Creators Are Fading. That's A Good Sign. And, How Investors Start & End Relationships.

0:10Hello and thanks for tuning in to Taste Radio, the number one podcast for the food and beverage industry. I'm John Craven, the founder and CEO of BevNet, and I'm joined with my co-hosts for this episode, Jackie Burgliera and Brad Avery. In this episode, we feature the latest installment of The Goat Pen, our regular series with Carlton Fowler, the co-founder and managing partner of early-stage investment firm, Goat Rodeo Capital. How are you guys all doing? Doing all right. Just got back from Washington, D.C. yesterday, so just recovering from a long weekend a bachelor party it was yes i'm getting married in november nice well countdown the days exactly i didn't i didn't clock any beverages uh while i was there i almost like well i i saw a lot of uh diet pepsi have you heard of that brand maybe i saw a lot of diet pepsi a lot of diet coke i was gonna say except from the uh handle of vodka that you probably consumed or maybe tito's or something coronas coronas i went i went sort of uh low-key again And you go into these bars where they didn't really have large craft selections.

1:18Nice. Well, Brad, you, I think, have not been on Taste Radio for a year, as Ray pointed out. Ray and Mike still on vacation doing God only knows what they do on vacation. Probably being numpties in some other town. Kicking a soccer ball. Yeah. Just a lonely kick of the soccer ball. Just back and forth in a field somewhere. Just to each other. Yeah, they're camping at a soccer camp. Yes. But I think last time you were on in 2022, there was a discussion about Chamberlain Coffee and I think some Gen Z brands, maybe Prime. And I don't know, maybe seems like a good time to check in on on those brands.

1:59Still still relevant, right? Yeah, I mean, probably more relevant overall. I mean, I think Chamberlain is in a ramp up stage at the moment. We're seeing them really invest a lot more into the RTD. They raised about$7 million around June, I believe. We covered it in June at least. And it's cans in the hands time for them. They're rolling out to retail and expanding. I haven't seen any data. I don't know exactly where the brand stands at the time, but they've been doing a lot of retail deals lately. And I think they've even been expanding the dry coffee as well in Target and elsewhere. It definitely seems like they're in this moment of moving beyond just online, influencer-driven, and into this broader mainstream market and seeing who they can capture there.

2:48And what about Prime? I mean, Prime is definitely blowing up. A league of its own there. It definitely is standing out. I mean, the last numbers I saw from Nielsen IQ for early August was 600 % growth in retail, and that's not even necessarily tracking every channel or e-commerce at all. And it was coming up on 500 million in sales. And that's just a sports drink. That's not counting the energy drink, which is already like near 100 million, again, just in like Mulo and I think C-Store. That's just limited data. And I would assume those numbers are larger. So Prime is definitely the one that is standing out in the sense that it's sticking around.

3:29I mean, I thought the question for them was always going to to be, can you prove it's not just a fad? And those are numbers that seem to be suggesting there's a lot more beneath the surface than just, you know, Logan Paul going out there and getting a bunch of middle schoolers excited about a sports drink brand. I mean, I don't know exactly too much about how they're doing it, but it's definitely resonating. And I think when you have, you know, say Chuck Schumer commenting on your product that, you know, doesn't necessarily hurt its sales, even if it does, you know, sort of raise some questions about, you know, regulatory and marketing issues that could or could not come up.

4:08Sure, the old, all press is a good press, right? Exactly. Yeah, I'm really curious to see what's next for creator, you know, founded brands. I think they're kind of paving the way for brands in the CPG space. There's been a lot of success in beauty and lifestyle and fashion with creator founded brands. And I think with like CPG, it's a little bit more difficult as far as the operations go. And I think some of these brands are figuring it out and they're finding good partners to figure it out. So I'm curious to see what's next. And I think we've also seen a shift from consumers really buying into celebrity-based brands to creator-based brands.

4:52Celebrities can have a million brands and they're just attaching their face to a product, Whereas creators, they're talking to their audience and they're having more of a collaborative dynamic and figuring out what exactly does their consumer want before they're launching some of these products. Well, it's interesting you draw a dynamic between creator and celebrity because isn't it just sort of a new brand of celebrity? It's just a different style of celebrity is what it is. But I think you did tap into why it's working more effectively is that it's a type of celebrity that is much more in direct contact with their audience than sort of the old school celebrity is.

