#212 - King of Sauce: How Eric Skae Has Grown Carbone Fine Food into a $100M+ Brand

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0:59As I go through every region in the country, it's like we're kind of 40, 50 % growth to 150 % growth still. At this point, you know, getting that distribution, and I think the consumer is really picking it up. And now I'm starting to see an acceleration. In the last 15 months, we've grown at an average of 154 ,000 households. 15 months straight. That has not slowed. Welcome to the Startup CPG podcast. Today, we welcome back Eric Skay of Carbone Fine Foods. We lasted an episode with him in February of 2024. And at that time, it was so clear that Carbone was on its way to disrupting the category.

1:35Now they've really broken through in a major way, hitting 100 million in sales, continuing to grow door count, their velocity, adding new SKUs. And we wanted to invite Eric back to talk about what that road has been like getting to 100. So on today's episode, we talk about how they've managed that growth, how they continue to innovate, and tons of advice from Eric for emerging entrepreneurs. Enjoy!

2:02All right, Eric, my friend, it is so good to have you back here on the Startup CPG podcast. I really loved the first episode that we did just because, you know, you're somebody whose career I have watched. It was really exciting to see you getting started with Carbone because Carbone is a restaurant that I know and really like. And just to see the approach you were taking with the brand and, you know, just driving really fast into the sauce category. It's been awesome to see. And so it's been a while since we spoke. And I just wanted to bring you back onto the podcast and talk a lot about what's happened since then.

2:36I mean, you guys have gotten to some crazy number of doors. Your retail sales are absolutely astronomical. and so I would love for everyone just to get to hear what that journey has been like and get to learn from you a little bit especially because you've done this a bunch of times before but every time you have new lessons new things that you can share you know the path is always a little bit different so super happy to have you back here so the last time yeah when we spoke you guys were really getting a very fast start to everything but can you just catch us up what is all the stuff that's happened since then at a high level?

3:11Sure. First off, thanks for having me. I really appreciate you having me on the podcast. But I read somewhere years ago that you tend to overestimate what you can do in a year and we underestimate what you can do in five. And we're not quite at five. We're four and a half on the shelves. I signed my agreement with Major Poo Group on October 29th of 2020. So we are actually coming right up on five. And you tend to underestimate in a big way what you get done in five. and i think that's been the case here right like i probably did overestimate the first year because i knew carbone from new york like you know carbone from new york and i assumed everybody knew carbone like everybody knows carbone well they didn't right it's a little bit of a heavier lip from a standpoint of building awareness for the brand as we scaled but the approach i took is the approach i've taken with every brand i've ever worked with it's a distribution first approach because I hate to market to empty shelves.

4:06And I know we live in a world like when I started, you know, back in this 1990, there was no such thing as online sales, right? That didn't happen. You have that today, but I'm in a heavy type of product. It's hard to do. You get breakage, very hard to make money online. So like you really need to drive into brick and mortar with this type of product. Other products weren't different. So that was the first approach. And we managed to get the, you know, call it 25, 26 ,000 doors is where we are right now in that period of time. But, you know, the thing that excites me is not really the number of doors.

4:40It's as I go through spins or as I go, spins in particular, as I go through every single account in food, you know, we're not down in any of them. We're double and triple digit in all of them, right? As I go through every region in the country, same thing, like we're kind of 40, 50 percent growth to 150 percent growth still at this point, getting that distribution. And I think the consumer is really picking it up. And now I'm starting to see an acceleration. In the last 15 months, we've grown at an average of 154 ,000 households a month, 15 months straight. That has not slowed. And again, I see an acceleration of that as we continue to get more space, as we continue to get more awareness, as we continue to take that social drives event, drives brand, right?

5:26You know, that's where we went. So can you tell me a little bit about that growth? Because you're saying you're looking across spins and you're just seeing it grow everywhere, like triple digits, velocity growth. But you also mentioned not everybody actually knows Carbone. I mean, people who go to New York and Miami and Vegas, like they know it. They love it. It's so good, but not everybody does. So what is actually making it clear off the shelves in all of these stores as you're getting all of this distribution? I mean, 25, 30 ,000 points of distribution. That's a huge number. You're all over the place and it's turning in all those places.

