How startups get on the shelves of Whole Foods

27:33But I was there in the Dallas farmer's market one day. And it's a relatively quiet morning. And there's this one table where there's a crowd of people around it. And I was like, whatever that is, I'll go talk to them. Anyway, yeah, like I want to try that. Right. And I was surprised to find it was sodas and gave him my business card. And I was like, you know, let's let's chat. Anyway, many years later, they started out as a small brand called Mother. We launched them in one region or actually in a handful of stores, then into a region. And then we were working with them for global placement when they they did their branding change to Poppy.

28:16and then they just took off. And I will say that one, it's a really, it's an important story because it shows what you can do, right? What a founder can do with an idea that is timed right and executed well. And one of the things I love most about Allison and Stephen is that they're open to feedback and they're open to partnering. There's been a lot of stories like that with the forager team and the merchants, of course, over the years. Why don't you just tell me what your day-to-day is? I feel like sometimes I have the best job in the world. My day-to-day is I get to work with incredible producers who are just passionate and excited.

29:07Sometimes they have no idea what they've gotten themselves into. So when it works out well, it works out really, really well. I get to taste all kinds of things and try all kinds of product. And probably my favorite thing is I get to meet a lot of people. I work with both our merchants and our foragers to help guide brands and get feedback for them. And any given day, I could be doing a podcast like this or a speaking engagement, or I could do, I could be working on our curriculum for LEAP or reviewing applications. We got 1600 of them this year. So it's a pretty, it's a pretty varied job. Yeah.

29:53I'm curious not to pad any stats, but like out of 1600, how many would you usually take it in or accept? Let me tell you, we start with 1600 and it goes through a bunch of filters, right? Our forager team reviews it based on their geographies. So the brands that are from their areas, they review those brands. Our emerging forager team, those are the foragers that focus on the emerging brands that we bring into LEAP, review based on category, the categories that they represent. And then I review. And it goes from 1600 to probably around 200, 250. And then we do another review of that before we send them off to the merchants.

30:35So it basically goes 1600, 250. And then the final, like the semifinalists who we interview, this year we interviewed 26 and we select 10. What's really interesting about that is even though we just select 10 for the program, we end up bringing in a lot of those brands and launching them within that first year, year and a half from the application program. And sometimes they end up in our cohort for brands that are a little further along later on. So it's pretty cool. So these are brands that you just feel very passionate or strongly about that you do want to find a way to bring them in anyway?

31:17We do a really, I feel like we do a really good job of getting the word out about the applications. We've got great support from our brands that are already in the cohort from our industry partners. So when we get to see such a large chunk of just motivated, exciting brands that fit a need that we have. Maybe they're not right for the cohort or there's some other circumstances where they don't fit, right? But they're passionate and they're excited and they're great products. I want to say, actually, I can't even guess how many brands we have that are local or emerging brands. But we onboard many, many, many, many, many each year and launch them in stores.

32:02So So there's more than one way to get on the shelf, I guess you'd say. Right. Through Leap specifically, I am wondering, are there specific, are there different categories you're usually looking out for or types of companies? I imagine, you know, their ability or capabilities to produce enough product is probably a top priority, but we'll get into that a little bit later. But yeah, anything else, you know, little known tools or resources that the program offers that goes beyond the, you know, the actual application for the prize or the accelerator? So the brands that get into the cohort, they participate in a, it's between a 14 and 16 week curriculum that we put them through.

32:46And it covers everything from business acumen, who Whole Foods Market is and how to partner with us, to navigating some of the tactical pieces. Like we just did a class on filling out a promo form. And then we do sessions around fundraising. So we have the curriculum. On top of the curriculum, we also, all brands are eligible for an investment through our donor advised fund. On top of that, we often leverage the Whole Foods Market lending program to help support them further as they grow. All of the brands that we accept in leap early growth will launch in store. And then the other cohort, the brands that are already in our stores that we see have a strong, are on a strong growth trajectory.

33:31If we can get a little bit more granular about the steps, of course, there's an application process that you walked us through. But why don't we talk about, you know, this 16 week or whatever, you know, the timeline, discuss, you know, what it is that you really try to drill in right into your applicants, whether it be, I think, a really hot topic is just how expensive it is to get on shelves and what they can expect. because I hear a lot, you know, I talk to many brands that sell at Whole Foods and other retailers, of course. And one of the things that comes up is just, it's always so much more expensive than you realize.

