282. How GOOD GOOD is Building a Global No-Sugar Brand in a Category Dominated by Giants

0:01Welcome to Startup to Scale, a podcast by FoodBevy. I'm your host, Jordan Buckner. Join me as I talk to aspiring entrepreneurs, seasoned industry experts, and everyone in between as we unlock the keys to growing from startup to scale.

0:19Today's guest is Gardar Stefansson, who's the founder and CEO of GoodGood. And Gardar started the company in Iceland with a simple but ambitious mission, really to help people reduce the amount of sugar they're consuming without giving up the foods that they love. I actually first discovered the product in my local Whole Foods store and we had the grape and apricot jam, which were delicious. We finished them to the bottom and excited to have him on the show today. And so what began as kind of a small international startup has grown into a globally distributed CBD brand, spanning jams, nut butters, fruit spreads, and is now sold in retailers like Whole Foods, Sprouts Market, Kroger, and HEB.

1:00Goddard, welcome to the show today. Thank you, Jordan. Excited to be here. So you are originally from Iceland.

1:06Gardar Stefansson:Are you still based in Iceland now? No, I'm actually based in Austin. I've been living here in Austin, Texas for almost one and a half a year. Still got the Icelandic accent, though. I don't think I can get rid of it. But my kids, they have a Iceland accent, and that's my contribution. It's okay. I'll get you into a lot of meetings anyway that way. Maybe. So I'm curious, what led you to really start this product and this business, and why kind of reducing sugar consumption? Yeah, so it started basically as we started as a sweetener company in Iceland, like way back. me and my two other co-founders just acquired like a stevia drop facility and we're just pumped about it and excited because stevia was just allowed in the eu in 2011 and we're like okay this is great this is gonna change the game you got a sweet tuna that is natural zero calories and you know it's gonna you know replace sugar and you know we that's the idea we started to produce that and you know had high hopes that everyone would buy it and you know it'd be like super successful, you know, and we produced a lot, but we didn't, you know, the sales didn't follow.

2:11Gardar Stefansson:So we had a lot of inventory and a lot of sweeteners that were like expiring. So then we just were forced or like then we had to pivot basically into something else. It was just either to discard the inventory and, you know, accumulate a huge financial loss or pivot into something else. And that's when the idea for the spreads came, you know, because I always, as a kid and as an adult i always go to the mountains in iceland in the fall and pick berries and i make jam and uh i was just i've always like been appalled of how much sugar goes with those amazingly nutritious fresh blueberries you know and i was like okay maybe that's something there that we can do so got my aunt who is a diabetic to help me and you know to and also pretty good cook and you know we cooked up the first jam and you know the first version was not tasted horrible you know to be honest like old prototypes i think and from there we did maybe 100 trials on until we got the recipe we have today and and we've just been improving it a tiny bit since then but yeah that's how we started selling iceland and and you know in scandinavia netherlands and then we got interest from a retail in the u.s so we went to expo west which many of you listener knows about i assume and yeah we like didn't know a lot about the american market we were there like in the attic you know like with all the cool new brands are you know with all the weird stuff and the smell and and and then a retailer stopped by we had no idea it was a we thought it was a corner store in the midwest but it was basically the biggest retailer there and they picked our products and you know then we got into distribution and then you know been growing the brand since then so here you were as a Icelandic brand expanding a little bit within the EU and some of the Nordic countries there and then you had this opportunity to expand in the US you see that as like hey this is our big break if we're going to make as a company we need to be like in the US as one of our main focus or like was it part of the plan or was it just all serendipity and how it happened so I mean being from Iceland we're like a really small country you know So we're like 400 ,000 or when we want to make ourselves big, 0.4 million.

4:21Gardar Stefansson:And it's just like, it's super hard to grow and scale from there. So it's like, we always have this mindset of we have to export if we're going to make it. It's either Europe or America or Asia, like that's our biggest markets. And our focus was Europe in the beginning and to grow there. But then this opportunity from the US came and we just started to grow there much faster than we had anticipated. and you know there was more demand there for you know better for you products uh you know low sugar because of various reasons and then it's just like it it fitted us and the opportunities came and we just had to make a decision are you gonna seize the moment you know and grow there it's easier it's not easy to scale at all you know that jordan it's super hard to build a company and grow i mean i still have nightmares and also you know it's like it's always something but it is a little bit you know it's one packaging that works for an entire market you know what i mean in europe we have like 40 different version of packaging 40 different health authorities 40 different languages just like yeah it sounds amazing when there are a million people market and like but it's like a bureaucracy uh bureaucracy like a nightmare to try to scale there you know like it's just like it's super hard unless you pick certain countries and i mean like even the uk hey, it's 60, 70 million, you know?

