How Malk is expanding as the plant-based milk space matures

0:04Hello, everyone, and welcome to the Modern Retail Podcast.

0:30and they're in your local grocery store, it means that they're definitely seeing some level of volume. I want to talk, you know, about the history of Malk, how it's been going. I believe Jason joined the company in 2020, if I'm not mistaken. So he's been there for a few years. But I also want to get into the overall world of plant-based milks because it's a really fascinating world. There are a lot of different decisions you can make on the business model front. And I know that this company has been expanding. Its retail distribution channels has been doing some product expansions. And I want to just talk about how Jason has approached that, the overall strategy, how it's been going, all that jazz.

1:01But Jason, how are you doing? Man, Kel, thank you so much for the opportunity. I love having conversations with people that are passionate about the space, as everyone in the company is. So I look forward to the conversation and sharing some insights with your team. Absolutely. We're happy that you're here. So let's start with the company. How did it all start? What's the history of Malk? Yeah, the history of Malk. So our original founder wanted to transition her son from mother's milk to something other than dairy milk. So that was back in 2014, 2015. There was so much demand for it from friends and family that it transitioned to a farmer's market.

1:35And then the proclamation was made, we're taking this to retail. And that, you know, between 2015 and 2020, the founder and the initial crew got it started. And that's an amazing way to start. It's so authentic. I had the opportunity to step in and join the organization in 2020 as we were looking to accelerate our growth dynamic and step in in a time when obviously there were struggles within COVID, self-manufacturing, co-manufacturing. There's a lot of questions that we had to dig into. And I had a great transition with the founder and understood the mission is simple. We want everybody to have the opportunity to buy great tasting, clean, simple ingredient, plant-based milks.

2:18And to do that, we had to take a different tack than we had started off the journey with. So, you know, over the last four years now, I think it's four years next month, we've built a dedicated team of individuals that have the same passion that we do. And that's to make sure that more people have the opportunity to enjoy Malk because there is a lot of questionable ingredients in the category. So we're proud to stand alone at the top as the only company that focuses solely on clean, simple ingredient products. Yeah. One thing that I noticed is Some of the new products you've introduced recently have been shelf-stable products, which I imagine is difficult to do when you're focused on purity of ingredients.

2:59Correct me if I'm wrong. So it's the process of taking it into the package. It's how the line is qualified with the manufacturer. Our refrigerated products have a year shelf life at point of production. And that's been part of the work as we expand it to ensure that we could deliver the same great taste and quality when we manufactured and it only had 40 days of shelf life. So that took us a very long time. It took us most of the six years, first six years of the company to be able to say we can match the quality, taste and expectations of our consumers and be able to expand into channels where, you know, quite frankly, as you talk about New York City, a lot of traditional grocers and retailers, they can't handle the quick turns of a product that only has 40, 42 days of shelf life at point of manufacturing, especially when you have a solo point of production.

3:56So it's a great transition. And on the Tetra specifically, what we saw was an opportunity because there's plant-based consumers that buy refrigerated all the time. That's part of their daily and weekly shop. They're buying it on Mondays and Thursdays because that's when they do their grocery shopping. But there's also a subset of consumers that love plant-based milk. They might not be as close to grocery stores, so they want something that's shelf-stable, that's sitting there ready whenever they need it. And there was no organic offerings over there. Well, consumers should have that opportunity to buy a great-tasting organic product.

4:31So that's why we launched into Tetra this year with the shelf-stable product. Got it, got it. So let's go back a little bit and start with you. So you joined in 2020. What were you doing before and what made you decide to go into the plant-based milk area? Yeah, so my history is a storied one within CPG. I started with a food broker, Crossmark, went through a management training program. I then went into packaged meats with Sara Lee Food and Beverage, Ballpark, Jimmy Dean's, State Fair, Hillshire Farm, went through that organization through managing brokers into key accounts and then ended up in the customer marketing department of the headquarters in Chicago.