34:14And it's not just inventory. There's a lot that goes into it. And then you've got, of course, marketing. There's just a lot going on. So yeah, what do you usually like to tell them and kind of repeat it throughout. Gabby, I can speak to this too from a, not a higher level, but from not just from the LEAP perspective, but how we operate as the local and emerging brands team in general with how we guide the brands. LEAP brands get a little bit more hands-on, they get the curriculum, but in general, we spend a lot of time coaching and supporting. And, you know, as we've learned what brands don't know or what isn't, what information isn't accessible to them elsewhere, we've sort of tweaked the way we work.

35:04Right. So an example of that, and you're right, the retail industry is a really expensive industry and it is not just inventory and production of that inventory and packaging and insurance, but working with the retailer costs money too. right um taking it from say you've got all your your product produced already um so getting it from production to the distributor that costs money so getting it into the distributor there's fees associated with the distributor always um and that's usually like a unfi unfi well yeah we We work with UNFI, but we also work with some smaller regional distributors as well.

35:53So distribution costs money and it costs money, everything from freight, distributor, promo fees, things like that. Then you get to the retailer. There are Whole Foods Market, for example, requires food safety audits for some categories. So if you fall into a category like, I'm trying to think of one, I think chocolate, bean-to-bar chocolate would require an audit. We have a whole list on our supplier portal of which departments require audits. So there's an audit fee that costs money. We may require a certain level of insurance that costs money. Promos cost money to run a promo, especially if you're not one of our smaller brands.

36:46And I'll talk about sort of what we do with our smaller brands in a second. And on top of all of that, marketing costs money, right? You can't just put a product on the shelf and hope that people see it because they're not. They're not going to just see it if you put a product on the shelf. You have to tell them that it's there. You have to get in the stores and demo or do promotions to drive trial. Yeah, it's a really expensive business. So I've tweaked my approach over the years and I know a lot of the foragers have as well, actually all of them, to make sure that as we're working with small brands, they truly understand how much it's going to cost just to launch and on an ongoing basis.

37:31And even when they get to the point where they're thinking like, hey, you know what, I'd like to tackle another area of the country, talking to them about what it costs to go into a new distributor or a new warehouse with the distributor you're currently in, talking about what it's going to cost them to to gain customers in that new area or to get their name out there. But what we do with our smallest brands, we call them forager brands. They're the brands that I and my team work with. When they launch, they're always for their forager brands for the first year, regardless of the number of the stores they're in.

38:07With our regular suppliers that we work with that just come in through our submission process or our foragers find, the line is usually around 50, 50-ish stores. And it's negotiable between our foragers and our merchants. As a forager brand, they get waived promo fees. They get a lower demo fee, both for a demo that they're doing themselves or hiring through our demo program. We get that additional support from the foragers. And then we also do some off-shelf things that no one, like the brands that aren't forward to brands don't get access to, and they don't cost any money. I want to go back to fee structure for a minute, if you'll indulge me, because I want to maybe dispel some myths about things like slotting fees, right?

39:02I think that comes up a lot. I feel like I had to learn what they were, first of all, when brands or founders were telling me about them. Things that have gotten, And from what I understand, more expensive across retail, right? Not just Whole Foods. In the last few years, just given inflation, operating costs, this is an opportunity for you to kind of explain why they're there and why they're so high. I don't know if I can speak on behalf of the industry on that. And I will give you the answer from my perspective and from how we work with Forager brands. So we don't do straight slotting fees. What we have is, you know, and sometimes people call free fill slotting fees.

39:51So free fill is when a brand launches in store. There is a certain number of products. Sometimes it's a case. Sometimes it just depends on the department, the placement, all of that stuff that we get for free, right? And it's to secure the spot on the shelf, all of that good stuff. That said, with our forager brands, we waive the free fill. So when they're getting their first launch, and as long as they're a forager brand, if they grow beyond that, they're not paying that fee structure. However, one really important thing for me is that we make sure they understand. because at the end of the day, if someone wants to grow, like I want them to be prepared to grow, right?

