How De La Calle’s Rebrand Aims to Capture New Customers

0:00The advice we always give is, is this a revolution or an evolution? Do you want to revolutionize your look and feel as in it's a complete 180? Or do you want to take what you have and basically evolve it? Hey, how's it going? I'm Schweng Esther Shan and welcome to Shopify Masters, your companion for starting and building a business. When do you know it's time for a rebrand? It's more common than you might think, especially in the first few years of a company. Our guest today just went through that process himself. Alex Matthews is a serial entrepreneur and runs three companies at the same time, including a design agency called Here's Studio and a Mexican soda brand called De La Calle.

0:48The brand launched in 2021, and Alex is here today to chat about the company's new look and strategy. Alex, thanks for being here. Thank you. Thanks for having me on. I checked out a bunch of the previous episodes and had so much fun going back over some of those. So thank you. It's an honor to be on. So Alex, De La Calle has been around for a few years and you just refreshed the branding. Tell us all about Tapache and how you originally positioned the drink. Yeah. So my Tapache journey really got going back in 2019, really, where my trips to Mexico started to become more frequent and salt Apache, God, roadside in the markets, also found it, you know, mostly where the tourists were not.

1:43So spots in Baja and Oaxaca and parts of Guadalajara. And so sort of had it really on my visits to Mexico and loved it. And I came back and sort of shared my experience with some friends of mine and how I couldn't find it anywhere really on the shelf in the US. And so that kind of got me really excited because I was like, well, it'd be great to maybe celebrate, you know, some of those flavors of Mexico with folks in the US. And so I've been in the beverage industry for a while. I had a previous beverage brand called Juice Served Here and called up a couple of people that were investors in my old brand.

2:28And basically, we started talking about working together on creating a brand that celebrated the sort of flavors around the world, really. And we kept coming back to Mexico, kept coming back to Tapache because it was just so fun and also obviously delicious. Yeah. And tapache is a fermented drink. There's also a healthier benefit to it compared to the average soda. So how were you distilling all of this story, all of the benefits to the customers originally when you were trying to launch the company? Tapache is such an interesting story because it's made relatively simple to make. You're really fermenting pineapple rind, which is, you know, in a wooden barrel called a tapachera.

3:23And you're then adding water and spices and typically fruits that are found really, you know, regionally, whether it's oranges or limes or pineapple or ginger or tamarind or whatever. And then you're basically fermenting it in water. And I think that that got me really interested because I was like, it's relatively simple to make. Unlike, say, like a kombucha where you're not exactly sure where it's from or even sometimes how it's made. But with tapache, it was so honest in a way, so true to the kind of traditions that Mexico has sort of celebrated with the product over the years that I thought, well, it's a simple idea, easy to communicate.

4:08So I think anything that's fermented has a somewhat of a health halo, whether it's, you know, fermented yogurts or, you know, fermented drinks like kombucha or even some fermented waters like kefir and things like that, where you're sort of fermenting is ultimately really good for your microbiome, for your gut. But could we present that in a way that was closer to like a soda, really, than it was necessarily to like a sort of hyper healthy drink? And so that's where we started off. I mean, I think the first year of producing our product, we were actually adding probiotics to it as well as the fermentation.

4:54And we quickly realized that the tapache itself, the fermented base of the tapache itself, already had sort of beneficial tapache cultures that are naturally occurring. And so we ended up sort of defaulting to that and really using that as the story that Tapache is this sort of fermented beverage from the streets of Mexico. And it's good for your gut. And it's also, you know, delicious. And again, sort of celebrates the flavors of Mexico. Amazing. Because I do think there is so much more saturation within the beverage space, especially over COVID. And I think there are so many players in the healthier for you soda stream of things.

5:41So when you were looking at this recent rebrand, what did you learn from the first few years of running this company to how did you position this new rebrand? Yeah, no, it's a great question. I think we knew that folks in the U.S. didn't know what Tapache was, right? We knew that from the sort of outset. and we knew that you know 50 of the front of the can is in spanish you know delicade tapache and then the rest of the the front of the can was really you know the fermented taste of mexico and then the flavors and then celebrating the sort of regions of mexico where they grow different kind of fruits and spices and so i think that the first three years we we thought that tapache alone was a big enough idea that we could sort of educate consumers that, hey, this is this sort of fermented drink from Mexico.

6:37It tastes delicious, but also celebrating the rich history that it has. And so I think towards the end of last year, 2023, after being in market for sort of three years, I started to realize that tapache alone is not enough, that we needed another descriptor to become a bit clearer about what tapache really is. And what I started realizing is that in America, especially Mexican soda was a very popular option. So if you go to, you know, I'm sure, you know, if you live in LA or Chicago or parts of San Francisco and even beyond that, like Texas, there is these huge pockets, right, of Latinos. And those people are drinking, eating food that their families have sort of passed down to them over decades here in the U.S.

