On's big earnings, Summerween's surge and why Sprouts is the new proving ground for CPG brands

0:09Hello, everyone. Welcome to the Modern Retail Podcast. It is our show that covers the ways the retail industry is changing and modernizing. I am senior reporter Gabby Barco here with my co-host Melissa Daniels. Hey, Melissa, how are you? It's been a couple of weeks since we've spoken, so I'm excited to be back. Yes, let's get back into the rhythm. Things are great. There's a new Taylor Swift album on the way. I secured an order of the vinyl, not even knowing what the beautiful cover was. and I'm getting a new washer dryer installed tomorrow. So life is good. Okay, well, to me, those are equally exciting.

0:50They are. I actually would be excited about them. I'm more excited about the washer, but yeah. I anticipate they will both increase the enjoyment of my daily life, you know, in the future. I'm looking forward to those life upgrades. Well, not only that, but it's also we're in the midst of summer ween. This is your season. I feel like, right? A little bit. You know, I'm more of like a true fall Halloween head, but we're going to kind of get into later how Summerween and Halloween are sort of bleeding together into one as far as the things we're buying to decorate and get into the spirit. Yeah, I think that's kind of the point is that it's almost like a countdown.

1:32And then I imagine by the time October rolls around, it'll feel like it's been Halloween forever. But yeah, we're going to talk about how retailers have responded to it. It seems like every year we get those skeletons and all the decor out earlier and earlier. So I'm excited for that. But first, we're going to also talk about some footwear earnings. There was a lot this past week. We had some good ones, some not so great ones. On was a big standout to me, the running shoe brand. They seem to just be weathering the storm. They're still doing pretty well despite tariffs and consumer sentiment. But then on the other hand, we have brands like Allbirds who continue to struggle.

2:23So we'll get into that. Later on in the episode, we're going to be talking about why natural grocery chain Sprouts has become so popular among CPG brands. It's got somewhat of a cult following. So to help us dive in, And we have Nicole Portwood of Suja Brands. That's the parent company of the newly relaunched Slice Soda, which is currently rolling out in Sprouts. So we're excited to have her on later. But yeah, first up, let's get into the news. Why don't we start with Ann? What are your thoughts on these numbers? Yeah, as you mentioned, it was a big week for footwear earnings. On's second quarter net sales jumped 32 % year over year to about 750 million Swiss francs, which equates to around 928 million American dollars.

3:15And the company is saying that much of the growth was led by strong DTC sales, which I think if you're a brand like On is what you want to see, you know, that people are coming directly to you for your product. And it's a brand that you are starting to see a little bit of everywhere. Yeah, exactly. It's one of those really hot, buzzy brands that's enjoyed a lot of success in the last few years. But to talk a little bit about some of the concerns, their CEO, Martin Hoffman, said in the announcement that tariffs aren't a cause for concern yet. The company kind of already got ahead of it by dealing with their U.S.

3:59imports, at least. About 90 % of their footwear comes from Vietnam, they said, and they seem to have offset it by increasing prices on select styles just last month. But yeah, that's not to say they don't have any headwinds. wins. I thought it was interesting, but their biggest challenge I thought was interesting, which is not necessarily tariffs or soft demand, but it's the currency shift because they are a Swiss company and the dollar is becoming weaker and weaker against the Swiss franc. Apparently, that's causing a lot of volatility in their profitability, at least. So yeah, they did swing to a loss compared to last year.

4:45But they also raised their full year guidance. So they still expect pretty strong sales going into the next half of the year. Yeah, this week's earnings from on also said that they expect net sales to grow 31 % year over year. That's an increase from their prior projection of 28 % year over year. And I feel like they must feel really confident in their strategy to be able to have an increase that's not only that large, but even tweak it upward a little bit. You know, you have to be in a really strong position to put out numbers like that. Yeah, maybe this is a good time to talk about why ON is doing pretty well at a time when a lot of footwear specifically is struggling.

5:29A lot of that, of course, is not only due to soften demand, a lot of promotional activity, but also tariffs just because footwear tends to be largely made in Asian countries. But On does have a very specific positioning. They are a premium brand. They tend to attract a lot of serious runners, amateur runners too, of course. But they've moved really into this lifestyle brand recently. They're getting more into apparel. And then, of course, they have their latest ambassador, Zendaya, who signed on last year. And I feel like they've been utilizing her pretty well. I don't know if you saw the new collection they just announced with her.

