Empowering Millions Through Food. It's The Afia Way.

0:10Hello friends, I'm Ray Latif and you're listening to the number one podcast for the food and beverage industry Taste Radio. This episode features an interview with Farah and Yassin Sibai, the co-founders of fast-growing Mediterranean food brand Afia. Get access to limited swag and exclusive content by becoming a Taste Radio VIP. It's easy for you to join that group of very important people. Just head to tasteradio.com slash VIP and take one minute to sign up. On the cusp of opening a new 21 ,000-square-foot manufacturing facility, one capable of producing a half-million falafel balls a day, Afia remains grounded in its roots of empowering others through food.

1:01Reflecting upon the brand's humble origins, co-founders Farah and Yassin Sibai point to a little black book filled with family recipes passed down by generations and which has long served as the foundation for Afia's products, including falafel, kippe, and a new line of ready-to-heat entrees. They recall long days in the brand's first commercial kitchen, which was located in the back of a bar in downtown Austin, learning how to engage with and sell to consumers at local farmers markets, their big break with Texas-based grocery chain HEB, and subsequent deals with Sprouts and Whole Foods that brought Afia to stores across the U.S.

1:40Throughout their six years in business, the Sibais have always leaned on their vision of creating a brand of nourishing, Better For You food as a means of empowering consumers seeking healthier options and their team, which includes a number of Syrian refugees who have fled war in search of a better life for their families. In this interview, I spoke with Farah and Yassin about why they have always been adamant about self-manufacturing, how adversity placed Farah in the right place at the right time, why brand and product awareness are equally important, the effectiveness of Instacart ads and instant redeemable coupons and the completion of Afia's Series A funding round.

2:24Hey folks, it's Ray with Taste Radio. Right now I'm in Taylor, Texas at the new headquarters and manufacturing facility of Afia. And sitting in front of me right now are the founders of Afia, Yassine and Farah Sibai. Thank you so much for having me. I'm so excited. Thank you so much for coming. It's probably a bit of a drive for you to get out here as well, all right? It was a little bit of a drive. I happened to be in Austin for a couple of days. And I think when we originally met, we were thinking about meeting at your former facility or your, I guess your current, this is the future, but your current facility in Austin, you're now about 40 minutes outside of the city, just about?

3:02Yep. I mean, it's the same distance that we drive from where we live to our current facility, to this facility, just in a different direction. It's also a very different size. Yassin, how big is this place? So this one is 21 ,000 square foot. Our current facility is a 5 ,000. So that's a big upgrade. You know, it will come with the scale of the business that we're at at this point. Yeah. Why do you feel like the timing was right to build this kind of place? This was actually planned back in 2020 with our projections for where the business would be and in terms of sales and scale. We are already a year behind given COVID and, you know, supply chain issues.

3:40there was a lot of delay with the construction. And I would say I cannot wait to be here and stop production because we are running, you know, through the seams where we're at and it's overdue for the move. I was very lucky to get a tour of this new plant. And even though not everything is online yet, there is a lot of amazing things that are about to happen as soon as you flip the switch, so to speak. Like, one of the things that really blew me away is that you'll be able to produce, and I hope I'm not giving away any industry secrets here, a half a million falafel balls a day in this plant? That's true.

4:21And to put that in scale, it's almost a truckload a day worth of production. Wow. The demand must be there. I mean, it's not just a question of, oh, we're just going to do this and just hope the demand is there. The demand is coming from retailers and consumers at this point, right? Yeah, some of it is. And with our projections, we see that, I mean, today it takes us about a week or so to produce the truckload. So this would give us, you know, 6 to 10x of capacity and allow us to grow into more retailers and other channels. Let's talk about where the demand is coming from and why it's happening.

4:53And I think we have to sort of go back to the start on this. Afia is a beautiful name. Farah, what does it mean? Afia means to your health or it toast to your health. And, you know, there are several reasons why we called Alphia Alphia. And it really stems from why Alphia started. And again, the reason why we started Alphia wasn't because of one reason or two reasons. It was several reasons that came together. It really all started with adversities and events that happened in my life. And I truly believe that you never know the future. You never know what's around the corner. My background is in business.

5:30I don't have any food or CPG background. So you tell me 10 years ago or 15 years ago that I was going to be running a CPG company and manufacturing as well, I would have told you. No, that's a joke. I wouldn't have believed it. But the adversities that I'd faced and the events that happened in my life put me in the right place at the right time. It's like a jigsaw puzzle where all the pieces were all separate, but then they all came together. Whether it was from, you know, the loss of my children or when the war broke out in Syria, we lost absolutely everything that we had and we built. And I was living in England at the time.