5:59So what's making that actually happen? You know, I think the consumer is just getting awareness of the brand because of all the social and the events that we're driving. Like, I wake up every day grateful that Mario Carbone trusted me to take this Carbone brand and take that feeling that you get in a restaurant. It's not just the taste, right? You go to that restaurant, it's kind of timeless. There's a feel, there's a look. Like, you know, I went for lunch yesterday and at 1130 in the morning, there was a line outside for lunch. Like, you know, so there's lines for a couple of different places.

6:29But to see a line for a restaurant that's over 10 years old, and that's anytime you get to Carbone, you get there before opening, there's a line. Mario did something special there. He's also very, very involved in the brand. So this is a modern Schefter and brand. So whatever he's doing to build the Carbone franchise, he's got restaurants. He's opening up in London two weeks, the 15th. So they're opening up in London. But anything he's doing to drive that restaurant does have a halo effect on what we do. And then he brings us opportunities that help drive the brand as well. So like the spicy rigatoni truck that we did at two Post Malone concerts that was bought in by Mario.

7:10Right. Like who gets those type of opportunities? So I wake up every day grateful. And it's those type of opportunities that drive this brand. It's not going to be TV. Like I did a CTV thing a couple of years back and I didn't see awareness growth. Right. I didn't see the growth the way I would have expected. yet I do an event or just like most recently the collaboration we did with Malin gets right I want to say that's gotten a billion impressions in the last couple of weeks okay that makes sense to me as especially now you guys are a bigger brand you've got you know very heavy retail sales overall which means you have probably the budget then to do those kind of events that if you're an early brand listening to this you're like yeah of course I would love to get to do a food truck you know post malone big kind of thing but like i'm years away from having that kind of budget but if you think back then even in the early days though you guys were doing well do you think that was just all about the strength of the brand and immediately doing well just i mean if you taste the product it's amazing people are going to keep buying it but just to really get people to start picking it up off the shelf at first in the early days looking back what do you think was the key there versus what you're doing now you know look it's just a continued push mario and i talk about this and we equate it back to boxing, you got to keep on hitting the body, right?

8:19Like you just got to keep on hitting the body and eventually you'll get them there. So look, the way we started, we did start in the Northeast. And if you look at what's happening in the Northeast now, where we had an awareness, so I was able to build the data story. And I will always tell her, at least startup companies, find a data story. I don't care if it's one store. Get me one store that's got velocity. Don't go out and get a hundred stores that are doing one unit. Get one store that's doing 100, right? And build that data story and then push the hell out of that data story. You know, like if you look at Carbone, it's not just the promotion.

8:51It was getting started in the Northeast. Stop and Shop took a big risk and gave me a shot. And the reason I say that, when I signed my agreement on October 29th, I had a call with them on November 2nd, and they put it in based on a picture because of the background that I had. And like, startup companies may not get that benefit. I did. You know what? And I took it. After 35 years, I should get a benefit every now and again. But we built that data story. And if you look at it now, like there's times where I've been number four in stop and shop, where I've passed some of the major brands. Right now, I'm sitting at number three in whiteness, right?

9:24And I do believe I will go to number two in whiteness. And this is like a crossover conventional supermarket. This is not like, you know, you get a lot of the data stories that come out of natural, right? This is now starting to hit me in mainstream. You know, I've been number two in natural for the last couple years. And my goal is to be number one. And I really wanted to get there this year. We're going to get there next year. Right. You know, but it's like continued pressure at every part of the business. It's not just the PR and the marketing. It's at the shelf, you know, making sure your sales team knows who a receiver is and are getting in stores.