6:15But yeah, I think to me, it seems like she's at the very least keeping them in the conversation. You've got social media impressions, just a lot of constant headlines based on her designs and her collabs. Yeah, I think she's been a real power player for the brand. The most recent announcement with Zendaya was that her longtime stylist, La Roche, kind of came into the partnership and co-created a shoe with her and on. It's called the Cloud Zone Moon. And I expect we're going to see a lot of it. Yeah, this is for the new collection that's coming up. So it seems like it's got a lot of excitement around it.

6:55But the question is, why do you think brands like On, Hoka, who is consistently reporting great numbers, and then this week also Birkenstock said that they're doing really well in the U .S. despite tariffs. These are all doing pretty well despite all of the headwinds we've been talking about. you know, do you think there is one specific factor or is this just sort of a combination of a lot of different things? Well, you know, the sneaker and the Birkenstock are maybe two different things as far as what's driving people to buy them. I'm a big Birkenstock fan. They're great for stomping around the desert and slipping into.

7:40They're actually pretty easy to drive in for a sandal, which isn't something I can say for other shoes that you slip into. But really, at the end of the day, I think these are just cool brands. It's cool to have Ons on your feet. It's cool to have a pair of Hokas. It's cool to wear Birkenstocks. And what I also think is interesting is these are brands that are cross-generational in appeal. I've seen Hokas on everybody from teenagers to 80-year-olds hiking trails. I see Birkenstocks on the quintessential desert hippies and my babysitters. It's a little bit of everybody who's attracted to these brands.

8:15And I think if you can manage to be trendy among different generations, that's a really hard thing to do. But these are brands that are doing it well. Yeah, I mean, for example, Birkenstock also said that they just raised prices, but that does not seem to be deterring customers. They're also really leaning on their wholesale partners. You know, they have such a huge footprint, you know, in thousands of doors. So while they are dealing with, you know, things like tariffs coming out of Europe, they seem to think that, you know, people being able to touch and feel the product is the biggest converter for something like Birkenstock, which I personally agree with.

9:01But I think, you know, when you're dealing with something like D2C, you know, you only have 90 stores, I think is their number right now. You do need wholesalers to really pick up that slack. Absolutely. And that's how you become a brand that is reaching everyone wherever they're shopping, you know, across generations, across trends. You can be in some of the higher on retail. You can also be in DSW, right? And you're going to capture different customers in those places. But you contrast that with some brands that haven't been able to execute at that same level. Allbirds also reported earnings recently, and they're continuing to struggle even though they've had a turnaround plan in place.

9:44I think we're in agreement in that there is almost like a secret sauce to some of the success here, which is that you've got consistent demand, just resiliency in that customer base. And then, you know, being able to be at least somewhat prepared for things like tariffs and the economy in general. Of course, things like currency exchange you can't really control, but, you know, you can raise your prices maybe to offset some of those losses. So, yeah, I think with somebody like On, we probably will continue to see them grab more of that market share, right, that we're seeing companies like Nike struggle with right now.

10:25And so I'll be curious to see, you know, whether they can maintain that momentum. All right. Well, let's get into another topic that has been all over the retail world lately, and that's the sort of unofficial start of the Halloween season. We've already seen a lot of summer ween the last couple months, which is that delightful trend of putting out Halloween decor in the summer. But we're also starting to see brands really roll out their official fall Halloween lines. Yeah, it just seems like people are searching for their Halloween. I don't know. Is it like it's everything from decor to ideas earlier and earlier every year?

11:03I mean, just for context, Michaels in 2024 said that people were searching for, quote, summer wean on their website in mid-June. And then this year they started as early as March, which to me, it's like, okay, what are we doing here? That's a little early, but, you know, it's not even summer. It got kind of crazy. Exactly. I think, you know, maybe for some people Halloween is on their mind year round. But, you know, all of this traffic, these retailers want to capture, right? I mean, might as well. You've got people coming to your site. You want to be able to, I guess, plan. I know one of the things they're trying to do is figure out how to plan inventory release around it, right?