5:25you know i i probably could not send a dm to the rock and have him respond necessarily or you know comment on it in a twitch stream i mean have you ever tried though to be fair i have not tried maybe he would he seems like a really nice guy maybe he would he wrote back to someone in the beverage industry on twitter yeah so but you know but i think you know the old school kind of movie star celebrity that always has sort of a remove from the public and i think these online you know influencer creator celebs have this much more like dialogue that's going on with their their fans who are younger and so like you know i'm i'm only in my early 30s and i already sort of feel this removed from the sure the teens and the gen z kids who are yeah i think you're you're old brad don't worry yeah but no i mean i'm just saying like basically these uh you know this new crop of celebrities who have this whole new way of talking to their audience and so that's turning into a different type of, you know, consumer base for one, they are now releasing all these products and, you know, entering into CPG.

6:26I think that that's really fascinating. And it's sort of showing the legs that some of these brands can have. I mean, I think there's also the Mr. Beast bars is another example of that. And, you know, there's been a lot of these, these online creators, you know, hopping in. Well, I think with with Prime and Logan Paul, in particular, it's, I don't know, it's interesting watching how the celebrity status started as a creator, right? And now he's like a WWE wrestler, which, you know, as a kid growing up, I would say like, I don't know, Hulk Hogan and like Macho Man, those were like celebrities, you know?

7:01So it's kind of weird to put a label on it at all. Yeah. I think it also just shows that if they have a core audience, they could become anything or launch anything as long as they're tapped into their audience and they have that buy-in. Like who thought that he would evolve into who he is now or that he'd launch the products that he would, but his core consumer and his audience are just so tied into what he's doing. Yeah. I mean, Logan Paul, I mean, that's the guy who got famous on Vine, a platform that doesn't even exist anymore. Like, you know, he's just a kid doing funny videos and, you know, you look at how that can just sort of pile into, you know, Stowball effect into where it's gone if you just make the right moves and the right decisions.

7:44Well, I mean, this is also like, you know, we're talking about like the upper echelon, like, you know, you could probably count people who are in that, that class of creator, like on your fingers, right. In terms of, you know, there just aren't that many of them. Yeah. The top tier, yeah. The top tier, which, you know, obviously top tier creator celebrity in a category that also has a lot of volume behind it, you know, is, is kind of an interesting play, you know, as opposed to, I feel like some of the pitches we're getting, you know, where it says it's from a creator, I have to like Google it again, you know, probably just too old to know who some of these are, but like, I'll ask my kids and they don't know who it is.

8:23And they're launching a product that's like a pretty kind of niche thing, right? In order to do it right, you've got to bring in sort of seasoned operators in CPG. Like, I mean, with Prime, you know, you have Congo brands behind who, you know, are also doing a lot of new. And so they have an operation that clearly knows how to market and merchandise a brand, you know, with Chamberlain and I believe Mr. Beast as well now. LA Libations has been doing, you know, a lot of work there. And, you know, they brought in some, you know, experienced executives to really lead the business, you know, and obviously Logan Paul, I'm a Chamberlain, Mr.

9:00Beast, they're all involved in these brands to probably a larger degree than, you know, we already saw that shift away from just the celebrity spokesman to the celebrity investor and executive type of role. But they've found partners who know how this industry works, can get the products made, can get the products out there. And then their job now is to represent them, weigh in on branding, weigh in on identity, and speak to their audience. And I'm sure there's other ways they're involved too. But that's one of the key factors of why some of these products have been successful is they have people who have experience in this industry doing them.

9:38And I think that's what takes them from online, you know, to retail because they can launch as a, you know, D2C brand and have their audience buy it off of their site. But once you get on shelves and into retail, it's a whole different game. So if they're going to be able to succeed in that format, like you said, they need good partners. Well, at some point, they also just if they want to be, you know, a brand that's billions of dollars a year, they have to transcend their own sort of celebrity status. Right. Because there's plenty of people out there who are either don't know who these folks are or are not influenced them because it's not the target demographic.

