Big CPG Vs. Emerging Brands. Why The Pendulum Is Swinging.

0:10Hello, and thanks for tuning in to Taste Radio, the number one podcast for anyone building a business in food and beverage. I am Jackie Brugliera, the Director of Marketing at BevNet, and I'm with my co-hosts for this episode, John Craven and Melissa Traverse. I don't know who put me in charge, but here I am. How are you both doing? Great. I'm glad that I'm not hosting. Yeah, me too. I would put you in charge every day of the week, Jackie. I know. Ray better watch out. Yeah, I know. His seat may be taken. This is going to be a surprise for Ray because I don't think he knew I was hosting today.

0:45So Oh, wow. Well done. Good rave voice, Jackie. I know. He is definitely never going to go on vacation again. He's going to truly be cursing when he hears this. But I mean, he might not have a job when he comes back. Definitely not. I know. We're going to get the hang of this. Someone that has the hang of this is Melissa, who is pretty much the mayor of BevNet. You host weekly live calls. You also have the podcast. What's going on in the community these days? Well, first of all, can I change my title to the mayor of BevNet? I feel like that's exactly what I want to be called. And I feel like I need like a top hat and a cane, some cross between the monopoly mayor and a...

1:25A Willy Wonka maybe? Oh, yeah, yeah, yeah, yeah, exactly. That's all I need. Thank you so much for that introduction. We do have some really exciting stuff going on in our community. For September, we've got a month of retail coming up. So everyone's back to school back in the rhythm of things. And there's, I don't know, maybe like two and a half months before you can reach buyers before the holidays are in full swing and buyers are sort of hard to reach. So we're going to do a full month of retail focused community calls in September. We've got the Whole Foods Market team. We have Target. We have Bristol Farms.

2:00We're working on Misfits. So I just want to remind everyone that you can zoom in and you can talk to those buyers. BevNet.com slash community call to sign up, or you can listen to it as a podcast after Apple, Spotify, wherever you listen to your podcast. But if you zoom in, you can talk to these people and ask them questions. So definitely do that. And then I also wanted to remind everyone that we not only chat with experts like retailers and investors, but we also have a unique opportunity for emerging brands who have a piece of business they're trying to solve and, you know, get them a little bit of extra exposure by having them on the community call as well.

2:38So if you're an emerging brand and you're working on a piece of business, whether it's marketing or sales or ops, we'll bring in some experts. We'll have you on community call and we'll do sort of a community brainstorm. So we've done that with Tsum Tahini. We just did one with Hot Pot Queen. The founder asked the question, when do I start making money in retail? So we had a community call to answer just that question. Bake me healthy, chutney punch, you name it, we've done it. So if you're an emerging brand and you want to be on a community call, email me at mtraverse at bevnet.com or you can Slack me, slack.bevnet.com.

3:15send me a DM and we'll talk about how we can collaborate. Always good to get your brand and I suppose yourself out there in front of the community. And this is like literally the easiest way. Don't have to leave your desk or home or wherever you're Zooming from. And it's free, which is kind of crazy. Yeah, exactly. And it's, I mean, it is, like you said, Craven, it's such a great opportunity to get that out there in front of everyone. And the content itself ends up being really useful because you as a founder or somebody who's working for an emerging brand is trying to figure out all of these problems in real time.

3:53So that problem solving conversation will be infinitely useful to other people as well. Well, I think also like a lot of brands, they're kind of, you know, they're looking at brands and entrepreneurs that are like further ahead of them and trying to figure out these like big impactful things to just like quickly, you know, move somewhere. and it just kind of doesn't work like that. It's like slow and steady and, you know, doing this stuff repeatedly. You know, obviously our stuff is just part of the equation, but it is a good way to practice that. And I suppose a semi-low risk environment and just, again, get your name out there, get your face out there and keep doing stuff like that.

4:31And it certainly will be good for your brand. I promise we will make you look good. So no worries on that front. Yeah. And I mean, it's also great jumping in and seeing a lot of familiar names every week or every month and seeing people participate. They're going from like, you know, a viewer to then being on screen and talking and asking the questions and being the star of the show. So it is great seeing that, you know, script flip and you always engaging the community in that way. Send me an email, mtraverse at bevnet.com or slack me, slack.bevnet.com. We really want to talk to you. Well, now that we've talked about kind of what's going on in the BevNet community, looking at the food and beverage community at large on LinkedIn, there's been a lot of eyeballs on a specific post by Peter Gialansis, the chief merchandising officer of Pod Foods.