11:49Yeah. And I think that's something that, you know, we mentioned Michael's has done really well over the last few years. They sort of roll out these really fun summer wean collections that get a lot of attention. and then that and more is available come Halloween. So it's sort of an early teaser for people who are gonna just pepper Halloween into their buying all year long. You know, some people do that with Christmas holiday too. You know, people buy Christmas presents all year round a little bit. And it's just one of those things where it's on your mind and you're out shopping and you wanna get it.

12:21But with Summerween, I think it's just sort of become this like really cute aesthetic trend. it's a lot of like skeletons in inflatable pools or sipping drinks like there's sort of a whimsy to summer ween that I think people are really responding to it's a little ironic and it's not the traditional black and orange jack-o'-lantern all the time right it's it's glitter it's pink it's purple summer ween is allowed to kind of have its own aesthetic yeah and I don't know about you, but I've been seeing on social media, a lot of creators are doing like, or were doing Halloween in July party. So they were serving like chips and guac and summer drinks and all these Halloween, you know, paper cups and cauldrons.

13:13And yeah, I don't know. It is fun. You're right. I think maybe we're in this part, I don't know, as a country, maybe people just want to find joy right now. But yeah, it's like the new Christmas in July, I feel like, right? Yeah, that's a great way to put it. I definitely agree. And it's getting more popular. You know, back to Michael's awesome data that they shared with us showed that this past June, there was a 2 ,889 % increase in searches for Summerween year over year. So that tells you a lot about how this is a growing trend and just how consumer demand is really ratcheting up. Okay, so let's get to the fun part.

13:51Should we talk about what are some of the standout products that we've seen roll out? I feel like the last month or two, we've been getting countless emails about summer wean products. I believe Bath & Body Works starts to roll out their scents, right? Their collection. And it always sells out pretty quickly throughout the summer. What else have you seen? You know, my eye was really drawn towards some great summer wean displays that I saw at my local Marshalls, they had really cute little ghosts who were like swimming in pools and things like that. And I thought that was really cute and really fun for summer.

14:27But as we start to, you know, really get into the fall season, I think we're also going to see a big boost in consumables. Like I think that's always big for Halloween. And I just can see that being a big thing for brands this year, sort of your fall and Halloween seasonal flavors. Speaking of, do you think there's something to be said about, you know, people rushing to get at least like, you know, those really big bestsellers, like the three foot disco skeleton that tends to sell out every year. It does feel like at least on social media, I don't know, maybe it's I'm just it's my algorithm, but it seems like people want to stock up on this stuff earlier in the year.

15:07And it's unclear whether they're just adding to their collection or replacing things. But yeah, I don't know if there's like a sense of wanting to get things before they're gone. Yeah, I think there is. There's that little bit of FOMO where you want that viral product. You know, I think we'll probably see some interesting stuff from Home Depot this year. They're known for their giant skeleton and they always kind of have some other fun things that start trending. But I think there's this sort of broader shift to like summer wean is almost a micro holiday that's coming before the actual holiday.

15:40And this is what I was trying to say before that it's like, we're not just buying at the season, we're buying ahead of the season in anticipation of the season. And I think that's something that retailers and brands can take advantage of if they're able to, you know, get those products that are really trendy. And that's then you have to make sure that your teams who are doing your product design are really on trend and forecasting ahead of what's going to happen, right? So, you know, like bows, for example, are really popular right now. Bows are having a moment in like almost every sort of aesthetic pattern that I see.

16:14And, you know, this Michaels collection with the sweet and spooky has a lot of little ghosts with cute bows, right? It just, it sort of fits with everything else in the zeitgeist. Yeah. And then you've got your traditional retailers that have that calendar also inching up a little bit earlier and earlier every year. So right now we're in the middle of August and Target and Old Navy are now starting to roll out Halloween merch and promotions. Then you've got PetSmart. They want to put out those costumes out as early as August so that you can, I don't know, you got to see what your options are. Do you have any pet Halloween options that you're looking into right now?

