Emerging food and beverage brands care about growth. Knowing this, we set out to find out what it takes to launch a brand from its early stages to national distribution. We recently sat down with Sven Stalley of Critical Mass Group, a food and beverage advisory firm that offers a holistic approach to maximizing a brand’s chance of success in today’s cutthroat marketplace.
Sven’s area of expertise lies in sales and business development. He had a lot to say about what brands should be doing to expand their retail footprint, and why he believes that the coastal United States, and Los Angeles in particular, are the regions that matter most for an emerging brand.
Read on to see what we learned:
What are some of the first steps you take when you partner with a brand?
"First we want to make sure we have all the marketing material, the excel sheets, the POS. Also, we want to make sure they’re set up in a distributor. We work closely with those distributors to get our brands coverage in all the different channels in Los Angeles and the Orange County [California] area - natural channel grocery, food service, college campuses, hospitals; you name it, we’re there. Whoever’s the best fit for our brands, we’re going to be there making sure their customers for those accounts have our brands in their reach."
How do you guys tackle rebranding or repackaging? What’s the research process like? What kind of examples are you looking at from other brands?
"L.A. is the breeding ground for brands, and we bring them to all of our accounts in the Los Angeles and Orange County space, and to all the different channels that are the best fit, and then get feedback from those accounts and provide that to our brands. What are the buyers saying? What are the store managers saying? What kind of velocity are we getting once we’re in those accounts?
After we collect all that data, we’ve got a lot of good research about product development and can determine if they need to go back to the drawing board to change things up, or if everyone loves it, or if we’re getting the typical velocity we’d expect from a successful brand at our accounts.
We get that feedback from a lot of the buyers and that helps us when going back to the drawing board with our client and determining what we need to change. Do we change the packaging? Do we need to change the pricing? Is there the correct promo strategy in place? How frequently are we doing demos for it? Those all come into play."
What kind of retailer feedback do you take into account when considering a brand’s pricing structure?
"It’s so hard to change pricing once you’re already in a lot of accounts; it’s just a mess - packing change, pricing change, all that stuff. That’s why we try to reset the pricing as early as possible, once we’re able to see where the competitors are and how early customers respond to pricing. That way we can position brands strategically from the get-go, so when we hit 'go' on new accounts we’re already implementing everything correctly. That makes pricing structure a large topic when we’re getting brands into a distributor."
How do you determine when, where, and how often to support products at retail?
"We will get updates regularly from the store managers, because we’re doing those regular visits, of how our brands are doing. And when we get feedback, for example, that a certain SKU is doing not so good, we’ll support it with demos, we’ll work on secondary placements, or we might put in POS materials if it’s allowed. Maybe there’s a special promotion that we could collaborate with them on to get their customers more interested in the product and to drive velocity. There are a lot of different variables that you can implement.
Demos can be particularly effective if there’s room in the store, and if it’s a great account. I’m not just talking about key accounts -- we’ll even support independents with demos because they can also have the right customer base and get a lot of traffic into their stores, and therefore justify the investment of demos in their store to drive that velocity."
Are there different types of retailers that are more willing to allow demos or more POS materials to come in? Are there some that are “anti-demo”?
"Yeah, every retailer has a certain look and feel and aesthetic to their store, so some of them have rules and policies of 'no POS.' Others are a little more willing to allow you to go in, but with a certain structure and parameters - perhaps no stickers on the glass coolers, but you they might allow you to install danglers. It varies from account to account, but the larger chains tend to have more strong policies, and the independents are a little more flexible and willing to work with you to drive velocity with your POS."
Are you (the brand/brand advocate) more likely to suggest doing more demos and bringing in more POS, or is it the retailer who makes that suggestion?
"It’s kind of both. When we talk to accounts we’ll have an open discussion with them along the lines of: 'We see that you have these other categories that are really similar to our brand.'
