Nearing $90M & Surging. The Keys To Clio Snacks' Scaling Strategy.

0:10Hello friends, I'm Ray Latif and you're tuned in to taste radio the leading podcast for entrepreneurs makers, and innovators in the food and beverage industry. How did Clio Snacks evolve from a homemade Greek yogurt bar created in a New Jersey garage into a$90 million national brand? In this episode, Clio Snacks CEO John McGuckin shares the strategic blueprint behind the brand's explosive growth, from prototype to distribution in nearly every major grocery and mass retail chain across the U.S. From within Clio's 80 ,000-square-foot facility, John dives into how the brand is riding the wave of health-conscious snacking trends.

0:59He discusses the complexities of managing a vertically integrated business, where Clio controls both manufacturing and marketing, and how that structure has been key to their agility and innovation. John also highlights the critical role of transparency and emotional investment from Clio's board in driving the brand's remarkable rise.

1:23Hey folks, it's Ray with Taste Radio. Right now, I am honored to be sitting down with John McGuckin, who is the CEO of Clio Snacks. John, great to see you. Great to see you, Ray. Thank you for the opportunity. Yeah, thanks so much for having me here at your amazing facility in Fiscataway, New Jersey. I just took an amazing tour of your sprawling campus, as it were. How big is the facility or how big is the space you have here? Thanks, Ray. Yeah, it's 80 ,000 square feet. 80 ,000 square feet. Now I saw how the bars are made. There's some proprietary stuff that I can't share, won't share, because I was asked not to do it.

1:56But it is an amazing, amazing process from the yogurt that you use, the chocolate you make here, to the packaging process. I mean, it was all pretty brilliant. And Adam, who took us through the tour, took us through the facility, talks about how a lot of the process was developed through trial and error. But I bet you're getting much, much better at efficiency and making the bars, as it were. Clearly we are. We've outsourced some third-party support in terms of making sure that our bars maintain consistency. And I think over time, the quality has improved dramatically. So believe it or not, Ray, there's a difference between winter milk and summer milk.

2:36And so working with our dairy and our providers, we've found ways to make sure that the product remains consistent throughout the year. So what you eat in December and what you eat in August will not differ. I have been in love with Clio bars for the longest time and I've never, ever thought about consistency in the way that I just did through that tour. I mean, everything is made so that every bar tastes as great as it did the first time you had a Clio snack. And I got to think that's part of the loyalty that you've engendered among your consumers. Yeah, the loyalty is terrific. The repeat purchase numbers are very strong.

3:13And for us now, it's just a matter of bringing more people into the fold and creating greater brand awareness and continuing to drive distribution throughout the country. Yeah, let's back up for a sec because we probably should talk a little bit about the founder story, the origins of Clio Snacks. During the tour, we encountered the very first Clio-making machine, if that's a term I can use. And it's an old... How would you describe it? A Model T4. It looks like it was put together with a little bit of spit and glue, but not spit, obviously. Maybe welding material and glue. And it looks like it pumped out some delicious products.

3:54But it's a little outdated at this point. Oh, for sure. But I think that when you look at everything that's happened with Clio since Sergei began this journey, you know, even that machine, a lot of love went into development of that machine. And the story of Clio is rather intriguing, just like a lot of entrepreneur stories are. So not too far from here, there was a little small plant in central Jersey that Sergei began making these bars and using that very machine that you saw out there in the lobby. And believe it or not, the proprietor of that building, his name is John Bush, always wondered what Sergei was doing in this little room.

4:30So he knocked on the door one day and he introduced himself and he asked Sergei, what are you doing here? And Sergei said, come in, come in. And so he did. And Sergei gave him a bar. John Bush today is one of our primary investors, a big supporter of the brand. And really because of him and some of the other people that have introduced equity into this operation, we're flying as strongly and as high as we are today. You mentioned Sergey, who's the founder. I'm not going to try to pronounce his last name. Konchikovsky. Konchikovsky. Okay. Yeah, I mean, I would have thought someone with his name would be the founder of Cleo Snacks, because whenever I go to the Russian grocery stores in my hometown of Brookline, Mass., I always see in the freezer these little wrapped cheesecake bars.

