#252 - The Rise of Laurel's Coffee: Whole Foods, Wegmans & 1,800 Target Stores in Two Years

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1:18what's been so great about our products i think contributed a lot to our retail growth and authorizations has been there's not one thing that resonates so with Whole Foods with Charlie he was super bought into A2 believed it was the way of the future love what we were doing so that's kind of what how he saw things but the Target buyer Allison and her team over there they really like the flavor piece so and now as we think about like our growth at Target what those future SKUs could look like it's largely revolving around flavor which I guess A2 is just kind of a component of our brand, but it's more like what flavors are missing, what are global flavors, what are their buyers coming to stores to see it.

2:01I think it's a very delicate balance between not having something so crazy like a blueberry snickerdoodle and also remaining like on trend and true to our consumer. Hello everyone, welcome to the Startup CPG podcast. Today we are talking to Isabel Washington, a former McKinsey consultant turned founder of Laurel's Coffee, which is an A2 dairy canned latte brand bringing coffee shop flavors like matcha and dirty chai to retail shelves. She launched in August 2024 and already landed major distribution with Whole Foods, Erwan, Wegmans, and has a huge 1 ,800 store target launch coming up this August.

2:41That is such impressive growth. I wanted all of you to hear how she scaled so early and broke into top tier retail. It was so much fun to talk to her. I learned all about A2 Milk. We also chatted about what skills translate from management consulting to CPG. Okay, here we go.

3:02All right, welcome everybody. We have one of my favorites here. We've got Isabel Washington from Laurel's Coffee. And Isabel, I'm jealous of you. Let me tell you why. Because I also ran a beverage brand at some point and I never got into Whole Foods. and you just showed up on the scene and it seemed like you were born right into Whole Foods. I was like, well, what? Jeez, how did you do that? It's amazing. So can you start off with a little bit of intro about yourself and Laurel's Coffee? And then I want to talk about how you managed to do that. Of course. That's too kind. Isabel, of course, founder of Laurel's.

3:37We launched back in August of 2024, which feels like yesterday, but also a thousand years ago. So today you can find us in Erewhon and Bristol Farms and Gelson's and Whole Foods, but it wasn't always that way. So it's been a really great ride. Grew up in L.A., live in L.A., so West Coast through and through. Happy to be here, Daniel. It's funny when you talk about time that way because I'm like August 2024. I think if you're talking about calendar dates, it feels like it wasn't that long ago. But if you're thinking about in the lifetime of an entrepreneur, I have shed my skin so many times since then and re-evolved as new.

4:15I'm like, well, no, that was like 12 lifetimes ago, August 2024. Jeez. Yeah, at least. I was a baby then. Okay. So as a former management consultant, I just love when there are other consultants out there getting it done because I really value a lot of the stuff that I learned in consulting that almost like nothing specific, but also everything at the same time. So I wonder, can you just tell me a little bit about your overall background and especially what have that really maybe prepared you in ways for this journey, even though I don't think anyone's ever fully prepared? Sure. So I went to USC here in LA.

4:57I was a public health major there. I had a thousand great internships everywhere from Amazon Pharmacy back when it was called that to work in hospitals. Really love the public health system. And honestly, I kind of think that's where better for you overlaps. I'm a big believer in the dose makes the poison and that people should be more knowledgeable about what they consume. But you can have a little sugar here and a little fat here and a little seed oil here. And it's more about moderation. So they proponent of that, really got that for my education. And then I joined McKinsey out of undergrad.

5:32A ton of consultants randomly are now in the CPG space. So it's kind of funny to see how that's, I guess, a pipeline now. but worked with a lot of really great consumer brands, large ones like Gatorade and Barry's Bootcamp and a lot of really Lululemon launching their sneakers. So a lot of really fun consumer brands there. Got to see how these big billion dollar conglomerates think about consumer and obsess over details and consumer journey and how that's even relevant in the stages when you're doing 10 grand a month in revenue. Okay, but I'd love to just talk a little bit more about management consulting and the skillset that comes from it.

