BRAND SECRETS AND STRATEGIES

PODCAST #52

Hello and thank you for joining us today. This is the Brand Secrets and Strategies Podcast #52

Welcome to the Brand Secrets and Strategies podcast where the focus is on empowering brands and raising the bar.

I’m your host Dan Lohman. This weekly show is dedicated to getting your brand on the shelf and keeping it there.

Get ready to learn actionable insights and strategic solutions to grow your brand and save you valuable time and money.

LETS ROLL UP OUR SLEEVES AND GET STARTED!

Dan: Welcome. Today's story is from an industry thought leader that says that usage occasion disruption is one of the most important things that every brand should be focused on. He shares that the most effective way to do this is through storytelling. Jon Sebastiani is a master storyteller. So what do I mean about that, and why is this important?

Jon grew up in the wine business, and in the wine business, people learn how to tell stories about how the grapes are unique to the climate, to the ground. They talk about the importance of a vintage and why that vintage is unique or different from any other vintage out there. They tell stories to help us identify with the products, stories that help us fall in love with a product before we've even tasted it.

Think about it. What's the difference between a $2 and a $2,000 bottle of wine? Why would anyone pay so much for a bottle of wine? It's the anticipation. It's the theater. It's the story behind the bottle of wine. Jon used these strategies to create a disruptive brand, to re-create a category. His message wasn't focused on, well, this is a blue box or this is a green box or this is something unique. Instead, he built a story around why his product was so unique, why this is something everyone had to taste, everyone had to try.

Jon's ability to effectively tell a story that was crafted in the uniqueness of the product, again, the usage disruptive occasion, that helped consumers identify with the product that brought new consumers into this category. Today, Jon shares his story with us and, more importantly, how he uses these strategies today with the new brands that he's created as well as the brands that he's invested in. I've listened to Jon speak on stage a few times and I've had the privilege of meeting him in person this year as a mentor for the Expo Pitch Slam. Jon was a judge.

He's even more inspirational in person. You're going to love this podcast. I invited Jon to be a guest today to share with you how he uses romance to effectively tell a story, how he uses his story to change the way people talk about food, think about it. You've heard the story "You need to sell the sizzle, not the steak." This is the strategy I talk about a lot. Brands need to have an effective selling story. They need to be more than just a package on the shelf. They need to help retailers grow sustainable category sales by leveraging their product.

This is how a brand becomes more than just an ATM machine. This is how a brand stands out on a crowded shelf. This is how a brand gets their product on more retailers' shelves and into the hands of more shoppers. Here's Jon. Jon, I really appreciate you coming on today. Could we start out by you telling us a little bit about yourself and your journey to becoming an entrepreneur?

Jon: Absolutely. First, the pleasure is mine. Thank you very much for having me. I've had this amazing journey. I'm sure in our conversation today, we're going to touch on all kinds of different pieces of my food and beverage journey, but I was actually born into an entrepreneurial family, and my great-grandfather, [Samuel Sebastiani, actually was the family's first entrepreneur and learned to make wine in Tuscany, Italy, and over the years in Tuscany earned enough money making wine for the monks there at this monastery to actually come to the United States.

He made his way to Sonoma Valley, where I am now, through New York and San Francisco and ultimately found Sonoma Valley because he was transporting cobblestones down to the first streets of San Francisco. But the weather patterns of our beautiful valley here, really reminded him of Tuscany, and so he followed back to his love of growing grapes and making wine and ultimately started planting grapes with some of his proceeds, and thereafter founded Sebastiani Vineyards.

So we're in this bucolic community here of Napa and Sonoma where it's really the epicenter of the wine-growing region for the United States. I'm very honored to be a small part of that, the history of this community of agricultural entrepreneurship. Beyond just wine in the Sonoma Valley are some of the best restaurants, Thomas Keller, Michael Chiarello. We have some of the best spas where mud baths were launched and just this very culinary-forward community.

I can go on and on about wine, but the transition for me took place in 2005. And much like what we sometimes see on television, Italian families and family business can have lots of drama. My family was not immune to that at all, and through a series of events, basically, between 2001 and 2005, the lion's share of my family's wineries were sold. They were sold because of just intergenerational challenges and just an asset being really too big to figure out a longevity plan.

It was a day of mixed emotion. I was about 35 at the time. I literally invested my career. I was working at the winery since I was nine years old, through college, after college, and really had that moment of, well, what's next for me? I could share with you that the wine business was not my first thought, even though that was part of my blood and had been my background. I'd come to realize that the wine business really was so crowded and had become a lifestyle business, and began to explore the world of food.