6:02And I just, everything around me just reminded me of, you know, my children that I'd lost. And I was introduced to Yersin and I needed to start a new chapter in my life and my daughter's life, who was, you know, suffering from a life-changing kidney disease. And this new chapter in my life meant that I just, I wanted to be in a new place and start from the ground up. So when I moved here to the States with my daughter, you know, we speak the same language as we do in England, right? But a lot of things are different here. So it took me a bit of time to assimilate and to get used to different things.

6:35And whilst I was here, when I first moved over, I also volunteered a lot of my time to help with a huge influx of refugees that were coming into the city. Mainly because I really empathised with all the pain and the struggle that they went through. because I'm not a refugee myself, but going through some similar type of pains and struggle, whether it's loss of kids, whether it's loss of everything back home, whether it's moving to a new country with new culture and new language and starting from the ground up. I mean, I know how difficult that is, but I'm already 10 ,000 steps ahead of them because I speak the language.

7:07So I offered all my time with them to help them just stand on their feet and help them in as many ways as possible. And at the same time, I always used to tell you, you know, I wish there was more than something more than just giving my time to them. I wish I could do more. I wish I could help support them. But, you know, I wasn't able to. At the same time, my mother-in-law was also going through her struggles. She had hours to pack her life in the bag before the borders in Syria closed. And when, you know, she packed her bag, she packed her most sentimental items and personal belongings. And one of those items was her generational black recipe book.

7:39And this recipe book traveled continents with her to arrive here in the States. And just like these refugees, she struggled she missed home she missed her life she missed her family but she found comfort in our kitchen when she took out her book and she'd cook us the most amazing authentic meals and so I'd go to our local supermarkets to try and find some frozen Mediterranean Middle Eastern food and although Mediterranean was and still is the fastest growing cuisine in the states it's the number one diet for six years straight in the states its presence in the freezer section was missing so at that point I had these amazing generation old recipes I saw this white space and this gap in the market I had an opportunity to be able to start a business to be able to support refugees give them an environment and a home that reminds them and takes them you know back home with foods that they they know and they enjoy and I also had a chance to stand on my feet start from the ground up and show my daughters and the Neocene's daughters between us we have five girls to show oh, my girls, life is tough, but no matter what comes your way, you can start from the ground up and build something great.

8:44So all those reasons came together and we started our fear. Farrah, thank you so much for sharing that story. It's a beautiful story and it's a very personal story and I appreciate you sharing it with our audience. Thank you. When you launched the brand, I think you had said that initially it was food for your people. It was food for people who were looking for these types of flavors, the flavors they remember from home. But it's since grown way beyond that. Now Afia is a brand seemingly for all people. How did you get the word out about what you were selling? Because hummus and tabbouleh and baba ghanoush in some ways, it's all kind of ubiquitous in the United States.

9:22Falafel, not so much. When I saw this gap in the market, Yassir and I, I went to, you know, with the idea and we sat it through and we did a business model. We looked into it. We looked into really what type of Mediterranean Middle Eastern food is out there in the frozen section. And we found nothing at the time. So we built our business plan and we barely had any money. We started out with$20 ,000. But you had a business plan. We had a business plan. That was a great start. That's important. That's important. A lot of people don't have a business plan. I think it would be so funny if we look back at it now.

9:52I mean, on a high level, we had a business plan. But looking back at it now, you know, there was a lot of gaps that we should have thought of. Did you envision having a manufacturing facility in the first business plan? Yes. Okay. From day one. Why? We wanted to stay in control of our product, number one. Number two, my mother-in-law's black recipe book has gone through a lot. It's a generation-old recipe book. You're not just going to hand it over to someone else? No, no. She wanted, you know, we wanted to make sure that the product that's going out there tastes great, you know, is what my mother-in-law and what's in that recipe book.

10:21And in addition to that, when we first launched, yes, we launched with Philephil, but we also launched with another product called Kipbe. and if we thought to find somebody that's going to manufacture a bit I actually don't think we would have been able to find anybody that will actually make that because it's a very difficult product to make it's not well known so it was a decision that we made day one and you know the consistency of the product is really important to us and making sure that our consumers are getting a great product all around self-manufacturing means that you know we can see the product taste the product ensure every single bag that goes out there has passed not only my mother-in-law's approval, but all of our approval.