6:07Because I think about it all the time where, okay, for me, gosh, I got put through the ringer. I did three years in management consulting. This was post MBA. And I came in so green. I didn't really know about anything. I didn't speak business at that point. But first, you just put in a lot of hours, right? And you're working on big problems. There's high pressure. And everybody who is directing you has done this stuff before. But I would just call, like, let's say the pace of work is very fast. and that's something that you really get comfortable with is just being able to like, you don't have the luxury of, I think in some jobs that I've had before of like, oh, you get given a big task, like, oh, okay, I'm gonna like think about it for a while.

6:47And then I could like maybe put it off and do some other stuff and go for a walk and think about it like, no, no, I need this in an hour. You need to just sit and do it. And like, oh, you don't know how to do it? Well, call someone and ask them how to do it and then do it. So I think also the resourcefulness that you really are forced into too, because you might get put on a project. I remember getting put on a telecom project and they're like, just so you know, I told them you had five years of telecom background. And I was like, cool, I see there's a telecom for dummies book on your shelf. Could I borrow that, please?

7:19And then sure enough, you're like on the project, but you just work so hard and you call every expert at the company that you really get pretty dangerous on that topic very quickly. So So yeah, like pace of work and urgency about stuff, resourcefulness. And I think overall, what that kind of stuff did to me is it actually, for better or worse, makes me feel like I can learn and do almost anything, even like maybe to a fault. I'm like, yeah, you like, are we down a chef? I'll get in there. I'll do it. I'll chef some stuff up. Like, well, what do you need from me? I can learn it. But I think especially in this CPG world and to be a founder, I think it's a really good kind of discipline to come with because, oh, there's a lot of stuff in there.

7:57like you don't know it's your first time through you have to learn so much and problem solve I mean you come from one of the best reputation firms out there obviously was that kind of like your experience or other skills that you feel like you really brought along with you I know McKinsey also is maybe like a lot more strategy than maybe the stuff that I was doing so did that help you design the strategy yeah I think that you articulated it perfectly better than I could have I think something and every time anyone asks me because you know something I don't talk about a lot is we went from idea.

8:28I left McKinsey in February of 2024 and we launched in August of 2024. So there's plenty of people who will spin their wheels on brands for two years. You see it on LinkedIn all the time. Like I've been developing this for six years and the longest amount of time. And I think for that, in my first probably six or eight weeks when I had left McKinsey, I spent 40 hours a week on calls talking to anyone that would talk to me. I mean, listening to this podcast, not even to kid you, listening to this podcast, reaching out to people on LinkedIn, emailing them, food scientists, coffee houses, like the leisure guys, anyone who would get time with me.

9:03And I think that is such a consulting trait. And I think that where a lot of people and the ability to make decisions quickly. I'm sure there's plenty of times where you were like, this is not my best work, but the client meetings in 20 minutes, and this is just what the client's going to get. Like sometimes you just have to put things forward and iterate, get feedback, constantly learning. Even to your point, we were talking about like formulation issues earlier, like the product just has to be iterative. Nothing's ever going to be perfect. You're going to change food scientists. Like I think that's just so much of a consultant perspective.

9:37That and the ability to email quickly. Even you and I will email multiple emails a day within the hour. It's crazy how long so many people can take to get back to you. Days, if not weeks. So I think there is a speed component there as well. It's so funny because I remember when I was in that time of life, maybe you'd work with a client or something and they'd be really proud of themselves. They're like, I actually make it a policy to get back to every single person within 24 hours. You're like, 24 hours? My whole life has changed in 24 hours. I'm like on to the next project. Yeah, I need to know right now.

10:10Like, what's going on? Just tell me. Yeah, it's a funny thing that's kind of hard to explain to people outside of consulting. but it's just that pressure is very real because if they've hired you it's because the stakes are high and their expectations are high and then the people who are managing you on projects their expectations are very high because they're just like well i did that when i was but your position you're gonna work very hard on this right now and like what do you mean weekend like what's a weekend no just work on this it's so funny i like i had no ability to set boundaries at that time and like i don't know i'm going like camping this weekend i really can't work like sorry like you'd have to have something where you actually could not be connected to internet.

10:48Like, I probably went sailing a bunch of times. I've never been sailing my life. But like, you know, that's like the only way you could defend not working on a proposal all weekend, even if you're not on a project. So anyways, I like commiserating with my former management consulting comrades. So I think that's really cool context, because you didn't spend all of that stealth mode time that a lot of people do. You just decided, I guess that you were going to do this and then went about being your resourceful, high pace of work management consultant self and then came out to market with something that really hit very quickly.

