7 Hidden Secrets to Absolutely Smashing The Out of Home Channel For Challenger Drink Brands

0:00Hello there and welcome to Hungry. Hungry is the podcast for the next wave of challenger food and drink brands looking to pour gasoline all over their growth. Each week we'll interview successful founders, thought leaders, unpack their lessons and provide you with a toolkit to scale super fast. I am Dan Pope, I am your host and without further ado, let's get started. Hello there people and listeners of The Hungry Podcast. Today I'm absolutely thrilled to welcome my very good friend and now business partner, Harry Clark, back on the podcast. uh harry was the founder of uh pops uh who did these frozen premium frozen ice lollies there's some amazing brand partnerships with diageo pims um uh loads of amazing brands and they got that into tesco sainsbury zicardo um they unfortunately had to fold the business which we talked about on our first podcast um which went down really really well uh and And we talked a lot about the pain points of actually being a founder, what it feels like to shut down your baby, to kill your baby, as Stephen King says.

1:12And today, what we want to talk about is drinks specifically. And I think drinks is a category that is so wildly different to every other category in that it's I always almost say it's like the matrix category. so by that i mean the opportunity in drinks is just way way way bigger than any other category like you know i've worked in peanut butter there's only so many kind of channels and occasions you can you can go with with peanut butter same with um you know drinking chocolate but with drinks it's like the world is literally your oyster and if it is the matrix you can literally bend the rules i think of trip you know trip are a functional cbd brand who i spoke to live on the podcast who have literally as i said kind of taken the fucking red pill or the blue pill and done some weird you know that they are they are in the co-op meal deal but they are in annabelle's private members club they are a drink that you'll have post yoga they are a drink you'll have um in the middle of the day to calm down they're a drink you'll have after you miss a tube they're a drink you'll have you know as i say in a private members club in soho and i think drinks is so fascinating but ultimately there's a lot of um there's a lot of competitors come crawling in it's very packed the rafters um and i think you know harry what i love you mate is you've done so much with drinks um with your agency and i'm excited today to kind of yeah just weave in and explore how this kind of majestical matrix-esque world of drinks work.

2:51So thanks for coming on again, buddy. I really appreciate it. No problem. Thanks. Yeah, great to be back.

2:59So let's start with some of the kind of common mishaps or mistakes drinks brands make. I think because there's low barriers, but everyone sees sees a drinks drinks category they see the upside and they think right we're going to launch a drinks brand how how hard can it be and ultimately you know you look at the the fixture of the meal deal it is so uh the shelf space is so finite you've got the big incumbent brands the coca-colas um i think in terms of challenger brands some of the only ones that have really kind of pushed through are maybe Dalston's, Corson Press. What would you say are the biggest kind of unforeseen challenges early stage drinks founders don't understand before they go into the market, if that makes sense?

3:57I think, look, you know, in terms of the category where there's, you know, just so much innovation, you know, the drinks category is, will be the leader in that. And I think now we're sort of in a world where essentially better for you beverages, which we see a lot of now, is that it's almost, it's become so prominent that almost functional and better, when I say better for you beverages, I sort of mean most innovation that we see that comes into market now is not going to be high in sugar. It's not going to have artificial ingredients. There's going to be something there that is on a healthier sort of angle.

4:48This doesn't necessarily mean that they've got to be just a health proposition, but they probably toe the line in terms of what we consider healthy. I think what I see from founders is, I think there's just this sort of, I don't want to say unrealistic, but I think people believe the volume that they'll see immediately is a lot greater than the reality. so I think you know I think I think if brands were if stuff and founders were a bit more sort of aware about sort of the time it might take to build that sort of distribution and rate to sell I think I think there might be you know I think in terms of in terms of like I suppose the appetite to get involved in the spike in the space might be might be different because the reality is sometimes different to um sorry their expectations are slightly different to reality um and and i think because people see that you know within the drink space there are just so many different channels that you can attack you know you can you can pick up a drink anywhere whether that's at the service station whether that's um on a plane whether that's um just in your sort of supermarket wherever that is your local gym so they just i think they they believe that that sort of opportunity in terms of how quickly they can scale um might be slightly quicker than than the reality and then because there's so many channels i always talk like one of the things i say say you line up all your channels and imagine they're imagine you're digging for oil right uh ideally you want to go narrow and deep on one or two channels because that's where you're going to get get the find the oil and that's where you're going to build the volume build the rate of sale i think what can happen with drinks brands is is they think fucking I've got all these different potential oil wells or oil kind of holes to mine and dig is that they become a wandering generalist instead of a meaningful, specific as per Seth Godin.