40:34At the end of the day, if they're moving into an additional region and that's gonna, they're gonna sort of graduate out of that forager brand space and become like start working one-on-one with the merchant and, you know, there's benefits to that too. They will eventually, you know, have to pay for free fill for those spaces. So, yeah. And then that's impacted also, I imagine, as you scale across different regions, right? Because I think you were touching on the regional aspect of growing into Whole Foods or across the fleet of stores. So typically, it seems like most brands tend to start in their local region or market and then expand out.

41:18So I have to imagine as they're growing across the country into other stores that those fees are also going to increase naturally. It does. Yeah, there is sort of an increase in fees or they get like if we're talking free fill, they get free fill, you know, they get charged free fill for the first time. Yeah. It's not always their first round of growth where that happens. It just it really depends on the situation. we've set up a structure that I keep saying in forager brand, cause it is a designation in our system. It is how we, um, how we know what, like how to manage the numbers, right. How to manage the accounting, how to manage who, um, is responsible for those specific brands.

42:02Um, so yeah, but as you grow, for example, if you go from, um, and I can't quote the exact numbers, but promo fees, If you're not a forager brand and you move from like 25 % of stores to 50 % of stores, that fee goes up, right? And same thing if you move from 50 to 75, right? The fee goes up. For me, the important thing is the transparency though. I spend a lot of time with our lead brands talking about finance, financial models, like knowing your numbers, uh, when you start out knowing where your, um, where the cost breaks in your ingredient are going to come, how big or how far you have to grow in order to gain those and to plan forward for what that looks like in the future.

42:56Right. Um, every brand should be coming in with the assumption that with hard work, with maybe a little bit of luck or good timing or, or, you know, resilience, that they are going to grow. So they should be planning from the get-go on what that financial impact to their business looks like. You caught me on something that I'm very, very passionate about. Yeah, I think when we were talking previously and throughout this conversation, it does seem like you really want to explain why some of the fees are in place, but also kind of set expectations seems to be a big theme, right? Because a lot of times we're talking to these really small bootstrap brands that don't really have the cash flow or the free capital to support a lot of these initiatives.

43:49And so sometimes maybe they're not ready. And so I guess I'm curious on a personal level, like how do you manage those conversations or how do you communicate that? Because maybe you do really want this product on shelf, but you know that maybe they can't handle it right now or it's not the right timing. Yeah. I mean, so I spend a lot of time asking, like, do you understand what this is going to cost you? Not just on our side, but on your side, right? And your time, also your cash, but your time. If you want to go direct a store and you want to be in five stores and you want to deliver, that is a lot of time delivering product to the store, right?

44:32And I've worked with a lot of founders over the years who were one-person businesses, right? That founder wore the hat of manufacturing, of delivery, of accounting.

44:46I'm in the business to help brands build a sustainable business. I have said to brands before, this is not the right time for you. And as much as I've loved their product, either it was too expensive to get on the shelf, or I could see that they didn't quite really grasp the idea of what it was truly going to cost them to do business. And I'd redirect them to... What's great about the industry right now is that there are so many resources for the education on that piece, right? As a forager, I used to do a lot of that education. Now, someone who wants to create a food product can go to the, say, Specialty Food Association's Maker Prep Program.

45:30It's a relatively low fee to join that. And it's six months worth of educational content on everything from building their own financial model. It's the foundational basics to set someone up for success. So on one hand, I am having those conversations in a really gentle and transparent way about what things cost. On the other hand, we do have, you know, we do waive certain fees for brands to a certain state. And the reason we have done that is because we know that, you know, at that stage of a brand, you're in 10, 15, 20, 50 stores, you are not going to be in a financial position to cover a lot of these fees.

46:19So we'd rather you take the dollars and put them back into your business, either through marketing or promotions or demo or R &D or cash flow, whatever you need it for. We'd rather see healthy businesses that are around for a long time than see people just paying fees. Yeah, speaking of that, I'd love to hear a little bit more about what kind of criteria you are considering because it's one thing to love the product and know that your customer is going to love it. But there's also now, you know, through the application process, things like direct-to-consumer sales or Amazon sales or e-com in general.

47:02And so are you considering some of that? Or in some cases, I've also heard like that doesn't always translate because obviously the online customer isn't going to necessarily, you know, translate to your own Whole Foods shopper. So, yeah, I'm curious what kind of data you take into account when someone's coming to you with like a product and they really think that your customer is going to go for it. Yeah. So I can speak to this from both the LEAP perspective. The way we've created the LEAP application is it distills those conversations that happen over many months with a forager into a 65 question form.

