Ep 543: Rotten’s Retail Expansion: Seeding Strategy, Brand IP, and Standing Out at Checkout

0:00It's super competitive out there for shelf space and you know it feels amazing when a retailer is interested in your product, your brand, and you and so it's it's hard to set boundaries and turn those things down. With TikTok Shop a huge part of the strategy is just kind of mass seeding to really start to generate affiliate videos and it all kind of becomes a flywheel from there.

0:25Michael Fisher:What do you see as being the biggest growth lever right now? Is it more about finding new doors or expanding with the current right doors. Getting on shelf is the easy part. Getting off shelf is the hard part. And it's hard to internalize that when you're early on and getting on shelf feels really hard, but it's definitely true.

0:48Michael Fisher:Welcome to the D2C podcast. Today, we are returning to the scene of the crime with Michael Fisher, CEO and founder of Rotten, my favorite better for you candy option. I used to have it in my studio here. I've actually moved to a new studio. I don't have a shelving unit, but still in my heart. Welcome back to the podcast, Michael. How are you doing? Thank you. I'm good. Super excited to be back on here. Yeah, it's been an absolute whirlwind for you. I've been following your LinkedIn journey. Everyone should make sure I include your handle in the link here. Make sure you go follow them. Give me an update.

1:21Michael Fisher:What's been going on in the Rotten world? So much has changed. You know, we were, I think, almost exclusively direct to consumer. When we first chatted, we just had our gummy worm product out there. The team was much smaller. And so, you know, since then, I'd say this year has both been kind of rapid retail expansion. We've grown a ton on e-com as well. We came out with a new product line, our gummy crunchies, which is, crunchy outside gummy inside, which has now become our top selling flavor. I just, on my recent vacation, we were eating Nerds Gummy Clusters. And I did a little research on Nerds Gummy Clusters and how much it improved their sales to create this franken candy that's this mad science of candy to make it so delicious.

2:18Yeah. I mean, it's a great product. has definitely been very popular. And, you know, if you look at the sales of that product, but, you know, also broader sales in the candy industry, you could see a lot of growth in gummy and multi-texture sour. So it's definitely where what people are wanting to eat right now.

2:38Michael Fisher:Very cool. So, yeah, you've had a lot of products. I know we talked about changing your product formulation sort of midstream. I don't know if we ever talked about it on the podcast, but it's been an ongoing process. How many products do you have now? How many SKUs? We have four different flavors that we sell in two different bag sizes. Nice. Did you do the content series about grubs, gizzards, and goo? We did. We started shooting that, tested it out. I think at the time, as I'm sure you know, it just like fell down to like a lower priority thing. And so our resources ended up just going elsewhere.

3:17it's definitely something I would love to bring back at some point it was very fun to go out on on the Venice Beach boardwalk and uh have people stick their hands in bins of gizzards and goo and it was fun I think it's a great concept I think as a brand you'll start to see you know more kind of ongoing social series from us moving forward. But I think what we really needed to do at that point was focus back on product. So continuing to improve our product, coming out with the new product that we just launched at the beginning of this year, which is the gummy crunchies. And then, you know, really start to plot out our retail expansion.

4:03Michael Fisher:Okay, talk to me about your go to market with retail, because I like when we talked, it was all D to C. Talk to me about your retail journey and what's worked really well there. Yeah, we did some like early retail tests last year in 2024. So started out with a couple partners there. One of them was Zoomies, which is, you know, skate apparel kind of mall retailer. I guess like quick background, like one exciting thing about candy is the fact that it's sold at checkout at most retail environments. So you have a pretty big channel of what, you know, some people refer to as different names, whether it's specialty, away from home, alternative.

4:45Some of these retailers even, you know, think of like Lowe's or Best Buy or, you know, in our case, Zoomies, there's a lot of opportunity to go out and partner with those retailers. For us, Zoomies was an awesome brand fit. It felt like we were getting in front of people who would really vibe with our brand packaging and be excited to try it. We also had a kind of early partnerships with Foxtrot, which was, you know, is an upscale convenience store chain based in Chicago. And then we also went into Hy-Vee pretty early on. They were our first grocery partner in 2024. And that's a you know, major grocery chain in the Midwest.

5:26So our approach was really to, you know, start out, be selective about kind of where we were partnering and testing, try it out. I say the other big piece of our strategy with retail has been to leverage in and outs strategically. So an in and out is, you know, when a retailer brings you in for, you know, just a specific period of time, they're not placing you on the shelf permanently for, you know, everyday sale. And so we designed, um, shippers like these floor displays, you can see actually have an old version of one behind, but this basically allowed us to go into a bunch of new retail environments, get our product out there, get it off the shelf so that people would actually see it, even if they weren't, you know, looking for it or shopping for candy.