My mom was a chef. My mom has written a cookbook, so I've been comfortable in the kitchen since I was a kid. As I explored food, I had this sort of ... moment where the worlds came together. I was training for the New York City Marathon. I was eating lots of beef jerky because it's just nature's best form of protein. It's been a food product since the caveman. This is a product that doesn't need to be educated. But in my mind, there was a disconnect between what was commercially available in the marketplace and why I was eating that product, because I was eating that product for health and fitness reasons to get my body fat down as low as possible for this marathon and reduce as much carbohydrates and sugar as I could from my diet.

I chose jerky because this artisanal jerky manufacturer here in Sonoma made it the right way, but what was commercially available was not that. What was commercially available was full of sodium nitrates and corn syrup and artificial ingredients and so forth. So the big epiphany for me was going from that highbrow world of wine into the lowbrow world of jerky. Many of the people in my community literally thought I'd lost my mind, because how do you go from cabernet sauvignon to turkey jerky?

But my thesis was I had a vocabulary based on my career in the wine business which talked about flavors, which talked about storytelling, which talked about traceability and sourcing. When you think about wine, so much of the romance goes all the way back to the particular vineyard or the vintage year and any nuances that were unique to that vintage year that told the story. So it was pretty easy for me coming into the jerky category to change the conversation and create a little bit more glamour, a little bit more sophistication on this very tired, very stale product category.

The question that I had was, did the consumer even care? Did the consumer even care, because this product was so ingrained in the consumer's mind that it was a gas-station gut stuffer?

Dan: True, sadly.

Jon: I deployed some basic tactics, which is a lean launchpad approach, which is developing a hypothesis. We created a brand. We created a series. We created five flavors, launched it in about 50 stores in the San Francisco Bay Area, and what resulted was what every entrepreneur looks for, which is, how do I trigger a trial? What do I have do to get a consumer to try my product? Obviously, a demo can be a great vehicle to get that done. Sometimes you can get your product in a unique display in the store or you can have the employees of the store all try it so they can recommend it.

But I started very small, trying to understand how do I get consumers to try my product, but more importantly, if and when they did try it, would they buy it and repeat buy it? That basic approach is what triggered the Krave explosion because from day one, what I simply couldn't wrap my arms around was there was a pent-up incredible demand for jerky, but people just couldn't find quality stuff. It was the same experience that I had. They just couldn't find a quality, trusted, transparent manufacturer that gave a clean ingredient to the consumer.

So when Krave showed up, year one we did $300,000, but we grew triple-digit year over year all the way until we sold to Hershey and really helped lead this jerky renaissance in the American marketplace.

Dan: I love the fact that you're sharing that because I used to be an extreme athlete myself. I used to do a lot of races and especially 10Ks, trail running, and cycling. To your point, there was nothing worthwhile in terms of the jerky market. I remember I used to really like it, but then I hated that synthetic flavorin. It wasn't authentic, and at the same time, I was really concerned about putting, like you said, all those nitrates into my body.

One of the things that I love that you really touched on is the storytelling. I think that's so important because every entrepreneur has a story, and for you to be able to take what you learned in the wine business and be able to utilize that or leverage that in another business, I think, is really unique. I'd like to spend some time talking about that. Where I'm going with this is, just like you said, talking about the vintages and what's unique from year after year, and then comparing that to food and understanding what's unique about maybe a slightly different spice or maybe the way the product was put together.

Can you share more about that and how that resonated with your end consumer?

Jon: Yeah. I feel like what's happening in all the food and beverage is the overall consumer is wanting to be entertained.

Dan: Agreed.

Jon: Entertainment can come in all kinds of shapes and forms. Entertainment can be specifically drawn from functionality. Coffee obviously is a great example of that. We are entertained by our high-quality coffee, but functionally, most of us need it every single day. Wine, of course, I believe epitomizes that intersection of functionality and storytelling because there is such a wide swathe of what the consumer deems is premium.

If you just think about this category for a second, on the one hand, you can have a bottle of wine from Central California for maybe $2, 2-buck chuck if you ever call that wine from Trader Joe's, or 100 miles north in Napa Valley, you could pay $1,200 for a bottle. So just from a premiumization standpoint, the consumer is prepared to spend an incredibly diverse amount of money for a bottle of wine, and some of the best brands have mastered their ability to tell a very intellectual story.

Sometimes, the story is based on factual transparency on how the product is made, and some of it is just pure romance. I think the wine industry for me was just this incredible PhD. It literally gave me a language that we were forced to speak in order to differentiate ourselves from each other. So when I entered the jerky space, absolutely, it was like shooting fish in a barrel. We launched basil-citrus turkey jerky and we talked about the flavors, and we talked about where we got the turkey breast, and we talked about that we were actually using a turkey breast.

