CPG veteran Justin Gold on how he's advancing Rudi's Bakery's product pipeline

0:03Hello, everyone, and welcome to the Modern Retail Podcast.

0:30I worked at a natural foods grocery store. And so when I was doing research, I was like, oh, I know this company. This was very ubiquitous to me. So I'm super stoked to just talk about who Justin is. He's relatively new in this role, I think. We'll talk about what this role entails at Rudy's, what the expansion plans are, all that jazz. But Justin, how are you doing? Thanks so much for joining. Oh, I'm doing awesome. I'm having a great day. It feels good to be back at work, you know, solving problems. Absolutely. So first, let's start at the beginning because you are the founder of another pretty well-known CPG company.

1:03Want to give just a little bit of background about who you are, how you got into food, I guess? Yeah. No, it's been such a blessing and such a lucky ride. I grew up in Western Pennsylvania. I, gosh, was studying to become a lawyer at a small liberal arts college. My senior year, I interned at a law firm and was preparing for the LSATs. And it was the best internship I ever had because I realized that I did not want to be a lawyer for a career. And those are the best ones that tell you what not to do. Sometimes you just don't know, you know. And so anyway, I graduated with a degree in environmental studies.

1:38And health and wellness has always been really important to me. And I moved to the Bay Area, was waiting tables. And then I was kind of lost. And I was like, all right, I need to go back to college. And I need to get a graduate degree or I need more education. So let's move to the mountains because that's where my heart is. And let's go to Boulder because that's where a university is. And let's get residency. And so I'm living in Boulder and I'm waiting tables. And I'm a vegetarian and I'm extremely active. I'm running, biking, hiking, skiing, climbing, you name it. And I was eating a ton of peanut butter and almond butter for protein.

2:11And at the time, I was just really curious why there wasn't much variety in peanut butter or almond butter or any other nut butters. And there's no variety in peanut butter. It was smooth or crunchy. And there was one brand of almond butter and it didn't taste very good. And you could grind your own in the store as I'm sure maybe you could at your store. So, you know, like how hard can it be to make nut butter? And so I got a food processor, started making my own. And, you know, I would add anything from honey to salt to cayenne pepper to chocolate, mix it with other nuts like cashews or pistachios and add coconut or, you know, just all these concoctions.

2:46and I'd put them in the cupboard, put them in the fridge. I'd slap numbers on them. And then my roommate started to steal them and eat them. So I had to start putting my name on everything, Justin's. And then someone has the idea like, hey, these are really great. Have you ever thought about the farmer's market? I was like, wow, you know what? Like I have thought about it, but how do you do that? How do you make a label and develop a UPC and find a commercial kitchen? And I didn't know anything about that. But what I did know how to do was ask questions. And I'm going to bring you full circle, maybe sooner than you expected.

3:20But one of the first companies I went to to kind of gain mentorship on how to develop a natural foods company was Rudy's Organic Bakery. And Rudy's has been here since 1976. And they're kind of one of the OGs in the natural food space. And in Boulder, we're so blessed to have White Wave Celestial Seasonings, Horizon Organic Dairy, and Rudy's. And so I went to Rudy's and I went to Jane Miller, the CEO. I didn't just go straight to Jane. I earned my way up to Jane. And I had lots of questions. And Rudy's was – the organization was a mentor to my organization on how to go to market and how to find film suppliers and how to do all these things.

4:00And so then Justin started the farmer's market and I went to stores. And then I had – I was on a mountain bike ride and I had the idea of putting nut butters into a squeeze pack as like an energy food per se to take with you on the go. And then that was a great innovation for the category that really awoken to sleeping, kind of quiet category. And then almond butter was really taken off and we were early with almond butters and all these varieties of almond butters and early unsqueeze packs. And then we were one of the early companies to develop a organic, you know, chocolate peanut butter cup, you know, like something like, you know, you grew up on a Reese's, but then you go to a natural food store and you're like, where's my peanut butter cup?