5:08and got a phone call one day from an old boss that, hey, do you want to move back to Texas and sell alcohol? I'm like 30 years old. I'm like, I'm in. Absolutely, yeah. What am I selling? It was Mike's Hard Lemonade. So I joined Mike's Hard Lemonade and I joined that organization and I went through the ranks there, ended up back as the head of sales in Chicago again. So a native Texan, twice to Chicago and enjoyed it. I got another phone call. A couple of founders down in Austin said, hey, we're starting this startup beverage company. You interested in running it? I'm like, hold on. I can get back home to Texas again?

5:43Okay, let's go. So I came back to Austin, did that for a minute, and then transitioned, did some frozen food manufacturing. And in that time frame, a lot of things happened. I got married. I had two amazing kids. My children, my daughter is almost 12 years old. My son just turned eight years old. And the reality was this, Gail, I was not being the best father and the best husband that I needed to be. I was so myopically focused on the titles and the prestige and the growth that I didn't prioritize that which mattered the most. And that was my family. And my health was completely out of whack. Most of my life galed well over 300 pounds.

6:28So I started a health journey in 2019. and I did some consulting throughout early parts of 2020 and, you know, continued the health journey. I found jujitsu for me, which was not only a sport, but also a stress reliever, something, an outlet that I didn't have because previously in my life, it was food and alcohol that was my stress reliever. That's, that destroys the body. So I tell you all of this to say, when I found out about the opportunity to work with Malk, I went, whoa, hold on. Plant-based, clean, simple ingredients, and it tastes good? This aligns with where we're going in our family.

7:11So it was truly a serendipitous moment that I had the opportunity to step in and join it and eventually lead an organization that was focused on the path that I was going on and the path I wanted my children to see. I wanted them to see my wife and I making these healthy decisions in what we chose to bring into the house, what we chose to stop bringing into the house. I'm somewhere around a year of not having alcohol at this point today. So we're in late September 2024. And sometime around a year ago, I stopped drinking. Wow, congratulations. And I share all that just because in a founder's journey, in a startup journey, in a leader's journey, there's a lot of stress.

7:52and it's how you choose to manage that stress and still choose to be the person you want to be. So I gave you a big journey there to dive into wherever you want. Yeah, there's a lot, a lot long and like going from Hormel to alcohol, then realizing you need to go back inward and first focus on your health and then go to an organic food product company. Was the product core to what you needed to work with, where it needed to represent the sort of values of what you were focusing on inward? Yes, and here's the beautiful thing, Cale. It is the first time in my life that I've represented a brand that my children can have as much as they want without any fail.

8:31Yeah, that makes a lot of sense. Pretty wild story. Thank you for sharing that. Because plant-based milk is no longer new. It's been around for a while now. It's definitely reached a certain, I don't know, I'm sure you disagree with me, but I feel like it's a certain ubiquity in the sense that it's no longer weird to get an almond milk in your coffee. But I feel like a lot of that was thanks to a business model like we've talked about before. I've talked with other people about like sort of the Oatly model, which was the fact that they made this sort of prestige based on coffee shops where like they made it into like a high end choice.

9:03And it seems like Malk, A, entered a little bit later on and people maybe had an idea of what the product was. But B, correct me if I'm wrong, but is grocery always been sort of the main goal of getting distribution to groceries? 100 percent. It's been the focus the entire time. We started with incredible partners at Whole Foods. So for a clean organic product, starting in the natural channel with partners like Whole Foods and eventually into Sprouts, where you're more likely to have the buy in and acceptance is critical. We believe that this product is for families. This product is for people at home.

9:39You know, we're not looking to go dominate the world with a marketing message in coffee shops. Maybe someday we'll be there in the future. But we want families, we want people that want to make that healthy decision to have it in their house and replace with the other stuff that they may be buying that have questionable ingredients. How much education do you feel like you have to do now? Because it seems like there is an overall understanding of what the product is, but I don't know if every family knows or cares or is thinking about it from that perspective. You know what I mean? Yeah. And they don't.