5:38Gardar Stefansson:Like, so it's just like, I mean, it's a pretty good market, but it's like in the US you have that opportunity and we worked on that. And yeah, so we had to make a decision and we had to follow our gut and the growth and we know where the interests were. And we're still selling in Europe, but we are specifically focused on the US market. I mean, that's why I live here and that's why we sat at our office here in Austin, Texas. Yeah, I was going to say that was a big move there. I'm curious, like, was there a moment when you felt that the brand and the product truly kind of found product market fit i know from your past experience with the stevia business it was more difficult to find demand and now with this product it's like oh was there a moment where you're like i think this actually might work yeah yeah it's like and it's so funny because it's uh that moment you know i remembered like yesterday it was like we just tried i mean i created the prototype we created the prototype in 2016 2017 we got like sold to a couple of countries and then we just tried Amazon.

6:36Gardar Stefansson:Like I just sent like a one box of product to Amazon in the US and we listed it up. And I mean, the first listing was like horrible. Like then we improved it and then just the demand went insane. And suddenly when we optimized or suddenly we became the best selling jam on Amazon and we're selling a lot. And then suddenly a couple of retailers came to us and asked for that particular product. That was basically the aha moment. I was like, okay, there is something... there. We're not like we're much smaller than than we are now. But, you know, the growth was like triple digits, you know what I mean?

7:10Gardar Stefansson:And you felt it and like, OK, there's something there. And, you know, we need to lean on that. So I'm going to mention that because, yeah, Amazon is actually one of my favorite selling channels. It used to be even more so, but I think still now, because I always say if you want to understand how well your product will do without Amazon, because most people in the U.S. still shop there. It's very easy to convert and people are searching for things. You can tell if you either have a known demand for your product, if people are searching for your brand or not. You can tell if people are searching for products like yours, right?

7:48Like low sugar jams, no sugar jams, what people and how they're searching. Or you can tell if zero people are looking for your product. Either though, all of those are very, very helpful. Found this sense of this ability for what I call unknown demand, where no one knew about GoodGood as a brand, I'm assuming, but they were looking for the product that fit their meat directly. And when they found you, they're like, perfect, this is great, like add to cart and buy. And that really tells a really strong growth story of existing consumer demand for this type of product.

8:18Gardar Stefansson:Yeah, yeah. And you know, when you're a brand, when your competitors are bidding in your branded keywords, you know, then you know. But yeah, I think Amazon is a great channel. I mean, it's super expensive and you have to use it as, I mean, in our case with a heavy product and like most CPT brands like popcorns or snacks. I mean, it's like the costs are heavy, but it's a great test market. You know, it's just like gives you meat and specifically with new product. It's just like, are we going to make it or not? And, you know, if you have more green lights than red, then you know, like, okay, maybe this is scalable and we can build some business out of it.

8:48So you talked about this a little bit, too, of like the competition within the market, right? Like the pantry kind of jam category is filled with some larger legacy brands that consumers have been using for decades. I'm curious about how you think about building your brand in this space and building products in this space. Obviously, I think you have a great differentiated product, but I'm sure they've come out with no sugar, low sugar versions of theirs. How do you think about making sure your brand and products stand out amongst the competition?

9:19Gardar Stefansson:It's the taste and the ingredients. So it's like, that's the key. I mean, if the taste doesn't, if the taste is not there, then, you know, the consumer is not going to buy it. And end consumer is king. They are, I mean, they're the ultimate decision makers if you're going to make it or not. And that's why Amazon is also great because people buy it at a premium price and then they rate you, you know, like you get a one star or five star. And it's like if you spend$12.99 on a product there and it's horrible, you're going to let them know, you know, it's more likely you write a negative review than a positive.

9:48Gardar Stefansson:So I think like the key is to never compromise the taste and flavor. And like the big legacy brands, yes, they have a sugar-free option, you know, because it's a fact that diabetes is everywhere. And it's a fact that, you know, around 50 % of American adults, for example, have either pre-diabetes or diabetes. So it's just like, so the need is there, you know, involuntarily, you know, to eat less sugar. And the rest just doesn't have the taste. It's just like, it's artificial, it's flavoring. It's not like, and it's just designed as a science, scientifically approached to like the metric they need to hit, you know, like no blood sugar raises or whatnot.

10:27Gardar Stefansson:And I think the key there is like to use great natural ingredients like we do, but still, you know, maintain low sugars that doesn't raise the blood sugar levels. And I think, I think that's the key for us. It's like we just taste good. And that's never going to change. You know, we're never going to compromise that. You know, even though it costs a little bit more and our cocks are not as amazing as those other sugar-free legacy brands, it's just like, hey, we are building like a forever customer that we want to be purchasing us again and again. Yeah, I think that's really important because I always have this theory around almost like culinary created products versus lab created products where the approach is completely different in terms of how do you get the taste, the quality, the experience different, right?

