Every month, Accountfully interviews a CPG industry pro on our podcast The Month End. Many of our guests are those we have helped with our outsourced accounting services, and others are industry stakeholders and strategic partners that we have met in the industry. The one thing they all have in common is their wealth of real-world knowledge to share. Each thirty minute episode is jam packed with advice, and we encourage you to listen to each episode in full. For those who just need the “bottom line”, we narrow down two key items as takeaways for the listener; one CPG “do”, and one “don’t”.
Volume five guests are some of our more wide-ranging CPG professionals, and the advice does not disappoint. We’ve got gems from founders, beverage company marketeers, resource hub providers, and a grocery store buyer-turned-consultant, all in one spot. Here is your recap of the two most important pieces of advice we get from each episode: one do and one don’t, summing up the most notable aspects of running, starting, and growing an inventory or product based business.
For more context and to experience the full episodes and show notes, visit our podcast page.
Steve is no stranger to the alcoholic beverage world. It is safe to say he is rather adept at creating and promoting unique, high end brands. His company, Tortoise and Volt is a strategic marketing and ventures agency, taking brands and making them into successful enterprises using Steve’s vast and diverse background in the high end beverage space. Here shared his story and methods behind growing and investing in these special brands. Among them are American Liquor, Hercules Mulligan, Bahnbrecher, and more.
In V/C speak, you always talk about risk, and there's three types of risk:
1) concept risk, 2) execution risk, and 3) financing risk. I always believe that the concept of risk is the critical one. The more you can go to town and get your concept right; your packaging, your product, everything that is relative to your proposition, execution, it will take care of itself. You'll attract the talent, and you'll attract the money, and you'll figure it out.
I call Tortoise & Volt, Tortoise & Volt because I think you've got to think slow and act fast. The part you’ve got to think slow on is on that concept. You got to really know--the brand name is critical. What is your differentiation? What's your point of difference? Is your product good? It's got to be amazing to succeed. So that's the “do”. I mean, that to me is huge.
Don't fall in love with your product. Certainly you can be passionate and you can internalize it, but you've got to separate yourself from your product and as a founder, you can't get too attached to it. You have to look at it objectively. That's why it's important to have people telling you another point of view, and just don't get over your skis. Go listen to your consumer, and keep in mind, people are going to tell you what you want to hear. So try and find out what you don't want to hear. Just don't get over your skis too far, especially when it comes to expansion.
Start small, prove the concept, and then expand. Don't try to rule the world.
We're not on Shark Tank. It's not as sexy and as fun as you think it is, especially when you fail. So just be an adult about it, and don't get over your skis. Really just try and go through it sequentially. If you do, that's how the big successes work. I mean, I always look at Tito's, and it's a 30 year overnight success, but what a success.
Jordan Buckner comes from a unique position. He is a successful founder (Forbes 30 under 30) and has experienced the journey of a CPG entrepreneur first-hand. This journey also led him to develop an extensive resource hub called FoodBevy, to help other founders and industry stakeholders find what they need and succeed. He shares the insight gained from both experiences. If you ask us, this is kind of a two-for-one deal!
Definitely go with where the opportunity is, and ride the wave. So what I mean by that is that there are certain consumer trends that are really taking off and growing–a big one is Keto, for the last five years. And really, the core behind that was low carb, low sugar, which has had history and lots of other diets and brands who launched a Keto brand. Even if they were like half in it. They saw like a million dollars in sales in the first year, right? Like the waves were just so big. So definitely move with consumer trends and don't fight against them. Otherwise you’ll have a harder time.
I heard a lot of brands who email buyers 30 times, they have a call and they’re like, "I just can't get the store to take my product”, so they hound them, and eventually the person's like, "okay, fine, like we'll bring you in." It doesn't get easier. It only gets harder. They might get your foot in the door, but they're not going to help you sell your product and it's going to be a detrimental relationship. I have an old boss who once said, "turn up the gain and turn down the pain."
So work with the people who want to work with you, and don't chase those that don't, right? Life is too short. Don't work against people who are only going to bring you down.
Alli Ball is a veteran grocery buyer turned consultant. She helps brands navigate the grocery buyer process using the experience she gained being on the buying side of the process. To sum it all up, she helps get brands on the shelf, so they can fly off. This doesn’t limit brands to physical shelves. She offers insight to position brands properly, whether their goal is to be in a grocery store or on a virtual shelf (or both).
Can I give some tough love? My “do” is that brands need to, or they should take full responsibility for selling off the shelf once they land on those new wholesale accounts.
So I always say that you are the person responsible for getting your product off the retail shelves and into the basket. It is not the store's responsibility to sell your product. It's not the category manager's responsibility to make sure you're fast moving. It's not the stockers or the merchandisers touching your product. It's not even the brokers and distributors who have likely promised the world to these brands, it is on the producer. So the “do” is to take full responsibility for your sales once you're on the shelf.