5:24And he leads off with just saying, Unify isn't the problem and Pod Foods isn't the solution. And then dives into a lot of stats talking about profit margins, specifically for big CPG, then for retailers and also distributors, talking about the impacts of larger CBG. Did both of you read this? What are your takes? I did. And actually, I worked with Peter Giolansis. He was one of the first people I worked with at Whole Foods Market. Super smart. I thought it was a smart post. He points out, Jackie, you just called this out, but he pointed out that Pepsi's, Abita is three times what Kroger's is. It's 14 billion more than UNFIs.

6:10So certainly he's pointing out that the bigger brands are taking up so much of the market share that it's really difficult for emerging brands to fit in. It's just so hard for emerging brands to win for so many reasons. You know, marketing is more expensive than it's been before, whether it's social media marketing or, you know, a lot of retailers are applying fees to running promos and setting up end caps where they may not have before. The price of ingredients and packaging and freight have gone up. And then after the pandemic and due to inflation, consumers are heading more towards private label brands and towards bigger CPG brands.

6:50it's really difficult for emerging brands to win for all the reasons he called out and in those as well. Well, I think, you know, it was interesting also as he started talking about how we just need the pendulum to swing a little bit. And, you know, I took that and, you know, I really, I do think the pendulum has been swinging a little bit. It just takes a really long time. And probably over the past 20 years, there's just so much more opportunity now for emerging CPG than there was, again, 20 years ago, where, you know, these big conglomerates had even more share. And to some extent, we're comparing PepsiCo that's a global business to like UNFI that's not.

7:33So, of course, the revenue is going to be way more massive. But, you know, I mean, big CPG is the Goliath and everyone else is the David, right? You know, they're kind of the market juggernauts and everyone else is the challenger. And I think, they also are the reason that there's opportunity out there. Their businesses are so big and complex that at any one point in time, there are brands in those massive portfolios and categories that are more at risk for them and have more entry points or white space for emerging CPG. I do think that chart that he posted, which sort of showed all the brands and subsidiaries and all that.

8:14And I mean, that's been floating around social media, I think, for a couple of years. You know, it is really an interesting thing for an entrepreneur and CPG to think about, which is, you know, that one of the things I would really stress with that is that the rising tide of emerging CPG sort of floating the boat where, you know, you shouldn't think about whatever company maybe feels like your direct competitor is like your enemy, like these big, massive companies are more like the real enemy. And there's kind of enough dollars to go around from those big conglomerates. You know, again, you don't need to steal share from whoever your emerging competitor is, but, you know, very interesting comments in there too.

8:58You know, definitely worth a read if you haven't seen the thread. Yeah. I feel like we hear from a lot of like manufacturers that there's a lot of hands in the pie. And I think the people that are closely involved in the production of their product and, you know, the distributors, they're looking at how they're taking, I guess, profits away from them, but they're not looking at like the larger market and how, like he was stating in his post, how big CPG is actually the one influencing a lot of this with their control over shelf space and within a retailer. Well, I think also, you know, PepsiCo is much more vertically integrated than your typical CPG brand.

9:41And, you know, I mean, this is just like the way of the world now, like people complain about UNFI, but like if there was no UNFI, we'd be back in the old days where it would be really hard to get your product into certain retailers. Like, are you going to be your own distributor? Like, what are you going to do? You know, the other options that were there before that weren't exactly like super friendly to emerging CPG. And, you know, I think otherwise, like, there just are a lot of hands in the in the pie or pot or whatever. Nowadays. I mean, I say that like, even, you know, a company like ours, I don't know, I got the like, quarterly thing from our accounting department that was like, here's all the things we're subscribed to.

10:21It's like, do we need these? Right? Yeah. And yeah, I guess, you know, there's all the cool like, platforms that people use, the Asanas, the Slacks. Do we need those? I don't know. It'd be pretty darn hard to work without those or to build our own. And, you know, I think that's just the way that it works. I mean, there's a lot of corners that can be cut because these things are in place. And again, I mean, if UNFI and KE and I don't know, Kroger didn't exist, it'd be a pretty tough world out there. So nothing's perfect, obviously. And another thing that I feel like people often ask is, is there still room for innovation?