11:07Like you can have a blueberry flavor that has a certain taste, but it's not delivering that real blueberry experience within the product. And I think more and more consumers are realizing that something is lost in these lab created products versus is more like culinary approach created products.

11:27Gardar Stefansson:Yeah, I absolutely agree with that. I mean, the consumer is not an idiot. I mean, it's like and it's important. I mean, as food prices go up and you have to like pick and choose what you want, then, you know, it's like people are figuring out like food is the most important thing you know regarding my health you know like diet is and like so i think like the key there is not to fool or compromise the quality and you taste first and then nutritional facts and benefits that's just second you know as in my opinion yeah i think that's so key you know one thing i'm curious about too so coming from from iceland you scale into major retailers like whole foods sprouts krogh or h-e-b What did you learn about retail expansion in the U.S.

12:08that surprised you the most? It's so expensive, man.

12:11Gardar Stefansson:It's like, you know, like Europe is like, it's so different, so diverse. I think like the market, like the country in Europe that is most like the U.S. is the U.K. in terms of how the retail is set up. Most of it is like most retailers in Europe want to buy direct from brands, you know. So it's like you have to work on lower costs, you know. I'm sorry, you have to work on lower margins. And then they split it with less middlemen, to be honest. That being said, I mean, it's super hard to be a CBG brand here. You have to pay for slotting, free fill. I mean, you have the distributor that helps you get the product from A to B.

12:47Gardar Stefansson:And then you get the retailer. And one thing is that you go into like, even though you win, not win, And even though you get like a yes in a category review and you get the products on the shelf, it's just like that you're not there. You know, you need to sell it like this. Like the buyers say, I'm not going to sell this product for you. You have to sell that product, you know, and that's why you have to have strong promotional programs. You have to build up the brand. So it is costly. And I think a lot of CPG entrepreneurs don't know that when they enter this chapter. You know, it's not the grass is not always green.

13:19Gardar Stefansson:And it's just like it's a lot of work, hard work. You need to figure out your pricing. You need to have the clock as much under control. You need to have a promotional plan. You need to know that you are going to be, there's a lot of investment involved on getting there. I mean, that was something that was so surprising to me as well. Not just that like the costs are high, but how kind of disconnected all the pricing is that makes it hard to understand what your true costs are, right? Like if a brand is selling exclusively on their own D2C site, they might have the product cost, fulfillment, advertising costs and, you know, website and backend.

13:58Right. And you can track all of those numbers. But when you're selling in retail, you have all the distributor pricing fees, invoices and bills that come paid with miscellaneous charges months after you send them the product. You have the trade spend that happens that you're not even sure what you're paying for until after it all happens and then they bill it back to you. And then there's all these fees and price changes that happen all the time where it makes it really tough to get a clear picture of what's happening with your business. And most experts almost say like you just have to build on enough margin because you're not going to figure out all that stuff to a dollar.

14:35You have to just know that it's going to get really messy in there. But you have to kind of come out and top after looking at it as a whole. I think that's really hard, right? Because it's one thing to say it's expensive. But it's another thing to say it's expensive, but we don't know how much it's going to cost you.

14:49Gardar Stefansson:Yeah. And that is like those deductions you're talking about, those distributed deductions. And if you have a distributor and retailer, the retailer charges the distributor and the distributor charges the brand. And there are a lot of fees added there in between that you're like, you're willingly signing when you do those terms. And that's like, and that is pretty hard. I mean, you're maybe having your best month, but then your margins are crushed because of a promotion that happened three months before, but they were charged that month. So it's just like, and then your bottom line doesn't look as good as you had hoped.

15:19Gardar Stefansson:So it's just like, it is super tricky. And I think like, and it's hard to teach because very few people understand exactly how it works, you know? And I think the game is designed that way, you know, and that's why you need to block everything. You know, there are some good tools now, thankfully. And AI is also helping in that regard of, you know, going through tremendous amounts of data and trying to figure out where those costs are. At the same time, it's super hard to dispute. And, you know, they're not always the right, you know, it's hard to figure out where it is, like, and what to do and who to talk to.

15:50Gardar Stefansson:So it's just like, it's an endless struggle, man. It's just like, it's just super hard. and specifically for small brands that have few team members with millions of hats that need to figure out everything. So, yeah. Yeah. And one thing I'm curious, you mentioned AI. I'm hosting a webinar coming up. By the time this comes out, it'll be in the past, but I'm doing a series around AI for CPG brands. And I'm curious around how you're starting to think about AI tools and workflows for your business. That's an amazing question. I'm all in. That's it. I'm all in. And I already, I mean, I've been using AI for, I don't know, two, three years or something.