6:52And they end up with this scattergun approach being like, right, I'm going to do a bit of airlines. I'm going to do a bit of grocery. I'm going to get it into gyms. I'm going to get it into some independence. I'm going to. And then before you know it, like you're a sales team of basically one, i.e. the founder, and you spread yourself super thin. say i'm a drinks brand and i've created i don't know popy's pop yeah sounds a bit naff but um and i'm starting out so i've just said to the manufacturer i've got popy's pop i want to i've got a huge uh minimum order quantity that i've just paid for it's all sat in a 3pl knowing what you know what is the easiest lever or easiest pedal to push to begin to get that rate of sale going like what is the whole or the channel you want to go narrow and deep on to drive that is it out of home is it grocery like where would you be playing well i think the the great things about the drink spaces in terms of from a you've got two you've got you've got two things on your side immediately is you've got um usually you've got shelf life um unless it's a sort of fresh juice um you know you've usually got shelf life which which might be anything from um you know uh six months up to 24 months especially for a sort of carbonated drink so you've you've got that sort of um you know when you're investing in product you've got um some time to sell it having said that just to caveat that which i think lots of founders are surprised about immediately is that um when you're when you're selling a drinks into a wholesaler or to a grocer um they tend to want um about 75 minimum life of requirement on on delivery so although you might have a 12 month shelf life um on on production you've got to be getting that into your customer within the first um three to four months or depending on what you can negotiate so so i i i think there's there's a misconception there immediately and i've seen lots of founders go oh my goodness like we've just produced all this and we've got to we've got to shift it into these channels and actually not not 12 months like we thought we've actually got to shift it in there within three months so i think there's there's there's often a misconception um because no one really tells you that i suppose um so so i didn't know that yeah so so so essentially when you're dealing with any trade customer so any i suppose um selling to a business a business to business So whether that going to a wholesaler, whether that going to a grocer, anywhere that's supplying the trade, you're going to have immediately, you're going to have that minimum life of requirement as a sort of stipulation.

9:36So what that then does is then what people then think immediately is I suppose what you have of the benefit of a drink as well, you have the ability to sell direct to consumer. Hi there, guys. Super, super quick one. I write a weekly newsletter called Hungry Friday Feast It goes live at 8am every Friday I'm pouring my soul into this bad boy It's probably my favourite creative ender I've ever done I basically pick apart all the biggest lessons All the biggest learnings From all the wonderful guests And throw it into a feast or a newsletter We've got over 1 ,200 subscribers Come and join the party I'm going to put a link in the show notes It's right at the top Subscribe and if you are already subscribed please just forward it on to a friend do the amount of favor it would mean the world to me anyway back to the old episode boys and girls in terms of distribution what you do have with a drink which is which is a fantastic opportunity is you can you can sell direct to consumer and you know platforms like your website platforms like amazon give you an immediate sort of distribution opportunity that if you're in a shorter fresh if you're in the food category if you're within anything that's fresh that becomes obviously a lot more difficult and i think um what we're also seeing is that you know that the direct to consumer side of the business and just as a bit of a caveat i i work with my sort of clients more on the sort of retail business to business side of things but you know you can build some very um you know um you know you build big businesses now in terms of direct to consumer.

11:15I've heard some very impressive stats that I won't quote from brands such as Dash and Trips and other brands in that ilk that are doing these phenomenal numbers online. And I think one of the reasons for that is, you know, drinks is now a category where consumers are pretty well conditioned in buying online. buying in 12 packs deliveries to your home is a very sort of common distribution method now and that really wasn't the case I would say five, ten years ago it's suddenly sort of soft drinks, health drinks were not sort of consumed in the way so that again gives again that gives founders an opportunity to sort of get, I suppose sort of get off the ground relatively quickly so okay so i've got popey's pops um you're saying d2c's d2c's not well well we should we should explore because you know you've got complete again that that's a riddle wrapped in enigma for sure because i know d2c is not as easy as just shopping online but let's just say right we're going to focus on d2c you could bring in and bring in someone to help with that or you can kind of figure out yourself i mean those everyone tells me about these facebook meta adverts i'm just like this is just but anyway for yeah for argument's sake let's so d to c then you've got grocery you've got um out of home yep horsica what fuck it's called yeah

12:51and and yeah so then then you've got some other oil wells you could explore again knowing what you know where should i be spending my limited finite resource with popies pops yeah it's obviously all it's obviously all sort of um you know slightly it's product dependent right and and it's got to be where you can see it see a gap in or you can see more of a gap because i i think one of the one areas of drinks there isn't a lot of white space in terms of um you know in terms of new innovation there is innovation coming in the market but uh there tends to be very quickly a lot of brands sort of repeating that innovation so i think in terms of other channels it is very sort of specific to sort of uh your brand what what um you know in terms of what yeah i suppose the channel plan has to be very much specific you know so you know i suppose a a a uh you know an example of this is you know lots of you know i've seen lots of brands who have done it who've started in the business and industry sector let's just say And, you know, they've gone, we've got a product here, you know, we're going to build our sort of core following in business and industry and supplying into lots of the offices.

14:07Because, you know, again, you've got lots of repeat purchase opportunities there. You know, often these offices might be in central London. You've got sort of a captive audience there. So I think, yeah, what we're basically saying here is, you know, as a startup, certainly not the strategy is this sort of scattergun approach. You need to very much be looking at your product and your proposition and go, okay, well, let's look at where that sort of gap is in the market for us. And I'd be picking one or two channels and sort of focusing on those as much as I can. Yeah, so going narrow and deep. Yeah.