47:39But we've set it up so that we gather a bunch of data points, like that DTC data, really important because it shows what parts of the country are most interested in their product or where you've already got traction. Yes, we like to launch brands in their home area, but sometimes that isn't the right choice. If a brand has a strong following, I don't know, say in Texas or like Austin area, we may talk with the brand and say, hey, you know what? It looks like this is a good place for you to start. Yeah. So we gather all of that kind of location data. We also gather things like some qualitative things like mission, what their vision is for their business, their long-term goals, to understand what path forward they're seeing so that we can build upon that.

48:37We have questions like the number of doors they're in just to sort of gauge their capacity, where they are now, where they want to go. and then future innovation pipeline, what they're excited about doing next, even if next isn't until several years down the road. Right. Yeah. Well, we talked a lot about the operational and logistical aspects of the program, but I feel like now it's time to get into the fun stuff, which is trends and what you look out for. So, you know, lately, of course, we've had a lot, we've seen a lot of like the high protein snack craze, the functional beverage space, just kind of taking over social media feeds and shelves, at least from my perspective.

49:26But I'm kind of curious, you know, with so many evolving food trends and just how fast they're coming at us these days, what's your approach to really seeking out the right brand or the right product to kind of represent these on your shelves? Because that could be a slippery slope, I imagine, to kind of try to bring in every single thing that's popular on TikTok that day. So this is the place where the art and science come in. We look all over. We're looking in, you know... Food publications, just to see what's happening on the restaurant side of things, right? Or wellness publications, see what's happening on the wellness side of things.

50:04But we're also, you know, big consumers of social media, just like everyone else out there to see what's popping up in sort of the industry and the product development spaces. A lot of brands come to us with stuff. And this is actually, this is where I'm going to take and make one of my big points that I always want founders to take away, that they are and they have the ability to be the expert in what they have created in the category they're creating or the product they're creating in the category they're working within. and they should take every opportunity to become that expert and bring that expertise to us.

50:43We see things from a certain position, right? Our point of view, if we're talking about the foragers, it's from a geographical position, right? We're talking about emerging brands team. It's from sort of trends and what's happening in the industry position. but they have the perfect ground level view to what is happening in their, in their, their little corner of the industry and with their sort of population of customers. So like they should never forget to be experts and forget that they are experts. Um, so a lot of times it's founders with expertise coming to us and saying like, Hey, do you know this thing?

51:25It's, it's getting really big or this ingredient. We also do the traditional forager thing too, like going to farmers markets and visiting small markets that tend to be the places that small brands start out at. Like in Austin, there's Royal Blue Grocery and Tiny Grocer that do a lot of that type of work. But I just love to see what they've found in the market. We do trade shows. We work with industry partners like Naturally Network to do a program called Retail Access at Expo West every year, which is a big natural products trade show where they activate their membership and their reach to get applications for meetings.

52:09And it's sort of like a first run meeting where we learn about the brand, we learn about the product, we get to ask each other questions. In fact, one of our Leap Early Growth cohort members this year, we met at the Retail Access program, this incredible supplement company called Reprise. So it's, yeah, it's kind of a big answer everywhere. I'm curious what, if you can give us any recent examples, maybe if not naming the brands themselves, the product category where, you know, it did fit this rubric of blending the virality with everything else we talked about, right? Because they still do have to support all the other criteria.

52:53Right now, I'm seeing it a lot in the functional snacks category. It's a place where you see jerkies and dried fruit, you know, nuts, things like that. In our most recent LEAP cohort, we have two brands in this category. One of them is a wild-caught salmon jerky called Fable Fish. And I'm going to tell you what they, sort of where this innovation comes from that's tacking onto trends after I described the second one. The second one is called Singing Pastures Farms, and they do a meat stick. What's different about these two brands is that we see them coming forward with macros that are kind of beyond just the protein, right?

53:36Like, you know, with Fablefish, it's skin on wild-caught salmon. So you think about everything good that comes from skin on wild-caught salmon, right? And then you talk about singing pastures, their sticks are infused with bone broth, which not just increases the protein count, but it also brings added collagen into it. So it's brands that are really taking something that exists and building upon it. And that like, to me, that is the most exciting thing because they're fulfilling a need that the customer doesn't even know that they have. Right. Yeah, because we've seen how quick the customers already starting to expect the macros, right?