Take Goldthread Tonics for example. Goldthread performs really well in stores where there’s kombucha and cold-pressed juices. It’s not the same subcategory, but it’s the same customer mentality. They’re looking for value, quality, and functionality in their beverages. That’s what Goldthread does, and that’s what kombucha does, and cold-pressed juices. So people who are willing to pay at a higher price point for that may be willing to do the same thing for Goldthread. If we’re in that same area, the customer sees the value and they’re gonna go for it.
Once we see that we’re a good fit for that particular store, we’ll say to the manager or buyer: 'We see that you have the other brands here -- we should be a great fit based on what I already see on your shelf', and the buyer will confirm it. At that point there’s a discussion of what kind of support do you provide.
We’ll come forward and say: 'We definitely offer demos -- if you guys have the space for it and if that’s an option, we’d definitely like to support you with demos.' We employ whatever we can to drive velocity for those accounts that are a good fit for our brands."
When do you guys cut ties with brands? Is there a time when a brand is either too big or too small to continue working with you guys?
"With Goldthread and other brands, as we saturate the market in L.A., O.C., and San Diego, essentially SoCal, and get them into all the distributors, then we simply start to grow up the coast. We go into central California, northern California, San Francisco, up to Portland and Seattle. We launch with a field sales team at each location, setting them up with distributors, and then employing our team at the ground level getting into all the accounts."
What makes L.A. the breeding ground for emerging brands? Why is it unique compared to other regions?
"Because it’s hip, it’s cool, and everyone looks to L.A. as the trendsetter. This is the place where clothing is made, where skateboarding started, and where surfing started. Plus music and acting -- it’s a lifestyle. L.A. is a lifestyle, just like the natural food and beverage space. This is where the consumers, the customer base, the buyer demographic is for natural food and beverage.
Where our office is here in Hermosa Beach, this is the kind of place where the moms wear yoga training gear up and down the streets. People are really mindful of their health and they want to look good, they want feel good. People are looking to L.A. as 'How are they living their lives and how can I follow that same model?' You want to eat healthy, you want to drink healthy, you want to buy those natural products that have the clean ingredient list because you know your body is benefitting from it, and it’ll look good in the process."
We see a huge concentration of CPG brands on the West Coast, but there’s also big concentrations in other “hip” cities like Chicago and New York, where people are also likely to be early adopters of an emerging brand. Why would a brand want to launch in one place versus another?
"I think New York is the other place where people like to launch brands. I feel like we’re either talking to brands that are in New York, or they’re in L.A. The coasts are the trendsetter space. People are more receptive to new products, whereas maybe in the Midwest they’re about established brands that are familiar to them."
What does it take for a brand to reach a point where it’s ready for national distribution, or ready to move “off” the coasts?
"We’ll hit the other major towns that have the right demographic, like Austin, Texas; Denver, Colorado; Chicago, and then just grow outward from there -- essentially hitting all the other younger demographic, trendy towns.
Seattle’s big too. They are kind of the trendsetters for coffee, and from there it’s grown into other categories as well. When I visited, their food, the restaurant scene, was top notch. It’s really innovative and that kinda speaks to the fact that the customers, the demographic there, they welcome new, innovative flavors and products. Not just for dining, but also for brands."
Do you have any other tips for emerging brands? Any “must-dos” or “must-avoids”?
"You want coverage wherever you are. You want to make sure that you have field sales reps that are merchandising and building those relationships with the accounts at the store level. But not only that - it’s knowing which stores your brand should focus on.
As Dan Morad from Critical Mass Group likes to say, and I believe it 100%, 'It’s all about being an inch wide and a mile deep.' So make sure you own it, wherever you are. And that’s what we’re doing for our brands here in Los Angeles and the O.C. We’re making sure we are everywhere, physically, where their ideal customer is going to shop so that they’re just reinforced on a daily basis about our brand. And that helps them, essentially, build brand equity and recognition of the brand, and that’s where it grows. We grow from L.A. to the rest of the coast, then bi-coastal, then the rest is history."
