out there. And I think that's something we certainly saw throughout our show and we'll see it on the Nosh side as well. I mean, it sounds like what you're describing on the retailer side is, you know, avoiding growth at all costs. Don't say yes to Walmart if you can't make it work. Yeah, I think that's a, you know, that's a point that we heard repeatedly. And it wasn't just Walmart. It was very interesting. A lot of the people who spoke, I think we heard, be willing to say no on three or four different unrelated panels.

26:21And so there was certainly a theme there. When you're talking about innovation, what about D2C products? I know on beverage, it's a little harder to ship those than, say, a bag of chips. But was there a discussion around the role that the DTC products are playing, both in retail or just in general, in the excitement and appetite for the industry? Well, it was funny because we had Nick Sharma speak of Sharma Brands. And, you know, he gave a really detailed set of instructions for brands on how their online presence can drive insights around beverage brands. And it's a change from how you can sell your beverages online.

27:19And I think at one point, and you'd have to go back to the tape, he basically said, it is nearly impossible to make money selling beverages on a D2C basis, particularly non-alc beverages that have lower margins and need to be consumed repeatedly. You know, I think it's not like we got into subscription, which is something that brands really like, but it felt like there's, and in the lead up to this event, it also felt like there was a sort of binary disgust where you're either doing it on your own or you're handing it off to Amazon. But either way, it's going to be a smaller part of your business.

28:09We know that Super Coffee, for example, cut their own D2C and just handed it off to Amazon. And I think that's happening with a lot of brands that either weren't fully built on D2C and continue to have it thrive, but I'm still not sure there are that many left. I mean, we've seen that on the food side, right? I think Partake also announced that they were cutting their DTC to focus on Amazon. Look, I don't know if it's that people are getting margin gospel or they're just cutting back that hassle that they don't want to be in those two businesses. Or maybe it's just that they want to focus. I mean, there could be any number of reasons, but we're certainly seeing it.

29:06And it's still a good way to test it out. But when I say it's tough, I mean, it's tough to base an entire beverage or heavy freight product business that needs a high repeat rate in D2C. And that said, there's an incredible opportunity absolutely to learn and to drive traffic to stores if you're using the right methods and to learn about the products that are going to move more quickly and to sort of create sales and amplify promos that you might not have been able to do in the past. Jeff, sounds like a lot of great conversations happened at BevNet Live. I'm excited for Nosh Live this winter and excited to see all the brands there and hear what they're up to.

30:15Yeah, I was so thrilled at the level of enthusiasm, the level of discussion, some really interesting things that, you know, anyone looking at BevNet will see on Convergence and the alcohol and NA space and just some really inspiring entrepreneurs and some folks out there who are going to be around for a long time to come. So it was, as always, great to dip into, you know, a hotbed of beverage joy. That wraps up our episode of the Nosh Podcast. Please rate us on your podcast platform of choice. Subscribe and continue to tune in next week to hear more about the world of natural food.