54:20The call out of the high protein, the grams per serving. But it sounds like you're already kind of looking beyond that. Or what else can you bring to that format? I guess to wrap up, I'd love to hear what are some of, from your perspective, what are some of the advantages and the challenges that you think emerging foods, food and beverage brands should keep in mind going into 2026? Because there's a lot going on, of course, the economy, tariffs, everybody's dealing with things. But yeah, would love to hear from your perspective what that might be. Yeah. Yeah. Advantages. There are consumers are more savvy than ever.

55:04Right. They're more open to learning about health and wellness. Consumers are becoming big researchers. Gen Z is of the age where they're out there buying like shop doing their own shopping.

55:19and our Gen Z customers care about that sustainability. They care about wellness. They care about what they're consuming, even in a way that's really exciting for the right brands, I think. So there's a lot of opportunity out there and I think there's a lot of resources. If you're a founder and you're just starting out, there are more resources than ever. like through either I mentioned SFA's Maker Prep program. Naturally Network has a retail readiness program that I'm blanking on the name of now. That's incredible. There's all kinds of resources because I've seen a need grow over the years, right?

56:07From like small mom and pop, like jam and jellies to true brands that want to grow into larger brands. So there's more and more resources out there. The challenges that they're up against right now are it's all economic, right? Capital is hard to come by. So you have to be more financially responsible and savvy than ever. There's economic uncertainty out there. So you have to think about what the consumer is willing to pay. And that varies from category to category and from what you're developing. Ingredient prices are rising, especially in agricultural ingredients. But truly with even packaging, prices are rising.

56:58I'd say what brands can do, though, the ones that are getting in, is just be aware. Be aware of what the trends are and the prices going up. Look at what the forecasts are. Educate yourself. Network. Find advisors. This is a great industry. I guess that would be another win for them, though, is this is an incredible industry, and people are willing to help. People are passionate about this work. Cool. uh okay well we can wrap up with a fun rapid fire round i hope you brought your answers for your favorites but um maybe we could start out with uh like what's your favorite current snack discovery whatever it may be snack discovery um i am going to say it you know what i'm gonna say it's the fable fish um salmon jerky i i have been ordering it online because it's not yet in our stores and it's really good.

58:05Cool. You're getting your Omegas. That's good. What about a product that makes it into your cart week after week? Because being a Whole Foods shopper myself, there are ones that tend to sneak in there consistently. So I'm curious what yours are. You mean the ones that when you get to the register, you're like, I didn't mean to buy all that. Yes. Yes. I will say the, my most recent one is Painterland Sisters Vanilla Yogurt. I don't even like the flavor of vanilla, but this yogurt is so good. The vanilla in it is, it's just, it's real vanilla. And come to find out, I like real vanilla um not that like artificial yeah taste yeah i'll throw mine in there if it's okay um mine recently has been the the cedars reserve which is the cedars like latest line um you know they launched at an expo i believe and it's essentially the hummus that is topped with just like so much topping, like so much za 'atar or olive tapenade.

59:21So yeah, didn't mean to do my own blog, but that's the one that comes home every week recently. And then, you know, this one is more, I guess, macro, but hottest product category you're predicting is going to take over shelves and feeds in 2026. I have a feeling we probably know, but yeah, what's yours? So I'm going to say something very not exciting, but it's fiber. I think we're going to see, you know, think back fiber. I think it's going to be our next big macro. I think it already is our next big macro, but we're starting to see more and more fiber callouts on product beyond functional beverages.

1:00:04Yeah. We've been talking about that a lot here, which is that, you know, protein needs to be supplemented with other macros, including fiber, which is it's nothing new. I mean, we've been hearing that fiber is great for your heart for decades. So all right. Well, thank you so much, Kelly, for joining us. This was such a fun conversation. Gabby, I love this. Anytime I can talk about snacks.

1:00:33Thank you for listening to this episode of the Modern Retail Podcast, a show by Digiday Media. If you haven't already, please subscribe and head to Apple Podcasts to leave us a review and a rating. If you want more from Modern Retail, you can find us at modernretail.co. You can find me, senior reporter Melissa Daniels, on LinkedIn and Blue Sky. and you can also subscribe to our LinkedIn newsletter at the Modern Retail profile. We'll see you next week.