9:56Like we just built a survey. Our person, Rick, who runs grocery for me, built a survey and he's got his team going to X number of stores a month, talking to consumers at shelf, giving our VIP coupons. I do it. I'm in stores all the time. Like that's where everything begins and ends there as my head of sales, Jim Morano. So that's it. It's just pressure on every part of the business you can while you're still trying to work cogs and you're still trying to do all the other type of success. Yeah, that's awesome. And I love the idea of there is a partner on the other side who's building the brand while you're doing all that work as well.

10:29And they are increasing even awareness now of the restaurant, which will have this trickle effect. And yeah, you can't, it's very hard to get a table at carbone, but you can get a jar of carbone sauce at your house. On that note, that is actually exactly what I have in front of me here. So Eric, you were kind enough to send a lovely set of samples here, which I will now pull in front of me. And I noticed you also have some new SKUs. I think the one that I'm most interested in, being somebody who has, I'd say, very nostalgic or kind of basic taste buds is this mac and cheese Alfredo sauce, which I don't know if it's weird, but I'm just going to sit here and keep eating it with a spoon because it just tastes like mac and cheese.

11:09It's so good. Can you like talk me through a tasting of this as you would if I were a high powered buyer? As you taste it, you get that full cheddar taste? Absolutely. And that was the goal, right? So as I looked at it and as we thought through the category, the Alfredo category, I said, okay, what can we do that's different, but that the consumer will immediately get like there's not a lot of thinking here as to what that is. And we have put it out on the shelves and it's going really, really well. Now that's one where when I went to my chefs who are arguably like top Italian chefs in the world, right?

11:44Like I could say that with these guys. They're like mac and cheese Alfredo. Eric, if you want to run that one, that one's on you, right? I mean, figure that out, right? Because that's not something they would develop themselves in in the restaurant. But I wanted to do something to kind of set us apart on that shelf. And this clearly has. What's interesting about it is like, it's too early to tell where it's going to go. I mean, where it is, it's going very, very well. The units per store for a week are old enough, but you know, it's early. So it's only been on the shelf, call it four to six months.

12:14You know, that said, the social that's coming out of that, I can tell the consumers resonate, right? We've had, you know, I won't say who, but we had a celebrity approach this and say, I love the mac and cheese so much. I want to do something forward facing. We can't move on the opportunity, which is why I won't, you know, kind of get into what it was. But like never in my life have I gotten someone reach out to me going, I want to do something forward facing with this mac and cheese. So it seems to be going really, really well, you know, where it is. And it's probably got maybe 10 % distribution compared to say where Marinaro is.

12:47I love it. Eric, I also want to do something forward facing with mac and cheese. It's so good, but I am not a major celebrity unfortunately but it's cool that actually you know i just do it with you there's not you know let's go whatever keeps the samples coming you know but i did actually just post a story on our startup cpg instagram showing all the bottles and it was because of the mac and cheese that made me like oh i gotta show this people need to see this thing it's so cool so i believe that it will be really effective in just some incrementality for the brand also and i've talked to pasta sauce buyers at some of the national retailers that everybody listening to this probably wants to get into.

13:24And it's exactly that that they're saying to me. They're like, yeah, I mean, it's getting to be a crowded space in the pasta sauce world. There are a lot of people who are coming in with really innovative stuff. And when I look at the lineups of stuff, I'm asking myself, what are you doing that's different? You know, are you just throwing another kind of standard marinara or whatever? Are you doing some really interesting innovation? So I feel like that kind of innovation, like the mac and cheese Alfredo that really hits and is delicious and can be a home run with consumers will definitely help get you into even some of the doors you haven't managed to get yet or just lots of additional shelf space and also make consumers really take note who haven't looked at your brand yet.

14:02Yeah, I mean, look, when it comes to innovation, you know, I don't know if the world needs a teriyaki marinara sauce, right? Like, I just don't know if the world really needs it. And at some point there may be an ollie pop or poppy of the pasta sauce category. Who knows? Right. That's not where we're going. That's not who Carbone is. Like, you're not going to see that. So if you see stuff from us, it's going to be kind of like tried and true to a degree. Like mac and cheese is someone everybody knows. I'm not going to go out on a limb and try to create some flavor and hope. Not doing that. Right.

