Nixie/Late July Founder Can't Overemphasize The Importance Of This

0:10Hello friends, I'm Ray Latif and you're listening to the number one podcast for anyone building a business in food or beverage, Taste Radio. This episode features an interview with Nicole Dawes, the founder of Late July Organic Snacks and Nixie Beverage Company. Nicole Dawes isn't the kind of CEO that operates from behind a desk. Throughout her career, Nicole, the founder of Late July Organic Snacks and Nixie Beverage Company, has consistently stressed the importance of building brands at the store level. Being in the field yields critical information about how products are performing on shelf, she says, and also strengthens relationships with retail buyers and merchandisers.

0:54That philosophy helped her build late July into a nationally distributed brand that was acquired by snack giant Snyder Lance in 2014. And she's drawing upon the same playbook to develop Nixie. Launched in 2020, Nixie markets organic flavored sparkling water sold in 12-ounce cans. The products are distributed in 11 ,000 stores, and the brand has become the fastest growing in its category within the natural channel. Earlier this month, Nixie entered the emerging Better For You soda space with a new line of zero-calorie and zero-sugar sodas. The products come in three varieties, classic cola, root beer, and ginger ale, and are available nationwide at Sprouts and regional retailers, including New Seasons and Raleigh's.

1:41In the following conversation, Nicole discusses the development of the new soda line, why, quote, doing what we say we're going to do is the key to strong relationships with retail buyers, the challenge of deciding when to accept opportunities, even if you're not ready for them, and how the Nixie team works hand in hand with outsourced field support.

2:06Hey, folks, it's Ray with Taste Radio. Right now, I am honored to be sitting down with Nicole Dawes, who is the founder and CEO of Nixie. Nicole, great to see you. Oh, Ray, thank you so much for having me here today. And where are we here today? We're here in New York City. That is correct. For BevNet Live summer 2024. And I got to tell you, this place is exciting today. Yes. We're expecting about 700 people attending the show. You are one of the 700, but I would say that you're a VIP of the group because you've been in CPG for many, many years now. You've been a beverage entrepreneur going on six years, I want to say.

2:42I think every year as a beverage entrepreneur is a little bit like a dog year. So is it six or is it 40? I don't know. The way Nicole looked at me when I said six, she's like, no, no, I've been in this business for a long, long time. No, but it's fun because I think beverage entrepreneurship for me, and I started at BevNet in 2011, the people that are in this business are so crazy passionate about what they're doing. The idea of creating something that people can drink on a daily basis, something that you can have as a refreshment beverage or with a meal. I mean, there's something really special about beverages in particular as a consumable, if I can use that word.

3:21You drink a lot of beverages in a day. I mean, you know, previously I had late July snacks and tortilla chips, you do eat a fair amount, but a box of crackers, you know, you're maybe buying one a month or, you know, the velocity is quite a bit slower, but with beverage, I mean, you can drink five beverages a day easily. And I mean, it's obviously a very fast paced, exciting part of the CPG business. It's a heavy business too. Going from late July where you have your tortilla Your chips, your snacks. Very light. Very light. You can ship them. Oh, it's just like light, fluffy, airy. And you get pallets and pallets of beverages.

3:59It's a very heavy business. Well, I realized that the other day when we're launching a new thing today here at BevNet, actually. And I was carrying three of the cases the other day. And I thought, oh, this will be easy. And then I got about 100 yards into this operation. I thought, you know, three cases of beverage is actually quite a bit heavier than three cases of snacks. Yes, yes. But you have help. Yes, I do. Yeah. Yeah. You mentioned a new product, new product line that you're launching here at BevNet. I saw it at Expo West. I tried it at Expo West. Delicious product. It is your new line of zero sugar sodas.