16:27Gardar Stefansson:And I think it's going to, my hope is it's going to make us, the output is going to be much more. I mean, it depends on the input. It needs to be good data, good decision and strategy involved before you try to build something. And not only for like writing emails or whatnot, it's good for that. It's great. I mean, AI is a great search engine, first and foremost. You know, it's just like if you compare it to the search in your email and then use it, you can find everything. so it's going to help us build better quality output and i think humans are always going to be involved at least the next 10 years i think not always but uh but that said i mean we're utilizing it a lot i already created uh an app because we always go we have like remote team members we go to stores we check on our on in the store so i created an app that you go to the store you take a photo of the set it uploads it to the cloud and the app you know has an ai and it analyzes everyone else, all the competitors and everything and put it into a sheet.

17:26Gardar Stefansson:And then we can pull that information to our dashboard and just see some trends, what's happening, what are the newest competitors and whatnot. And this is just an internal app I created. It doesn't look good, but it works. And that's one thing. And then I think first and foremost, it's going to help us make better decision because it can read through data super fast. My hopes is that AI is going to make everyone's life better and more efficient and just help us, you know, enjoy life a little bit more and work smarter, which means that not necessarily work 10 hours, but like work a little bit fewer hours because we have some backup there.

18:01Gardar Stefansson:So I think it's also, it can help us like from a production side point, from logistic side point, just, you know, making better decisions so we can hopefully just lower costs of products. And that's because if it's going to help us make better decision, you know, we better see it like in raw materials, you know, or products or whatnot or production schedules, you know. So I'm on the positive side of AI and I did it funny you said, I just had a team meeting and I encourage everyone to play with it, you know, like just, and I'm all in and I think like this is going to help everyone to be better, like more output and just like be aware that, you know, everything you put in, you know, that's how good the output will never be as good as what you put in.

18:40Gardar Stefansson:So if it's online, I'll be joining that workshop. Yeah, I absolutely love that. I might have to have you present in our next one because I'm sharing real stories from founders. And similar to you, I've been kind of all in and how it helps. Even I actually had a conversation this morning with one of my team members and we've built apps internally as well. And so like, what else can we be building? Right. It's less about giving her and my team members like less, fewer hours. It's more about how can I supercharge your abilities so you can go out and do more to get more and to make your life easier too, right?

19:13Like with a repetitive task that you shouldn't be doing so you can do more high-level thinking, that's going to really set you apart now. So absolutely love that. And then kind of as we're wrapping up, I'd love to know for founders building mission-driven CPG brands right now, what advice would you give about balancing growth, purpose, product qualities, and the financial realities of scaling in terms of like your lessons that you're learning?

19:36Gardar Stefansson:Yeah, I read this great quote the other day, you know, don't design your product for millions of consumers, you know, you know, try to design it or like develop it for like 200 people that will love it, you know. And I think the key is just like continue to, you know, find your market fit and do it in a small scale. And that's why Iceland is a perfect market for us. We tried the product there, you know, like we like there have a couple of retailers and, you know, we tried it there and like and we saw immediately, you know, people are picking it up, people liked it we tweaked it so it's like i think the key is just starts more you know even though like we're somehow you know watching all of those uh shows you know and shark tank and everyone's just like super successful you know like all those brands that exit and like are bought up or whatnot and like people are thinking about that's that's where i'm going but like the fact is that 19.5 percent of us are grinding, you know, and, you know, working hard.

20:34So it's just like times 10 ,000

20:37Gardar Stefansson:on how many hours you need to put into it. And it's like, it's a hard work, but if you're passionate and you love what you're doing and you think you're changing something or making things better or just bringing something that is going to really make the lives of the users like better, you know, in whatever form that is, I think that's like the true aspiration that one needs, you know. And then, you know, before you go out and like buy the biggest production facility, you know, whatnot, just do it really small, you know, do it in your kitchen, you know, get like 10 friends, you know, start small, do it on Amazon, you know, it's easier to fail on Amazon or test there than, you know, getting a deal with a 100 store retailer that's gonna deduct and charge and whatnot, you know.

21:17Gardar Stefansson:So it's like, just be prepared, you know, and just ask questions, find people out there, find mentors, you know, like what I feel with the CPG community is that it's a lot easier to knock on people's door, you know, and people are happy to answer any questions or give you feedback. So it's a, yeah, it's a tricky world. I haven't figured it out yet, you know, and I'm not sure if I will, but I'm trying and working really hard on it. So it's like, there are just, you know, so many ways to fail and so few ways to succeed. And just like, you're gonna fail more often than succeed and just do it in a really small scale if possible.

21:52Gardar Stefansson:Like that's the key. so you can learn from it and pivot into something great as soon as you grow and scale. Yeah, I think that's amazing advice. I think that that's definitely the way you're doing them, but I recommend to brands as well. Gutter, thanks so much for being on the show today and for sharing GoodGood. I can't wait to see where the brand continues to grow from here and wishing you the best of luck. Thank you, Jordan. Been a pleasure.