7:34So second, third generation Mexicans. And they're all bringing that nostalgia from Mexico with them. You could sort of think of Fanta. You think of Jarritos. You think of Mexican cola. And those drinks have popularized in the U.S. So it's well over a billion dollar business in the U.S. And it's made up of a few brands that are selling drinks that are mostly high in sugar and no functional benefits to speak of, really. And actually some ingredients that, again, you probably maybe would think twice about. And so I think describing it as a Mexican soda unlocks a lot of that existing demand from, you know, those second and third generation Latinos, but also from, you know, ethnic groups as well.

8:24So I think that to me was a big, big light bulb moment because positioning De La Calle's Tapache as a Mexican soda gave us a much broader audience to talk to, but also much easier way to describe to people. A lot of other brands that have come into the market that are selling better for you sodas. And look, I think that's a good thing for everybody. So I think that in and of itself for De La Calle is a much better positioning than potentially we had before, which was really just a fermented beverage of Mexico, which is it as alcoholic? Does it taste good? Because a lot of fermented foods, you could say maybe they don't taste as good.

9:10And so positioning it as a Mexican soda just answers a lot of those questions, basically. It's so interesting because it is just a switch from a few words from tapache to Mexican soda, but it feels like it's the seed for a redirection and it's greater simplification and clarification for the consumer. So you also run Here Studio, which is an agency that helps a lot of businesses with their Shopify site. The studio also looked after this rebrand for De La Calle with its packaging and website. So tell us more about that process. Yeah, totally. I started here at Studio. It was really out of pursuit of all the things I'm passionate about in life, which is, you know, I love food and beverage.

9:57I love hospitality. I love consumer packaged goods and wanted to sort of package all of those things and basically work with other people and brands to achieve their sort of vision and their dreams and what they want to build. We built a ton of Shopify websites. And in fact, we pretty much just use Shopify as the basis for all websites that we design and build. And we've done now countless websites on using your guys' platform. And everybody loves it. Super easy to work with. And honestly, we find ourselves talking about you all every day. And then we do brand advisory work, which is, I think, answers your question in that like our strategy around the approach to Delacalle from the very beginning was rooted in our experience with your studio, obviously, and really sort of applying a lot of thinking to naming and the look and feel and then the storytelling behind that brand.

10:57And, you know, so the name de la calle stands for of the street or in the street in Spanish. It's where you find tapache in Mexico. And again, any good food that you go to in any country, really, street food is always a big, big thing. Right. Whether it's a crepe in France or, you know, a taco in Mexico. I think it's always the best representation often of that country. So I think, you know, Here's Studio has always been about that storytelling aspect and getting it right and a story that resonates with people. And so for the rebrand, we obviously worked, all of us really collaboratively, both with our buyers and with our distributors and our brokers and obviously the team at Here and our investor as well on how do we just make that, like you said, that little change that isn't like a complete revolution, but just crisps up the description.

11:54And so we added modern Mexican soda to the front of the can. We made the De La Calle logo and the word Tapache slightly smaller so that we could pump up the size of the word Mexican soda. We kept our pineapple, of course, because Tapache is made with fermented pineapple rind. And we actually lost the regional descriptor, which we used to have. And we just stuck with the flavor descriptor to simplify the front of the can further. So that when you looked at it, it was very obvious. It's Tapache, it's Mexican soda, and it's watermelon jalapeno flavor. So, you know, very much a methodical approach to the way that we approach the refresh for Delicare.

12:38Yeah. And I think it's something founders struggle with, right? A lot of people fail to launch because they think they need to get the branding perfect before they launch. but you actually need the market to give you feedback in order to know how to iterate. What's your advice there when someone is trying to think about rebranding? What's on the must-do list when they're going through that process? We deal with that question a lot at Here Studio. I think a lot of it comes down to, I think most founders get caught up in, it's not a bad thing, it's just sort of agitation around the packaging. because that is the thing that is the shelf speaker, right?

13:25And then obviously if you're selling on, you know, your e-com store, you've got a bit more to play with, right? You've got descriptors and you can give a bit more of a brand experience. But if you're selling on some of the other online marketplaces, we obviously just have a few seconds still to capture, you know, people's imagination. And so I think there's always a angst or agitation with, And even me, I include myself in that where I'm constantly scrutinizing it. But the advice we always give is, is this a revolution or an evolution? Do you want to revolutionize your look and feel as in it's a complete 180?

