A $198M IPO & The 'Healthy' Divide. Is CPG Changing?

0:10Hello, dear friends, and thanks for tuning in to Taste Radio, the number one podcast for anyone building a business in food or beverage. I'm Ray Lateef, the editor and producer of Taste Radio, and I'm with my co-hosts, John Craven, Jackie Brugliera, and Melissa Travers. Melissa, it's good to see you again. You know, I'm just never going to stop coming back. That's it. I am. I don't have a problem with that. The only thing is I can't see Jackie. I see a whole bunch of gobbledygook in lines. I'm trying to see her in the screen in front of me, and I can't see anything right now. It's broken? It's not broken as much as it is our switchboard operator.

0:51I'm going to call it because that's a kind of a dated term. That was like AI Jackie. Our director. Our director. Switchboard operator is for phones, right? I was trying to date Mike because Mike is actually running the... You're trying to date Mike. Oh yeah. Oh geez. Everything's gone. We've come off the wheels here. I think everyone's probably a little groggy from last night's Super Bowl. Certainly people from New England are probably a little bit grumpier and groggier than usual because, you know, the Patriots lost the Super Bowl. It was not a very exciting game. It was very pretty. Thankfully, they had a couple runs that made it a little bit interesting at the end of the game, but I thought it was gonna be a shutout.

1:34Yeah, I think that was a worry among New England Patriots fans is that the team wouldn't score a single point. It certainly looked that way for a while, but it was a blowout. But Seahawks play their butts off and their defense was just spectacular. But it is what it is. And I didn't have a dog in this fight. I'm a Bills fan. People know this. So I didn't really, I wasn't really rooting for either team very much. Very much. I just show up for the food. Yes, exactly. What do you bring? What do you have for your spread? So I actually went to my sister-in-law's house and they did a smoked pork. They smoked it for like 17 hours.

2:08It was amazing. Some coleslaw. And I actually brought my own Royo bun to put the, you know, Royo bread. It's like the super high fiber bread. I brought my own bun to put the pork on. And, you know, I'm really glad I did. Why? I don't know. I just felt I feel really satisfied after a meal with plenty of fiber, I guess. Oh, OK. Was not expecting that answer. All right. I mean, you know, it's just that you feel like you, you know, you got what you needed. After all that bacon and the wings and all that other stuff, you want to make sure that you can actually digest all that food properly. I get you.

2:45I hear you. I'm with you. All right. I probably didn't have enough fiber yesterday. I'm not getting into any specifics of my bodily functions. But anyway, no, I had some bacon wrapped scallops from Wegmans, which were fantastic. I'm a big Wegmans guy, especially at prepared foods. Just amazing. Even the ready to prepare, you know, good stuff. What are you laughing at, John Craven? with your beverage over here. We're so in the weeds. I was just talking about nutrients. Baking wraps, scallops, wagons. What are you even, what are you doing, man? We have wings too. Anyway. All right. All right. Anyway, I'm really excited because we are T-minus five days until Taste Radio's Miami meetup.

3:25That's happening on Wednesday, February 18th from 5 to 7.30 p.m. at Casa La Rubia in the city's Wynwood neighborhood. What is Casa La Rubia, John Craven? It's a beer taproom. Beer and taproom, sure. What else do you want to know? They've got some amazing outdoor space. It is a beautiful locale in the most vibrant neighborhood in Miami. So, yes. Someone asked ChatGPT about Wynwood. I prefer Claude. Yeah, me too. But anyway. After I saw all the advertisements yesterday. But it is a taproom owned by AB &Bev. There you go. The makers of Budweiser, Bud Light. Yeah, like a bajillion beers. You'd waste the whole episode talking about them all.

4:07Exactly. Casa La Rubia, I believe they're not going to be serving any Bud Light or Budweiser. Don't believe so. Don't think so. They got some beer and wine, cocktails. All kinds of stuff. Yeah. So we're going to be able to sample some of that beer and wine. In addition to all the amazing industry networking that's going to be happening at the event, the live podcast interviews, there will be NA drinks. So there'll be A and NA drinks available in Light Bites. We're going to have some Light Bites there as well. So we are encouraging attendees to bring samples of your brands. If you're a founder, if you're an operator, if you're an executive with a brand, CPG brand, food and beverage brand, please bring samples.