10:57But yeah, when we first started out, you know, we had this business plan and we wanted to test it. We wanted to see, you know, is this really viable? So with our$20 ,000, we were started out of a commercial kitchen. We handmade absolutely everything. And then the best way to test it for us, and I would, you know, I tell this to every startup out there, the farmer's market made a night and day difference for us because, you know, it really It validated for us our products, the market demand for it. And it also gave us a lot of constructive feedback early on in the day. So when we started out at the farmer's market, our kids were young at the time.

11:30We used to take them with us to the farmer's market. They used to sell out even more than Yersin and I did. But the feedback that we would get there from, you know, our customers and our consumers was finally, you know, there's a frozen Mediterranean, Middle Eastern product out there. And we love how convenient your product is. We love its great attributes. We love that it's vegan. We love it's gluten-free. we love that your ingredients are just clean and I know what every single ingredient is. And then selling out on a weekly basis also validated to us, okay, well, there is a demand, but there's no supply for this type of a product and all its great attributes that come with it.

12:05At that point, Yersin and I, we decided, okay, well, our goal eventually at the beginning was to be in retail and was to be the go-to Mediterranean, Middle Eastern brand in supermarkets all over the country. And we started out with HEB, amazing partners. We applied for an HEB Quest for Texas competition in 2018. And we're chosen as finalists, which launched us into 200 HEBs in 2019. And that was our first entry into retail. At this point, we did not know what to expect. At the time, I remember we sat down with our buyer and we're like, what do we expect? What's a good amount of sales or velocities?

12:43And he just said, you know what? I don't know. there's nothing like this on the shelf. And bear in mind that when we launched into the 200 HUBs, we were just doing farmer's market locally here in Austin. So we'd made a little bit of a noise, a little bit of a buzz. People knew us here slightly, but nobody knew us in Houston or in San Antonio. So going out to 200 stores with no brand awareness or recognition was, our hearts were racing. We didn't know what to expect, but straight off the bat, the product was selling off of the shelves and we were shocked. We were surprised, but then it also, yet again, validated, okay, there is a demand for this, but there's just no supply for it.

13:21Where was the demand coming from? Who was your consumer? Who was your customer? Who was buying the product? So in all honesty, day one, I mean, with the limited amount of funds and money that we had, we just did not know. But with its great attributes at the time, you know, we contributed it to being, you know, it could be the vegans, it could be the gluten freeze, it could be, you know, the people that are looking for a great plant-based alternative because it's a great source of plant-based protein. And also I can probably add to that during the first initial days when we launched, we would do, I would personally at least do marathons of demos.

13:56I'll go to different HEPs, sometimes two HEPs in a day, four hours each, and I would just like sample out the product to different people. and I can say that the majority were millennials, young people that were eager to try something new and mothers. Usually, you know, they end up doing a lot of the shopping but they were interested and many of them tried it and ended up liking it and some of them had their kids with them. They would, you know, sample the falafel to their kids and be like, oh my God, my kid is very picky and he's loving this. So that kind of created that whole initial, you know, consumer base around it's healthy, it's good, and it's been accepted by, you know, the delegates that are trying it.

14:41And it's convenient. You can put it in an air fryer, you can put it in a toaster oven and have a great meal in about 10 minutes. Yeah, they can frozen ready-made. All you have to do is heat them up, air fryer or the oven, 8 to 10 minutes, and you're done. But funny story about the demos, actually, I'd like to say. So Yasin was running these blitz of demos. And at the time, it was just him and I, by the way. It was just, you know, it was both of us and we were running the show. Just going to all the H-E-B stores that you were in. And doing the production. And doing production. We were in out sales and there was nothing.

15:09So we were wearing all the hats at the time. You were literally just the two people wearing the company. Oh, just the two of us at the beginning. So whilst he was out doing demos, I was running, you know, production, making products and stuff and sorting out some other stuff. And he would come back every single day from his demos. And he'd be like, I just sold the end cap, you know, in a two, three hour demo. And I'm like, really? So he's like, yeah. So we do it again. And I was like, OK. That's like 400, 500 units. I mean, it's extreme. In two or three hours. Wow. Wow. I mean, if you can do that, I bet I can do that in half the amount of time.

15:42So we're like, OK. I mean, we had to make it a little bit fun at the beginning because there was so much hard work going on. So we decided that I would do a demo instead of him on any one day. and I came back and I told half of the end cap and I said what is it that you're doing different so he said oh you know you know I'm just I'm just a better seller I was like I was like oh no okay I'm gonna come and watch you so Yersini actually and I did I went and I watched him and the great thing about is is he explains the product but then he goes straight into the cell I realized when I was doing demos I'm a very talkative and conversational person and people really like my accent and you know I'd go into a lot of detail about the story in the background and everything which would mean that, you know, I'd have the same person sit at my demo table for 10 minutes.