14:48I talk about the Piper's example all the time, and I really believe every brand can find a slipstream channel. So it's a channel where no one else is really looking. It's kind of like stumbling upon that oil. Well, I don't keep talking about oil. You sound like some fucking Machiavellian masochist. But I think there's always a channel. The biggest example is Piper's Crisps, right? So every Crisps brand was knocking on the door of Waitrose going, please give me a listing, please give me a listing. what they did is they were like right screw this where's no one playing farm shops and delis uh or speciality um let's absolutely hammer it there and that's what they did they built a huge multi multi-million pound business in farm shops delis had a huge customer base there but then when they crossed the chasm into into uh retail they people already knew who they were if anything the supermarkets was coming were coming to them saying oh my god look what you're doing in uh speciality we'd love to buy you and i think i think you know with islands chocolate we uh wolf and the guys they stumbled across um kind of didn't stumble across they started as a brand that was selling bars of chocolate and then they ended up finding this kind of unique channel in all these high-end michelin star restaurants and by doing that they've then unlocked this whole delta of opportunity with gales fill in the blank coffee shops and that that is what i would call a slipstream channel in terms of drinks and again i know all of this is case by case specific and let's just say popy's pops is a functional drink like everyone's functional drinks all the rage right now knowing what you know again what what would you say are some of those potential you know we've got our d2c we've got our bni business industry what would you say are some of those spooky in the murky waters lying opportunities i think as well as um looking at just the specific channels i think it's also about the audience that you want to be targeting as well because because you know you know we we have a brand um in the portfolio called savile beverage company, which is a very sort of premium alcohol-free RTD.

17:02And, you know, we've been trading for the last sort of three years, and we've been really focused on, you know, the out-of-home channels. And what we've done here, and this is maybe a sort of good example of how brands should be thinking, is, you know, we're in this space where we have, we're in the alcohol-free category, so the no-to-no category. Within that category, spirits have been a sort of domination within that. So, you know, brands like Seedlet, that come in sort of 70CL spirit bottles, and we've come along as an alternative in a 250ml can. So then when we start to look at the out-of-home channel, what we start to do is go, okay, So we don't have that many like-for-like competitors within the load-to-know RTD space.

17:59So these are 250-mil can cocktails. But we do have quite a lot of competitors that are trying to explore the out-of-home, specifically the sort of entree, so like bars, restaurants, stadiums, sort of large events. but essentially how we look at it is we start to look at um you know okay so what what are the operational challenges of trading with a alcohol-free spirit so we're and and by the way i'm not here to sort of um say anything bad about alcohol spirits but i can just take a sort of honest and open observation um the alcohol-free spirits um you know in a environment like a that's choose an account so um chelsea football stadium for instance so which is one of the compass sites um they need to have an alcohol-free option but on the bar they have staff that are um uh being paid 10 pounds an hour um they don't necessarily know how to mix an alcohol-free spirit um so therefore what our sales pitch what how we go and attack that situation and say okay, we're ready to serve.

19:10Therefore, we can provide a product that's operationally consistent. There's the speed of service is much quicker because there's less ingredients. You just open the can and serve. So what we try and do is we try and look at the pain points from the operators. So we pick a channel and we go, these are the pain points that these operators are having. And that can be in that category, can be replicated that sort of strategy in lots of different areas so whether we're um you know we've got a listing on british airways because they don't necessarily want to be mixing too many drinks there it's an easier sub we we're doing quite a lot in uh on cruise ships again we're doing quite a lot in offices in that category because again an office they don't necessarily want to they don't have all the facilities to make a alcohol-free cocktail so with lots of this um And I hope that's sort of an interesting example, because what we're trying to do is also look at where the pain points are from the customer and go, okay, well, how can we sort of address that for them?

20:16And I think that's sort of what we've done. One thing that I would say that would sort of counter that is, you know, we are with Savile Beverage Co., we are an alcohol-free cocktail. well, it's an RTD and RTDs are not necessarily widely adopted in very sort of premium outlets. So they can be, but not all the time. So for instance, we've learned with that brand that we do not win in five-star hotels because in five-star hotels and looking at that sort of luxury hotel sector, they will always want to use a spirit, an alcohol-free spirit, and they will also want to mix that drink using it. And actually, psychologically, when you're in a five-star hotel, even if your drink takes five, seven minutes to come out, you don't care, actually.