11:01Is there still room for new brands? And I think this kind of points out that again, if we just take 1 % of revenue from, you know, larger CPG, then there's a whole big opportunity for a bunch of new brands to enter. And he pointed out in his post that even product innovation sections like in Sprouts is a great place for retailers with like kind of a low risk to introduce new products and get them onto shelf and get trial in a fast way, rather than dedicating, you know, entire shelves. And without necessarily charging those brands tens of thousands of dollars to be placed on those. I mean, certainly we're not seeing the kinds of acquisitions now that we saw four years ago or so.

11:46But I did a little Googling to see exactly where small brands are succeeding in our current market. And according to a report from IRI and Boston Consulting, they found extra small brands, and that was less than$100 million, and small brands, which were more than$100 million, they gained about four sales dollar points from 2018 to 2022 and large brands lost 3.7 share points in that same period. And I know that, you know, a hundred million dollars isn't necessarily small to us, but I think that that's hopeful and shows that smaller brands are actually making their way into the market and onto shelves.

12:27Yeah. I mean, I think we also went through a stretch of the pandemic where, you know, to some extent discovery of new items at retail was like impossible at some points right and you know now we're kind of back to some of the old ways that worked you know in-store demos and whatnot and you know again i i think if you look at the makeup of these big companies and what's in their portfolio like there just are brands in there that are ripe for innovation from emerging players like these big companies are not like their strength is not coming up with cutting edge stuff, either product or branding.

13:04And I don't think that'll ever change. I mean, they just they want to sell like billion dollar brands, not incubate things that it's going to take a while to get to, I don't know, 100 million dollars or something like that. Yeah, hence big CPG is like monthly new flavor release, you know, that we're always talking about. Yeah, I mean, those are kind of like, you know, just to give you a little, little nudge to not quit them. Right. You know, it's like basically saying, Hey, like, don't leave us like, here's something that'll keep your interest for a little while. And then we'll just rinse and repeat this.

13:36Right. And it works. It works. I mean, it's obviously really hard for the bigger brands, the Conagra's, the Nestle's of the world to innovate. I know of a couple of those big CPG organizations that outsource their innovation, because even to try something out on their own lines is so expensive. and so disruptive that it doesn't make sense. So, you know, right there, you see a big opportunity for smaller brands to offer a ton of value. Quick break. If this episode has you thinking about what's next in food and beverage, explore BevNet and Nosh Insider, our subscription platform with deeper insights from the BevNet team.

14:12Visit tasteradio.com slash insider to learn more. It's such a pleasure for us at BevNet and Nosh to always be talking and interacting with the smaller brands. Jackie, you guys have a couple of really fun events out there on the West Coast that I think pretty much everyone here listening should go to if they're in the area. Or not, just get on a plane. Yeah. Yeah. John Craven's getting on a plane. So is Mike and Ray. So I think everyone else could too. But yeah, we are hosting a meetup in our San Diego office on September 25th from 5 p.m. to 7 p.m. Our office is located right off of Miranda Boulevard.

14:50If you're in San Diego, you know where that is. if you don't Google it, but all of the information can be found at bevnet.com slash events. It is a free meetup. We will have samples. We will have some tasty pizza. We'll have some drinks and we'll have good conversation and the whole Taste Radio crew will be there. So another, you know, plus and reason to attend. And I think we're working on some special guests too, but we'll see. Yeah. Maybe there won't be any guests. Maybe there'll just be pizza. Who knows? Either way, it'll be fun. Special guests like, Like, I was going to say Beyonce, but we're not going to tell her.

15:23I mean, that would be impressive. Imagine. Imagine Beyonce in this office. I don't know. I couldn't help using her name, even though we're not going to talk about the Kanye. You're just thinking about her new whiskey. I am. I am. I know you bought like a case. It's about what we'll say on that. I saw Monica already bought one. She posted on Instagram. So I'll be curious. She'll have to report back. I think it's made by MGP for whatever that's worth. I mean, I read the BevNet article. It looks like it's in the style of a Japanese whiskey because Beyonce is a fan of Japanese whiskey. They are good.