10:17And it's such a cool opportunity to be able to have that conversation with consumers and find different ways to connect with them. I belong to a group of men called Front Row Dads. It's family men with businesses, not businessmen with families. And I was on a call with them earlier today. It was a Zoom. I think there were 60 guys on there. And I put in the message. I'm like, if you've never tried Malk, let me know. Just shoot me an email and we're going to get you some malk. Why do I do that? Because once you taste it, it's easy to understand why malk is different, why it's special, because it tastes great and it only has, like our unsweeted almond, three ingredients.

10:54That's it. And it still tastes amazing. How are you, you know, on the grocery front, especially when you see words like organic, I think families usually think that means more expensive. It usually means premium. You started in Whole Foods. Sprouts, also, you know, a pretty nice retailer. Correct me if I'm wrong, but you're also in Erewhon. Is that correct? Absolutely. Yeah, Erewhon's been a great partner. Do you view yourself as more of a premium player? Do you think you need to play in that space? Or especially as you continue to expand nationally and you're in so many grocery stores, how do you focus on telling the story to more value-focused customers?

11:30So here's the way that we choose to look at the category, Gail. There is a value tier within any category you shop. there's a mainstream tier in any category you shop, and there's a premium tier in any category you shop. It can be packaged meat. It can be chewing gum. It can be plant-based milks. And consumers in every, if we go back 15, 20 years ago, people would go to their one grocery store. They were loyal to one store. And now if you look at the way assortments continue to grow and people are actually starting to look at their health differently, they're willing to explore why is this product more expensive?

12:07Why do I pay, you know, 3x on a per ounce basis for this simple ketchup versus mainstream brand or the private label brand? And our marketing message is hashtag turn it around. Look at the ingredients on the back. So to your question about the value consumer, we, instead of calling them value consumers, it's like, we want to talk to the health conscious consumers. Because in every single grocery store in America, there is a health-conscious consumer looking to make a better decision for themselves and for their families. And we believe they have the opportunity, if there is a plant-based milk in that store, there should be a premium offering with clean, simple ingredients without gums, oils, and fillers.

12:48And we want it to be malt. And is all of that storytelling, or most of it, do you believe it's mostly done on the packaging? You have the hashtag, is this as much a brand campaign or is this a retail media campaign? So it's all of the above. And that's what's so great. And here's the thing, Gil. It's not just for malk. We want consumers to do with everything in their household. I've told the story before. My daughter was looking at ingredients, and she turned around a ketchup bottle. And she must have been probably seven or eight years old. She said, Dad, what's high fructose corn syrup? Yeah, we probably shouldn't have that one in the house.

13:23And it evolved how we shop. But the messaging is you ask the question, and I will answer the question. It's important for us to make sure that we are reaching consumers where they're absorbing their information, be it on social media, be it on connected TV, be it on package in-store through direct messaging. We want to make sure that we're exploring the path towards health with consumers as they're looking for it. We want Malk to be there for them front and center, that they understand they do have a clean option that is organic. And most importantly, it tastes great. What are you seeing, especially as you are expanding channels, in terms of, are you surprised by either the types of shoppers that you're getting?

14:09Like, where are you seeing the pockets of demand or like the certain types of grocers that are signing on and you're seeing real volume with? It's so exciting because all of the standard assumptions like, well, we might not do as well in the heartland or heavy dairy areas. You know, we, you know, you could easily go into this category and say, Malk will likely be successful on the coast all the way down, maybe catch Austin as the third coast, and then maybe the high metro areas. But as we're expanding into the heartland of America, it like Schnucks just landed. Deerbergs just landed. As we go into these, in the St.

14:50Louis metro area, the center of America, they're excited about Malk as well. Rural Alabama, they're excited about Malk. Places that you wouldn't typically say, that is a haven for plant-based milks. Consumers, we're connecting with them, they're trying the product, and they're coming back into the family time and time again. Can you just give a little history of how distribution has gone? So you said Whole Foods and Sprouts were the first national accounts? Or I don't know, Sprouts isn't really national, but like big accounts, you would say? Yeah. Unequivocally, our gold standard partner, when we launched in 2018 with global distribution was Whole Foods.