Imagine that we actually were just saying, "We're really using turkey breast. We're not blending the meat scraps from a slaughterhouse to make jerky," which was what our competition was largely doing, and to get into the traceability of the actual meat and then the ingredients and where they were from and having it tie back to wine country. We even designed a line of flavors for Whole Foods nationally where we did intersect ... We brought wine back in the jerky and we had a cabernet sauvignon rosemary beef jerky, and we had a chardonnay thyme, T-H-Y-M-E, chardonnay-thyme turkey jerky.

So we really brought flavor back to jerky which jerky never had before. But it was like the tale of two worlds for me because one was in its infancy, which is jerky, and then the wine business being fully blown in terms of romance.

Dan: This is exactly why I wanted to talk to you, the idea being that we are continually bombarded by so-called experts, saying price is the only thing that motivates a consumer at shelf. I hate that because that is the direct antithesis of what we're about, point being is that natural organic consumers want traceability. They want products they can know, like, and trust. They are going to read beyond the four corners of the package, and to be able to tell a story like that ..A little bit of a segway: decadent and luxury products are always growing in terms of price. They're always growing in terms of sales volume and velocity, like you said with the wine.

To be able to tell a story that is similar to, like you said, a $1,200 bottle of wine, why this particular jerky is better than the other brands on the shelf, I think that's where a lot of entrepreneurs really need to focus on. It's about your story. It's about your authenticity. It's about where you came from. It's about what makes you different. Can you share more about that and maybe some anecdotes that you have in terms of stories people shared with you, why they loved your product and why it resonated with them?

Jon: Sure. A couple questions in there. In a storytelling, you're absolutely right. There's a lot of different tentacles that create a unique story. It's pure serendipity when you get it right. There's no formula. There's no architectural framework that you can just apply. But it's not just traceability of your ingredients. It's not just the mission that your brand represents. It's not just the founder's story. It's all of it.

As you know, you can have a fabulous story with a fabulous founder relationship to the product, but if you're a third mover into a trend, your story's already a bit stale. So one of the things that made Krave different ... And, again, obviously, addressing my personal relationship to wine gave me a little bit of a head start. But we attacked basic elements of the product that ordinarily people felt represented the category. So, again, in today's market, the jerky space is much more mature, but when I started Krave back in 2010, 90 percent of jerky was as hard as a piece of cardboard.

By just changing the texture to creating an easier bite and a better chew, which is nothing more than doctoring up the manufacturing process by leaving the marinade in the product a little bit more, completely changed the conversation from women's association to the product because women had a constraint. Their constraint was they didn't want to tear their teeth off by biting into a stale piece of jerky and then spending the rest of their afternoon with a toothpick.

So by making it moist by an easier chew and by focusing on the health elements, suddenly, 50 percent of the population, the females, started to consume our product. I think the colors, when you look at just packaging ... Again, blindingly obvious pieces, but when you've done it masterfully, you know it, and when you haven't, you also know it. I think at this stage of the renaissance of the jerky space, we were first to market in launching colors that invited the female consumer and that definitely were introducing a new way of talking about jerky with pastel yellows and baby blues and so forth.

Dan: It was very inviting, and I think it goes back to what we were talking about in terms of it's your feet and your lips are moving in the same direction. What I mean by that is a lot of companies rely upon ad copy to try to sell their product, and here you are saying no. Like you said earlier, in terms of the demo and getting people to trigger a trial and then come back and buy again and again. At the end of the day, that's the success of any brand.

Getting someone to try something once is difficult, but nowhere near as difficult as getting them to come back again and again and become a loyal evangelist for your product. That's one of the things that really inspired me to want to speak to you, is because the people that like Krave jerky don't just like it; they love it. They look at you as being the solution not only because it's nutritional but because it's fun and because it's food that they can trust. And then, to your point, the story that goes along with it is both inspiring and inviting. So how did you leverage that at retail?

Jon: You're right. I think having a real good understanding of that consumer's relationship to the product .. In today's marketplace, consumer evangelist is a great buzzword that we all talk about, but when we think about building a business, a capital-efficient business, we both know that driving consumer trial on a one-on-one demo standpoint is just not scalable.

So you'll run out of money at some point. You simply rely on your own consumers to be your best ambassadors. We're absolutely looking for that first and second interaction with the product and really understanding what they're substituting it by or with. Our whole thesis when we approached the jerky category was I didn't want to be even in the same sentence as Jack Link's or Oberto or Slim Jim.

Our conversation was about reintroducing this product into the same sentence as Chobani greek yogurt or a Cliff bar. That was our mantra back in 2010. I think when people began to associate the product itself alongside a Cliff bar or a KIND bar as a very convenient, portable way to get protein in your body, it completely changed the perception of the product. I was able to work with retailers to expand. Many retailers, especially on the East Coast, didn't even have a meat snack set because meat snacks were primarily in the convenience channel.