15:55Yeah. Yeah. They're really good. So I would, I like Japanese whiskey. I would try that. I do too. It's an interesting mix though. It's made in Texas, but it's American whiskey, but it tastes like Japanese whiskey. There's a lot going on there, but I'm curious to hear how it goes. TBD, stay tuned. Yeah. But speaking of alcohol, we do also have another meetup in San Diego. On September 29th, on Sunday, before NBWA, which is happening in San Diego, we are having a brewbound meetup as well. That is a happy hour in partnership with Lost Abbey at their church location, which is a super cool venue. If you haven't been there before, 10 out of 10 recommend.

16:35I will be there. Our San Diego team will be there. And that will be from 4 to 6 p.m. And that's also free. I'm jealous. That is like the weirdest but coolest beer venue I've seen in San Diego. Why is it weird? Because it legit was a church and they kind of left a lot of it there. Yeah. There's the stained glass. The main bar is like right at the front with some, you know, religious, I guess. Theme stuff or style, style. Yeah, style. Yeah. It's interesting. It's cool. It's really unique. I will say I'm not an avid church goer, but I do wish I could spend more time in churches. So you got a reason.

17:16That's the one for you if you like beer. Right. And for people that can't make it to the meetups, we still are announcing speakers, retailers, all the things that are going to be going down at our winter events this December in Marina Del Rey, Nosh Live, BevNet Live, Brewbond Live, food, beverage, and beer industries. Also, all that information can be found at bevnet.com slash events. And Spirit Sunday, are we doing it? We are doing it. Yeah. So we do have Spirit Sunday on the Sunday prior to BevNet Live on December 8th. We will have the cocktail showdown. So if you are RTD cocktail brand, check that out, you can apply and we will have some content specific to spirits as well.

17:57So lots going on. Fun times. Sounds great. Is the spirit Sunday in a church? Nope, not this round. Okay. Is it a Marriott? Close enough. Does that count? Same difference. anyways there will be lots of products at our events and we also have some products in our offices is there anything that you want to share from the east coast that i haven't been able to try yet sure because we need some processed food i don't know what you call this processor it's idahoan triple cheese mashed potatoes with uh tapatillo wow okay yeah i made one of these and tried it. I wish this existed when I was like, I don't know, 12.

18:41But it's basically instant mash with half the dose of Tapatio to it. Also says triple cheese. I don't know what didn't really taste too cheesy. But I also don't eat a lot of instant mashed potatoes, like zero. But yeah, it was interesting. I don't remember seeing small containers of instant mashed potatoes. Like I was eating easy Mac when I was in college, but I never had something like that, that would take it to the next level. Yeah. There's a lot of odd collaborations out there. Like this feels maybe in that bucket. I can imagine that the Tapatio definitely adds something positive to the powdered mashed potatoes.

19:21Yeah. Flavor, I think it's called. Right. I mean, like if you put hot sauce on just about anything, it usually ends up being a little better. So that makes sense. I'd rather like chili crisp or something, but you know, whatever. Won't complain. I'll take hot sauce. Maybe we should call Fly By Jing and see if they want to participate in the next. Do a new mashed potato. One more. I got the, this is from one of our listeners. It's called pistachio. Is that how you pronounce it, I guess? Yeah. Pistachio spread. I have not seen a call out like this before. Italian founded. But it's really good. I mean, if you like pistachio, this has some oats in it.

20:01It's kind of like smoothed out. Really good. You could definitely just like eat this with a jar. I guess one of their suggested uses also is make a latte with it. So we're gonna have to get Mike on that when he gets back. Yeah. Yeah. I just saw last night a TikTok video of this guy making like a 15 layer cake. And in the middle of some of the layers was like a pistachio cream. and I think he took like a pistachio spread and kind of mixed it into heavy cream and whipped the cream but I would definitely eat that is that how they like make a latte like how do you put the nut butter in the latte is it within the milk I mean you could you could mix it with the espresso and pour some uh froth milk over it I think and aren't a lot of nut milks in the manufacturing process basically like a nut or a seed paste mixed with water well powder oh powder yeah okay kind of a letdown right yeah sorry anything's powdered like powdered mashed potatoes powdered nut butter what can't you powder picture 50 pound bag of powder being put into a mixer it makes you wonder why you would buy you could just buy the bag of powder and save a lot of money exactly yeah but this stuff is really good i would definitely recommend grabbing a jar i love the packaging too the design is um it's like indie but also attractive yeah like the like illustrated uh format got a nice uh call out for the founders on the back and yeah i don't know what this stuff costs but it's super tasty i bet it's delicious nice and melissa is that a beverage i see next to you what's that yeah so we got we got a shipment of United sodas in, and I've been working my way through all the flavors.