6:14It's a super fun shipper design. So it like stops people in the aisle. And we were able to test, go into stores that way, see if the product was selling, and then basically double down with the retail partners where we saw it working. And if there was a partner where it didn't work, great. We didn't have to invest a lot more into that area.

6:34Michael Fisher:Was your hypothesis about Zoomies correct? Was it a great product market fit there? Great product market fit. So we've expanded, got more items in there. They're an awesome partner. we've started doing kind of more marketing activations with them. I think we're the top selling candy at Zoomies, which is awesome. So we've definitely taken that and expanded into that channel even more. And then are you doing the sort of display behind you? Are you doing that in all retail spots? Or do you have a mix of those kind of features and on shelf placements? Yeah, we have a mix. So totally depends on the retail partner.

7:11Like sometimes, you know if we proved out the channel we're excited about the partner we'll go straight on shelf and then we'll use these you know throughout different periods of the year to get additional placement in the store so like Halloween's coming up it's we've got a lot of shippers going out to our grocery partners because our branding is you know Halloween-esque and it's candy and so great fit there we have some retail partners where they want to test out the product before they're resetting their shelf so we send you know shippers out there to start and then we can go on shelf beyond that.

7:43And then sometimes we'll launch with a retail partner and have both shippers and be on shelf together, which is really for us like the ideal way to launch because candy is such an impulsive purchase. So even though like every CPG brand wants to get their product into secondary placements and, you know, have shippers out there for candy, it's just so important that we get in front of the shopper and can, you know, encourage that impulsive purchase.

8:09Michael Fisher:Have you remember, I think we talked either on the podcast or since just about slightly deemphasizing the better for you nature of the product? Is that something you've done? Or is it still pretty front and center? Yeah, it's a great question. I think we don't really think about it as de-emphasizing the better for you nature. We more so think about how do we prioritize what we emphasize. And so for us, we really prioritize that this is a candy, delicious candy. This is a fun brand. And I'd say better for you falls after that. But it's not something we like try to hide or anything like that. Your brand is such an asset.

8:47Michael Fisher:How are the merch sales going? They're good. We're actually about to like restart a merch program that's going to be more focused on kind of regular limited time drops that will actually see us start to partner with artists, creatives, et cetera, out there and use merch as a, again, platform for partnerships. And so excited to kind of see that come to fruition. What is the style of art called? Is it like 90s skater, like hyper gruesome? I'm like, what is there a term for it? Because I know it's so nostalgic to me. It just hits the spot for a bunch of design. I remember from my, you know, young, young years.

9:27Yeah. It's, I mean, the, the world is kind of this world of gross out humor and culture. So there's a bunch of different design references. Like some of it's Ed Roth style. Some of it's like garbage, pale kid as garbage, pale kids for sure. We're, you know, looking at old Nickelodeon materials a lot, like Nickelodeon Magazine and old Nickelodeon shows. It's definitely a combination of a lot of different things.

9:57Michael Fisher:What's your current thinking around the types of content you want to be making around this brand to grow both your retail and your DTC? So we built out this huge kind of brand world and all of these characters that live in this world, whether it's Dr. Rotten, who's the brand founder and this kind of mad scientist character, or it's Frankie Freak, who's the little green character on the front of our packaging. And he's really the main character in this world of freaks where, according to Rotten brand lore, we all have a freak inside of us. And Rotten is the key to release that freak, which is, you know, our call to action to go have fun, live your truest, most authentic, kind of freest self.

10:44And so with our content, it's really about how can we start to leverage and build up these characters and build up IP in that way.

10:53Michael Fisher:I just was daydreaming about a party I recently held where I put out, I just had some gummy cluster, I put out two bowls of like gummy clusters. They were a massive hit. I feel like in your marketing, you should like adults having parties. I think a lot of people think of candy as like, you know, the freak, you know, just their private feast on some candy. But that idea of like building it into social settings more, it's always going to be something people like. Completely. And that's, it's a great idea. It's something we're wanting to lean into, especially around performance creative around Halloween is not necessarily positioning Rotten as like, hey, buy this to give it away for free to trick or treaters, but more so like we all love Halloween and it becomes this moment where for whatever it is, one month, two months, I saw people celebrating Halloween like earlier this summer.

11:45So it depends on the person, but we all like want to, you know, whatever, give our friends a Halloween themed gift or we're hosting a pumpkin carving party or whatever it is like lean into too rotten as that kind of occasion treat.