4:30That's correct. Yes. The next evolution of Nixie. Correct. Yeah. What's so special about these sodas other than the fact that they're zero sugar? Because there's a lot of zero sugar sodas out there. So what I'm most proud of about these, and honestly, I've been doing R &D for almost, I mean, I think over 30 years, if you don't count the cookie company I had when I was 12, which took a little longer. And I've been working with organic ingredients for my entire career. And I can honestly say creating these zero sugar sodas certified organic was one of the most challenging things I've ever done in my career.

5:03And I think part of what I kind of pride myself on and what I've really tried to achieve is I want to make sure that organic products have a similar taste experience to a conventional. Because I don't think we're ever going to move our industry forward if the products don't taste like what people are expecting. And a little bit of this comes from my mom at a health food store in the 70s. And I think I have a little bit of PTSD about those days when natural food products just, you know, they had a real connotation of not tasting great or having like a weird, some weird component. Right. And so I've spent my entire career trying to create organic products that really rival their conventional counterparts.

5:45And nobody has done that for diet soda. We're 70 years into diet soda. And, you know, we're still dealing with products that have questionable ingredients. And nobody's been able to really deliver the taste experience of a conventional diet soda for organic consumers. So we've spent the last year working on this R &D and making sure these products were exactly the way I wanted them to be because I really believe that just because I care about the environment and my health doesn't mean I want the products to taste different. I still want them to have that same experience that people are expecting.

6:21So that's what I'm really proud of here. I think we have put forward a product that is going to really give conventional diet sodas a run for their money. I would say so. I've tried the cola. It's amazing. Thank you, Ray. I would never think to call it a diet soda, though. And it's funny because we were just talking about how many beverages people typically drink in a day. And I think about the Diet C. I'll just say Diet Coke. I mean, people are fiends for Diet Coke. And getting them to switch from their product, because it is their product in so many ways, to something different is really hard.

6:56And I think, again, the positioning of a low calorie or a zero calorie soda is something that a lot of people love. They just don't want to drink their sugar. They don't want to drink their calories. But again, it's really hard to get people to switch. I mean, how are you attempting to convince people to make that switch? Well, obviously, it's really hard. We're an emerging brand. You know, we don't have a big advertising budget. I think one of the most important ways that we're going to try to convert people is just by working with our retailers. You know, our retailers are amazing ambassadors for organic food.

7:28We're actually launching these nationwide with Sprouts, and they've just been an incredible partner. You know, people who are walking into Sprouts, you know, they're expecting to see a product that is free from questionable ingredients. And, you know, so I mean, I can't tell you how many people that I've talked to since, you know, I started working on these that, you know, people said, I used to love the big one. but I stopped drinking it because of all the questionable ingredients that are in it. And I just, you know, I don't feel like that's compatible with the, like the kind of food and I want to put into my body.

8:01So I do feel like there's a lot of people out there that are like me that, you know, want these products, but they just aren't willing to drink what the conventional brand has to offer. And, you know, one of the things as an emerging brand, you know, we don't have to be all things to all people. It's a$10 billion category. We just have to be all things to the people who care about what I care about. And there's enough of us out there to be a sizable business. I mean, typically natural food products will be, you know, 10 to 15 % of the conventional. I mean, that's huge. It is huge. But in our business, that of CPG, the end game is always in the back of your mind.

8:42At least it is for most entrepreneurs I know, thinking about, okay, well, how do I really scale this? How do I think about getting this in the hands of everyone? But at this point, yes, Sprouse consumers, Whole Foods consumers, natural retail consumers are the ones that are going to be looking for these types of products. But when you think about the big opportunity, perhaps even a Coke or Pepsi or DPS, which is now Kirk, Dr. Pepper, as a strategic partner, I mean, do you ever think about that? Or is that something that's just, let's stay focused on what we're doing right now. And that will come later.

9:20I mean, I think the best thing to do, I mean, I obviously scaled late July and we sold it. But the thing is that all you can do to create a brand that hopefully will last forever is to build a strong brand. And I mean, I'm excited to see late July. I actually just read they grew 26 % this year. I mean, it's still performing. And that's what I want to do with Nixie. I want to create a brand that resonates with a lot of consumers, that continues to put out strong growth year after year and has a foundation to back that up. And I think that that's what I need to focus on. And, you know, a strategic partner, if and when that comes along, will come along because of the strong brand that we've built and the foundation that it's resting upon.