4:41And so, you know, we created one that was really good and it resonated with a lot of consumers and it just went on this wild ride. And it got to a point where there were a few, you know, large food organizations that really wanted us to be to join them, to be a part of their organization. And at that time, I had a lot of investors, both angel and institutional, and I had a fiduciary responsibility to offer them a great return. And I was very selective on who we worked with. I found Hormel Foods, who gave me the opportunity to continue to work with the organization. I stayed on for five years to make sure it was stewarded in the right way.

5:17And the organization stayed in Boulder and everyone stayed intact. And then during COVID, my role changed and I was no longer needed at the organization, which was kind of a blessing and a curse. You know, I didn't have an exit strategy. And so I took my young family and we traveled for a year and lived abroad. And when I came back, you know, Rudy's Bakery, Jane Miller, who was part of Rudy's and then Rudy's was acquired by Haynes Celestial. And then, I don't know, seven or eight years later, they spun it out and Jane comes back to run Rudy's. And she's like, Justin, I'm back at Rudy's. and I think I need your help.

5:59And so Jane and I reconnected. And Jane, who was the former CEO of Rudy's Organic Bakery, when it was acquired, she left. She ran a few other companies. And then when Rudy's was spun out, it was bought by a group out of London and they really didn't know much about the business. And so they brought her back to kind of help steer the organization in a new direction. And when they brought her back, she called me. and Jane was on the board of Justin's. And so Jane and I have a really longstanding relationship of working together. And so when she calls you, I answer the phone. And she's like, hey, I'm back at Rudy's and I have some great ideas and could really use your help.

6:42And we started talking and it was something I really couldn't refuse. It was just too much fun. Wow, a much more full circle story than I expected it to be, to be completely honest. The sort of tying bind that I saw between your two companies And you kind of said this early on, but that you're both kind of OGs in the space. And we're sort of way ahead of whatever the curve was. Like natural nut butter, I feel like, is much more of a commonplace now than it was a few years ago. And same with gluten-free baking. Like I remember in the early 2000s when I was working, there were very, very few options.

7:16And the reason why I remember Rudy specifically is because the gluten-free people at this co-op I worked at were like, that's the only good one. I have this very distinct memory of being like a 15-year-old and someone telling me that. And so it's really interesting that now you're sort of much more in the zeitgeist of the food space. But I wanted to get into, you gave a really interesting sort of quick truncated history of Rudy's ownership over the last few years. It's 40 years old. How did it start? What was the overall beginning story of it? And then can you just talk a little about what, you mentioned how there have been some different strategic turns and switches.

7:52What have those been over the years? Yeah. So I want to make one clear distinction that Justin's and me and our organization, we're almost like a 2.0. Rudy's is the OG. You know, Justin's was started in 2004-ish, 2004 to 2006, you could argue. And these guys started in 1976, right? And so they're started by a guy named Sheldon. And Sheldon was living, I think, in a monastery with a bunch of his friends. And there really weren't any great organic bakery options at that time. So Rudy started as a bakery and they did a lot of, you know, handhelds from croissants to specialty breads to muffins. And then they realized that it was much easier to make one thing and a lot of them and sell them to stores.

8:43And so early on, they started selling organic bread to a lot of the grocery stores out here and they had their own routes and their own trucks and they were delivering to all these stores and they were wanting the original. And so the way that this organic bakery was set up is they bake everything fresh and then they deliver it to stores. And then to grow and expand, what they would do is they would bake everything fresh and they would flash freeze it. And once it's frozen, they would ship it frozen across the country to other stores. And then that grocery store would then bring it out and slack it to room temperature to the shelf and put it in the bakery section.

9:23And honestly, freezing is nature's best preservative. And so you can take a fresh loaf of bread and freeze it, flash freeze it, and then thaw it. And it tastes honestly fresh. Now, clearly, there's nothing better than a warm loaf of bread right out of the oven. But this is how you could grow national distribution early on. And that's what these guys did. They were the first nationally distributed organic bread through UNFI and Tree of Life and then Cahey and all those great places. And then what happened was another brand called – this is maybe 10 years ago, 15 years ago. Dave's Killer came out.