11:21So do you feel like it was a lot of that background that helped you just settle on something that was good right out of the gate? How did you get to this idea and the key ingredients in the branding so quickly and effectively? Yeah, I think another consulting term is work streams, where all of the things are moving. You're working on multiple things at once instead of like, I think I meet a lot of entrepreneurs all the time who are like, okay, so first I'm going to work on my idea for six months. And then I'm going to work on my formulation for six months. And then I'm going to do this the next and all of a sudden they're 24 months down and still don't have a product in retail.

11:57So I think it was like, okay, you know, at 12 o 'clock, I'm with my food scientist at 1230s, the branding, like it's really just working on all of these things. Again, understanding that they all connect, like you're not going to have your finished nutrition panels until you have your finished formulation. but you can have an idea and start working especially recognizing that everything's not going to move as fast as you want to and that designers might take a week or two weeks to get back to you on a new concept everything moving quickly at once but i do think that a lot of it was how can i not overthink this how can i get a v1 like again back to consulting like the first version of this deck at least an outline and look for us it was going into air one pretty much like I think we're on shelf three weeks after our first production run.

12:40So getting into Erwan and then thinking about it, spending a lot of time. I did like 50 demos in 40 days or something like that, getting feedback from all those people who would talk to me and then taking those learnings into our V2 of a product. And we launched a new package design in January and constantly iterating to where we are now. And we're probably on V100 of the product, frankly, and there's probably a thousand more to go. I like that. the idea about the work streams and like pushing project plans resonates a lot with me also when i first was getting more into operator roles and cpg i remember looking at a project plan with an ops team and i'm like how come you can't just start these four things already like you don't have that info but you're not going to have it for all can't we just like start this and start that and like really pushing them and i felt like it was the management consulting pressure of stuff that would like make me push them and ops people they will let you do that like they're like yes that makes sense you can do that also but ops people they don't always like try to offer up the very pressurized timeline that you would like for them to have and so just like it helps you i think really like i don't know troubleshoot a lot of project plans that don't necessarily have the overlapping work streams that you and i like so okay i am a very lucky boy because in front of me here, I have a lovely lineup of Laurel's products.

14:00So can you maybe as I'm enjoying a sip here, could you just describe what I'm tasting for people out there? And I'm starting with the Laurel's A2 Dairy Classic Latte. Yes. So we have three products all are made with A2 dairy, gut friendly form of dairy. So it's actually the bulk of our formulations, about 50 % milk in that. So very similar, actually, kind of to what a latte would be. In the classic, we have some vanilla extracts, organic cane sugar, no artificial sweeteners or anything like that. So really trying to keep it close to what you would actually get at a coffee shop if you went to one, which is milk, sugar and vanilla extracts.

14:41So I'm not a milk expert, but yes, like when I taste it, it tastes quite milky. It tastes like very high quality milk to me. And obviously I taste the coffee in there as well. For me, it's like pretty smooth, I would say. I mean, I'm just looking then at the nutritional label. Like it's not overly sweet. Like I think some of the canned or bottled lattes can be. Like I know, I feel like there's a safe space for me to admit. As a teenager, I was really into those Starbucks bottled Frappuccinos. I think they might have 30 plus grams of sugar in, right? Like maybe it's like a 10 ounce bottle or something like that.

15:26I mean, they're like crack. They're good because I think it's just like, okay, yeah, it's just like a lot of sugar. You put that much sugar in anything, it's going to be pretty good. Like, so I think, okay, I'm looking at your label. I see a lot less. So I think it's like five grams of added sugar. Yeah, total of 10. But it just tastes very, it's like creamy and high quality. And it's sweet in a way you can enjoy, but not regret. Yeah, I mean, I think a lot of coffee companies try to add a bunch of sugar to cancel out the acidity of coffee. And obviously acidity oftentimes correlates with the quality of coffee.

16:04It also goes back to cogs at the end of the day. But those other processing agents, of course, using full fat milk kind of helps add the natural sweetness, especially as it's heated through the process to bring out a little bit more of that caramelization. But I do think overall it's a pretty, I mean, biased, of course, but it was formulated to feel very balanced and you're not getting too much of any one thing. And can you tell me a little bit about A2 milk? I did not know a lot about it before, except that I think it was just always supposed to be one of the highest quality milks. Like when I worked in global chocolate, I was working a lot in China.