10:06The brand is amazing. When I first saw Nixie, I thought, okay, this looks very differentiated from other sparkling waters that I've seen in the past. One of the hardest things I think about that, though, is you can have the best brand, best-looking brand, most polished, most attractive label, but you're still in a category that is extremely competitive and has a lot of players with a lot of deep pockets. How are you evaluating or how did you evaluate that opportunity in sparkling water? And how are you making your way through it? Because Nixie is well distributed. You are one of the, in my opinion, best independent sparkling water brands out there.

10:45So how have you kind of navigated this humongous, highly competitive category? Was it something that we have a plan, we're going to stick to it? Or is it very much, we just got to go with the flow? I mean, one of the things that I feel really grateful for is that when we started Nixie, we were able to bring a lot of our senior talent from late July along for the ride with us. And, you know, I think that we have probably one of the best retail execution teams in the biz. You know, I mean, we've built our brands around retail partnerships. And when, you know, when we partner with the retailer, we do what we say we're going to do.

11:19We uphold our end of the bargain. And, you know, we've been doing that for a long time. So, you know, when we go out into a retailer, we don't do it until we're prepared to support that exactly the way it needs to be supported. And I think the reason why Nixie has grown into so many retailers so quickly is because of that track record and because we go the distance for our retailers the way that they do for us. And obviously, with our sparkling water, we're out there in about 11 ,000 doors nationwide. Our soda is not going to be there quite yet, but we're following the same strategy that we did to build our sparkling water for soda.

11:54What's an example of doing what you say? I mean, it sounds pretty straightforward, but when you tell a retailer you can count on us to do this for you, what's an example of that? Well, a good example is like when you go into a retailer, depending on the size of the retailer, it's, I mean, obviously you're trying to get a customer that has been buying something else or maybe not even in the category at all to take a chance on a new product. And, you know, hopefully the goal is that we're going to come into a category. We're going to raise their category sales, you know, because obviously you don't want to just you want to you want to trade up and grow.

12:30And, you know, you want everyone to win in the end. Right. And so in order to do that, the retailer has to give you opportunities to get in front of customers. But you have to be able to pay for those opportunities, too. You can't go into a retailer until you're prepared to support them with what they need. And every retailer is different. So, you know, if you're going in and you need to do a certain types of promotions, you need to be able to do certain types of marketing support. And I think the worst thing that you can do as a brand is to go into a retailer before you're ready or able to do every single thing you need to do to succeed there.

13:03And, you know, it could take two years, three years of building to get to the point where, you know, now enough consumers in that account know who you are and are buying your brand. And, you know, you've hit all the benchmarks you need to hit and their category is growing, you're growing, and it's a win-win for everybody. But you have to be financially able. And also, you have to have the people, the bandwidth in your team to be able to support that on the ground, at the headquarters. So I think that, you know, it's a lot. I mean, it's store level and it's also, you know, headquarter level. Finances are important.

13:39Fundraising, in particular, in the beverage industry is really important. And people, it seems, are always looking for money. Founders, that is. When you started out, did you have a sense of how much money you would need? And has that changed over the years? Well, I think one of the things that was a little bit unfortunate is we started, like, we hit stores right as the pandemic started. And that definitely wasn't ideal. I mean, we've made the decision to stick with our retail strategy as opposed to switching to DTC or some other strategy because, you know, ultimately, I believe that consumer products, you know, the majority of them want to be purchased at store level, especially beverages.

14:18It's very hard to ship beverages and have people have a good experience. So, you know, we stuck with our strategy, even though it was definitely, it added some expense and it made us roll out a little bit slower because, you know, obviously we couldn't be at store level to support it. But outside of that, I would say that, I mean, it was essentially what we expected. If you remove the COVID from the equation, that I would say added an extra, you know, year and a half to our expectations. But I mean, I think our rollout went about as we had planned. And the scaling up of different suppliers in terms of cans and other things was about what we expected.