10:04Oh, I know Dave's Killer. And they did an incredible job with seeded breads and organic breads at that. And they were acquired and their acquiring company had such a great distribution network, DSD, direct store delivery distribution network, that during COVID, what really exposed this was it was really hard to have in-store labor, take a frozen product, slack it to fresh, and manage that process. when you have a vendor who can just go into your store with fresh bread, frozen or not frozen, who knows, and just stock their own shelves for you with their own distribution, take away your labor. And so, you know, companies that had their own routes and their own DSD really did well during the COVID cycle.

10:54And Rudy's lost a ton of distribution because they weren't able to do that. Here locally, we have our own routes and so we're able to maintain a lot of our distribution. But nationally, we weren't. And then the company that had owned Rudy's for the past 15 years wasn't investing in the business. They weren't – they have so many brands. Hain Celestial has so many brands that they just weren't able to give every brand the individual attention that it needs and deserves. And so they just honestly divested it and sold it off. and the new company that bought it, you know, to their credit, they saw an opportunity.

11:34They just didn't know where the opportunity was yet. And so when Jane came back, she saw a clear opportunity, which I think is really phenomenal. So we have a bakery asset here in Boulder, Colorado. There aren't many companies left that still manufacture in Boulder. And the idea is, well, if we can't continue to grow by creating more bread products to put in the bakery set, where else in the store does this organization have a right to be, an opportunity, right, for a brand line extension? And so Jane and I are talking on the phone. She's like, Justin, we have our own bakery. And, you know, there's some easy things I would love to do that I think would really be fun.

12:14One of them being Texas toast. We can make really thick slices of organic bread here, really thick slices of gluten-free sourdough bread and slather it in butter and cheese and garlic and whatever else and really make an incredible product. And I was like, wow. And then we can take that product, freeze it, put it in a different part of the store, the frozen set, and have a value-add bread company that we can create here with our bakery asset. And I was like, Jane, that's a really great idea. What else are you thinking? She's like, well, breakfast sandwiches, right? You know, when I go and buy a Jimmy, whatever, a breakfast sandwich, we don't want to get two in the weeds.

12:55But kind of like the missing link is the bread. The sausage is always good, but the bread is what encapsulates it, holds it together, and we can do better. And so we made these incredible gluten-free brioche buns and these incredible English muffins, and we use a real egg frittata, and we make this really good breakfast sandwich. But Justin, the big idea, what I really want to do, and I know that after Justin's, you were working on this, was I really want to do a peanut butter and jelly pressed, you know, pocket sandwich. And I was like, oh, you mean like a better for you and crustables? I'm like, yeah, I've been working on that for years.

13:36The hardest part, Jane, is the bread. If you can't get the bread right, you have to have the right cell density. You have to have the right structure, the right size. It has to really like crimp and hold together. It has to freeze and thaw perfectly. And I'm like, organic's really hard. She's like, Justin, we have a bakery. We have labs. We have scientists. We have technicians. Like, let's work on this. And so that got me really exciting, really excited to solve. I really feel like a need in the marketplace because when I go out, I created a squeeze pack of nut butter for mountain biking, for skiing, for running, for protein.

14:11And, you know, and after a while, you have so many energy bars. Honestly, what you really crave when you're on a long bike ride is real food. And all I really want is a damn good peanut butter and jelly sandwich. And so if we could create something with organic bread, I want something that has 50 % or more less sugar, and I want it to have more protein, you know, that would be a big win. And so Jane and I spent all summer working on it and we nailed it. We came up with a really incredible peanut butter and jelly experience. And then I found this really great brand called Voyage. And I've been working on a peanut – I've been trying to create a peanut-free spread forever.

14:50And then I finally – and then I found one out of Berkeley, a startup that has this – it's incredible. It's a chickpea sunflower seed wild rice blend that really has the mouthfeel, texture, aroma, and taste of peanut butter, but it's peanut free. And so we're going to launch a certified peanut free and jelly sandwich that is awesome. And I couldn't have made it better. So I was really happy to find someone who is to partner with there. Well, you're actually Voyage Foods alums of the Modern Retail Podcast from a few years ago. Oh, good. Adam's a good dude. Yeah, he's great. So there's a lot I want to dig into.