16:40and there were just a lot of stories about how receptive the Chinese market was to A2 milk coming in from, I think, New Zealand. Just because it was so high quality and everybody really trusted it and it was a huge thing. And now I think more because I learned about it through you using it and stuff, I just now understand people look at it as being easier on the gut, I think, than some other kinds of milk. But can you just give me the A2 overview? Yes. So A2 refers to a specific beta casein protein. So all mammals are A2 animals, including humans. It's why we can breastfeed. Sometimes people who can't drink like traditional dairy in the way can drink sheep's milk or goat's milk.

17:23It's because those are also A2 animals. So it really refers to a specific protein that our bodies can't break down, which is called an A1 protein. Most traditional blends of dairy, you know, if you buy from Horizon or Clover Sonoma or any of those, those will be blends of A1 and A2. So a lot of people who think they're actually lactose intolerant are actually what's called like A1 sensitive. They can actually find comfort a lot of times in drinking A2 milk. How would you know that about yourself? Like, first of all, I find it kind of amazing when people even figure out that they're allergic to something.

17:56I would just be like, I don't know, my stomach hurts a lot. Like you don't have an internal chat GPT to correlate all the things that you ingest and when you feel bad. Right. And I don't know, maybe a doctor can figure it out. But that's kind of amazing. Like how would somebody figure out that they are A1 sensitive, but A2 is OK? Yeah. I mean, no one ever goes like people call themselves lactose intolerant, but no one ever goes to a doctor actually gets a test. Like I think people are just like, oh, you know, I eat ice cream. My tummy hurts or I get gas after eating pizza or something like that.

18:27By the way, I'm really worried that the answer here is that an influencer told me, but I think it actually might be true. Like I heard about it from an influencer. It could be. I'll usually tell people outside of the context of Laurels, like just go. You can buy really small like eight ounce cartons of A2 milk at the store for three or four dollars. I usually tell people to just give it a try. I mean, there's so many A2 products on the market. And of course, like people are already eating ice cream. They're already eating pizza. Like instead of eating Ben and Jerry's, like just go buy Alex and see if it hurts your stomach after.

18:58Instead of drinking La Cologne, buy Laurels. Like see if it hurts your stomach after. So I think there are a variety of products in the marketplace that people can try. I'm imagining an event series that you could curate that would be somewhat similar to when people go on ayahuasca retreats and then they're in a circle. And I've never done it, honestly. But from what I hear, you get administered the ayahuasca and then a little time passes. And then absolutely everybody has a lot of stomach issues. and then okay there's an experience so i feel like you could just do that though with the a2 just like okay i'm gonna be your shaman they're like brand trips to help you find out if this is actually just an a water a2 thing some maybe some similar effects yeah our new influencer event we'll have to see all right i'll sign up i think i'm good with most of it but this does feel pretty good going down okay and then i'm gonna continue my laurels journey because i have two other lovely cans here.

19:53So I've got in front of me dirty chai, which feels like giving myself permission to do something kind of fun and dangerous. It's dirty chai. All right, let's go. Can you tell me about this flavor and why you decided to launch it? I know it's a pretty popular one for you. Yeah, it's our best seller at Whole Foods by like one and a half and two X in some regions. So it's not my favorite. If it were honestly up to me, I would have killed it. So I'm glad that it lived to see another day. Why do you think it's so popular for Whole Foods? Do you think some people are choosing your brand based off that flavor or do they like laurels and then they end up coalescing around that flavor?

20:30Yeah, I think it's the flavor piece because I think if you really look at the category at Whole Foods, you only have the two SKUs. We have classic and dirty chai. So if you're looking for a vanilla type flavor, there's La Cologne, there's Pop-In Bottle, there's Starbucks, but dirty chai is the only one on shelf. It's a flavor profile, familiar enough to people. Maybe it's their favorite drink. Maybe they've seen it at a brick and mortar coffee shop, but they've never seen it on shelf. So it's familiar enough to spark curiosity. It's$3.99. You can pick it up. It's not a huge financial commitment.