21:07And sometimes it's a positive because you're thinking they're taking such care over my cocktail and the craft of it. You're sitting in a lovely cocktail bar. There's an ambience. You've got some delicious nuts, some olives. It's all part of the experience. So when looking at that channel strategy, it's not necessarily just looking about, okay, well, where's the gap in my exact category? And for the light for lights, it's also zoning in on what are the pain points and operational issues that some of these end customers are having? And how can I kind of come in and solve them? I love that. it's all the original question was how do you find that that slipstream or how do you find the oil well with lots of gold or oil where no one else is looking i think if you focus on the operational pain point and really dig into that that will be the compass to find that oil well where and as you say the delicious example of of savile is it's like okay well in a cocktail bar if you just if i went to the the ritz and some guy just pulled a can and in the thing and said there you go mate i was on a date i'd be like oh thanks thanks a lot fucking hell there's that's an arm and a leg 18 quid yeah but then as you say you go to chelsea football club it's like well time's of the essence people are on 10 pound an hour you need speed of service and i think that's really useful for listeners instead of looking really zoning in and saying what is the operational pain point and that will lead you to that's the compass to the beautiful oil well down the road delighted to announce the extension of our partnership with the wonderful billion pool from mckenzie jones but even more exciting they have just launched a brand new brand as part of mckenzie jones called mkj ignite mkj ignite is a recruitment firm which specializes full shebang focus entirely on challenge brand space they work some incredible brands lucky saint good race purdy and fig hunt and gather and real superfoods they can support with your hiring needs across all levels top to bottom junior entry-level jobs all the way through and up to md and ceo level so if you're looking for a field sales stomper a sales wizard an ops guru a supply chain sensei you name it, MKJ Ignite can help you out and look, if you're looking to wet your whistle ignite your curiosity, then check out the poddy we recorded with them back in July, laden with wisdom all about like do's and don'ts of hiring and like how to create the perfect job description you will love it Guys, are you ready?

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24:24Well, look, very, very simple, mate. GS1 will help you drive revenue upsell and cross-sell your amazing products boost your bottom line boost your bottom line yes please where do I sign? Enhance customer engagement delight your customers with dynamic content that captivates and keeps them coming back for more, more, more please sir, can I have some more? yes you can comply with regulations look, you want to be building your brand you don't want to be knee deep wading through a deep river of legislation aggrovation these barcodes allow you to stay ahead of the curve look don't allow this beautiful boat of boundless opportunity to sail away into the malting sunset be on that boat join GS1 UK's free pilot program today yes it's completely free there will be a link in the show notes thank you so much I think you've just got to put your shoe on the other foot right um so I think again this goes back to what i often see with early stage businesses it's it's it's it's brand brand brand all the time um and i think it will be in i think maybe because this goes through such a different sort of a different beast and somehow you look at it maybe we just focus on the out of home um because um within the out of home there's there's obviously a lot of different nuances to that and you know if we if if for people that um you know just to be sort of very clear on sort of what out of home is how i define out of home is you know anywhere um where you will basically be consuming a product outside of your house just to sort of be clear so so that sort of opens up sort of every sort of huge amount of channels so i think and and you don't need to be an expert in this i think what you've just got to be doing is you know is thinking about what the dynamics of those channels are going to be so you know if you're thinking that you are let's say um let's focus on let's say the business and industry channel so let's say you're a contract caterer and you are buying in drinks for an office your your mindset is thinking um specifically around the needs of your customers who are basically the workers who are working in that environment what do they want between their hours of work um so you know that's the way that you've got to you've you've got to then think about it and then go and and also you know in certain um you know in certain of these out of home channels you know these these buyers are buying multiple different products you know and they're not going to be necessarily so laser focused on the category so in the likes of a grocery category that grocery buyer is buying um you know if they're buying in the world of drinks, they're the soft drinks buyer.

27:08They're going to know every single data point or they should know most data points in that, what's driving the category, what's driving the growth. If let's say you're in an environment where you're speaking to a contract caterer that's buying food and drink for an office, their insights in terms of the sort of category are going to be completely different. It's going to be a completely different sort of touch point. So I think what you've got to do is sort of you've got to then obviously amend your pitch slightly depending on, you know, obviously what category you're going into. But then understand.

27:46So if I was going to give an example of us sort of pitching into an office, you know, obviously what are offices now? Now, again, offices are looking at lots of different, the larger offices, lots of them have sustainability agendas. Therefore, they're looking at putting less plastic in their offices. Hence, we've seen some really good sort of water brands that are now aluminum cans do really well in those office spaces. We've seen functional beverages do quite well in offices. but actually I would actually say sort of the more functional actually, you know, you know, you know, in terms of that sort of consumer, depending on the office, you know, Facebook and Twitter might have a sort of audience where, you know, they're far more up to date on trends.

28:35Therefore something more functional might be suited for them. Therefore maybe a more traditional office it might, might not be. And therefore maybe a Causton Press might be, which is a sort of very delicious, healthier soft drink, but it's not a kombucha. So, you know, you start to have a think around, you know, firstly what the sort of operators are sort of where their pain points are. And then you sort of just start to, you know, tap into that consumer piece as well and sort of go thinking, you know, who, you know, what's, you know, in terms of sort of the employee base, what that business stands for.

29:10And then you sort of tailor your pitch that way.