16:57You know, we have old standbys for our crew. The Chawini Penny will reprise her role as a banana split this year. And Willis, my senior doxy rescue, is a hot dog, obviously. Okay, great. I like the upcycling. I like that, you know, Penny is willing to rewear. her outfit. Oh, yeah. She's been wearing the same sweaters since she was a pup. Somebody had to hand me down to other doggies because she got too big. But she is a dog who likes clothes when it's cool enough. But yeah, I mean, for my part, I don't do a ton of Halloween shopping too far in advance. I can't say that I'm a big part of the summerween consumer.

17:43But I do really love Halloween. I do really love buying for Halloween, but I tend to be more of a last-minute shopper around it. Yeah, I think in the next couple of months, I'm sure we'll see more data around this and how people are behaving. I'm also curious to see what the candy and the treats sales are going to look like. Last year, we had this cocoa shortage that really hit chocolate brands. That was a story I wrote about. So yeah, curious how companies are going to get creative here. Yeah, you know, I think you're also probably going to see a bigger role played by some of the real discount merchandisers and an off price, right?

18:22Like Aldi, I believe, had rolled out some sort of Summerween Halloween themed items along with its back to school, you know, just kind of tapping into a younger generation that might appreciate the aesthetic. And, you know, I always expect to see a lot of Halloween merch from Dollar General and Dollar Tree. Right. Yeah. Well, with Aldi, that was also alongside their Lububu release, right? I think that was a big day here at Modern Retail. Yeah. They had the little accessories that you could put on your Lububu, the little Aldi gear. Yeah. A little Aldi tote is pretty cute, I have to say. We can't get into the Lububu conversation though.

19:04So let's talk about our next segment. So yeah, we are going to get into our featured segment of the day. We're going to talk about Sprouts and why it's just become such a big retailer on brand's wishlist. It has 440 stores nationwide. It's growing its footprint in regions like Florida, Maryland, Pennsylvania, Texas. So just kind of spreading across the country. But at the same time, it's very highly curated. Melissa, So I was wondering what you thought about the fact that, you know, they have this like less is more mentality, which is what Nicole mentioned, which is like kind of what attracts a lot of especially younger brands that want to stand out on these shelves.

19:49Yeah, I mean, I think it's a great way to highlight to your customers that you are doing the work for them, right? And providing a really tight duration. Exactly. And it's like, okay, here are the brands that you're seeing now this year at Sprouts. that next year you will see in your croaker or your target, right? It's a way that they can position themselves as being ahead of the curve. And I think there are shoppers who go to a place like Sprouts wanting to find something new. You're not just going there to pick up your regular produce and pantry items for the week. You also kind of want that element of discovery.

20:26And I really love this conversation we had with Nicole that kind of brought us behind the scenes on how that's created. Yeah. I mean, just this week, I spoke to a couple of brands that had, you know, somewhat exclusive launches there. You had True Bar who had their kids protein bar. That was a very early, like, you know, their founder told me that Sprouts really loved the idea and they wanted to be first. And so they rolled it out in time for back to school. And then of course, we talked to slice about how, you know, their cherry cola flavor is an exclusive to Sprouts this summer and it's performing very well.

21:06So yeah, I mean, 18 ,000 SKUs tends to be the average at a Sprouts store, kind of small format. And if you compare that to like 300 ,000 SKUs at Kroger, that should give you an idea of, you know, the sort of curation, brands that are hot on TikTok, like that sort of vibe when you're walking their aisles. All right. Well, we'll have more about Sprouts with Nicole after the break.

21:44One of the most prime retailers for a CPG company to land these days is Sprouts. It has a unique positioning as a natural grocer offering curated selections. So Sprouts has become a coveted partner for young food and beverage brands that are looking to widen their reach. One of the highlights is Sprouts New For You section, which features new and trending products for its customers to discover other areas of the store, like the Fresh Finds cooler are becoming a hotspot for product discovery. So these unique features are making Sprouts something of a proving ground for many small businesses looking to break out into grocery.

22:21Gabby, you talk to brands about Sprouts and other places all day. In your mind, what's making Sprouts stand out these days? Yeah. I mean, for one, I think some of the features that you mentioned are big draws for young brands, especially ones that are sort of startups or in the early stage that are trying to break into the grocery or retail sales channels. I think, you know, the fact that Sprouts is a nationwide natural grocer is also a big draw of course for Better For You brands. You know, if you haven't gotten into Whole Foods yet, for example, I think Sprouts is a pretty great stand-in as far as testing what that customer is looking for in your category.