14:57When you're selling at the store level, what's the most important thing for a consumer to see first and foremost? Is it price point? Is it brand? Is it ingredients? What really convinces the consumer to buy a can of Nixon? Just multiple exposures to it. I mean, getting off shelf is the most important thing you can do because you're just you're trying to get someone to notice your packaging, to hopefully pick it up, to read about it. Maybe they go to your social media, but, you know, you're really trying to stop them in the store because they haven't seen you before. And, you know, that could take four or five times of them going into the store, going down the aisle where you are.

15:37So it's really just exposure, I think, to your packaging in store. So you want to do as much as you can to increase the chances that they're going to see you. Typically, when you have multiple facings, that'll help with exposure for sure. When you're selling into a retailer, how do you negotiate multiple facings? How do you negotiate a block? I mean, it takes time. Again, that goes with the whole building. Effectively, when you start out in most retailers, you're not going to get the ideal scenario. You're going to get one facing of each. And one of the most important things I can think of that people need to do is to make sure that if those facings are limited, they're your best sellers.

16:17That can be tough because sometimes a retailer will fall in love with a product that isn't your best seller, but you only have three spots. You really need to work hard to make sure those three spots go to number one, number two, and number three. When you say number one, two, and three, you mean of your products? Of your products, absolutely, yeah. Yeah. There are so many brands out there with incredible distribution and have relationships, deep relationships with retailers already. When there are such entrenched brands, is there a way to build trust such that they trust you? And again, I know we talked a little bit about this, which is do what you say you're going to do.

16:52But is there another way for you to build a similar relationship that they have without the kind of muscle that strategics and established players already have? I mean, again, it is really difficult because, you know, you're at an enormous disadvantage. You know, if someone's been working with somebody for years, obviously they're going to know what that brand does and they're going to rely on it. And that's where it comes into just, again, you absolutely always have to follow through. And when given opportunities, take advantage of them. I think field support is incredibly important. You know, store level, getting to know the people who are actually out there building displays and working in the stores is invaluable.

17:35And it takes time. But eventually, if you make sure that your product stays in stock, which isn't the easiest always, and you're supporting the stores not just at the headquarter level, but also at the store level, you're going to build those relationships and your brand will grow with time. So I want to unpack two things you said there. Field support is expensive. Typically, if you are at a certain level, it's outsourced and you've got to find people that you can trust to manage your brand well at that level. When you start out, you're probably doing a lot of this in-house. But as you continue to grow, how do you think about finding the right companies to partner with such that they are on the same level, almost a part of your, an extension of your company, and that you're completely in line and balanced with your goals and objectives?

18:28I think it's like with anything else, you know, you really can't leave those relationships up to chance. You know, you need to get to know people. And in every major market, you know, we have our own Nixie team members that are out there in the field with merchandisers. And And any job that a merchandiser is going to do, we're going to do too. I actually think that the store level relationship is one of the most important in our business. And, you know, we take it that seriously. So, you know, we're always in the field. How many field sales representatives do you have that actually work for Nixie?

19:01We have five. Okay. And then we marry those up with our, you know, other salespeople. And, I mean, there's someone outside of our field team. And, you know, we have our senior team is in the field, too, or I'm in the field. I mean, someone's in the field all the time because I cannot emphasize enough the importance of knowing what's going on at store level. Taking advantage of the opportunities that are presented to you, that's something else you said. But I want to contrast that with being ready for retail and being ready for those opportunities. I just sat down with the founder of this better for you candy bar company called Harkin.

19:39But Hunk and Sweets, they're phenomenal, phenomenal brand. And four months after she launched, Katie Lefkowitz, who's the founder, has gotten the brand into 34, 3500 Walmart stores. And I asked her.