16:23And then, you know, he would go through 10 people in 10 minutes and I'd still be speaking to this one person. I was like, that's what it is. At the end of the day, that one person still ended up buying. I just had a very long conversation with them. At that point, Yassin had already put the product into five people's shopping carts. Yeah. Yeah. Well, you know, that conversation is really important. The backstory is important too. We hear that all the time from consumers that they're looking for something that they can connect with. They want to know the history behind a brand. But again, at the end of the day, it has to be better for you.

16:53It has to be made with better for you ingredients. The question is, can you scale what you're doing? Can you scale it in a way that is going to lead to strong unit economics, that is going to lead to a profitable business at some point? And, you know, owning your own manufacturing could go either way. I've heard horror stories about manufacturing, Self-manufacturing, I've heard some very big success stories. So when you're thinking about taking that next step from commercial kitchen to your own manufacturing facility, what was that conversation like? When we took that step, we stepped back and thought about this strategically.

17:30Part of writing our business plan was evaluating CPG as a whole. And we looked at, you know, what are the rates of success for CPGs and what makes them successful, what doesn't, what does it mean to be manufacturing? So we addressed a whole list of questions before we embarked on this journey. And even then, when we talked to, you know, different people in the industry, knowing that both of us are not from the food industry, we said that we wanted to do our own manufacturing and they would laugh us off. They were like, oh, you guys are crazy. I mean, running a CPG is a big undertaking by itself, let alone you starting manufacturing alongside with it.

18:05And it's very capital intensive. As we talked about, it's two different businesses, sales and marketing and manufacturing. or you're essentially, you essentially own two different businesses. Correct, yeah. It's literally that level of work. But in hindsight now, when looking back through COVID and supply chain, a lot of the same people that were laughed us off looked at us and said like, that was very insightful. That was very smart what you guys did because the position we are in today, even though we are in over 3000 retail doors, with all of COVID supply chain issues, we have not shorted a single retailer, a single case to date.

18:41We are in 100 % control of our production, our supply chain, ingredients, the whole line. Not to mention it's a higher margin business, long-term. Initially, it's very capital intensive. You have to figure out how to get the money and all of that, but long-term, it pays off. So if you're in it for 10, 20 years, from my perspective, and strategically, we looked at it, we're like, this is a family business for us. It's not just, you know, you build a brand and then eventually some strategic, you know, bigger brand will come and buy you out. We wanted to be in it for the long term. In addition to what you're saying, another thing that we've seen has really helped us with, you know, controlling and owning our own manufacturing is the ability to perform R &D on our own time, on our own machinery, you know, with our product, we don't have to schedule time at another co-packers and when they're available and pay for days because R &D could take days and days and days if you know you're working on a specific ingredient or you know it's a long process so having the ability to do that in-house for our current line and for future lines has been you know a huge advantage for manufacturing in addition to being able to offer our offerings in so many different ways we just recently hired a food service team so we're able to take our products now we're retail but we're able to introduce them to food service as well because we self-manufacture, we can pack them in different size bags and boxes.

20:13You know, we can work with chains out there specifically on filer fill if there was any modifications because we are in control of the line. So there's a lot of advantages that come with it. It's not easy to scale manufacturing. As you did the tour today, you know, you saw a fully automated line, but it's taken us several years to get there when we first started out. It was all manual. And then, you know, we scaled a certain piece of machinery as we went and we identified bottlenecks and we scaled that piece of machinery. It was a challenge, but the positives definitely outweigh the negatives, at least in our case.

20:47I feel like this facility is not a leap of faith. This facility is based and built on the sales and the demand that you've been seeing for Afia products. But when you're going from commercial to that first facility, there had to be a little bit, right? I mean, or am I wrong in that, you know, the retail authorizations that you had and the velocities that you were seeing justified building that plant? When we moved from the commercial kitchen to the very first dedicated facility, which was 500 square foot, it was literally the back kitchen of a bar. We closed it off and we run, we run as a, you know, our own semi facility we did that because our first product alongside the falafel was the kibbi which was a meat product and therefore we had to be usda right now we didn't know what we're doing but at the same time we're like you know we need to set a bar for what we want to do so we filed for the federal usda not even the state one we're like you know if we're doing it we might as well go the whole way and to be usda certified you had to be operating in a dedicated space we no longer could be in the commercial kitchen.