15:30And when I joined in 2020, we were distributed, the number was in the high 17 to 1800 stores that we were distributed in in that timeframe. And they were largely traditionally natural food stores. Now we did have some pockets. We had Ralph's was an early adopter partner, Kroger, Texas, early adopter and partner, H-E-B, an early adopter and partner, as well as King Soopers in Colorado. But that was the extent of traditional Mulo grocery. So you had H-E-B in at the time, maybe a hundred stores. You had the hundred stores of King Soopers and 200 stores of Ralph. So 400 of the 1700 were Mulo. And now the team has us in nearly 10 ,000 stores.

16:17And when you're in so many stores, where are the areas you're focused on growing? Is it like just getting more volume in the heartland where there probably isn't as much density of those types of products? Or what are the key accounts now? So it's a twofold answer, Gail. The first thing we've got it we have 14 skews that we offer now across almond oat cashew creamers tetra so we've got a widespread of products in the natural channel we want them all in there and then as we go in traditional grocery and look retailers reset once a year so we need to get in there prove our worth in the first year we'd love to start with three or four i'd love to start with four.

17:02Three is typically where we land. And then once we've proven ourselves in year one, then it's expand to four SKUs, then five SKUs, and six SKUs. Continue to offer that expansion of offerings for those consumers in that area so that they can have Malk in different ways, formats, and flavors. And what is usually the highest performing? I would think maybe almond, because I feel like most people know what almond milk is, but I might be wrong about that. Is that usually when, especially new categories or new channels? Yeah, so we'll talk category for a second. Categorically, like 67 % of all plant-based milks are almond sales.

17:37Then it's oat. Then it's soy, coconut, cashew, and then blends and all others. So for us, it's a similar split. I mean, unsweet almond is our number one. Vanilla almonds are number two. Coming in number three, our original oat is doing phenomenal. A lot of people left the oat category over the last year, Kale, because there was a big pushback on seed oils. And if you look in competitive SKUs, there's a lot of seed oils. So while they saw a significant decline, the category data would suggest that oat milk consumers went back to dairy. Okay, I get it. And our job is to remind them that there is a great plant-based product that doesn't have the oils that they can stay in the family with.

18:19And did you do active, like, I actually wanted to ask about that because the backlash to seed oils is so interesting on so many levels, which could probably be its own episode. But from your marketing perspective, did you do actual work to push back on that with customers? Be like, wait, we don't actually have that in here or anything like that? Or how did you try to navigate that? So the one thing that we've always held true at Malk is we want to talk about us and not about others. I will never talk about a competitor by name. We'll have some fun, punchy ads at trade shows where we'll line up their package.

18:57We'll block out their name and it will list their ingredients. And we'll put our package with our list of ingredients. So we'll have fun with it and say, hey, scratch out all the ingredients that we don't have. It's like there, we fixed it for you. So we have fun with it in an environment where it makes sense, where there's buyers and retailers, things of that nature. But we're not going to go out there and start a campaign against the other players in plant base. It just doesn't make sense. We want to talk about who we are and why we're the right choice for consumers. Can you actually talk about just how you choose campaign storytelling content?

19:32Because, you know, it seems like for a company like yours that has national distribution over 10 ,000 stores, and being in an area where it's reaching maturation, but not everybody uses it, but they know what it is. How are you going about telling the story? Because it's not necessarily about explaining what plant based milk is anymore. Like people know what it is, right? Right. And that's the beautiful thing that we have the opportunity. You mentioned it on the onset, like we weren't the first in the category by any stretch. And for us, it's to continue the dialogue with consumers that are in the category and those that are curious about the category.