14:06Or do you want to take what you have and basically evolve it? The second thing I always ask is, is the packaging working as hard as it can for you without there being sort of attribute overload? And I think we have reached a point, especially in certain categories within CPG, especially in certain areas, whether it's food and beverage or even in categories like nutritional supplements, where there is attribute overload. and it is just like how many things can we sort of say on a tiny piece of real estate and i think the brands that have done a great job of sort of almost ignoring that and saying let's just let the product and the brand speak for itself and use all of the other channels at our disposal to tell the story and if you want to dive deeper you can so like seed is a good example of that it's very simple you know in their approach there's some others like graza is a great example in olive oil of just simplicity tell me what to do do i fry with it or do i dress with it things like that sizzle or drizzle i think that we're always trying to pull back on those things so even with with de la calle we've we've really not promoted a ton of product attributes what we've tried to do is position it as a Mexican soda that is fermented and it's delicious.

15:39And there is a good benefit in that it's low in sugar, it's low calorie, it's high in vitamin C and it's good for your gut. But those are secondary attributes and you kind of have to look around the can to find those. And so I think that that's the advice we try to give out is when you're thinking about a rebrand or a refresh um let's just you know is it an evolution or revolution and let's try to make the can work as hard as it can without there being sort of attribute overload the other thing i'll just mention on this subject is that i think a lot of brands get kind of dragged into the same colors as the category uh like protein drinks is a great example uh where everyone's using this sort of pale blue color, like every single brand.

16:28And I'm like, it waters down the, I think the, what makes that brand special, uh, because everyone just ends up using the same color, but yeah, not getting too dragged into what everyone else is doing and trying to kind of do your own thing is also another piece. I could go on for days. So I'll stop there. No, I love it. I think it's very concise, like three very good categories. Is it revolutionizing or is it evolving not to have your attributions be overloaded on your label? And also like, how do you differentiate? Right. But yeah, we had Graza on earlier on the show and yeah, our production team and myself really loved their slogan of drizzle and sizzle.

17:10So bringing it back to De La Calle, after the rebrand, do you think now it's reaching a wider audience and who do you think it appeals to today? Yeah, the rebrand is really three steps to it, I think. The first very intentional step is the position to be a modern Mexican soda. So, you know, front of the can, side copy, and then obviously all the photography updates that that requires, and then website and social channels and all of the things that are required to sort of make a shift in the positioning. The second part of it is pricing. We've definitely, since 2021, when we launched, we launched with Whole Foods, which was our really, you know, our first partner on a national basis.

18:02So still one of our best customers and can't speak highly enough of Whole Foods. But really, at the time, there was the encouragement because it was this sort of fermented beverage of Mexico that we should try to price line very close to kombucha. And so we started off at about$3.29. And what that does is it absolutely positions you as a premium product. And so kombucha typically is higher price point than soda. And so we definitely were mostly selling to a white, you know, I would say sort of middle class male, female, relatively evenly split actually between male, female, probably female would beat it by a couple of points, but, and also in mostly in the liberal kind of state.

18:54And so we did that for really the last three years. And so what we realized is that as part of becoming a Mexican soda, you start to have to think a bit more strategically about what kind of customer you're really going after, right? And so I think initially, we wanted to become mass market in the US in most grocery stores. And we are in a lot of the grocery stores now in Target, Walmart, and Kroger, and Albertsons, and things like that. HEB, which is a Texas chain, but still really mostly selling to a similar kind of audience. In the move to become a Mexican soda, we now have to we now realize that the audience where we could achieve further growth now is obviously within the more Latino customer as well.

19:44And that Latino customer is price conscious. And, you know, if you look at the shift in population in the US by 2028, the population will be about 25 percent Latino. and that makes up you know mexican and other latino countries or groups and so but that is a big number 25 of the population in the u.s so they're spending powers in the trillions and those customers are going to the kind of places that they've grown up going to and that their families have grown up going to so it's the northgate markets it's superiors it's the Viartas, it's the Cardenas. And obviously Walmart and Target have those guests as well.

20:28But we wouldn't be able to sell to them at$3.29. And so we realized that we have to come down on price. So the second part of the strategy is to lower the price to$2.49 and actually lower than that in some places for more mass market retailers and about$2.99 in natural grocery. So natural is typically is sort of the Whole Foods and the Sprouts and the Air Wands and the Bristol Farms and things like that. So the second part of that is that unlock of not only the lower price point, but again, starting to appeal to a different demographic. And then really the third part of it is how do we get product to them is the route to market.