21:54So that was our transition and our thought process to get into the dedicated space. When we pitched to H-E-B, and we hadn't gotten a firm yes from them yet, but when they were evaluating us, they came to the 500 square foot facility. Your retail buyer came to the facility? Yeah, they came to the 500 square foot. They looked at us and they looked at the facility like, okay, I mean, we could potentially give you this many doors but we were like you know it's one in a lifetime shot to get to talk with H-E-B and be on their shelf we need to do this right so we took another leap of faith and we looked for the 5 ,000 square foot facility we leased the space and we're like let's just hope H-E-B lands and so you did it before the retail authorization you built the facility wow I mean we were far enough in the conversation that we took that leap of faith really that it's going to happen and we better make this happen and we moved into the new facility and then we invited the buyer again and we're like that 500 square foot forget about it this is where we're going to be operating and where we're going to be you know producing for HGB he looked at it and that by itself was you know it left a very different impression on HGB and in my guess that was one of the reasons why they actually gave us the 200 doors day one.

23:15I mean, remember, we couldn't ask for 50 doors or 100 doors. It's up to them to decide. But I will tell you, you know, our start with HUB was an amazing start. I mean, we couldn't have asked for a better partner, in all honesty. When we first started out with them, like I said, it was our first entrance into retail. So we still had a lot to learn at the time. We were still right at the beginning of our journey. And, you know, they held our hand. They really helped us with, you know, our first entry into retail. In addition, that same year we're actually part of the Chobani cohort Chobani incubator which also really helped us learn and navigate how to run and scale and grow CPG but going into HEB was for us a domino effect and we wanted to make sure that our entry into HEB was as successful as possible because it was based on our success there that we would be able to you know present to other retailers and they would actually see validation back here in our backyard in HEB.

24:11So, I mean, when we launched with HEB, the retailer after that, I mean, we were in HEB for about two years before we expanded further out. And in those two years, not only did we validate that there is a demand for this product, but we also, we learned how to market it potentially. We learned how to, you know, what best ways to sell it, even at a very small scale. I mean, we still didn't have that much money back then. So how we market the product today is very different to how we did back then. But we learned a lot, which helped us in our scaling and helped us in our conversation with the next retailer.

24:42Are demos still the best way to sell your product or is word of mouth getting interest in demand for your brand? I would say demos are amazing. They really are, just because of what I saw firsthand and how much we could shift and the interactions that we could have with the people there and then on the ground. But there's two issues or two problems with demos is they're very difficult to scale when you're selling nationally. And it depends on, you know, the amount of money you have. But, you know, in our case, it's very cost prohibitive to be able to scale demos on a national level. So there are other ways that we work to get the word out there, whether it's, you know, brand awareness, whether it's through influencers, whether it's through trial programs, whether it's through, you know, online, you know, shopper marketing through Instacart.

25:29So we're having to really home in and lean on that side of marketing to raise awareness for the brand versus demos. And also the world did change with COVID. Right. Even the retailers stopped allowing demos. So toward the end of 2019 or early 2020, even HGB said no more demos. So we had to, you know, stop, rethink and pivot. We're like, okay, if we can't do demos, how else could we reach our consumers? So that kind of allowed us, and it's for a whole set of other agency businesses that kind of catered to companies like us that wanted to market, but we no longer could do demos. So post pandemic, or I guess, I don't know what kind of world we're living in right now, but what has driven trial the most beyond demos?

26:19what is really engaging the consumer the most? I would say a few things that we're working on. And again, you know, it's a learning curve. I think marketing is really difficult. You have to try things and some of them work and some of them don't work. What might work for Alphia might not work for another company. But as it stands right now, you know, one thing that we've really leaned into is getting the word out there, brand awareness and, you know, product awareness. And, you know, we're home into influencers a lot. We have influencer partnerships where they can target our demographics or certain retailers and they talk to our products to their whole platform of followers and a lot of people know of filerfil some of their followers know of afia but a lot of people still don't know what it is so it's through these influencers that they are able to educate their followers whether it's how to use it it's versatility it's great attributes you know the fact that it is a great source of blank paste protein it's a clean ingredient you can you know adapt it and use it in any of your meals.

27:16So using, you know, and partnering with influencers has been a huge, you know, huge advantage to us whereby we can really get the word out on a national scale. In addition to that, I would say online ads, specifically on platforms like Instacart, where, you know, we've done a lot of A-B testing. We've learned how to optimize, you know, our ad spend there with a great ROAS. We actually captured 10 % of customer acquisition on Instacart for frozen vegetarian meals. I mean, we've quadrupled our sales on Instacart from 2022 till now, just through A-B testing and optimization. But the great thing about that is that that's a sale there and then, you know, when they put it in their basket, it's a purchase there and then.