So in the early days, I had to help build the set at retail, and in order to do that, we kind of had to lead the horse to the water. We had to prove to these major retailers that people did buy jerky and it was now viewed as a healthy snack.. We were only able to efficiently accomplish that because once a consumer came into the brand franchise, we could track that consumer that they would go and tell three or four or five people. So that more geometric growth was enabled based on the core love of a product.

All of us in this incredibly emerging and changing and exploding food-and-beverage space, we know it when we love something. I'm not quite sure what's your favorite go-to, but like Spindrift sparkling water right now for me, I probably have seven a day. And so when we think as entrepreneurs about building tomorrow's brands, I always try to think about, how am I going to build a product that's both innovative and culturally relevant but also not a boutique little once-every-couple-of-months type business?

I want the products that we build, that we invest in, that we create, to be brands and products that are a part of a consumer's life every day. I think that's what we did at Krave, is we were able to re-engineer the conversation around jerky and the health halo above it, and suddenly that was now a meal. It was a snack. It was breakfast. It was lunch. It was training for your next marathon or Iron Man or weight loss.

We were at the forefront of brand partnerships, and so on the one hand we had Jillian Michaels, who is all about weight loss and fitness, and she was our brand spokesperson for Krave. She was a female and she was very forward-thinking and just invited in the whole female audience of "I'm looking for snacks because I'm hungry during the day, but I want to lose weight." And jerky became that substitute snack. We had athletes like Vernon Davis and Meg Kavlezigi that were literally training on Krave.

We became the official snack of the USC Trojans and the Alabama Crimson Tide and San Jose Sharks, and just really understood that the brand and the product had to have relevancy and had to be aspirational. So if we could both deliver an enjoyable eating experience at an affordable price but also create an aspirational element to the brand that people felt like it was helping them get somewhere that they wanted to get to, that the brand loyalty would be so sticky and that we could scale it.

Dan: Makes all the sense in the world. Let me say that one of the things that I think we're talking about here ... We're at the intersection where food is changing. Consumers are changing the way that they look at food. It is no longer something that you go buy whatever's cheaper. It's about buying the food that nourishes your body. It's about the community. It's about the relationship that you have with food. And so, to your point, being able to leverage it for health, for being able to extend your ability as an athlete, that's one of the things that I struggled back when I used to go for long bike rides every day and do a lot of running, and there really wasn't anything.

Peanut butter was a pain in the butt. Well now, Justin put it in a package. That makes it great. But the only thing that was out there was that syrupy, sweet stuff that really gave you a quick high, but then you crashed. So one of the things I love about jerky is that it gives you consistent fuel for the long haul. So can you share other stories about that, about how not only do you transform the industry, transform the way people are thinking about it, but you also provided a resource that helps athletes perform at a higher level longer.

You shared some stories about how it is the official product for some of the different football teams, etc. Have you seen other stories about it, like cycling and some of the more extreme athletes? I'm also thinking back on when I used to do a lot of rock climbing and backpacking. It's portable. It's simple and it's small, and it lasts for a long time. It's not perishable. It's something that's not going to expire by the time I get to my campsite.

Jon: Yeah. Absolutely. I think when we were finally able to overcome the stigma that beef jerky or any form of jerky was junk food, it allowed us to include the brand and the product into other areas of community that jerky never even played. We were a major sponsor of Wanderlust, which is a national yoga retreat festival. So if you just think for a minute the crunchy relationship of yoga and Wanderlust, which is primarily a female event, where suddenly jerky is a part of that, really showed just how far the product category came.

You're absolutely right. You touch on some very important facts, which is just portability of the product, shelf life of the product, meaning shelf life is not going to spoil upon opening after a few days. It's light, so the outdoors and hiking, I think, was a big area that the category played in well before Krave's time. We stretched that into skiing. Maybe Michael Phelps as he trained for Rio was a big Krave athlete and sponsor. So we sponsored ... This is now with Hershey when they bought the company. They were very active in the women's soccer during the Summer Olympics.

So the reality of this category now is it has gone through a renaissance. I think the category has matured to a point where retailers from coast to coast have expanded the footprint. Many new innovators have entered the market, and so the consumer now is benefiting even more. When we sold Krave in 2015, that the stage of the category has continued in my opinion to even get better. There are brands out there that are just making fabulous, non-dairy, sugar-free. Paleo is no longer the highest-reaching star. It's now Primal.

There's so much growth we're just proud that we had a small part in it. I think the overall category is now double what it was in 2010 when we started.

Dan: I've done a lot of work in the snack category, and to your point, this was always an area that was overlooked. Actually, going back to my roots, I was a grocery manager and DSD driver for a salty-snack company, and I remember jerky didn't really even exist in most store sets unless they were huge. And then a couple years ago, I did a project for a company where there is a defined meat-snack section. And, of course, Krave was a big part of that.