4:46We'll have space for everyone to pour, sip, and snack on your products. Also, I am thrilled about this. We are going to welcome the amazing folks from Otomo Strategic Marketing. They're going to be hosting an Ask Me Anything table. So bring your toughest CPG marketing and design questions, and you're going to get real answers from experts who know their stuff. Otomos is based in Miami. The team there has been deep in the marketing of CPG brands and products for many years. So if you have a question about how to promote your brand, how to market your brand, design, what have you, they're there to answer those questions.

5:27So I'm really excited about that. It's kind of a new thing we're doing at these events. I bet you could even bring your packaging or your packaging iteration and get some feedback on it. Absolutely. And it's not just from some random schmo like, you know, Ray Latif. It's from an expert in the industry who knows what he's doing or she's doing. So if you are thinking about attending, and I don't know why you wouldn't if you live in the Miami area, we'd ask that you please register. Tasteradio.com slash events slash Miami. The registration takes maybe two minutes, 120 seconds. Not very long. I would say five seconds.

6:02Oh, five seconds. If you're using dialogue. This isn't going to be the reason that you're not going to go. No, I think I don't like filling out long forms. I don't know, man. You said a minute and 20, but it took a minute and 35. I'm out. I'm out. I'm just saying it's not going to take 10 minutes. What would we be asking that would take a long time? Okay, so when you apply. Say you're talking about senseless things that no one's thinking about. No, no. And you're making them think about it. When you have to register for Expo West, how long does it take? I don't know. It takes 10 minutes. Who cares?

6:28You're still going to go. That's my point. No. I just don't want people to waste their time. Two minutes. It's going to take time. Okay. Is there a wall that I can bang my head on? There's a table. Anyway, yes, if you just show up, that's fine, too. 5 to 7 p.m. Wednesday, February 18th, Casa La Rubia. Take the 25 seconds it takes. Yes, take the 25 seconds. TasteRadio.com slash events slash Miami. A humongous thanks to our partners for the event. Casa La Rubia, obviously, Vibrant Ingredients, Matriarch Wealth Management, and of course, Atomos Strategic Marketing. If you have a company and you're interested in sponsoring this event or any one of the other six Taste Radio meetups that are going to be happening this year, later this year, that is, please email us to learn more, ask at tasteradio.com.

7:18Very exciting stuff. I am excited to just be able to go to a place where it's not going to be a degree. Yeah. When I walk outside in the morning, it's literally like one degree here in Boston. Yes. Meanwhile, Jackie's wearing short sleeves. She's just basking in the sun. Did you say 80? 80. Son of a gun. I just got colder hearing that. Sounds awful. It does. Too hot. Where is Once Upon a Farm based? Are they based in, they're not based in San Diego. I think that's where they started. That's where they started. I don't know. Yeah, they were founded in San Diego. I think they're technically a without an office company.

7:54Ah, okay. Well, they are definitely not without funding because Once Upon a Farm just last Thursday made its debut as a publicly traded company. This happened after months of speculation. Once Upon a Farm is a baby and kid food brand. And upon this debut, they raised$198 million from selling 11 million shares of common stock. Once Upon a Farm is helmed by John Foraker, co-founded by actress Jennifer Garner. At the time of the debut, the company was valued at$724.2 million based on shares outstanding. So a lot of speculation about this. I actually didn't think it was going to happen because it was taking so long.

8:43I know you've been following me, John. I mean, it's pretty cool because we don't typically see a lot of CPG brands launch an IPO. We don't see a lot of publicly traded CPG brands. Not good ones, at least. What does that mean? I'm saying there's always companies that... Oh, I see what you're saying. Yeah, like penny stock sort of things. So, you know, to see a like actual kind of legit, more traditional IPO with a actually material valuation. Yeah, that's kind of cool. And not only are they a baby and kid food brand, but they're also a refrigerated brand, which is pretty operationally complex. I feel like it's really impressive that they've done what they've done and come so far in a pretty challenging category.

9:27Yeah, I mean, establishing their own space in as many stores as they've had. I mean, they really were the forerunners to creating a refrigerated section within that baby food aisle. You go into a lot of stores these days, obviously a Whole Foods, but I mean, I think they're in Target and Walmart and other places like that. they've carved out an entire section in that aisle and not only created a place for their own products, but I think expanded the opportunity for other brands to get into that space as well, which is pretty awesome. And really, at the end of the day, provided consumers with more options and more better for you options for kids and children, which is a fantastic thing.