21:01And I think that's really what's driving a lot. I mean, it is. It's what's driving a lot of our sales. It's pretty interesting to me to think about that because, okay, I worked at a company that had cookie dough that was in the fridge. And the number one flavor for you is going to be chocolate the chip that's just what happens in that category and then you talk to the chefs of the company and there are a million things that they could make that just maybe aren't going to get picked up and like okay we also had a bunch of different kinds of mayo and dressing really obscure incredible flavors that unfortunately there's just not much of a market for if this were on amazon we'd be talking about search frequency right it's just sometimes people are just like yeah like okay hey, that like awesome sauce flavor that you have, what's up, whatever, is just like, yeah, it might be your chef's favorite, but actually no one's going to pick that up off shelf.

21:51They're not looking for it. Whereas for you, it seems like it wasn't necessarily the best move for you just to go after the most classic flavor profiles. It's actually having something that's differentiated that is bringing you a lot of interesting customers and probably a lot of incremental sales to the set as well. If I'm the buyer looking at that, I'm like, yeah, I need this product on here because there are a lot of people. if I don't have this dirty chai flavor, they're going to a different set, maybe. Yeah. I mean, it's the Koya playbook, right? Like I feel like a lot of people, even if you look at that set to kind of draw parallels, protein, overwhelmingly, mocha, vanilla.

22:28I think they're really the first ones in the beverage set. I mean, outside of like soda, obviously, but I guess in the more like milky beverage to really innovate on flavor. And I don't have their sales data, but they do have the cookies and cream. They have matcha. They have all of these flavors. that I think brings in a consumer who doesn't resonate with the mochas and the salted caramels. Even in the coffee set, the innovation you're seeing with protein and Lion's Mane, like it's still the same kind of flavor variation. And I think that that does resonate. The Starbucks mocha frappuccino is still like number one in the entire world.

23:02But when you're thinking about what the next kind of wave of coffee drinkers are, people who are driving that innovation at the brick and mortar, it is the younger Gen Z female who's ordering like these crazy experiential drinks in the brick and mortar space, but they're not seeing any of that innovation they get to shelf. So that's my big bet. All right. Okay. So now I've moved to the matcha latte, which is this lovely kind of mint color, which honestly, I'm not a matcha drinker, but this is nice and smooth. Educate me a little bit, please, on the taste profile for a product like this. Like the, again, I don't drink a lot of matcha on its own but when i drink this maybe the way it's combined with the a2 dairy like i sort of get a little notes of like mint but i don't know if that's just because i'm looking at the color a little bit of grassiness as well but just yeah still like overwhelmingly smooth yeah so what's interesting about matcha i mean it's a very complex plant every like it'd be very similar to coffee and honestly probably very similar to yerba mate is how the light changes where it's grown the soil It just brings in so many different complexities.

24:09So something else that's interesting and unique about Matcha RTDs specifically is that, and this is back to the iteration piece, is that ours doesn't have any green tea in it. If you look at Pop and Bottles, any of the other ones on shelf, they do because it gives it kind of a more balanced flavor. But I do think that there is something to be said. I mean, our Matcha SKU has so much Matcha in it. So you are going to get a lot of that grassiness. If you're used to a coffee shop, matcha, it's going to be way less sweet. So we're actually right now thinking about how we can kind of formulate it to be something that people are a little more familiar with on shelf.

24:43It's pretty good. I don't know. It's my favorite. I love how light it is. It's really, really light. Tastes pretty good to me. I don't even really like matcha. And I'm like, I can't put this thing down. Yeah, maybe just for some reason, I do pick up kind of a little bit of like almost like mint chocolate chip from it with the creaminess of it. Interesting. I'm just like, this is delicious. Nice job. So when you talk to your friends now from the consulting world and they find out what you're up to, they're like, whoa, that sounds hard. What's that like? What do you tell them about it? Like, what are the things that you've learned so far at this point in the journey that someone might not expect?

25:18Well, they're all in business school, so they're probably having way more fun. They're probably not jealous of me at all, actually. But I do think I could probably never go back to a corporate job. And a lot of my friends who are at McKinsey and didn't go the business school route are looking for startups. It's just so tactical, which I think you can also probably appreciate in the way that, I mean, you're physically holding something. You can go to the store and see it on shelf. You can send it to your friends and they can experience it. That's very different. But there's way less thought that has to go into like, how does this actually matter?