Another point is that the energy bars of yesterday were that gelatinous, hard thing that was made up in a test tube that didn't look like or smell like or have any relationship to food. So the idea that you can actually take something that you can associate with, that you know what's on the label, you can understand what it is, it makes sense ... Again, that's what consumers are looking for today. So how did you come upon Zupa?

Jon: After we sold Krave to The Hershey Company and me and my Sonoma-based team really transitioned the brand to their emerging team for the following year, in 2016, we really realized that there's , as we both have already shared today, that the entire food-and-beverage space is transforming at a pace and at a rate that we've never seen before.

Beyond the economics of building businesses, I absolutely love building brands, consumer brands. I am fascinated by looking at changing consumer behavior. I'm fascinated by entertaining customers. Again, back to my wine days since I was a kid, the wine business is basically the entertainment business. And so I wanted to do it again. I had no interest whatsoever to stop charging forward.

Maybe I was partly motivated by the ecosystem that would view me as I "got lucky" with Krave: "Oh, he was at the right place at the right time." And then perhaps part of me is motivated to show that there's some skill there. We didn't touch on my family dynamics. There's a lot going on there that continues to drive me. But I think beyond it all, I love the fact that we're participating in transforming food and beverage, and one of the areas after we sold Krave, I realized that I wanted to do it again. I wanted to keep my team together. I didn't want to just do one company. I wanted to invent new brands and new companies as well as I wanted to invest into emerging brands.

So I felt that that was in and of itself a different way to come to market with a smaller investment firm. So we call ourselves Sonoma Brands, highlighting the region that we're from, highlighting and paying tribute to the generation of food and wine and beverage entrepreneurs before us. We launched our first fund in January of 2016, and out of that, we started Zupa Noma, which is a chilled HPP, so it's a fresh vegetable product, and our first vertical that we've launched is a sippable soup, which is one way of describing it, or a super-food smoothie. But basically, this is a vegetable-forward, fresh, non-GMO organic product that's blended.

What you get from a health halo element is you get a ton of fiber and less sugar than you would get from a fruit juice. So the basic thesis was we've seen what's happened in the US on fruit juice with many high-quality premium brands that have ... from Suja to BluePrint to Naked and so forth that have grown. The vegetable is as dense better-for-you food sector as I can think of. And in Europe, which I spend a lot of time, Europe has a very close relationship with Gazpacho. Gazpacho is served in every restaurant as a first course. It's also available in sippable containers at convenience stores and grocery stores and club stores.

I just felt like the American consumer should get more veggies in their diet, so Zupa Noma is all about heroing the vegetable. The first vertical is the soup. We're going to have follow-on verticals. We have a veggie shop right now with adaptogens like tumeric and apple cider vinegar. And then we'll be extending into a snacking line later this fall.

Dan: Well, a lot of people, they're kind of almost afraid to eat their vegetables. I remember the cold commercials for V8. I love the product, but it wasn't as authentic. So you guys are coming out with ... I love the fact or the idea that you're calling it a sippable soup because that is a category that is stagnant that is really challenged, and it's challenged because the big guys really aren't able to grow. That's why the little companies are really making a stand.

But more importantly, to be able to put a sippable soup in the convenience cooler, the cooler that you see at the front of the store next to the Bolthouse, next to the Naked juice, next to those other brands, that's where the consumers are turning for those products. So you're, again, helping to carve out a new space for health and nutrition. Love the fact that you're doing it with organic and using authentic ingredients.

What challenges, Jon, have you had in getting into that space, and then how do you help the retailer understand what you're doing is different than some of the other products that are out there?

Jon: That's a great question. Definitely, I can talk about how Zupa Noma is very different than Krave in terms of its go-to-market strategy in a variety of fronts. First, the most obvious is this product is a refrigerated product, and therefore, supply chain and everything about the movement of the product is so much more extraordinarily complicated and expensive. So there's very little room for error and just before you even get the bottle on the shelf.

As you can imagine in retail, the retail network is constantly shifting and changing, too. You see what's happening between Amazon and Whole Foods and how the entire balance of the marketplace is responding with one strategy or another. And so the retail landscape is constantly shifting, but the real estate of a refrigerated product is a lot more coveted and a lot more difficult to get than a shelf-stable product like a snackable piece of jerky or my other company, Smash Mallow, or Dang coconut chips where you can walk into a store and put a shipper or a clip strip or some off-shelf display to help drive awareness of a new brand. Every new brand needs some moment of interruption to trigger a consumer's consideration.

So you're absolutely right. Because Zupa Noma was a vegetable and people inherently don't like vegetables ... We know that. We know we need to eat them more, but ... Maybe some zip codes in our country are vegetable-forward, but by and large, as a percentage of our population, most people don't like vegetables.

Dan: True.