15:30But when I want to just you sort of in your explanation of your brainstorming process, I have a general idea of what you're doing. So is your mandate and your general job right now at Rudy's just coming up with all of these new product ideas and expansions? Is that what you're focused on predominantly? Yeah. So I'd say the first thing we need to do is we need to bring the brand back to its glory, right? This is an OG organic bakery here in Boulder, and we want to bring it back to its glory. And so the best way to do that is to first create some products that really resonate with a modern consumer.

16:09And so we have a bakery asset. So where do we have a right to win? It's wherever there's bread. So let's create some products that are exciting, that are a little different, that aren't already in the marketplace in a natural organic variety. Let's start there. And then hopefully what will happen is the idea, Kyle, is if someone's going to the freezer and buying Texas toast and having a great experience or a sando, we're calling a peanut butter jelly sandwich sando, having a great experience. They're like, wow, this bread is really good. Oh, look, here it is over here in the bakery. And let's create a halo effect for the brand, right?

16:42And then the idea is to bring this brand back to its glory because it's so important to me to see this brand shine. And so my job is to focus on the strategy. So where does this brand have the right to win? What other categories can we go into? And then what is the strategy as far as other partners we can work with? Is their brand still communicating and messaging to our current consumer correctly? Is our consumer the same person? Has that person changed and evolved? And are we changing and evolving to meet their needs where they are? And those are all questions that we're working on now. We're going to take a quick break and we'll be right back.

17:25A couple of follow-ups with that. One is with this new product line or expansion, have you updated your distribution practices or are you still using the age-old method that you were using before? That's a great question. So the bakery is the bakery. We're going to keep doing what we're doing because we're good at it. As far as the new innovations, what we've learned is you only want to freeze bread once. So our biggest competitive advantage is we bake bread fresh and then in-house we create a product or we send it somewhere fresh and then they create the product and then we freeze it. So we're working with a fresh product that's then frozen and it just tastes really better.

18:12It tastes good. And so that's what we've learned here and really leveraging a bakery asset is important. And what's interesting is what's really hard – organic baking is not an easy business, which I'm learning. And when you try to go to an organic bakery and develop a new product line, there are MOQs you need to meet. There's formulation challenges that people don't have time to work on. There's line time you have to reserve. and then you have to line that up with, you know, down the road with maybe you're sending it somewhere else to have them create the new product with your bread product. All of this is so hard to line up.

18:50But when you have your own bakery and you can make decisions just in time, no pun intended, you know, you can really like move fast and make a difference. And that's really been a competitive advantage for us. Would you say that you are trying to make a new hero product for Rudy's? When I think of Rudy's, I think of the bread, and I think specifically of the gluten-free bread because they were so ahead of that curve for decades. But are you now trying to make it such that when people think of Rudy's, they think of the peanut butter and jelly sandwich or the Texas toast? Walk me through that thought process.

19:30Yeah. So I think at the end of the day, what we want to do, which is what we've always been doing in the natural food industry, is build our base. And so, and I'll answer your question. First, we want to build the base, right? So we don't want just a Rudy's consumer to just levitate towards our products. We want consumers who are looking for new products that are natural and organic. We want to build our base. We want to get new people on who maybe never have tried Texas toast because they've never seen one organic or never seen one better for you or seen one gluten-free. And so that's our first goal is just build the natural and organic and gluten-free food base.

20:09Get more people involved in caring about their health and wellness. I'd say that the second thing we're trying to do is create lots of hero opportunities. And honestly, like what's so much fun about, we're running this like a 50-year-old startup, right? We don't know what exactly is going to work. So you just got to start trying things, right? Texas Toast could be a hero and could take off. The Sando, the peanut butter jelly and peanut free Sando could be a hero. That could take off. We're launching, we have other innovations that are kind of on the heels of these ones that could take off. And so we really, we don't know, but what's so much fun is we get to create, innovate, and try things.