29:15Yeah, I love that. So it's, it's case by case, almost doing the research beforehand saying, you know, so probably PWC, I remember doing a sampling session there. It was riveting, but, um, the, uh, but that's going to be a very different vibe to Google where we didn't, we did a thing at Google and it was like, you know, as you can expect, it was, you know, it was super, super fun. and I think getting tapping into that that problem operational problem first yeah and then actually the mindset and and the context of the office the context of the office is super interesting that's very valuable very valuable you said earlier there's a lot of nuance to our home which is which is really interesting you know grocery kind of it's not as easy as this bish bash bosh get bob's your uncle but like you know you get the listing they put you in the stores do the media plan and then you go and sample like crazy and it's either sink or swim but without of home it's such a incongruous perplexing beast what are some of the nuances you wish you knew you knew when you started your career in fmcg 10 years ago well i think i think in terms of in terms of the expectation of you know again you know the different routes to market in in out of home massive differently and and and you know there is a how there is yeah so so i was you know so you know we you have you have you know you in terms of out of home you know generally you're not not always delivering direct into them so you've got to work often with with a wholesaler so you've got sort of wholesaler relationships you also have within those wholesalers they have relationships with contract caterers and I think that that might sometimes be a I've seen in startups often founders or commercial teams can be slightly sort of you know confused about the sort of difference between sort of a wholesaler and a contract caterer and the food service provider so you've sort of got you know you've sort of got you know three different sort of terms there um but again what's the difference between each yeah so so in in terms of um a wholesaler so a typical sort of uh wholesaler will be you know they will be buying x amount of your your product you'll be selling it at a wholesale price which will be a discount on your direct price um and and then essentially they will be basically selling into the customer for you.

31:54So the relationship that you, you know, it streamlines your process because rather than delivering directly into 50 accounts, you having to raise invoices for every single one of them, you've got to facilitate the delivery and pay for that cost. It's all being centralized for the whole set. Therefore you will, you know, they will order X amount of cases. You'll, you'll have a minimum, you'll have a MOQ, which will go in and then, then it'll essentially be driven out to all the end customers. Obviously, you know, which lots of people then, you know, I think there's a disconnect between brand thinking.

32:32When you land a wholesaler, that is going to mean automatic volume. That's never normally the case. There's a lot of work that has to go into driving the end customers. So, you know, working collaboratively with that wholesaler is going to be key to drive that sort of end result in terms of getting your distribution out. But it's a chicken and egg often in terms of you need that wholesaler in place to win the end customer. So that's the wholesaler, which I think, you know, that the wholesaler approach is obviously what's in retail. So you have retail wholesalers that will supply them to all the sort of typical indies.

33:08You also have wholesalers that deliver into retail and they also cover into out of home as well, because essentially all these retailers are looking to extend their customer base anyway. So, you know, it's sort of the model still works. So that's the sort of wholesale relationship. And again, you know, what I've seen a lot of is seeing brands, you know, again, recently I had a meeting with a very small brand who had nine wholesalers, you know, and, you know, it gets you thinking, thinking, you know, that's a hell of a lot of wholesalers for a very small business to handle. How much revenue is really being driven out of that wholesaler?

33:51The answer, very little. But the reality is when working with these wholesalers, you've got to invest into brochure adverts. You've got to often invest into telesales. You've got to invest, there's minimum hurdle rate. So having a whole load of wholesalers is certainly not a sort of, although that means you might have very good availability in the market it doesn't it doesn't mean it's going to drive particularly a huge amount of end sales so I think I think there's I think there's a there's definitely a sort of you need to be quite strategic about what wholesalers you partner you work with and trying to also have be aware of who their end customers are and and actually being aware that lots of these wholesalers deliver into lots of the same customers so actually you know there's a lot of sort of overlap and cannibalization really between it so you just got to think strategically strategically there in terms of your question around the contract caterers um you know the contract caterers the essentially the easiest way to sort of you know define what a contract caterer is you know these organizations like you know, Compass Group, CH & Co, Elior, you've probably heard of some of these sort of larger contract caterers, and they will have their catering businesses.

35:18So they employ chefs, and they will have the catering contract within a number of different sites and operations. So usually these are within non-food and drink businesses, i.e. for instance, you know, So going back to the example of the office, you know, PwC are not in the business of employing chefs. They don't want to manage chefs on their P &L. So they will work specifically with a contract caterer and a contract caterer will have that contract with that office. These contract caterers then service into a wide, wide part of the market. So, you know, if you're looking at the likes of Compass Group, you know, they will have contracts with prisons.

36:04They will have contracts with schools. They will have contracts into business and industry, into leisure sites such as hotels and stadiums. So there's this massive sort of breakdown underneath that. So often when you get a listing with a contract caterer, again, there's a common misconception, which is we're listed with Compass Group, which if you can get on Compass Group's sort of listing platform, which is called Food Buy, you know you have availability you know for a number of sites thousands of sites to order you but again it comes back to the same thing you've just got to keep driving driving that in customer and being sort of very sort of um clear in terms of sort of what what channels you're targeting most challenger brands that listen to this podcast are not going to be appropriate for prisons i imagine i'll say that definitely but i probably can make a pretty pretty safe safe assumption so So you work on...