23:10So, So yeah, we hear a lot about it. I think one big draw I hear about a lot from brands is that Sprouts is also unique in that when they take you on, they launch the brand nationwide in like every location, which is a pretty big deal. I mean, to me, it sounds like obviously they're betting on your brand, but also it's a pretty big departure from the way like Costco or Whole Foods launches brands, which is that you're kind of going like one region by region and testing different locations before you launch nationwide. So that's a pretty unique proposition and, you know, shows why a lot of brands have it at the top of their wishlist, which we're going to talk about in a minute.

23:55Yes. And to help us understand the attraction of Sprouts and what it takes to launch there, we are joined by Nicole Portwood, the CMO of Suja Life, which is the parent brand of Slice Soda. We'll be talking about why Sprouts was one of this revived brand's top choice for retail partners, including a new cherry cola flavor that's exclusively available at Sprouts. Nicole, thank you for joining us today. Thank you so much, Melissa and Gabby. It's great to be here with you. Well, before we get into the Sprouts partnership, tell us a little bit about the relaunch of Slice. It's kind of a unique story in this healthy soda set we're seeing.

24:31It is indeed. And I think one of the big things is it's a familiar name. So we're back, but we are back and better than ever. Slice originally launched back in 1984, which just for a culture set here, When Doves Cry was the number one song. It was the year that the original Karate Kid movie released. So it was an amazing time in American culture for sure. But it was a mainstream soda brand back then. But now it's been reimagined by Suja Life. And we're a company that's known as a leader in the healthy beverage space. So we reimagined this soda for today's consumer who is a lot more health conscious and is looking for benefits even from the soda category.

25:08What we did is we kind of took the best parts of soda, the fizz, the classic flavors, but we left all the bad stuff back in the past. So the new formulations, they have five grams of sugar or less in every single flavor. No high fructose corn syrup made with all natural real ingredients. and each can has a blend of prebiotics, probiotics, and postbiotics. We're the only healthy soda out there that has all three of these. We've just loved getting to bring these classic soda flavors to consumers all across the country. Not only do we have, you know, the new flavor with cherry cola that we launched with sprouts, we've got orange, lemon, lime, classic cola, grapefruit, strawberry, grape, and a whole bunch of other awesome stuff on the horizon, including a new watermelon flavor that is, I think, going to be the hit of the summer.

25:50It's absolutely delicious. us. And we've really seen an open arm reception by consumers and the retail community alike. Millennials, Gen Xers, we're kind of hungry for that, or maybe thirsty for the nostalgia from our youth. But now that we're older, we're looking for sodas and things that can complement a healthy lifestyle. And by the same token, we've also seen this nostalgic approach really, really resonate heavily with Gen Z. They're identifying products and that time as something that's just a little bit simpler, a little bit more carefree. And there's a lot of joy in that. So it's been a really fun kind of wave to be a part of, for sure.

26:29Yeah. So I actually want to get a little bit into the parent company because Suja Life and your brands, you're known for Suja Juice, for example, you already have a pretty longstanding partnership with a lot of retailers, including Sprouts. So I feel like this puts you in a pretty unique position to be able to speak to, you know, just how Sprouts has evolved with Better For You brands over the last few years. But yeah, how did that partnership help you with the relaunch phase? Because Sprouts, for those unfamiliar, Slice relaunched very early this year in 2025. And just within a couple of months, you are already on their shelves.

27:11As Suja Life, we have Suja Organic and Vive Organic, which are two brands that operate in the natural healthy beverage space and have for many, many years. We're leaders in our categories, both in functional CPJ as well as in wellness shots. And so we're bringing the expertise of our R &D formulation capabilities and the fortitude that we have there, as well as the infrastructure that we've built that's helped us deliver a 99 % fill rate, as an example. We have really strong operational infrastructure, in-house manufacturing, and have had incredibly strong retail partnerships, not just because of that, but also because of the broad appeal and the growth within health and wellness that's driven our products to continue to grow in velocities, even as we grow our distribution footprint.