10:07It's difficult and expensive to get consumers to learn a new behavior, but if you can do it, it pays off. Yeah, it's exciting. I think it just shows that there's like another path for CPG brands to like, maybe there's another one that's coming up in the ranks that could do the same thing. Yeah. So if you read the story about Once Upon a Farm's IPO penned by Adrienne DeLuca, at the end of the article, she notes that investors such as Manitri's Steve Young, and Nutter McClellan and Fish's Will Burnett have expressed optimism that Once Upon a Farm's public offering could establish market demand for food and beverage companies.

10:47So who knows what we'll see next in terms of IPOs for CBG brands. I mean, it's a pretty complicated process, as far as I know, and it takes a long time for it to happen. But as you pointed out, Jackie, it's another path for better for you brands emerging, well, not really emerging brands, but better for you brands and more established brands to build value and create greater value on their own terms versus selling the company. Well, and also I think it is something that requires brands to really think about their future a bit more. And I suppose their willingness or ability to kind of stay independent.

11:27I mean, obviously you're a public company, but you know, it's different than getting rolled up into some larger CPG company or something that's going to come with for better or worse, all sorts of other stuff, infrastructure, et cetera. I think that's a lot of times been the challenge with food and beverage companies that have gone public is just Wall Street just expects continued growth, you know, and like how big can any brand or company get on its own? Like, what's the runway, you know? And I think that sometimes has been, again, something that at least the past ones, it's kind of made them not work out so great.

12:06What do you think would make a team choose an IPO versus an acquisition? Terms, acquisition terms, I think, you know, it's no secret that Once Upon a Farm has been on the radar of large CPG companies, large strategics. And I think the terms just weren't there. Beyond that, I think, as John pointed out, you know, you're sort of controlling your own destiny, even though. Well, yes, no. Yes, well, yes or no. But I mean, yes, Wall Street is going to be demanding or has certain expectations for your company. But I think if you want to hopefully maintain the quality and integrity of your products and your brand as a whole, you probably have more power to do so launching an IPO than you might selling to a strategic.

12:54I mean, let's be honest, like, you know, John Forger was the CEO of Annie's when they sold to General Mills in 2014. That sale brought in$820 million or the acquisition price was$820 million. Clearly, Annie's is a major brand right now. It's a ubiquitous brand in every grocery store in America. But I wonder if the founders are happy with where it is right now. I would assume they are, but maybe they had a different kind of vision. They have no control over that vision anymore. Well, they probably moved on to other things at this point. It's been so long, but. Perhaps. They're probably heavily invested in real estate on Mars.

13:32Or crypto. Or crypto. Yeah. But I know you were saying something about like not being able to control your own destiny as a publicly traded company. No, I was just saying, I think the other part, you can operate a company and just be like totally heads down, focused on numbers. And that's not how publicly traded companies work. Like share prices, I mean, if it were just number driven, it would be, I don't know, way less interesting, I guess. But I mean, it's kind of emotion driven in the eyes of Wall Street and whoever the actual like investors are. Hence, you get acquisitions like buy, which was acquired by a Kirk Dr.

14:09Pepper for$1.7 billion, which in hindsight is dramatically overpriced. Well, it's more like for public companies, you get a company like NVIDIA that trades at some absurd, obscene multiple, whereas other companies don't. Yeah, but I'm saying in the buy example, there was a lot of pressure from shareholders of Kirk, Dr. Pepper to acquire buy when they had the opportunity to do so. And I think there, if I recall, their share price was taking a hit before the acquisition because people felt like buy was going to be acquired by another strategic at the time. Yeah, I mean, but there's a whole other mess of problems here.

14:45We could talk about this for hours, and obviously we're not the best people to talk about it, but there's also nice things called activist shareholders. Sure. Is that a nice thing, actually? I don't think that's a nice thing. Depends who you are. Gordon Gekko over here. I think to a certain extent, it's like an almost untested path of sorts. The more traditional M &A fundraising route has somewhat well-established outcomes. I think for what Once Upon a Farm is doing, they are like on their own path. I mean, I think it's definitely pretty cool. I'm not knocking it at all. And I think it's great that for the broader CPG industry, I think, at least for right now, this is good, you know, and we'll see how it plays out.