12:00Michael Fisher:How else are you, because I guess for Halloween, you guys, it's kind of a special holiday for you. How are you trying to lean into the Halloween momentum as a candy brand? Great question. I mean, one big thing we've done is with retail partners using this moment to gain additional placement in store. So sending a lot of our shippers out. I think the other piece is with our content. So on the performance side, kind of doing what I just said, leaning into like how rotten can become a way to celebrate Halloween with your friends or family. And then I think, in addition, you know, with influencers, creators, a lot of people out there who love Halloween and, you know, are looking for Halloween focused content to be posting.

12:44And so how can we work with those people and support them?

12:46Michael Fisher:So I kind of basically took a bunch of your LinkedIn posts, I think you're a great thought leader on LinkedIn. Can you talk to me about a time where you sort of asserted boundaries with a retailer. I think that's one of the, that was a post that really resonated with me where I think a lot of people feel like, you know, with retailers that they're sort of totally beholden to them in a lot of ways, but it doesn't always work that way. I have a couple examples that I'll share, but it's, it's hard, right? Because it's super competitive out there for shelf space. And, you know, it feels amazing when a retailer is interested in your product, your brand, in you.

13:22And so it's hard to set boundaries and turn those things down. So two examples I'll share and kind of the context there as well. One's going to be a retail partner that was interested in additional business with us that we ended up turning down because we were paid almost like six months late on our order before that. And so that was a partner where without kind of any communication or context around the late payment, just continued to not pay us and avoid emails and was really hard to work with. And so when it came, when they expressed interest in placing a new order for different products, we ultimately just decided that it wasn't something we wanted to pursue because we didn't feel like that was a smart move for our business right now.

14:14The other example is, you know, I've talked a lot about the shippers here and how that can be great for temporary placement. That said, they're expensive. Like this corrugate, printing it, shipping it, all of that, that's an additional cost for us. And so we need to make sure that that's a worthwhile investment. And so when retailers come to us and they want the shippers or they want the product temporarily and they can't show me we can gain permanent placement from that test, that's a sign to me that that might not be an opportunity worth pursuing. And so we've similarly set boundaries around, you know, would love to send shippers to your store.

14:54Can you let us know what does success look like on those shippers? And what is the timeline for gaining everyday placement if we're successful with the shippers? And if, you know, the retailer can't answer that question for me, then to me, it just shows they don't, they're not serious about bringing Rotten in every day. And they're just looking for, you know, the in and out shipper. And depending on the retailer, like that's something that we have turned down. Can you describe your sampling strategy? So I think food and beverage is a category where you just want to be sampling. If you've got a good product, you have distribution, it's just really important to get people to try the product because that's a huge hurdle.

15:39So we do a couple things there. One, we've like always had on kind of evergreen seeding campaigns. We're always kind of reaching out to people on TikTok and Instagram and elsewhere that are in these kind of verticals that we're interested in getting the product into. One of which right now is actually like long distance runners. who are using candy to fuel their exercise. And so reaching out to those people and, you know, sending them a sampler pack of free product and using that as like the first step to build a relationship, but also, you know, get the product out there, get them to share it, all of that.

16:15The other piece is really with TikTok shop. So with TikTok shop, a huge part of the strategy is just kind of mass seating to really start to generate affiliate videos. And it all kind of becomes a flywheel from there. And for us, you can look at the seating as a cost center, which it is. You're sending product out there and paying for shipping. But ultimately, it's a very cheap way to get the product out there, get someone to make a video for it. And And again, as a goal for food and beverage, like you just want people to be trying the product. And so we see TikTok shop as a kind of an important strategy for us.

17:00Michael Fisher:And what kind of content is working well driving to that? Like that the creators or affiliates are making? Yeah, both internally, both like within, because I guess you guys are probably creating content on TikTok as well. And also what, yeah, what affiliate content and organic content is working well? I'd say, you know, comparison content works well. So like showing how we stack up against competition, why we're better. That always works well. With our product, it's really all about talking about taste, texture, showing the product super up close. like I said candy is a super impulsive purchase so there's definitely friction to someone buying it online and buying it in a bundle and so what you kind of have to do and what we've had to do is try and get them to desire that product from the video like they if they're hungry or whatever it is they're craving candy like we need to show them in that moment like why they should be craving rotten and so it's as much as you can talk about the taste texture show it visually all of that Got to get some pop rocks on the exterior of the candies and do some ASMR.