20:56And if we fail, we fail fast, we learn, we move on, we correct, we pivot. And that's what's really fun about this experience. So I want to dive in more to that customer and opportunity question, because I think there's who a brand like Rudy's caters to has changed and expanded specifically over the last few decades. Growing up, a natural food company was a very specific thing that was in a very specific store setting, I would say. You can correct me if you disagree with me on this, but I think now there are more people seeking out new types of foods. There are more, you know, often when people think of gluten-free, they might think it could be in a more mass setting.

21:38Like there are gluten-free options in my regular grocery store, but there's also like the higher end, like how food startups want to get placement in Erewhon, for example. So like, where do you think you're focusing on for Rudy's in expanding this customer base? Is it for everyone? Are you trying to revamp the brand so that it's not affiliated with the natural food markets of the 90s and early 2000s? What are you thinking about in that regard? Yeah, I think at the end of the day, Kyle, it really comes down to whoever wants this, whatever retailer wants this product should have it, right? And clearly there's a systematic approach to launching a new product.

22:19And it really depends. What we do internally is we say, okay, who wants this now? Who's the hungriest for it? And whoever wants it and gets it first, usually will say, look, we'll give you 90 days to get ahead of everyone else. And it really depends on the category review timing. It depends on, you know, how competitive the set is. It depends who the buyer is and how much they like it. There's so many things that factor in. But for us to say we're only going to sell in the mass channel, we're only going to sell in the natural channel. Again, like we don't know. Like here's what's so interesting.

22:53You know, we're creating a conventional type of product, a peanut butter and jelly sandwich that's frozen, a Texas toast, and we're doing it in a better for you offering. Is there enough of a market of organic consumers, natural consumers, gluten-free consumers who are going to want that? I don't know. Are there going to be, you know, people in the sidelines who have been waiting for this in a natural and organic form factor? Maybe. Are there conventional consumers who are just been buying this because there hasn't been anything else to buy that's better for you? Maybe. Yes to all the above is hopefully the answer.

23:33And whoever wants it, we'll figure it out. We're hoping that this will have a broader mass appeal. You know, I mean, sandwiches, if I had my dream come true, these sandwiches would be sold at Vail Resorts or at a ski lodge somewhere. So I can go and do some consumer, some customer, you know, research and then go ski for the day and grab a sandwich at the lodge or something, you know, at lunch. But I think this thing can sell anywhere. And we don't, honestly, we let our customers tell us what they want. And if they don't want it, we have to ask why. is it the price point? Is it the case pack? Is it the ingredients?

24:15And we have to figure out why and continue to evolve to make sure that we're listening to our customer and of course the end consumer. So as you're launching these new products, what is your ideal test? Are you going to pitch them all and see who takes it? Are you going to be like, no, we're going to try one store here, one natural food store here, one mass store there, and then see how it goes? How are you formulating it to make sure that you're really getting the right types of inputs to know what to do next? So I'll answer this in two parts. The first part is how do you know when the product is right?

24:51And what I learned at Justin's was let's say you have honey peanut butter, right? You're like three ingredients, peanuts, honey, and salt, right? How hard can it be to formulate that product? You know, how do you know when you've hit the right formulation with that product? And here's what's crazy about a three-ingredient product. Okay, what type of peanuts do you want to use? Spanish, Virginia, runner, which most are used with, Valencia, which is mostly found organic. So what variety peanut do you want to use? What roast level do you want? You want a light roast, a medium roast, a dark roast?

25:24Do you want the skin off or the skin off? Skin on or the skin off? There's hearts in the peanuts, which give it a little bit of a bitter taste. You want the hearts in, the hearts out. So now you have like eight decisions to make for just the peanut. Now, you know, what kind of salt do you want to use? Sea salt, regular salt. How much? So what's the salt level? Half percent, three-quarter percent, one percent. What type of honey you want to use? You want to use fresh honey. You want to use, you know, spray-dried honey. Do you want to, you know, like what honey percent do you want to use? You know, 10 percent, 5 percent, 4 percent.