10:17But they still need to drink Prime or Chamberlain coffee or eat a Feastables bar, which, again, at least they've picked categories where that's a believable leap. right yeah i mean i i'd say mr beast is the only one i'm noticing that really has tied the branding to the creator i mean chamberlain coffee has her name in it but i feel like there's a chance for that to transcend who emma chamberlain is and then chamberlain just becomes the name of the coffee brand yeah and prime you only know that logan paul and ksi are involved from all the because they show it non-stop yeah yeah but it's on the actual bottle there's you know i don't know if there's any indicator or not maybe i don't know if there's text that says it but otherwise the brand kind of could stand totally on its own right separate from them you know that's what's the interesting thing about the mr beast bars is they do sort of tie themselves directly to the creator in a way like mr beast is not someone's last name right yeah i guess all of these creator brands will continue to be a theme for sure and appreciate you bringing some insight brad great uh i guess well maybe we'll talk about this again next year it'll be maybe we just need It's the end of August special.

11:24We just talk about all these brands. There you go. Well, I guess before we go further, I also need to thank our presenting sponsor for this episode, Tetra Pak, the pioneering package solutions company that provides safe, innovative, and environmentally sound products that each day meet the needs of hundreds of millions of people around the world. Hey, how about that? so summer's coming to a close here which for those of us who are on a lot of pr lists it's the dreaded pumpkin spice season oh yes yeah you guys getting bombarded yet you guys drinking your psls and whatever else we're supposed to do yet haven't yet it's too hot here in san diego to you know start diving into pumpkin spice come on you can get a nice pumpkin spice i just came back from Washington, D.C.

12:12It was like 90 degrees there. I was drinking cold brew still. Yeah, I think everyone's trying to rush the year, though. You walk into any retail store and they're selling Halloween products. Oh, yeah. They're trying to push fall flavors already on us. I don't know. I'm personally not ready, but I think as soon as Labor Day hits, everyone's in fall mode. So it's just a matter of a week. Well, I guess we should check in next week. Oh, I went I went into just grocery shopping last week and already they had like I got bombarded with this like scent of cinnamon from like all the scents that they put out and there was like little ghosts and skeletons which i welcome those those little guys i i like to be greeted by like a you know a smiling skeleton hey speak for yourself i guess but uh too spooky i don't know it's just yeah it is kind of a bummer that summer's winding down and we're in full halloween mode and i don't know the pumpkin spice thing is always pretty interesting to see which brands like hop on that each year you know some like a starbucks obviously has a recurring thing that they're known to do and it works but there's always sort of emerging brands that you know decide to roll out a pumpkin skew or maybe it's a some winter christmas themed product but it seems kind of like a challenging thing to really make noise with at this point.

13:32If you're doing a limited release and it's during the fall and pumpkin spice is just so played out for me. I don't know. It has to be the right product to have that flavor profile. I also saw some brands do a great job of just suggesting recipes that include pumpkin spice that uses their product, but they don't have to make a skew that is pumpkin spice. So if you like that, you like it. If you don't, you don't. And that's like another good option, I guess, for brands if they want to tie into fall flavors. Yeah, I mean, it's interesting that the flavor trend has kept up after all these years. I mean, at this point, I don't know how far back we're going with the real pumpkin spice, like, takeoff.

14:12It's a long time, like, a decade plus. Yeah, for sure. I mean, the fact that it's, like, continues to be so strong is already sort of impressive with that, that, like, you know, it's become an annual holiday, sort of like, oh pumpkin spice is back yep yep i mean i'm also throwing shade on pumpkin spice but you recall last week well brad you aren't here for it but we had this eggo waffle sipping cream oh did you actually get that and yeah and uh i had a uh bartender friend attempt to make some drinks out of it and it's i don't know that stuff it was weird it's like i wanted to try it i was like morbidly curious about it you guys have seen the movie anchorman yes yeah you know that scene where he's putting on the cologne and everyone in the sort of newsrooms like freaking out like what is that yeah like that that was kind of the reaction that i saw when i opened the eggo sipping cream like it has a really strong eggo smell that if you're like 10 feet away from it you're like what what the hell you know if you put it in a waffle iron can you make waffles with it i think that would lead to fire because it's got some alcohol in it but yeah maybe make ice cream out of it i don't know but anyway yeah so maybe i'll dial back the the pumpkin spice hate for a little while yeah i think i think pumpkin spice got one of those things where i got too popular and so like you were like oh i since he was he was cool for a bit and then it got popular and everyone was like i can't like it anymore it's not you know it's not punk rock anymore it's like pumpkin spice yeah yeah well i guess uh we'll see how it pans out maybe uh one of these episodes as well, a pile of pumpkin spice products to take a look at here.