14:33It doesn't make sense to do it for this brand. It's not who this brand is. But I see a lot of innovation coming into the category and I'm happy about it. Right. Because I look at it, that's going to bring in a new consumer. It's going to bring in a younger consumer. That consumer is going to buy XYZ brand, but then they may graduate to my brand because they're premium pasta suppliers. So it used to be Rayo's just pushing on the premium end of the category. Then it was Rayo's and me. Now you've got a lot of people pushing on that premium side of the category and a category that happens to be premiumized.

15:03And at Carbone, like the way I look at it, I'm delivering more growth than the five fastest growing brands behind me, which is pretty good. That's what the buyers want to hear. I know that. So yeah, I mean, you guys have the right to play in that premium segment because of the branding, because of the quality of the product that I think gives you a pretty big advantage over a lot of brands that are probably trying to come in, grow as well. So I mean, I think you guys probably had a little bit of an easier time at it, but then also taking these bets on innovation, but innovation that feels really classic at the same time, that probably means it also has a pretty big addressable market.

15:39So, okay, in my hand, I have one of the more classic flavors, I think, that you guys have. So I have the tomato basil, which I think maybe is my favorite. I always go back and forth on which one it is. But can you talk me through a tasting of it as I have a lovely spoonful? What are you eating again? Did you say you flipped marinara? Is that the tomato basil? Tomato basil. Yeah. So, look, I mean, the difference between our brand and any other brand that's out there. And, Daniel, you're going to see me because of Paris. Like, I'll go there. You may at some point. you're going to see me start pushing on ingredients in a very, very big way.

16:12Because I think it's what sets us apart from anybody else that's out there. So that product that you're eating right now, there's a number 10 can of tomatoes being opened up to make that product. There's 29 to 31 Pilates in each can. High-speed can opener doing it. We're not doing drum tomatoes. If someone gets me a drum without citric acid that tastes as good as a number 10 can, I'm all over it. We're chopping onions right on site. We're mincing garlic right on site, but for our basil, we're hand stripping basil right on site. That's what's going into that product. You know, a couple other people that are doing it in the category, but very, very few.

16:48Like you have the cleanest, closest thing that you're going to get to what you would make at home. That's what it tastes like. It just it's so tomato forward, but in the way that reminds you of eating, you know, actual fresh tomatoes that it's really cool. One thing I really want to do, and I just haven't had the opportunity to do it yet, I want to get a video of Mario cooking his sauce in the Carbone kitchen and then a video of our sauce being made in our production facility. And you are really going to see pretty much the same thing. Like you are going to see my dog behind me is doing a little cameo.

17:23I'm sorry. That's okay. My dog is also next to me and watching me with this tray full of Carbone jars as well. She's really interested in a fed might leave it unattended for a second. This is a really fresh process and it takes over an hour to cook. So like onions are cooked in olive oil for 18 months before you see onions are cooked, you know, for 18 minutes before a tomato hit. And those tomatoes are being opened up in number 10 cans and they're being poured into a very small kettle compared to like a ragu or totally, you know, some of the other what I call process sauces. They have a completely different type of cook process.

18:00so it takes a long time it takes an hour to make this product like yeah and honestly it saves you an hour and a half that's what it does and if you were to go out and buy every ingredient to make your own sauce you're probably pretty close on price this the four cheese one that i'm having now it tastes like if i had really good pasta put the sauce on and put on a bunch of cheese on top of that like i loved having it like when i was that was that was good now when you're eating that right out of the jar, it's probably a little grainy. When you actually cook that down and you add the pasta, you have something really, really special with that sauce.

18:33Just because then the cheese kind of melts and it, you know, melts together, the different, you know, the different types of cheeses that are in there and end up with a really, really special meal that makes you feel like you've cooked for a long, long time to get there. We'll be right back. What's up, friends? Years ago, I opened an account with one of the old banks, but they were stuck in the past. The Online banking was terrible. The customer support was worse, and I basically had to go into an actual bank to deposit any check. It drove me nuts. That's why I'm so excited to tell you about our new partner for business banking, Roe.