20:1091 % of households in America still buy dairy milk and have it in their house. 45 % have plant-based. so and most of them have both so when it's in the house how do we let the i'll use my parents as an example both children of the 50s you know they grew up as dairy consumers so i kept sending them different bottles like okay try this one try this one until my mom found that she loves our chocolate almond in her coffee and she found the one that works for her and as we continue to expand our offerings, we love cooking with our cashew at home. It's a phenomenal product to cook with. So there's different usage occasions.

20:52You can either drink it alone in coffee, smoothies, you know, with cereal, you can bake with it. So there's a lot of options and it's showing consumers the diversity of the choices that they have and using malk in their products, knowing that it's clean and simple ingredients. And it's not about, hey, you've got to shift your lifestyle to just drink plant-based milk. We're for everybody. And that's what we stand for is we're not going to isolate anybody. If you are interested in a fluid milk, be it dairy or plant-based, we want you to understand what we have to offer you. With that, one thing I've noticed, and this might be geographical because I'm in New York, and I don't imagine this is the same at HEB, though, correct me if I'm wrong.

21:35But when I go to my grocery store, you're there. but the plant-based milk section is kind of insane in my opinion where there are it's different than normal dairy where I feel like with normal dairy you're choosing the product you want two percent and you want either the cheap one or the slight organic valley slightly better one but with plant-based milk there are like I want to say at least a dozen brands in my section and they all are different specific ones and they have ranging from different price points and it It becomes very, very overwhelming. And so I guess my question for you is, how do you as a brand playing in that space in this very, very competitive aisle strategize for that and think about that?

22:13And has that changed a lot over the last few years?

22:18So it's one of the things, as you look at a brand, you have the brand name and then you have the vessel in what you sell in. We're fortunate that we have a unique vessel that's memorable with our barrel-shaped packaging. So we love to lean on that. We love to have fun with that. And we stand out. We're not in a half gallon of milk is called a gable top. We're not in a gable top box that looks like everybody else. So our package gives us a point of differentiation on the shelf. It stands out. And that's good and bad. Because of the height of our package, a lot of retailers either put us on the top shelf or the bottom shelf.

22:54We don't typically get the middle because they have those adjusted heights for the taller bottles. Okay. There's opportunities there for us. So the way that we choose to do it in a market like yours, quite frankly, what we've done just over last year is we've started to put feet on the street and actually work the shelves, build the relationships, build the rapport, make sure that our partners at retail know that we're here to support them to make sure that Malk has the shelf space it deserves. I always am interested in those types of solutions because you're in 10 ,000 stores. It's not necessarily scalable, I imagine, when you're still growing and still figuring.

23:38Do you have 10 people in New York who are going to the key accounts there? How do you think about that from an operations and allocation standpoint? As a historically cash-strapped company, I'm always looking for what is the ROI. What do we need to deliver with an individual in order to ensure that they more than pay for themselves and are accretive to the company profitably. And so I don't do this alone. I have fun now because we built a team here, Cale, of people that are passionate and capable and have done this in other organizations. I brought in back in June, a president of sales and marketing.

24:18We've got a chief revenue officer. We've got a CFO, a chief operations officer. And these people bring the depth of experience to help us make those decisions. And that's where we invested early on in people. When we got down to a point in December of 21 where the team meeting was eight people, this December in 24, we will have 37 people. So the investment in people, which you can have a great brand, you can have a great tasting product, but if you don't have the passionate people behind it to solve the problems that you're going to face, then you're going to be out of luck. So the people around the brand is what makes us who we are.

25:04Got it. How are you approaching product expansion but also remaining core to what you guys offer? Because I feel like you could go in so many different directions, but some might be a little bit far afield. I imagine most of your customers have a specific use in mind, either drinking a cup of plant-based milk or adding it to their coffee, maybe baking. But it's a very specific thing. So how are you thinking about these expansions you do and how many more likely will we see coming down the line? I love that question. I won't answer it. With regards to how we do it, we look at the data. We understand what is the consumer doing.