5:17And they're all delicious. And they're pretty similar, I would say, to Clio snacks. But is that the inspiration? Were they the inspiration for Clio? Yeah, I think more or less. So Sergei grew up, of course, in the Ukraine. And when he came to the States, he was basically just playing around, looking for something to give his children something to snack on. And he was familiar with those cheese products. But he figured out at home how to do something with the chocolate and the yogurt that just delighted his kids. And that really is the genesis of where Cleo comes from. And they're a little bit better for you in terms of the ingredients.

5:50I'll turn around the ingredient panel on some of those snacks that I mentioned. And they're not Cleo bars. Yeah, no. Typically lower calories, higher in protein, and very, very tasty, as you know. Yeah, absolutely. Well, going from a small facility and a small machine and saying, hey, I have this idea for Greek yogurt bars. I guess when you look back, and I know you weren't with the company at the time, but when you're able to look back and say, this is a product that a lot of people are going to like, how do you think he may have assessed the opportunity for a Clio Snacks in the same way that you're assessing the opportunity for more people in this country and maybe even beyond to appreciate and enjoy what you make?

6:30Yeah, I think he operated more on gut and trial and error. So he had a little van. He would make the Clio bars and he would go into the city and he would sell them to some independent operators in the city. He'd give them 15 cases of product and then wait to hear from them. I know that after the first week, he got a call from the operator and he was sweating it out because he thought the operator was calling to come back and get his product, take it off the shelf. Conversely, the product sold out in a week. So he began to feel like he had something pretty special. But we didn't have the consumer research, the tools, the distribution opportunities, the team in order to bring that to the market.

7:12Today, I think we're dealing with a different consumer mindset. And today, I think it's all about portability, snacking, higher protein. This whole of Zempic phenomenon is changing the way people are consuming product. And so when you offer a product that is kind of better for me, so permissibly indulgent, but has these values associated with it, including a lower calorie, higher protein, better for the product, I think that's where the consumers are migrating to today. I think the timing was really important for Clio Snacks as well, because refrigerated snacking really kind of came into its own around that time.

7:55I think retailers had to buy in, but they were buying in because things like Perfect Bar were working. And there was an opportunity to expand that shelf space. And there still is. You're still, you know, I think in some ways maybe pushing is the wrong word, but encouraging retailers to expand that shelf space for more products like Clio and others. Do most people look at Clio snacks and Clio bars as a dessert type of occasion or are they eating it for functional benefit? Or, I mean, just personally, I just love eating them anytime because they taste good. And I know it's an easy snack that's not going to fill me up.

8:30But what are you seeing on the market? I see both. I definitely see that most people who eat Cleo bars find them to be very special, very flavorful, and they really love them. On the other hand, I do think that people are looking for alternatives to traditional dessert items that have better qualities. And I think Cleo kind of fits there, too. So between the portability, the higher protein, the flavor, I think we're capturing the imagination of the American consumer. Yeah, and I think, again, going back to consistency, it's really important to make sure that you're delivering on the value that they see and the value that they're tasting every single time.

9:08And you do that by controlling the manufacturing process. That's correct. We've talked about this on the podcast a number of times. It's difficult to operate your own manufacturing, to be a vertically integrated company, but it offers a lot of different benefits. You are, in essence, running two different companies. You're running a manufacturing company and you're running a sales and marketing company. How do you as a CEO make sure that both are running harmoniously? So I think first and foremost, it's a team sport. Getting the right team in place is absolutely critical. and I've been blessed and Clio has been blessed in terms of attracting a management team that is extremely experienced, very dedicated, and very passionate about what they do.

9:49And as a result of that, I think the collaborative nature of the team, the cross-functional capabilities, really put Clio in rare air. Is it difficult to find people to run manufacturing? I think When I've talked to entrepreneurs, a lot of times operations is a huge bottleneck for, to use this term, I used it before after the mic, bottleneck or pain in the neck. Being able to understand what it takes to demand plan, to forecast, to actually make the products. But how have you been able to recruit people and maintain the team that you have? So first, from a process standpoint, we've introduced an SNOP process here that is very strong.