37:04Pobie's Pops would be. And then just lastly, just in terms of covering all the bases, you then have food service providers. And the food service providers generally are providing food products. And generally, so the likes of breaks and bid foods and crude food service, and there's a number of others. but these are normally delivering larger quantities of food. So in the likes of islands, they will be delivering their chocolate powder, their flakes in sort of more industrial size, pack sizes into their sort of coffee customers. But there's still very much opportunities within that space because those businesses understand that they can still provide drinks within that.

37:57There's extensions within the ranges. So even with food service providers that are typically doing catering size sort of food products, you can still, there's add-on opportunities to have drinks and drinks, of course, and the likes of Bid Food and Breaks and Crete Food Service have an array of sort of drinks offering that sort of complements their food offering. So yeah, I hope that's not a sort of too long answer, but you know, it's quite a fragmented side. So I suppose if you're coming into this industry with not that sort of prior understanding, you start to understand this is a very, very fragmented sort of market with multiple sort of different layers.

38:40And then underneath all that to add complexities, you know, within things like Compass Group and CH & Co, they then have different businesses underneath that, you know, know with different names that supply into different channels so you know you know compass has levy that supplies into all of their ledger sites for instance and then they have their business and industry so so um what i would probably you know and you know having and i've actually created you know for anyone you know if anyone's hit me up and happy to share i've created sort of more of a sort of a map of uh and sort of mapped out lots of these sort of channels um who the key players are, who are the sort of subsidiaries below them, just because I think a visual representation of this and what channels they then sell into can be helpful.

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we've won listings at a load of wholesalers we've got milk and more we've got our first grocery listing coming very soon which is very very sick but what i'm thrilled to announce is hungary's merging with hc consulting um my boy harry clark and his wonderful team he's an absolute g they do brand strategy new business business and account management but why i really love working with harry and why we've got on so well over the last couple of months is harry was actually the founder of the boozy isolate brand pops he's been in the trenches he's grafted his face off he's had the sleepless nights he's had the turmoil he's had the triumph he knows what it is to be a founder he is a founder and he's got a proven track record in grocery and out of home holy moly dips the gut stuff savile drinks remio gelato so if you're a brand and you're you're stuck you're looking for like new business help you're looking to scale drop us a message we'd love to chat thank you so much back to the old episode let's dig deeper into the contract catering specifically because i feel like it's almost like we've dug we dug past the oil and we've entered a fucking brand new world like we've almost got into atlantis like the water world and it's like so perplexing and confusing and the way i've always heard about it or to me it's always perplexing it's like i feel like you can end up being a busy fool in that because the amount of effort to get to get to get a spotify listing and there's bugger all volume there which you could just spend i don't know you could spend that energy building dtc where there is volume or you could spend that energy going into trying to get a co-op listing with this 500 stores um but then at the same time as soon as you get into that that atlantis underworld of out of home is there are these huge opportunities in like uh i don't know for example if you're a functional drinks band and david lloyd that's suddenly 80 sites but where it gets confusing is it it could not saying it would but it could take and maybe david lloyd's bad example because i know they change the menu very infrequently but it could take as much effort to get a single site like a spotify which is great for shouting about linkedin um as it would a david lloyd as it would uh a school which isn't great for linkedin imagine saying oh i got into loads of primary schools i mean that's hardly gonna you know hardly bang the bong for that yeah um imagine let's make this really dumb right so you get the contract catering listing like what are the first one or two you go for because i know compass is really hard like again let's just say this is popy's pops who am i going for first question second question i get a listing what are the first three things i do like i'm sat there going fuck and now i've got this listing what do i do so so i think like you know i think it's really easy i think it's easier when i can bring some like relevant sort of brand examples into the picture right because i think that helps it helps everyone so you know one of my first clients which is a great brand um i worked for a couple years called unrooted drinks so they do they're in this sort of shop space um you know um they are they're they're doing well in that in that space um but they have they have a quite clear difference to to moju which is Moju again you know they are they have a you know they have a 30-day shelf life in terms of their their product so I think it might be slightly longer but it's essentially it's essentially a fresh product right so they're slightly limit you know that limits them in terms of in terms of some of their sort of distribution right because um not not all the time but you know there are certain retailers um and certain outlets that just require a longer shelf life it's just it's just it's just a fact right so you know unrooted which is very much a challenger it's a smaller brand than that then than moji you know the picked up pace or in the supermarkets but they they they had a very much a sort of focus which was okay let's let's try and play in in spaces which um and you know that might be more difficult for another fresher product you know, perhaps like Moji to sort of come into.