18:10Michael Fisher:I'm sure ASMR would work already with the crispy, crunchy, chewy product especially. Yeah, when we launched our crunchies, that was a big campaign that we did there. We worked with some ASMR creators. So with retail, the most important thing is pickup. Are people picking up your product? So how are you measuring that and how's it going? and what are you doing to increase pickup in retail locations? So, I mean, you have, well, first I'll say like, that's the name of the game, right? Like it's funny, you know, being new to the CPG industry, like there's things you just hear over and over again. One of them is getting on shelf is the easy part.

18:53Getting off shelf is the hard part. And it's hard to internalize that when you're early on and getting on shelf feels really hard, but it's definitely true, right? Like you got all this, you know, upfront work trying to get that one. Yes, it starts to snowball, though. The more yeses you get, the more placements you're getting. It's easier to get new ones. So you're on shelf. Like if you're not going to sell, you're not going to get consumers to repeat and continually buy the product. Then all that initial work was for nothing and you're going to be discontinued pretty quickly. So it is true. I think our focus on moving off shelf combines a few pieces.

19:32So, you know, we do all, you know, standard retail strategies. So getting our shippers out to the store helps with that. Doing promos, other types of secondary displays, that really helps too. We also see digital strategies like all of our paid ads that run to our D2C site. That whole funnel has huge bleed in into retail. And I think there are some newer tools out there that you can do geo holdouts and then upload your syndicated data from retailers and see what kind of lift you get from running meta ads. We're not at a point where it's worthwhile to do that yet. But just from testimonials we get, like I watch most of or a lot of the UGC that gets posted about our brand that we have on our social listening tool.

20:25And so many people are going and buying us in store and referencing that they first heard about the brand from an Instagram or a Facebook ad. And so there's huge benefit to all of our digital marketing tactics that we have in place for our D2C channels, for our TikTok shop channels, for Amazon that people end up buying in retail too. Like everything is just so interconnected. People buy in store, then they buy on Amazon, then maybe they're going to subscribe on D2C or there's so many different journeys. And so our goal is to be in as many places as possible so that we're wherever you want to buy candy from in that moment.

21:07Michael Fisher:Just generating awareness, right? Like, and I think your brand does a lot of that heavy lifting. We talked just now about getting off the shelf, but I noticed a post about getting on shelf and the sort of psychology of retail buyers. What's worked really well to get in front and get on shelf with retail buyers? I'd say first of all, like demonstrating any sort of data around your velocity on shelf and other retailers or anything like that. That's probably first. However, like a lot of other brands, when you're super early, you're one, not buying that data because it's expensive. And two, you don't have a ton of data because you're brand new.

21:47So what we did was we actually captured a ton of data from our direct consumer base. And we asked questions like, you know, what other products are they purchasing? Have they purchased other Better For You candy before? Who are they? What age? What are they like? Et cetera, et cetera. And we really started to filter those into tidbits that would be compelling to a retailer. So I'd say the most compelling stat we were able to pull in was the fact that so many of our customers had never bought Better For You candy before. So that we could use that and go to our retailers and say, hey, you might already carry XYZ brand.

22:31but we can show you like our customers incremental to those brands. Like you're not going to put us on shelf and just capture the exact same customer you already have because you have to think like the mindset of a retail buyer, they're managing the candy category. Their goal is both to increase their margin, but also to increase the number of dollars, the amount of dollars being spent in the candy category. And so for us, the whole goal is not to just show like, hey, we're going to steal the exact same dollars you're already making on this other brand, but more so how can we increase the dollars that people are spending on candy?

23:12And so we really leveraged our D2C customer base through surveys and interviews and all of that in order to do that.

23:22Michael Fisher:What would you say has been the most challenging part for you, maybe personally and professionally during this phase of scaling? Yeah. The pace that we grow, it's like the place where I spend my time, the place where we have challenges just feels like it's changing completely every three months. And so like my job and what I do, I'm like, I get good at one thing and then it's like not important for me to do that anymore, which also makes it fun. But I think right now we're in a phase where, you know, there's some growing pains with operations and the amount that we've scaled and just how many people are you now we're now six people six people i think you were two or one when we spoke last year or something right i think we were just one yeah so the the other thing i was gonna say in addition to operation scaling is like scaling the team and again realizing like oh wow i have not had to hire people before?

24:20Like, how do you get good at hiring people or building and managing a team or great? Now we're a team of six. Like, what's our culture like? What do we expect from each other? How do I set the tone for that? Like, those are all new things for me to, to kind of manage and think about. And in a lot of ways, it's fun to always have a new challenge like that. But it also is challenging.