Jon: And then creating differentiation in beverage was a lot more difficult than I had anticipated. I got my three or four facings on a 20-foot refrigerated beverage set, and it was pretty hard to create any sort of awareness on that shelf because we blended in with all of the other beverages. As we've thought about ... We're about a year and a half in on that brand. Our retail strategy has shifted quite a bit.

Unlike Krave, where in a small subset of stores we could just trial it with somebody to demo and they'd buy it and buy it again and again and tell their friends and so forth, this was something that was harder to find our core consumer. People that knew they should eat more vegetables. People still don't like the taste of vegetables. So it's a very unique consumer, and it was quite expensive to build through the retail network. So we actually, about a year ago, brought on a President that runs that company for me, who joined us from Pepsi. And we're building a direct-to-consumer channel.

The lion's share of the growth ... We're still in Whole Foods and Wegmans and Sprouts, but in terms of really building the deeper roots of the brand, it's all on a digital landscape right now because we can target those consumers a lot more effectively. We can partner with folks like Melissa Hartwig, who's the founder of the Whole30 program. She is an investor in our firm and helps us really communicate because this is a product that you need to understand the functionality of it. It's not going to just give you a great experience in the middle of the day. It's not a refreshing product.

So from that standpoint, it's been a little bit of a different business model for us, but so far, so good.

Dan: That's good to hear. Like you said, vegetables are kind of a four-letter word. Everyone kind of shies away from it, which is kind of sad. But I will say that the vegetables that came out of my grandfather's garden were night-and-day different from the vegetables that you go buy at a retail store. And organic is getting better, which is ... I really appreciate that, but the point being is that back then when they were prepared with the love and the care that he gave them, I enjoyed them. I really looked forward to them.

In fact, I almost hate to admit it, but I liked his beets. I can't stand beets made by anyone else, but the point being is that having a relationship with that food, having someone introduce it to you, and then, like you said, it's a difficult place to be. And I don't think people really understand that, and I'm glad you pointed this out, that refrigerated freezer space and those containers, those areas within the retail store, are nearly impossible to get in, and brands that are in there will fight to the death to keep you out of it. So the fact that you're able to even get into it, first of all, that's almost a miracle, but then secondly be able to survive and thrive within that area.

I like the idea that you're using a digital strategy. I don't think that the traditional, "This is how we do it: we go to our retailer first to get our product on the shelf," is the strategy that makes sense. I think brands need to be thinking multichannel, and I think that this is where you're going with this: you can build runway for a brand and build awareness and trials outside of traditional retail and then leverage that at retail to help with your selling story, back to that again, to help retailers understand how you're driving a unique consumer into their store that when they buy your product, the Zupa, they're also buying a lot of other, healthier products. So that consumer is far more valuable to the retailer than the person who buys the mainstream stuff. Any thoughts?

Jon: No, absolutely right. I think it's incredibly effective when you're the brand owner to have a digital relationship because you're getting real-time feedback. Oftentimes, when you're selling a premium-priced product to a consumer, it requires a lot of education, a lot of explanation, and having a digital relationship allows us to tell our story our way. It's commonsensical to understand if you cruise into the Whole Foods at Columbus Circle, there are so many great brands on the shelf that are all competing for your eyeballs and your brain time. It's very hard for any brand to tell their unique story.

So, digitally, it allows us to be agile. I will tell you we didn't launch this way. For the entrepreneurs out there listening to this, it's commonly said but often not practiced to be agile and to pivot. Pivoting means that you are completely available and open to admit that you miscalculated something. We can admit that with Zupa Noma's launch, we were overly confident that the product, once put on shelf, would have velocity. And so getting on shelf is the hard part. Staying on the shelf is even harder-

Dan: Absolutely.

Jon: ... because if you're not hitting your numbers, you're out. That real estate is too valuable to the retailer to have somebody occupying space that's not turning. And so we haven't abandoned that by any means, but we recognize that beverage, especially refrigerated beverage, is so competitive and so fierce right now that we're opting to pivot in a way to build in more digital framework for our business. Part of that was awareness; part of that was just failing fast.

Dan: It's so important. One good friend of mine, Bill Bishop, the chief architect of Brick Meets Click ... He was on episode six. We talk a lot about that intersection between traditional brick-and-mortar and online. A big piece of that is the digital strategy. Where I'm going with this, Jon, is that the shopper journey is changing today, and I don't think a lot of people really realize that. What I'm getting at is that the consumers today look beyond the four corners of the package. They do online research. They talk to their friends and their family. That is a big part of their buying decision.

So if you have a well-defined story outside of the package, the physical package, that's only going to help you succeed in any retail store and anywhere else as well. So to be able to leverage those two assets together, I think, is the ultimate. It's so critically important for anyone listening that you've got to have both. You cannot rely on one and hope to be successful, because like you said, everyone is gunning for you and everyone wants your shelf space. Unless you're knocking it out of the park almost literally or unless you've got some really, really deep pockets, which is a whole other conversation, then it's really hard for you to survive.