19:56Nicole almost cringed when I said that. Because, again, yeah, of course, as an early stage founder, how are you prepared for that? How are you going to support that at store level? Even if it is next to Snickers bars and Twix bars and in the ideal place in the store for candy bars, it's not like someone's going to see that and be like, oh, I should trade up and buy this automatically. You've got to introduce, educate, make people aware of what you're doing. So in her case, she said she's buttoned up and she's ready to go. But I would be freaked out about that opportunity. I would say, okay, yes, I would love to do this, but am I really ready for it?

20:29And I think that's a question that a lot of people struggle with. I see founders and entrepreneurs who will say, oh, yeah, you know, Sprouts is offering me this opportunity to be in all of their stores nationwide. I'm like, that's amazing. Are you going to be able to support the brand nationwide with a two-person team? So, you know, how would you advise early stage founders to be prepared for those opportunities and to say yes, even when, you know, they might not be 100 % ready? I mean, that is the eternal question, I think, for CPG founders is, you know, when do you say yes, when do you say no?

21:03And Nixie's doing a test right now in Walmarts, but we're only doing 100 in California because I felt like I could comfortably support that level of a launch. and I cannot emphasize enough the importance of testing things and you know going slow in certain scenarios if you're not a hundred percent that you're capable of supporting it I mean I've made that mistake it's it's so easy to make because you you know you see the sales you see the opportunity and it's I mean saying no to opportunities is one of the hardest things to ask a founder to do because obviously you believe in your products you know they could succeed it's probably not a question of, can they succeed?

21:43It's just, do you have the resources right now to make them succeed? And I think as long as you have a supportive buyer that understands that there's a chance that you might not be able to have the resources or you might not be able to do that, and they're still willing to take a chance with you, I think that is, I mean, it's still going to be expensive, but it's worth a shot. It's far more superior to know you're prepared, have tested it, figured out what works, how you can support it. You know, with big accounts, distribution is one of the more difficult things to solve for. And, you know, just because you get on the shelf doesn't mean that you can replenish that shelf effectively.

22:22You can support it with trial. You can, you know, get promotions. So I definitely would encourage people to do tests before you do nationwide launches, if at all possible. And if you can't and you're still willing, hey, I'm an entrepreneur. I get it. I've done that many times when I probably shouldn't have. Hopefully with Nixie, we learned all those lessons earlier on with late July and we're trying not to repeat them with Nixie. But I'm very sympathetic to when that opportunity presents itself. But I definitely, if someone wants to listen to me, I would advise you to test things, save your money, figure it out before you go nationwide.

23:03If you're not 100 % that you can is important. I want to pull a quote from our last conversation from six years ago. We spoke in December of 2018. And as part of that conversation, he had said, understanding your velocity is the entire game. But when you're in 100 stores, when you're in your 100 Walmart stores, and you're evaluating velocity at those stores, it's still a pretty small sample. I mean, let's say Walmart's like, oh, you know what? We want to take you from 100 to 2 ,000. Is that 100 or do those 100 stores give you a good representation of what's possible in terms of velocity? Oh, definitely.

23:41I mean, it's not perfect, obviously, because you're not going to have exactly the same demographics in every single store in the country, but it gives you a decent enough expectation of what it's going to be like. So understanding your velocity is incredibly important. And I said it a few minutes ago too, but it's understanding, you know, what your best sellers are in account, you know, how the product is going to get there, how well it's going to be replenished. I mean, there's so many question marks when it comes to each and every account. And velocity is number one, absolutely, because knowing the benchmarks and what you have to reach and are you reaching it and can you do it?

24:16And is your distribution even capable of doing it? I mean, sometimes we'll do the calculations and, you know, we'll know a store's benchmark and we'll know our distributor distributes twice a week. and we know our shelf space can accommodate two cases. So at two cases twice a week, we're going to sell out before we can hit that store's benchmark if they won't keep back stock for us. So I think it's working out the model on all of those different scenarios for each and every account is, it's unique and being successful means you have solutions to each of those problems for every account. Quick break.