15:51That's inevitable. That's definitely going to happen. Brad, you didn't bring any new products here, aside from a beverage we talked about last week. But what do you think of it? Tell us what it is. I'm drinking Bennu. Is that how it's pronounced? Energy from Plants, Uplift. This one's the Passion Fruit Green Tea. It's got 100 milligrams caffeine, all your um astragonda lion's mane l-theanine it's pretty good i i'm liking it i'm not normally an energy drink person uh clearly this is tea based so you're not a three bang a day guy no i'm not no as much as i love caffeine i'm more i go more for my my coffee overall but you know i grabbed this and feeling pretty good i did notice you know i'm not too familiar with this brand at the moment but they also have sort of like relaxation and calm skews.

16:42And I think the big thing for me that I always question is I see a lot of startups now, you know, functional beverage brands that are launching, you know, it's like we have our relaxation drinks, we have our energy drinks. And I, you know, I think this has been discussed on the show before. Yeah, I sound like a broken record when I talk about this topic. Yeah, exactly. But I kind of agree with you there. It's like, you should probably just pick one because it's like you don't go to like monster energy for your relaxation drinks. And obviously it's totally different, but like, I think you want your brand to be identified with a like need state as well.

17:15So you're like, all right, Bennu, like, is this my drink that I go to for my energy or is this my drink I go to like to relax? Yeah. They're not the only ones that are doing this by any means. And so, yeah, I think you look at some of the functional brands, like, you know, like the Kinuforix that sort of hit a mark of like having that type of thing, but they're sort of, you know, that's a brand that jumped into mind, but they're, they're sort of like got this almost like crazy new wave type of, you know, feel to it as well. But yeah, that's one one trend I've noticed. And, you know, I can't think of any examples of someone, you know, super blowing up doing it.

17:48Right. I think, you know, there's some good products have come out of it for sure. Yeah, I think it's at like the beginning stages still of just these almost supplement beverages. Like if I walk into my Lazy Acres, and I walked to the supplement section, There's a whole refrigeration set now of all these beverage brands that have specific functions and it has it labeled on the can. So I think like for people that are looking for energy and that's all they're looking for, awesome. If they're going to a supplement section and they're looking to substitute, maybe like taking a vitamin or doing something else for these beverages, maybe it could work for them.

18:24But I still think it's like early stages for that. Yeah, I think it's also like to what Brad said before, you know, there isn't really anyone that's kind of blown up doing that, which to me is partially an example of just the reality in CPG where someone will go and be like, why is no one doing this? Like maybe I could be the first one doing this. And it's like, well, they actually everyone who's tried that didn't make it. No. Yeah. It's not that the cans are confusing either. With this particular brand, they are very clearly labeled. Like I was not confused, but I think just in the question in my mind of like, what am I going to associate this brand with?

18:58Right. Am I going to associate it with an energy drink or am I going to associate it with a like, this is my wine down at night, like alcohol replacement? Well, I think it's like if you took an energy brand that had five flavors, their sort of premise is, you know, you're someone who will look to that brand for energy as you are stating. And maybe today you're in the mood for, I don't know, lemon lime versus fruit punch. Right. And a brand like this is sort of banking on you to not only have that dimension, but also like, you know, you might be in the mood for lemon lime, but that's the relaxed flavor and you want energy.

19:30It's like it does kind of. Yeah. Too many variables. Yeah. Too many variables. And I think, you know, just risks kind of really limiting like the use occasion for, you know, that brand. Yeah. I mean, you know, it's like you don't see too much like decaf coffee in CPG, for example. like it doesn't mean that maybe there's not a market for it but it's the type of thing where you know no one necessarily wants to like oh well we offer a decaf but it's only the vanilla latte right you know what goes great with beverages though cookies yeah i wouldn't say these are functional though no we've got the uh they can be these are the milk bar crunchies line of bagged cookies they have a brown butter chocolate chip cookies and cinnamon toast cookies so we all have live live sampling here all right yeah have a chocolate chip cookie do i do i want to chew it on the mic do i want the audience to hear that just extra crunch yeah yeah they're pretty crunchy right i've tried them before so they're pretty good it's interesting because they are packed with crunch from crispy rice cereal so i know like milk bars known for their cereal milk soft serve ice cream that's how they like started right and they're carrying that through to their other products which i think is smart that was pretty tasty yeah i i've liked their past products they have too the milk bar so that i mean that definitely delivers like on a package like real crunch chip you know the you know i i tend to go for a chewy cookie myself but that that's pretty good yeah i mean these are these are pretty tasty i think you know it's to me still kind of interesting that there feels like There's a big gap between what Milk Bar sells at its retail outlets and what it sort of stands for, and then the CPG products.