10:32It's part of our culture. And so what does that stand for? I'm sorry. That's sales and operation planning. Okay. Because of the way we secure our product and produce our product and the lead time that we give to customers, forecasting is one of the most important things that we do and we have to get it right. So the people that run operations here, from Rafael Rodas, who's our COO, to Adam, who's our VP of manufacturing, to David Carabella, who runs our sales, and Lauren, who runs marketing, John Thompson, who runs our finance group, we're all in it in terms of providing the appropriate forecast down to the SKU level and then making sure that we're scorecarding and analyzing how we can help improve because the forecasting is what makes the dream work.

11:16And then we have a very supportive board. So when we look forward to increasing capacity, we're usually well ahead of the curve. I mean, just think about it. We've grown almost four times in the last four years. So it's very significant growth here. I mean, it's powerful. Can you talk about your revenue at this point and I guess where you're at in terms of revenue? We will top out at just about$90 million this year. When I joined the company four years ago, we were about at 28. Wow. Well, good on you. No, good on us. Yeah, good on you. Well done. Well done, John. Yeah. Well, along those lines, what I heard from your team is that you are expanding pretty dramatically into Target.

11:58Clio had been represented in Target stores, but now how many stores are you going to be in or are currently in now? Yeah. So with the latest planogram with Target, we've gone from 250 stores to 1 ,200 stores. Target, I would say, was a late adapter for a lot of good reasons that Target had. But yeah, so when you look at our ACV nationally, we're topping out the brand itself has about a 63 % ACV, believe it or not. But our goal now is to really get three, four, five, six items on the shelf, you know, 60 % ACV. So we are a national brand. You know, if you think through the retin-A of retailers, you'd be hard-pressed to find one that we're not authorized in today.

12:37HEB stands out on one end, but we're nationally distributed at Kroger Albertsons, regionally with Publix, ShopRite, Wakefurn, of course, Ahold. We've made tremendous inroads in terms of distribution. And of course, if you look around this room and you see all these college and university banners, this is not where we all went to school. These represent places where we've been able to take our away-from-home business and gain new distribution at colleges and universities across the country. So today we're on almost 300 colleges and university campuses across the country, often in multiple locations.

13:11You'll now find us in airports. And our C-Store work has just been tremendous as we've gone into places like Wawa and Quick Trip and Sheets and some others. And the product is performing extremely well in all of these channels. So we've really become a multi-channel solution for many of our customers. Where I buy Clear Bars is at Whole Foods. Okay. And I love buying them there because they're really easy to find. Yes. So I'll walk into my local Whole Foods. I'll go to the refrigerated juice section. There's some kombucha there as well. And the top two shelves are refrigerated snacks and Clio bars are always there.

13:49You have, at least at the location I go to, I think there's probably four or five SKUs there, which is great. It's not always the case, though, that Clio bars are easy to find in grocery stores. I was talking about Wegmans earlier. I love Wegmans. It's probably my favorite retailer. We all do. But it's hard to find Clio bars there. You have to go way in the back to the wellness section and there's some juice shots there. And I assume Target probably has their own places in terms of where they merchandise Clio bars. How do you navigate that? How do you navigate the planograms that they have for refrigerated snacks and where they merchandise Clio bars at different retailers?

14:25Yeah, it is a very difficult and interesting proposition. So when Cleo first introduced, so when Sergey first introduced the brand, because it was a Greek yogurt product, a lot of customers began putting the product smack in the middle of the yogurt set. And it's easy to get lost in the yogurt set. So what we've been working on here is trying to create a destination for the category. and what we're targeting is in between yogurt and refrigerated desserts to have not just a bar set but a refrigerated snacking set where our consumers would always know where to go. Now some retailers have migrated to this philosophy so if you go to a Walmart or if you go to a market basket up by you they've done a very effective job in creating this bar category.