15:29And I wish them nothing but the best. I think it's a very, you know, amazing brand that they built and have a lot of respect for those folks and see what happens. It seemed to have worked out for Vitacoco, which was in a similar position a few years back when I don't think they were getting the offers that they wanted in terms of an acquisition and they were like, screw it. We're going to do an IPO as if they made it that simple. I'm making it seem like it was just like, hey, I'm going to do it. Turn on the switch. Well, I was going to say you asked ChatGPT, you probably, I don't know, use like Siri or something still, but you just asked.

16:02I use my own AI platform. I've created my own AI platform. It's called Encyclopedia Britannica. Do you call it with like an 800 number? It's a 900 number, actually. I'm really, really dating myself then. Oh boy. Anyway, we'll continue to follow this story because it is an interesting one. And congrats to John Foraker, Jennifer Garner, the entire team at Once Upon a Farm because it is pretty remarkable. And at a valuation that is just spectacular. You just don't see companies like this all the time. And it's a great thing for emerging brands. It's a great thing for our industry as a whole. Yeah.

16:37And again, I think John Forker especially has done a lot of, I think, really positive things that whether early stage entrepreneurs know it or not, he's probably had impact on their ability to do what they're doing. So got to get him back on the pot. Yeah, I sat down with him in Jennifer Garner in 2020, late 2020. So it's time. Time for a check in. It is absolutely time. No doubt. Both of them will be at Expo West. For those of you who wondered about my ranting and raving about that show and whether I'd actually show up, I will be there kicking and screaming. I'll be at Expo West with the rest of the team here.

17:14So see you there. Ahead of major trade shows, food and beverage professionals across the industry are turning to BevNet and Nosh to stay informed. If you have a brand update, share it with us at submit.bevnet.com forward slash news. I'm assuming we'll see the team from Graza as well. I am sure that we'll see the team from Graza. I feel like I'm seeing more and more from Graza all the time. I actually picked up their olive oil mayonnaise this weekend. It was at Whole Foods. They have a fancy version and then they have an original version. So the fancy version uses only extra virgin olive oil as the source of fat.

18:00And the original uses refined olive pumice oil. So they have two different versions. I just thought it was a really interesting kind of case study around ultra processed foods, oils, kind of catering to a few different audiences. On the non-based platform, I'm going to publish a couple of podcasts that are centered around some of the new nutrient scoring systems. So there's the food health system that Kroger and Hy-Vee just implemented. That was created by this woman named Sam Citro Alexander and then Chris Finucci from Koya. So they put together this scoring system and it's being used by retailers.

18:42There's an app and that scoring system uses nutrient density and ingredient quality. So they do rate things like whole grains, unsaturated fats, fiber, protein, fermented things, that kind of thing. But they don't restrict or limit things like processed oils or seed oils, anything like that. I thought that was really interesting contrasted with the non-ultra processed food verified program, which just was launched by the non-GMO project. Bill Creelman from Spindrift is part of that. And they were the first brand to have it. So I have a part. The first beverage brand. I thought they were the first brand to have the label.

19:24I think so. I think so. Yeah. I think they're the first brand to use it. And I know that they were part of putting the whole system together. So I have a couple of non-based podcasts on that at non-based.com, but the non-UPF verified program does restrict any kinds of processed oils at all. And they really are focused on limiting ingredients like emulsifying gums, added sugars, industrial trans fats, and any kind of RBD oils, which are refined, bleached, and deodorized. But I just thought that it was really interesting that Graza has one for each group. They have one that would fit into a more strict non-ultra processed food certification and then one that is cheaper and appeals to the masses.

20:13It's pretty strange, honestly, to be completely honest with you. I feel like most people are going to expect that Graza will be selling a clean label product with no gums, fillers, what have you, deodorized oils, which is a term I've never heard before. How do you make an oil not have odor. You use a solvent like hexane to take all of that stuff out of it. I was like, do you really want to know? Right. That was impressive. But so, and so interestingly though, the olive oil mayo that has extra virgin olive oil, you can obviously taste the extra virgin olive oil. I didn't taste it. It'd be weird if you couldn't.

20:49It'd be weird if you couldn't. What's the point? Exactly. And I think if consumers aren't looking for that or aren't used to that and are comparing it like I love Duke's mayonnaise, but it doesn't taste anything like that. But I would also say, though, that so many products and consumer packaged goods have processed oils in them or RBD oils. And I think a lot of people don't think of them as being unhealthy at all. No, I think that's something that general awareness of it is so it's almost like your focus has been just redirected to other things, you know? I mean, I think what they're doing with Graza is super interesting in that like other sort of things that are out there in the mayonnaise aisle, I don't know, when I saw different colors, I was like, Ooh, are they, they can do a Chipotle one or something, you know?