44:46So, you know, they, they, for example, focus massively into the travel space. So they focus really hard on travel and they've focused on, um, into hotels and mini bars. Um, so, so, so, you know, in terms of that example is, you know, that's an example where sort of a brand's looked at, look, they're, they're in a shop space, they're in a functional space. Um, um, they've got a competitor within that space, but you know, where can where can they not play and where are those little nuances and you know again shots for travel they've done really well they're on virgin they're on virgin they're on british airways shots is actually a real a perfect place for you know it's a quick boost of goodness um you know you know you know people have digestion issues sometimes on on planes they have a good gut shot health you know there's a story to tell that again same with with the minibar scenario you know So people often in business hotels, for instance, we saw a lot of success focusing on business hotels.

45:47We have a good energy shop that sits there. The businessman's coming over from flying in. They're staying in a hotel for one night. They might have an espresso or coffee, but then they might take an energy shot from the fridge. So, and again, in terms of looking at sort of the rate of sale in a minibar, minibars is a big opportunity. but in terms of volume, if you can go into hotels with hundreds of rooms in, but the rate of sale is often small in terms of per room, so they're looking for a product like that. So again, I think looking at that example, it's again, that's a little bit of tapping into what are the operational issues, the whole dynamics within that category, and it's also also looking okay you're sort of also doing a little bit of looking at your competitors and going where can they play and where can they own and where can we own and sort of making sort of sort of a plan around that i think that's hard to one half of your question but we can dive into probably the second half yeah no but just just just just just to kind of kind of play with that is i think one of the things and i i do this a lot is is you can literally write on a piece of paper is like what would this look like if it was easy so i and because the world is so complex people are obsessed with complexity we lean on complexity as a crutch for making and we end up just faffing about basically but what would this look like it was easy and i i asked this so getting the podcast going what this looked like it was easy and he just boils away all the all the bollocks yeah and i think when when you when you ask that as a brand scale what would this look like it was easy and you literally write this on a piece of paper have your competitors and it's like what is hard for our competitors yeah so when you do these two things suddenly you find the slipstream channel so with with unrooted it's like okay what would this look like if it was easy but we've got a much longer shelf life which means we can play in places where there's where they where longer shelf life is actually super advantageous airlines hotels fill in the blank yeah what is hard for moju places where they don't have a short short shelf life airlines uh hotels blah blah blah so that's hard for moju grocery is probably pretty easy for moju because they've been up and running um so again what you've done there super shrewd is like oh fuck it we're not going to play in the in the grocery space just yet we're gonna we're gonna dial in on these contract caterers yeah i think that's super valuable and super actionable for people listening to this but then let's let's go into the as i said almost like atlantis the underworld of contract catering so you've done you've done this upstream strategy upstream i can't pronounce my words upstream strategy where you've been like right this is easy for us hard for them this is what we're going to play that that that kind of boils away a lot of the whiff in terms of being being a meandering gallivanting fool yeah um to to focus so you've done that piece of work then what is the next step and maybe we could talk about yeah do you pick off end sites do you look for the big ones with lots of sites how do you do it mate it seems so confusing to me yeah so so i think look like you know one of the hardest things like all this is is is actually understanding who their customers are so you know getting getting understanding who the customers are so you know um you know this this this sorry to interrupt so so when when you wait sorry wait sorry to interrupt so so when you say customers are you talking about um say the wholesaler's customer so would you say say the wholesaler is i don't know i'm just saying x yeah when you say customer are you talking about david lloyd as the customer or are you talking about the consumer which is the person in the gym because i always get confused yeah sorry so i should have clarified so so yeah in terms of the the account so the david lloyd uh you know the the account that you're going to be going to be selling to not the consumer who's going to consume the product so so so you know often these these wholesalers or contract caterers can be quite cagey with with their accounts so um you know what that really requires you to do is to try and you know this is a relationship building and this is a relationship building exercise which is you know you have to try and get to know you know in the contract caterers you know your lead contact from from compass and then underneath your buyer they will have um they will have business development managers that look after different sectors and and there's there's there's a game of being able to sort of try and build relationship with with with them um you know they will um if they're kind share lists with you you know this startup industry is i do find is sort of um sort of relatively sort of sharing and caring so you know you might be able to sort of get some contacts from any other sort of people that you might know in the industry and and and i think what you've just got to when you're targeting these and when you're targeting these sort of sales accounts you've you've you've got to be um yeah i think you've got to be very very um very quickly because because because like it keeps keep saying is when you're looking at these out of home categories you know it's addressing the pain point it's addressing the gap so you know immediately you've got to try and find your space within that you've got to you know you can't just be another of another you've really got to give them a reason why your product sort of needs to be in in in that environment so um i i i think yeah there's quite a you know these contract cages are pretty good you know um you They often do days where they invite lots of their accounts down.

51:36You have larger sampling days. They can be collaborative. But I think this goes back to the point, which is looking at this difference between this out-of-home and this grocery there. And I think this is where lots of people go think, oh, we just emailed one buyer. It's the buyer of Waitrose. We get the listing. Happy days. you know and there's this huge this out of home piece there's a lot of hard graft and there's a lot of um boots on the ground and and there's a lot that goes goes into it um but you know as you sort of mentioned dan before it can really um it can also really what what it can also do is really help create your brand identity what you stand for you know it does so much more and to go back to this sort of example, which I think I didn't actually finish the question earlier, but, you know, with Savile Beverage Co., we've just won a listing in Sainsbury's, which launches in two weeks' time.