On that note, what other things are you doing? I'm assuming, I'm just guessing, that your digital strategy is also very connected to social media. You're probably also dealing with influencers, like you said, Jillian Michaels with Krave and Michael Phelps. How are you leveraging those assets to help support you at-shelf?

Jon: With Zupa Noma specifically, we do have three partners. Our first partner is Ayesha Curry, and that is Steph Curry's wife. She is a busy mom on the go, and she's a self-proclaimed foodie. She's a cookbook author. She has multiple cooking television shows. So she is an emerging food personality in the space for sure. When we launched Zupa Noma, we launched with her. She is an investor with us, and she gave us immediate awareness.

Dan: Good.

Jon: I think when we look at that as an asset, we have been able to participate in the explosion of her brand. Next to her is Meredith Kessler, and she is an athlete. She is obviously a female. She is the US, basically, top female iron woman-

Dan: Wow.

Jon: ... and has won multiple international Iron Woman races and is a perennial competitor at the world championships in Kona. She's also a mom and a busy person on the go and just talks about what it means to compete at that level, how you have to be as rigorous on what you eat and put in your body as you are on your training. So it's not just training. It's literally what you put in your body.

Then the third party is Melissa Hartwig, who is the founder and CEO of the Whole30 program. The Whole30 is just sweeping the nation now. It's perhaps the most powerful food-eating trend, and it's more of a reset within your body than it is a diet. Our foods, the Zupa Noma lines and shots, are both compliant and approved within their program and-

Dan: Great.

Jon: ... are great ways to get a snack. They're able to talk about the brands and the products on their own social media and their own marketing efforts, which obviously drives eyeballs to our website and to our social media pages. They're very important. In a digital world where impulsivity is not as available, you have to have a rigorous partnership program to drive awareness.

Dan: Well said. That's so important. One of the things I love about your story is that you're getting people that really can appreciate and understand the value that your product delivers. I mentor a lot of young brands, especially in the Boulder, Colorado area, and the point being is that if you can get an extreme athlete to become an evangelist, they understand exactly specifically how that product is interacting with their body nutritionally, how it's benefiting them, how it's helping them, far different than having someone in a focus group ... We kind of talked about that earlier ... or someone who's not healthy, because they may not see the benefits.

So to be able to have someone who has a story to tell, one, and then, two, has the capacity to really understand how your product differentiates from other products and how that really helps support them. Again, going back to a Michael Phelps or a Jillian Michaels and some of the other brands that you've talked about, the other thought leaders, point being is that that had so much credibility and, going back to where we started with this conversation, the story, the story, the story, that you take to the retailer, that you take to your consumer. At the end of the day, that's what needs to live on. That story needs to extend far beyond the cash register.

I tell brands that the selling starts the moment that you come up with the idea, the moment you put put it in a package, and it never ends. It extends well beyond after you take it home, after you share it with your friends and family. A lot of brands fail to realize that once you take it home, once you've made that sale at the register, a lot of brands say, "Okay. Oh, we're done. We're finished." They don't realize that, no, that's actually kind of where it really takes a life of its own. So thank you for sharing that.

Let's talk about another brand of yours: Smash Mallow, another great brand. I like the idea that you've created a snack that's very popular that's a lot of fun. Can you talk about that? How'd you come up with that idea, and how is that company doing?

Jon: Absolutely. Again, that's another brand that we invented internally about a year and a half ago. Like most brands that have great stories, there has to be some personal connection to the product. It's just it's the only authentic way to tell a brand story. In this case, as I've shared previously, I'm a marathoner. I'm actually running in Iron Man in Utah next weekend.

Dan: Congrats.

Jon: But I have a vicious, underscore vicious, sweet tooth, and so I've just always loved my gummi bears and my cookies and my cupcakes and whatever. And with a 10-year-old at home, I'm constantly surrounded by junk food, even junk food that has cleaner ways of having sugar. So, to be honest, since I was trying to retain my weight in terms of competing in these races and to scratch the itch of my sweet tooth, I would frequently reach for a marshmallow simply because the marshmallow is a much lower-calorie, lower-sugar product than any other kind of soft, gummy, chewable candy.

It always struck me that, why am I the only person doing this? It seems like everybody in America, they ... Everybody knows what a marshmallow is, but basically, people go, "It's for s'mores and it's for rice crispy treats or it's for hot chocolate." Maybe occasionally you'd make it with your Thanksgiving yams. But when I was in France, kind of in between Krave and starting Sonoma Brands, I began to see at a lot of these bakeries that the marshmallow was a delicacy. Consumers would go into the local baker and they'd grab a loaf of a baguette. They might grab a croissant. They might grab a cookie and they would grab some marshmallows, flavored marshmallows. They were a delicacy.