15:12When I first started of course as you mentioned earlier, Perfect Bar had already been successful in the space. So what we tried to do is marry up with Perfect Bar in terms of creating a category on the shelf together. The problem we had is that just like we had issues with merchandising coming out of the gate, so did Perfect Bar. So you could find Perfect Bar 30 % of the time in produce, 60 % of the time in a snack set and dairy, but they could also be kind of in the yogurt set. So there's a real opportunity for the folks within the category to work together to drive to this category destination for refrigerated snacking.

15:51And I believe that the retailers that are experiencing that and have done the work are recognizing incremental gains within that refrigerated snacking set. 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. Visit tasteradio.com slash insider to learn more. Trial is so important for any CPG brand. And Greek yogurt, I mean, I imagine that household penetration or awareness of Greek yogurt is probably, what, 99 % or pretty high at this point. And I think there's a health halo associated with Greek yogurt as well.

16:29Do people consider your bars to be healthy? I think they do. I think because of the Greek yogurt component and due to the higher protein and the fact that it's lower in terms of calories than a lot of refrigerated dessert products. Again, I come back to the words permissible indulgence. I feel like they want to have that treat. It does satisfy the sweet tooth because it tastes like cheesecake, as you know. But, you know, you don't have to go all in in terms of big caloric intake, high fat intake. And so I think we're kind of in that sweet spot between the two. When you are trying to acquire consumer insights, what's more effective?

17:07Is it having people on the ground who are talking, literally talking to your consumers? or is it a bit more market research? Do you outsource that kind of data? I think if we look at the college and university experience, I think brand ambassadors play a big role for us in terms of communicating the benefits of the product. A lot of times it's just making sure that people know that it's available, whether it's available on that campus or whether it's available on Whole Foods or Target or Kroger. Oftentimes people like the product. They don't know where to get it. And we go back to the merchandising issue.

17:41They could even be in the store, as you mentioned, and they can't find it. And then they just lose patience and they go out to the store, which is why this category destination from a merchandising standpoint is so critical to us. Is it more effective to have someone say, hey, you should try this? Or are demos a big part of what you do as well? Demos are tough. I mean, Costco does demos really well. But as you go down the line and you look at the impact of retailer demos, it's a little bit tough to cost justify. We did a program with HelloFresh just a few months ago where we delivered 500 ,000 samples to HelloFresh users.

18:21That was an effective play because it actually put the product in folks' mouths. And we got one of the highest rates of feedback from HelloFresh consumers in terms of buying intention after they sampled in that program. That's a lot of bars to give away. It is. Yeah. Yes. But it goes to your point, right? Yeah. When you have a product like this, you have to get it into people's mouths. It was a bit of a gamble. I mean, I think you're rolling the dice a little bit when you are giving away 500 ,000 samples. Is it very much just, we think this is going to work? What gives you a high degree of confidence that something like that, a marketing initiative like that would work?

18:57HelloFresh shared with us that they've done programs like that in the past. They met with varying success, depending on what the product was. We felt that our product really fit what they wanted to do. So we did go into that program with a high degree of confidence, you know, and it was a fairly expensive proposition. But as we looked at all the data and scorecarded the performance, we were very happy with the activation. You're about 90 million in sales or projected to do 90 million in sales. I feel like there's so much more runway. And I think what you were talking about earlier with distribution being a key to the future success of Clio, you still have to pick your spots, right?

19:37You do want to be everywhere, but not in places where you can't, I guess, manage the brand on shelf. I once talked to an entrepreneur who told me that all CPG brands are built at the store level. So when you are increasing distribution, when you are expanding access and availability of Clio bars to different retailers, how do you manage the brand at the store level? How does that work within your strategy? One of the most exciting things about Clio and what we see in our data is how the velocities are growing across the board. A lot of people start out and they don't want to go to Walmart because they're afraid that they can't handle the volume, or they don't want to go to Whole Foods because they're not sure about how to get the distribution and manage all the regions.

20:28When we look at our data, we see Walmart and Whole Foods as being two of our best performing accounts in terms of velocity. So when I talk about broad appeal from Walmart to Whole Foods, to college universities, to airports, to major retailers, we're seeing takeaway from the shelf from consumers on every level and every demographic. So we're not shy about expanding distribution. And based upon what we've learned to date, we're not intimidated by a retailer that we can't control to the extent that perhaps a Kraft Heinz could or a Mondelez could. How much do retailers impact your innovation strategy?