52:37We actually had a call with the buyer the other day. You know, he said to us, you know, and I noted that down. He said, what you've been doing in the out-of-home channels has really influenced my decision, seeing all that great work that you've done. And I did put a little sort of caveat there had to speak to my client who's the founder which is saying look you know the volume might not be extraordinary but what we've done is we've sold a story into a retailer that's unlocked something that is very very big and and and and that's a little bit and you know in that case you know we're you know we're in all the premium offices in the city canary wolf we're in david lloyd we're in all these places and what it also does is when you if you are trying to unlock those listings with those supermarkets it gives them you can do the positive conditioning you've always got something exciting to say you know we've unlocked this we've done this you know it gives you all that um um it gives you a lot to sort of talk about it sounds uh very crass and it's a wanky phrase but it's like it's the whole piece of you know some people some some people you know an x excel nerd would look at it and be like well look how many how many slices of margin are we giving away like you know we sell into the customer sorry we sell into the distributor then the customer then the consumer it's like how much margin we got left it's like that's a very um reductionist way of looking at things if you reframe that and say well this is actually our marketing budget this is that those slices and slithers of margin are given away is actually marketing spend because again i said the crass wanky phrase is your district your marketing is your distribution it's like yeah you go into selfridges it's fuck fuck all volume but you're in selfridges it's it's a it's a beacon account or however you want to say it the same the same with with out of home is it's like we talked to um i interviewed uh jeremy tours from who's the founder of union um uh coffee yeah sick brand they've been around for like 20 to 30 years they basically solely focus on out of home for ages they've only just begins began begin began begin begin to dip their toes into uh into into grocery and he was saying to me he's like look what if we're in these right places that is our marketing yeah that is it's commercial mark palmer calls it commercial marketing which i love it's like it's the hybrid of sales marketing you get some volume but you also get the marketing return yeah and i think um i think that simple reframe is like why is why is out of home because i mean i dismiss it as like that's not a ball lake just focus on d2c and grocery yeah it does make sense in terms of in terms of margin piece i was just going to say because let's talk about the margins because i think what what again it's case by case all everything's case by case there's a lot of nuance but what are the minimum margins you need gross margin so that when you to actually not even necessarily make money but break even and make sure that story you're selling to the retailer is actually profitable because it's all well and good having all these accounts but if you're making fuck all out of it what's the point do you know what i mean true and and i think that that often is a challenge in terms of dealing with it is a sort of it is sort of um it's a sort of uh it's sort of this reality that is sort of a painful reality for startup brands which is you to build distribution you normally have to work with a wholesaler or a sort of distribution partner those distribution partners now want somewhere between 22 and 28 percent gross profit but you know that's so they will basically be you'll be selling so you know you'll be selling let's say one pound for as a simple argument they will be adding 22 to 28 percent on top of that to that and that will be their margin and then the retailer is going to be wanting to take depending on what you know what channel you're selling it into you know because you know someone an on-trade customer you know might be looking at sort of 60 70 margin on top um you know and those restaurant partners and on-trade have different margins but you know there's there's quite a lot of margin to to give that um so yeah you know in terms of a sort of profitable channel you know um you know like like any i suppose you know the other way to also look at it in some of these in in some of these on trade channels you know and out of home channels you know you you expect to pay more for if you you know if you're going out to a restaurant you expect to pay more for a a drink than you do in tesco's right you know that's sort of a there's that's just everyone knows that so you know there's some sort of there's definitely some sort of um optimizing of your sort of commercial value chain so you know your sort of cost price into that where you can try and you can try and claw back your own margin off the back of the product being sold at a higher price so most most brands will sort of try and do that but um ultimately you know there's cost but But I think ultimately the reality of operating a brand in this market is there's cost in every channel.

57:58There is cost. And I think one of the things that particularly beverage brands coming into market, and when we talk about canned beverage products, so normally in 250 ml or 330 ml sort of aluminium cans or even bottles, your early stage production runs that you're doing, which might be 1 ,000 to 5 ,000 liters, they're very expensive. You're normally not going to be dealing with printed cans. So once you move over to, so you'll probably have a can wrap rather than it being a printed can. So it can be a painful, like all years, it can be quite a sort of painful experience. so sort of first trading years but you know the one thing that the drinks um category really can't you know once you get to scale usually depending on your the ingredients that you're using within your product you know once you can optimize your manufacturing you know which is essentially moving to uh you know you're buying your cans printed which brings down the cost significantly plus moving to a slightly larger um you know the next stage on for your sort of early stage bottlers to your sort of larger commercial bottlers you're you're you're capturing a significant amount of margin so um you know there will be founders in in in this sort of um space who are going to be thinking oh my gosh you know margins are really tight but you know they should have a pathway so you know looking okay well look if we can get to the station we can move so you know we can recapture that margin so um that's sort of i suppose just the evolution of the journey.

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