21:20Kind of felt that way about the Magnolia Bakery products, too, that we had recently, where what they create in the store just can't ever fully translate to like a packaged shelf-stable product. But these are good. Just don't know if it makes sense as part of the Milk Bar brand, but so it is. Yeah, the cinnamon toast cookies are my favorite. These are really good. There are a lot of different flavors in my mouth. This doesn't necessarily go with cookies, but I have Fobalish, which is a line of chickpea-based products. So this is a vegan mayo, and it's made with aquafaba. And they have other dips, like tzatziki and things, that is also made with aquafaba, which for people that don't know, It's like the liquid that is in a chickpea can.

22:11So often it's wasted away. It's just thrown down the drain. But they use that and make it into dips. It's a great substitute for like eggs, which makes it vegan. And I know that their mayo is a new product this year. They have chipotle and they have their traditional. I found it in my local sprouts. I know they're rolling out in sprouts. So really tasty stuff. I love the branding too. And they also have frozen like chickpea bites, brownie versions, as well as like falafel. And this is a nice little extension. Just again, sticking to their core product of aquafaba and chickpeas. Definitely some nice looking packaging.

22:54We'll have to give that one a try if we can get that out here on the East Coast. Yeah, I think like especially for mayos, you see a lot of the same kind of like branding, white, you know, not anything exciting. And I think the color blocking of this will really pop on shelves. Definitely. All right. It's time to get to our conversation with Carlton Fowler, who, as I mentioned earlier, is the co-founder and managing partner of Goat Rodeo Capital, a VC firm that makes early and growth staged investments in emerging food and beverage companies. Goat Rodeo holds stakes in Lemon Perfect, The Good Crisp, Hoplark, Beatbox Beverages, and Nectar Hard Seltzer.

23:35This is the third edition of our interview series with Carlton, who spoke with Ray about Campbell's acquisition of Rayo's owner, Sovos Brands, why he's bullish on hard tea and the potential for Monster Energy and Dunkin's respective forays into the category, his perspective on how to most effectively set expectations and navigate disagreements between investors and entrepreneurs and the trajectory for CBD-infused food and beverage brands.

24:03Hey, folks, it's Ray with Taste Radio. Right now, I'm honored to be sitting down with Carlton Fowler, the managing director and co-founder of Goat Rodeo Capital for volume three of The Goat Pen. Carlton, great to see you. Good to see you too, Ray. You know, it's been a minute since we saw you and heard from you, and I hope all is well. You know, it's interesting, this summer has been flying by, and I think about all the interesting brands that are coming out in the summertime. And it's kind of a strange time to launch a new product, to launch a new brand. But in your experience, I mean, is it like any time of the year or is it just as effective to see a new product or launch a new product at this time?

24:43I mean, just the basics of summer is hot, people drink more when it's hot, makes it an interesting time, right? It's kind of like trying to launch a new BevAlk brand during October, November, December. your distributors are so focused on getting the actual cans and bottles on shelf that sometimes they don't have quite as much bandwidth to focus on it so a lot of times you'll see the new launches be in maybe a an april in preparation for the summer but with the size of some of these companies that are kind of moving into the space with your monsters and and duncan's like they're so big that The distributors will do whatever they need them to do so they can do small cut-ins.

25:26Yeah, it is funny. We chatted about this before we hopped into the mics. Monster Energy announced in June that they're going to be launching a lineup of non-caffeinated hard teas in late 2023. And then just this week, actually yesterday, as of this recording, Dunkin' is launching a new line of spiked iced coffees and iced teas. The iced coffee threw me for a loop because I feel like that is a segment that's been there, done that, and without a lot of success. But let's start with the hard teas. You're a fan or maybe not a fan, but you are bullish about hard teas. Yeah. I mean, tea in general, it's fascinating because it's like the largest category worldwide after water, right?