21:49This is the Cherry Pop. I also actually just recently bought the Sour Blueberry at a Dave's Marketplace, but I think they do such a nice job with the product. They use a little bit of cane sugar. They use some stevia, but there's only eight grams of sugar, 35 calories. I mean, I really think the sweetness in the United sodas product is really nice. It's not cloyingly sweet. It doesn't like stay in the back of your tongue for 10 minutes after. And I think the cans are very attractive as well. Ultra minimalist if there ever was, right? Yeah. Yeah. And it kind of makes me feel patriotic. Like I see the United.

22:30Never have had that feeling from drinking it, but to each their own. Oh, nice. Well, I have a couple of things over here. I am currently training to hike Mount Whitney in two weeks. So I would say it's very truncated training. I should have been training months ago, but I'm really going ham now. And part of that training is like preparation. What am I going to bring for snacks on the trail? How am I going to stay hydrated? Because you're just like constantly consuming calories. So I've been taste testing a bunch of things. Grabbed misfits from my local grocery store, which is a nice option when you want something that's tasty and doesn't just taste like, you know, your traditional protein bar.

23:14So this is their cookie butter plant-based protein bar. They call out new and softer. So I think they just reformulated has 15 grams of protein, one gram of sugar. I'll definitely be packing a bunch of these in my pack because I'm going to need the calories and something that tastes pretty good. Is it an overnight trip? Do you sleep on the trail? You can do that, but I am just psycho and I'm doing it one day. It's 22 miles, 7 ,000 feet in elevation gain. And the summit is at 14 ,000 feet, I believe. I'm doing it with our old coworker, Jessica Fagan. Jackie, that's insane. You're going to do 22 miles, 7 ,000 feet in one day.

23:55What time are you going to start? Midnight. Wow, you're badass. Yes. So you start at midnight and then you pretty much get back at, I don't even know when we're going to get back. We're probably like six or 7 PM. That's amazing. Crazy. So I also need to stay hydrated or else, especially with altitude, altitude sickness, if you get dehydrated, that's like number one. No boy, no. No, no. So I've been trying the only hydration. They have some really tasty flavors, lychee, yuzu, citrus, Asian pear, white peach. And there's four times the electrolytes compared to leading sports drinks. real fruit, vitamins.

24:32And then what's really important is the electrolytes and the sodium. So I've been trying this one because I was kind of like, you know, sick of liquid IV. I feel like that's everywhere and I wanted something different and some new flavors. So I've been trying this and so far so good. Total hater. I like it. I grabbed a bunch of samples and I've been drinking them this summer and I think they do such a nice job with their flavors. I think it It has less sugar than Liquid IV too, which I really like. It tastes really good. Like I would rather just drink salt water, I think, than something sugary.

25:06Yeah. Which some people suggest on the trail, actually. They're like, just drink salt. I've heard of that. You could do that. And then you could have plenty of, you know, grams of sugar left in your day to eat something delicious. Yes. That brings us to the end of this episode of Taste Radio. Thank you so much for listening. Taste Radio is a production of BevNet.com Incorporated. Our audio engineer for Taste Radio is Joe Cratchy. Our technical director is Joshua Pratt. And our video editor is Ryan Galang. Our social marketing manager is Amanda Smirlinski. And our designer is Amanda Huang. Just a reminder, if you like what you hear on Taste Radio, please share the podcast with friends and colleagues.

25:48And of course, we would love it if you could review us on the Apple Podcasts app or your listening platform of choice. check us out on instagram our handle is bevnet taste radio as always for questions comments ideas for future podcasts please send us an email to ask at taste radio.com on behalf of the entire taste radio team thank you for listening and we'll talk to you next time