21:37So there's just like a lot of other stuff that's taken away from the actual like core ingredients that make the actual mayonnaise, you know, which at its core, I mean, obviously you could just make mayo at home with some eggs and olive oil and citrus, right? I do wonder how long it'll take to get that message across. And clearly they need other brands to help kind of create education on that. And I think it's an interesting one, like in, in the, I don't know, it's almost like, uh, what's a good comparison. I mean, they're, they're highlighting something that's in there that you don't know about that you might not like, right?

22:15Right. Yeah. I mean, I even think about growing up all the crap that I ate and I'm making better decisions these days, but it might not be perfect. And I think that it just shows that there's the consumers that are really hyper focused on, you know, almost biohacking and like incremental nutrition versus the ones that are just trying to make better decisions that are still affordable. So there are different consumers out there and there are different channels. And I think it's interesting that like the first one that you mentioned is in partnership with Kroger, which is, you know, mainstream retailer that's trying to help the consumer guide them a little bit in a better direction rather than like something that's not as approachable or even on their radar yet.

23:05And it feels almost like doing something like Yuka is doing, where it's an app you scan and you can just see whether it's good, bad, you know, not terrible. So you can kind of make your decisions with just a little bit more information. Yeah, it seems like the food health rating system is a little bit more accessible for a lot more people. Whereas the non-UPF verified certification is going to be tough for a lot of brands. I mean, I'm actually kind of surprised to see that there is xanthan gum in this mayonnaise from Graza. I don't know if you need xanthan gums for a lot of mayos. To keep it stable for that long, you do.

23:39And the other thing that the non-UPF verified program limits and restricts is natural flavors. More than half of the things that we try and eat have natural flavors in them. Well, that was Spindrift's, we're going to stand in our soapbox moment many years ago, almost 10 years ago, I think at this point, where Bill Creelman was just confused about where natural flavors actually come from. How are they produced? Are they as natural, quote unquote, natural as people would think them to be? And he came to the conclusion that a lot of natural flavors are actually more synthetic than natural, at least in his opinion.

24:17And he's like, no, we're not gonna do that anymore. He's just gonna use juices and purees to flavor our products, which was pretty bold at the time. But I also think in line with their positioning in premium nature, Spindrift that is. You don't see a ton of brands doing that. It was interesting because we had a guest last week, Ashley Nicholson, who's the founder and CEO of BTR Nation, which is a maker of protein bars, less protein and more snackable bars, but also chocolates. And they don't use natural flavors in their products. And it was just her stance that we just can't use ingredients that we can't stand behind.

24:53And we had a fantastic conversation that we're going to feature in a future episode of Taste Radio. So stay tuned for that. But those are the only two brands that I can think of off the top of my head that don't use natural flavors. I mean, there's a lot out there for sure. I mean, certain coconut waters, like single ingredient products. I was going to say it really depends on the product and the product category in terms of the tolerance for it, necessity for it, etc. a la like, you know, Graza probably doesn't use that in their olive oils, right? Some things like, I don't know, maybe chocolate's easier?

25:27Who knows? I don't know. But even something as simple as orange juice, where you would think that the only ingredient is orange juice, there was, I think it was in The Economist or Forbes, it was some business magazine a number of years ago, where they revealed how large-scale orange juice, legacy orange juice brands actually make orange juice. And a lot of it depends on the price of oranges at a certain time of the year. They buy it at its lowest price. They juice it. They seal it hermetically. And it's going to lose some of its flavor and some of its nutrition. And some of that flavor and nutrition that gets lost is re-added via vitamin C and natural flavors.

26:08But they don't disclose it. Apparently, they don't have to disclose it, which is kind of a weird thing. Yeah. Interesting stuff. Jackie, I think your point about how the food health system and the non-UPF verified program coincide and how they appeal to different consumer groups. I think that's right on. I was just talking to Kiva Dickinson recording a non-based podcast about Caduce, which is the new cracker brand that he has with Jordan Carpenter and Rachel Mansfield. They only use extra virgin olive oil in their crackers. And I asked why limit it to something like that. And he started talking about how these sorts of values have a ripple effect.