I have so many don'ts, there's so many don'ts. Don't swing by, don't blind ship samples. And I'm going to reiterate a don't that I touched on earlier.
Do not make the incorrect assumption that the buyer is going to bring in your product line because of your delicious taste, your company values, your mission, or your sustainability. So we have to recognize that the real reason why buyers bring in your product line, and it is to increase sales or margin in the category. So the faster you realize this, the faster you will start to create a pitch that's of any interest to that retail buyer.
Jeremy hopped on board to support the YES Bar cause; a delicious food allergy friendly snack that is as delectable as the not-so-healthy sweet treats out there. His “old school” EBITDA approach is at the forefront of how he likes to manage the business, and he shared some great insight surrounding profitability, how three founders separate their duties for success, and how they tackle supply chain struggles.
I think it's super important as an entrepreneur and an owner of a company to try to do every process that you are going to hire for or invest in, try to do that on your own for a little bit. We may have done that to our detriment for too long in some cases, but I also think it's really valuable.
I've managed 3PLs, I've dipped my toes in Amazon advertising, I've been in the co- manufacturing kitchen. If you can own those pieces of the business, even in the beginning, when you're really lean and you're trying to learn and grow, you're going to be able to identify people that you can either hire or bring in to help in a much better way.
You're going to understand those processes better. Knowing that we've been involved in almost every aspect of our business, I know I'm not an expert at any one of those things. I also feel much more equipped to look at those pieces of the business and bring someone in and know, "this is the strategy". I've been in that position, and I've done some of that stuff.
So try to learn and try to do as much as you can, especially in the beginning, when you have an opportunity to do that before you can bring in more resources.
We've been unconventional when it comes to our growth. It was hard for us to get capital. Banks wouldn't lend to us, because we were too small. We tried to find alternative sources of financing, and we worked with an amazing team over at Circle Up doing some stuff on the credit financing side. They were the first people to do it for us, but we also made some mistakes working with factoring companies, which I want to caution people against. They're good companies, they're good people out there. If it works for you, great. However, that fee structure - that 2%, or 3%, when you amortize it as an APR over an entire year, it's 24%., it's 28%. We needed capital at certain points, so we didn't have a choice, but I would just caution folks to be mindful when it comes to the inventory financing in the factoring and that sort of stuff, because it can get to be expensive.
Miguel and his co founders know real, delicious Mexican food. Coming from an impressive CPG background in marketing, and working with brands like Kind and Cholula, Miguel wanted to fill a need in the market for truly authentic Mexican meal options. He developed Somos and focused on its unique brand and market position, without sacrificing authenticity. He shares his take on the best way to position a brand in the CPG market.
I like to talk to a lot of other founders for my benefit, and this industry is very collaborative. I'm gonna call them the little guys, I might be the smallest one but, let's say it is all the brands under 50 million in sales, we love helping each other out. And the pieces that I can that I have more experience than my fellow founders, which is probably on the marketing and sales and commercial side.
My CPG “do” is separating the decisions of growing the brand and growing the business. Like I see a lot of fellow founders doing a fantastic job growing the brand, being out there spending money in marketing, but then when you look at the business, the business still needs a lot of love in distribution, or needs a lot of love on margin and you cannot do both of them at the same time.
On the other side, I see businesses that are fantastic and have great repeat rates, great margins, great themes, but are not promoting the brand enough. So I think when you give yourself as a founder, or as a CEO your rating, separating it on those two sides, I think, especially in food is super important. The brands that do it great; the Kinds of the world, really separate themselves from the others.
This is probably like, half of the feedback that I give to other founders or other companies that I've invested in is to use the right marketing mix for the distribution that you have. So I see these mistakes done over and over again. We have a tendency to spend a lot of time looking at our competitors. What are our competitors doing? And if they are doing this, if they are doing TV, I should be on TV, if they are on Facebook, I should be on Facebook, if they are doing influencer, I should be doing influencer. To make this very simple, if you're only in 10% of a store, so roughly the universe between mass grocery and natural is 25 to 30,000 stores, if you only have 2,000 stores and doing 10% of distribution, those awareness tactics are not going to work out especially when they are national.
What works great when you have a small distribution? Marketing in the store, building displays, doing sampling, if you have a product of immediate consumption that can be sampled, doing geo targeting, you know around your stores like that is what is going to give you the highest ROI. And I don't know if I did a quick math. I think you know 25% of companies, one out of every four do it right. Understanding that piece. How you should be moving your marketing mix, depending on the distribution that you have.
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Look at all of that insight, and that’s only two questions highlighted from four episodes! Make sure to check out our podcast page and subscribe to your favorite streaming option. We also share each episode on our YouTube page, if video is more your style. If you are a founder or think you might be a good guest, please feel free to reach out to us!