21:14Certainly, if you're going into club, it's gonna affect pack size, but do they give you cues or do you take cues from retailers as to new flavor development, new product development, and the potential to even go beyond bars? We do. I'm not sure that we're ready to talk about going beyond bars, but a lot of our flavor development, we can certainly point back to certain customers who've made contributions or recommendations around whether it be the size of the bar or the flavor of the bar. You know, we're very excited about moving back into a situation where we can add more protein to the bar. We're in a process right now to try to bring back our parfait capability, which we had a few years ago.

21:58And that, I think, will open tremendous incremental opportunity. We're also looking at kids as an opportunity for growth. We're getting that feedback from our customers. So it's like customers are telling us that they have solutions for kids from like two to six, they're really looking for solution for kids from like seven to 13. So we have our R &D team working with our customer, with our internal folks to try to figure out how we can meet that need. Well, I got to tell you, last year when you introduced the mini yogurt bars, I felt like it was perfect because it just seemed like a great snack for the entire family.

22:35If you wanted to give a small one or one mini to a kid who's eight years old or someone who's a bit older could eat two of them. Someone could even eat three of them. It just seemed like a perfect snacking occasion and opportunity. And I imagine there's more to come. You talked about the importance, however, of having a strong and committed board and investors. I'm sure they're curious about the growth strategy and the growth plan as well and what's coming up next in terms of innovation. I mean, this is one of the touchiest subjects, I think, in CPG, especially for entrepreneurs and founders who are just, you know, getting their feet wet in the business, making sure that their investors believe in their vision and believe that they're the right people to take the brand forward.

23:16When you are having those investor discussions and you're talking to your team, how do you talk to them about the growth strategy in a way that's going to make them believe that the brand is on the right track? I mean, certainly sales and, you know, forexing your revenue is a good way to do that. But what do they want to hear from you? I think we're fortunate in the fact that every member of our board and all of our advisors love this product like you do. They all have not just a financial interest, but an emotional interest in the success of the brand. And they're extremely supportive. So, you know, there's full transparency.

23:51So they know what our capabilities are. They know what our limitations are today. They know where we want to go tomorrow and they're fully on board, whether it be incremental investment or support in terms of research and analysis. We have a very strong group of advisors and a very strong board. I mentioned John Bush before. He called me just before our interview today. He was playing golf at his country club and he convinced the president of the country club to bring Cleo in on the weekends. That's the kind of board that we have. Yeah, I mean, well, if you have an emotionally committed board, that goes a long way.

24:24I think it also helps when your board thinks about, you know, the capabilities that you have and where you can go. You also mentioned limitations. How do you keep them in the loop about potential problems? I mean, certainly there's a fiscal responsibility that you have, but do they want to be notified? Do they want to know when things aren't necessarily going according to plan or is it? Yeah. Yeah. They want the bad news before the good news. The fortunate thing for us is that there hasn't been a lot of bad news, knock on wood. But yeah, I think full transparency with a board that is financially and emotionally invested in your business is critical.

25:02So you really don't want to be in a position where you're surprising your board. Yeah, I would say that's probably good advice. You know, we laugh about it, but it's true. I mean, I've talked to a lot of investors who are like, how did you keep us in the dark about all this? You know, you're losing$10 million. You know, maybe we're telling them in$10 million. But something is going wrong. And you should have told us way before you just did or that we found out secondhand. Exactly. John, it's been so great speaking with you. It feels like, I guess you said this, you know, Clio feels like a company that is doing really, really well, but there's a lot more room to grow.

25:36And you're in some ways just getting started. I don't really love that term, just getting started, but there's so much opportunity for more people to enjoy what you're making. And I think it's just great that there's an opportunity to be in so many more places and that the refrigerated snacking category as a whole is growing and that you're one of the leading brands in that space. So thanks again for taking the time. Really appreciate it. And thanks for showing me out to your amazing facility here. You got it, Ray. Thank you very much for the opportunity. It's been a pleasure. Really appreciate it.