21:10And obviously that route to market for us has for the most part been pick us up in the sort of refrigerated case in most places. But what you'll now see is that we're starting to sell our products with displays. You've probably seen it at Whole Foods where you walk into the lobby and there's a big display of LaCroix or Chica's chips. And we're now able to sort of participate in that in raising the awareness of Tapache as a Mexican soda. So I think in terms of audience and demographic, we are absolutely making that part of our strategy for the next 24 months is to appeal to those new consumers to departure.

21:51And it's actually funny. They don't need any education on what departure is. Right. They know what it is. So it's, you know, we obviously know that there's a big opportunity for us there. We started off with talking about that simple idea of repositioning from tapache to Mexican soda. And I think it has led to so many interesting strategic decisions with your pricing and your distribution, which we are going to get into even more. I'm chatting with Alex Matthews, the founder of De La Calle. I would just like to take a moment to thank you, our listeners, for tuning into the show. If you haven't already, make sure to subscribe to Shopify Masters and leave us a review with feedback for the show.

22:40Thank you so much. So we talked about how lowering the price actually was strategic to make sure that De La Calle is more approachable for a bigger audience. How did you balance the production, the ingredients, and also the relationship with retailers to make sure that this pricing change made sense on all of those aspects? Most beverage brands lose money for quite some time at the beginning. I'd say the first, you know, three to four years, maybe five years, you're not making money, you're losing money. And so having a patient investor and partners on your team understand that from the outset is pretty important.

23:27I think the second part of it is, can you build your ingredients and supply chain and production around a goal for what the product should cost to make? And our goal was quite low. And we definitely didn't achieve it in the first year. Almost the second year, we did not achieve it. Last year, we got a little closer to where we need to be. And I think that really the production aspect is obviously critical to the pie. But I think with volume becomes better purchasing power on things like cans and ingredients and things like that. But tolling, you know, you're co-manufacturing, you're tolling fees.

24:14If you're co-manufacturing, of course, not everyone does that. Some people self-manufacture under their own steam, which is much higher capital investment. um we we've we've sort of done a hybrid of that because we make our tapaché base and in our process we've really leaned into the experience around the table to really start to set some benchmarks and how do we get the margin to be obviously in the mid to high 50s and that's been our goal and right now we're sort of pretty close to achieving that and so yeah look i mean the price change for us right now is obviously eroding some of that margin gain that we've had, but it's done in a controlled way and done with the support of the board and with our partners.

25:02And it's the right decision at the right time in conjunction with the move to become a Mexican soda. I guess like in your shoes also, you have this direct-to-consumer arm along with all the relationships you have to manage with retailers. How do you balance all of that while you're trying to make sure that logistics for both direct-to-consumer and all of your retailers all make sense all at the same time? Yeah, I mean, I think going into sort of knowing that you are going to sell your products, especially beverages, liquid, you're going to sell them online. Typically, you're going into that with the mindset that it's quite hard to make money in shipping beverages in the mail.

25:48You know, heavy to ship, especially if they're cold products, you have to add ice packs, which add weight. If you're shipping them ambient, less ice packs, less heavy, less expensive, but still expensive. So I think that, you know, there's a number of ways that you can, you know basically box clever on reducing or maximizing the efficiency of that like one way of doing that is having your Shopify site live but fulfilling out of Amazon FBA because it's just the same as fulfilling out of your own warehouse but at a lower cost typically you know most 3PLs or third-party logistics companies have their fees that they charge and you know typically Amazon can beat most of those.

26:40So having your regular Shopify store pull inventory to ship to consumers out of there is absolutely one way of doing that. That's a way to save money. And, you know, I will say another way of thinking about it is strength in numbers, right? So if you have an investor or you're part of a network of portfolio companies where you all share an investor um oftentimes that one entity will have an arrangement with whether it's a fedex or a ups or you know one of those big shippers and typically they club together and negotiate sort of a master shipping rate and oftentimes you can you can benefit from that so it's another way of sort of starting to think about how you can reduce the cost of of getting the product to consumer.

27:32But yeah, look, I wish I could sugarcoat it, but very expensive to ship. And I'd say that most people who are shipping liquid in the mail are sort of suffering from the same problem, and that is how can we find another dollar or two or three from the cost of shipping? Yeah. And I think you just offered some really great alternatives, lots of great insights and Lots of great tips following your rebranding journey. Thank you so much for joining us today, Alex. Thank you so much for having me. This is really fun. That's Alex Matthews, founder of De La Calle. A big thank you to our team, our producers, Megan Coyle and Gogo Zoger, our engineers, Matt Shorts and Miku Betlem.

28:19Benjamin Gottlieb is our managing producer, and I'm your host, Schwang Esther Shan. We will catch you next time on Shopify Masters. Thank you.