26:14So it has to be reckoned with. we have you know many many examples of it being very popular in the traditional beverage side and yet one of the only real success stories on the alcohol side has been twisted tea and don't get me wrong twisted tea is really big but i think that people have kind of considered it down market and it does have a little regionality to it it's strong on the on the east coast and and to the South to some degree, but that's just because that's where Sam Adams is very strong. Which is the owner of Twisted Tea, for those who are not - Owner of Twisted Tea, and it's really funny to me, like consistently, because stock analysts are lazy, the brands that do the strongest in the Mid-Atlantic and East Coast, where the predominant concentration of public market analysts are, get like overhyped, because if you're going to go do some channel checks and check out stores and stuff like that, you don't like also fly to Arizona and Boise and all those, you check your bodegas and the stuff around there.

27:20So there's always a lot of really interesting kind of reflexivity to how specifically Sam reports to the street because that was one of the things that truly got a little out of control on because no one was seeing some of the softness elsewhere. And they just had an absolute bang up quarter for Twisted Tea. And that has not surprised me. I'm seeing a lot of smaller growing tea brands do well. You know, you've always had the one, I don't know why I'm blanking on it. Loverboy has always kind of been there. But there's some new competitors like Giant, like Owls Brew, like this Dunkin' one. And, you know, it really does make sense.

28:07tea is a really big non-alcoholic beverage category. The flavor to it and the tannins to it help it stand up really well to either a malt or a spirits base. So there's a lot of things going for it. And I think it's here to stay. And I think we're going to see a premiumization of the twisted tea consumer in the way we've seen a lot of these categories happen, you know, where Seltzer kind of went to the high noon and the vodka RGDs. I think we'll see that. And who's going to win, though? I don't know yet. I mean, like every hard kombucha brand all of a sudden has a tea. Yeah, it's interesting you mentioned that because Luna Bay, which is based in Chicago, a hard kombucha brand, they just launched a line of hard teas.

28:50And it's sort of a platforming of their brand where they're putting as much emphasis, it seems, on the hard tea as they are on the hard kombucha. Yeah. I mean, same with Giant. They were hard kombucha. I would not be surprised at all to see June Shine do it. who knows what flying embers is up to they they kind of just like throw everything against the wall and see what sticks it's definitely exploding quick and i think we'll probably see the majors get involved because you're seeing it you know the numbers are just so clear in the public markets on on sam how well that's doing and there aren't any competitors in you know molson cores really or you know ab and they could really use something that could go up against that So not to get too deep into the weeds with hard coffee, but again, we've seen a lot of people get into this space and they have just disappeared.

29:41I mean, PBR got into this space and... Great packaging. PBR packaging was awesome. Yeah. A lot of hype. But I think within a year, if that, it was gone. Sometimes it's just really simple. It's really hard for a new beverage brand to make it if there aren't power users. the people that are evangelizing the brand, the people that are drinking multiple cases a month. And like, it's hard to sit down and drink six hard coffees and not have a really bad physiological outcome. Like, it's kind of just that simple. Like, I can drink a cooler of beer. I can drink a cooler of hard tea. I can drink a cooler of seltzer.

30:22Can't drink a cooler of Dunkin' Donuts hard iced coffee. Yeah, I mean, La Cologne tried it. La Cologne tried it for, it lasted, I think just about a year. That was that. And when you think about it that way, like an alien would be able to back into espresso martinis because they, you know, they cost$15, you know, and you're not trying to drink seven of them. If you're a normal human, I mean, not saying that there aren't some folks out there that might really kind of go for the Guinness Book of World Records, but priced right and dosed right. It's great because people love coffee and people love booze.

30:59Why wouldn't they combine? But you just can't do it in a fast moving good and expect there to be a power user that can actually become the backbone of your brand. I think the common sense argument that you laid out there is as easy as a way to explain why a category is probably not going to work or why a product is not going to work. Who is going to sit down and drink three hard coffees in one sitting? It's not that kind of beverage. I mean, how many people actually drink three cups of coffee a day? I mean, I would assume that number is pretty limited too. But you add alcohol into the mix and good Lord, it just doesn't sound like there's going to be a lot of velocity there.