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20:19Okay, so I've also, I've got the pizza sauce and then I tried the spicy pieces. Pizza sauce, which is pretty spicy. A little hot, huh? Yeah, it is. It gets you. And then I've got the spicy vodka sauce because my favorite dish at Carbone is the spicy vodka penne, right? Yeah. So we work hard on that, right? And I think, you know, I could probably say we're the first brand to ever say, hey, you got to add your own cream and butter to get there. But it was because we had that recipe in particular that's been written about more than any other recipe in Carbone. it's been tried you know everybody's tried to knock it off like you've got everybody's version online and it's interesting this is kind of what made me do this i put spicy rigatoni in the search engine before i signed my agreement on october 29th of 2020 so five years ago i'm like the first five pages on google were carbone i didn't mention carbone i just wrote spicy rigatoni right you know so they're known for that dish it's photographed so we really had to get as close to that restaurant taste as we possibly could and the only way i could do that it was you got to add your own cream and butter.

21:21Well, that seems fair. And also, I just love that dish. And also, when you go to the restaurant, it definitely does not break the bank to get it also. So you can go and experience the goodness of Carbone. Most importantly, get the focaccia bread as well. And also, it's one of the more affordable dishes. So if you have basic taste buds like me and you're going to Carbone, you're in luck because there are way more expensive things that you could order there. But it's just a simple classic. And yes, I love going there. So back to the business side a little bit now that we've done the full dive into these delicious jars.

21:53So can you tell me a little bit about how you've been scaling the business to keep up with all of the increased demand? So how are you growing your team and your infrastructure to support all the growth? You know, round pegs and round holes is the way I look at it. We're at 35 people. I never wanted to be at 35 people. I like running small, lean teams. That's what I like to do. But having the right people in place and a good mix of someone you know and trust versus new energy that you don't know and trust that's bringing in, you know, you don't know and you don't know them well enough to trust them yet, but you develop that trust, but they bring in different ideas and they bring in a different energy.

22:29So I've got a core team that kind of knows me, knows how to work with me, and they know how to scale, which is important. And then I've got a lot of, you know, other folks that have come in and brought in new ideas and energy and so on and so forth. So the balance is there. We're constantly trialing co-packers. We want to make sure that we have the capacity. We're qualified in multiple places where we have the ability to... We have a primary, but we have secondaries that are qualified. It kind of went down the same rate. We have one with Alfredo and we like them, and I believe that's where we'll stay.

22:59But I will trial a couple of other people in case, because you need some redundancy. You just never know what happens. So staying on top of that is very, very important. For a long time, it was very hard to get ahead of it. Thinking about it now, I got like 10 weeks inventory on the floor. I remember in the beginning where I'd be calling the packer going, I need you to switch from marinara to Arabiata because I'm out of stock on that. And that was every week. The juggle was happening constantly. The juggle's not happening as much anymore. Where it happens is when I get a special order, like a Costco order, for example, and I've got to assemble two packs.

23:32And now all of a sudden I'm taking some line time for a few days. That's where it gets tough and we've got to be really planned. But we seem to be very, very ahead of it from the production and source and standpoint right now. And so as obviously you're not going to be doing all of the hiring by yourself for every role, you know, you're building out teams, but do you have any approach to hiring about like specific qualities that you really like to see and just about anybody or a specific kind of culture you want to build? Or do you really just go with tried and true people that come through your network and you know, they've been crushing this for a long time?

24:06No, no. I love bringing in people. I love hiring gratitude and training skills. I really do. You get the right person and they come in, they bring energy, they bring ideas, they'll make mistakes, who cares? You know what I mean? Like the way it goes. I like energy. I like people who, you know, are focused. And, you know, when you meet someone, you can kind of tell, you know, what kind of energy they're giving off when you're, you know, when you're interviewing them and so on and so forth. And I just like people who are driven is really what it comes down to. And that's important. Like I'm a growth junkie.