Kind of with that spark in mind, I came back and started thinking through about the stale nature of the marshmallow category. This should sound very familiar to our assessment of the jerky category. It's super stale. It's center of store. There's only a few brands out there. Kraft is the number-one brand with their Jet-Puffed, and then there's a different brand called Campfire. So basically about two brands plus private label has about 90 percent market share of the United States marshmallow, and nobody's ever changed the conversation on what are other ways that we could have fun with marshmallows?

Our food team was turned loose to design a series of super fun flavors, and we believe that when people eat things, they like a crunch. If you've ever added sunflower seeds to a salad, it just adds so much because a little bit of crunch to anything, it's just a more fun and exploratory eating experience. Many of our flavors would have, like, a chocolate chip or they would have a poppy seed or they'd have a coconut flake. But we launched seven flavors of Smash Mallow, all non-GMO, all natural. These were just super clean, organic cane sugar, so there's no corn syrup. There's no artificial flavors or ingredients. And basically said to ourselves in a very humble way, just like we did at Krave, "Does the consumer care?" Because maybe this is just a cool idea to us but the consumer could care less about a snackable marshmallow. They don't snack on marshmallows. Marshmallows are for s'mores and for Easter bunnies.

The results were mind-boggling. We similarly started in about 100 stores. We dry-trialed. We served it to employees of stores. And before we knew it, each customer that tried it would buy it. Each customer that bought it would evangelize it. And social media would light up. This business began to grow on itself on its own. It developed its own momentum. So we're 18 months into this brand. This thing is growing three times faster than Krave ever grew.

Dan: Wow.

Jon: We're nationwide Target. We're many, many foods, from Safeway to Kroger to Wegmans and Whole Foods. We should do well north of 20 million this year-

Dan: Wow.

Jon: ... in revenue already. So it's a phenomenon.

Dan: Inspiring.

Jon: Obviously, when you think about building a brand, there's the aspirational elements to it. There's the brand story to it and making sure it has authenticity. And then there's usage occasion. I think usage occasion disruption is a great way for entrepreneurs to think about their businesses. That's what I call the Smash Mallow. This is a usage occasion disruption-

Dan: I love that.

Jon: ... because, yes, we're trying to build the snackability of it, but we're also going to go after every major seasonal event available to us. We've trademarked Malloween. We're going to have a Smash Mallow Halloween offering. We've got all kinds of Christmas offerings and Easter offerings and Valentine's Day offerings. We're partnering with Annie's. You know Annie's-

Dan: Sure.

Jon: ... which is owed by General Mills, and Lindt Chocolate to create the nation's first premium s'more offering-

Dan: Wow.

Jon: ... from a flavor standpoint. So we have a whole program of ... called "S'more Across America," which are going to be a series of vehicles that will be around the country driving a premium s'moring experience. Then, of course, just about three months ago, we launched a new vertical called Smash Crispy, and that is, as you'd expect, a flavored line of rice crispy treats, in again, another category that most of America's familiar with but all of them think of Kellogg's Rice Crispy treats, which are made with corn syrup and tons of artificial ingredients, but is a 500-million-dollar category and it's just them.

So we're coming, and we're not so shy to say that we're coming after them with a more premium, better-for-you eating experience that has a crispy for kids but also for moms and dads and anybody else, because they're only 80 calories, half the sugar of an Rxbar, and very tasty.

Dan: They are. In fact, you guys choked off the lines. I felt sorry for everyone who was around you at Expo because no one could get around your booth. I remember when you guys launched a couple years ago, a year or two ago, whenever that was, that I remember hearing about it first word of mouth: "You gotta go try this thing." And there was a buzz, a very ... You could feel that through the entire building. It's like, "You gotta go try this thing. It's amazing." And my point being is it goes back to that storytelling.

I love the fact that you said usage occasion disruption. You're talking about something that is a part of our childhood or part of what we were when we younger, so to take people back in time ... And, by the way, I don't think that ... You made the comment that, are you the only athlete that likes sweets and stuff like that? I remember back when I was really a lot more extreme and a lot of the people that I know, we do have sweet tooths. It was interesting: the more exercise I did, the bigger my sweet-tooth fang or whatever grew, the point being is it's a craving and it's really hard to satisfy, but to satisfy right.

The point is athletes love their sweets. I think that's pretty common. So you're running in a marathon next week in Utah? Congratulations. That's amazing.

Jon: Thank you.

Dan: I never actually ran a marathon. I did a couple half marathons, did a lot of biathlons, did a ton of 10Ks. I do miss that. That was a lot of fun back then. So I completely understand where you're going with that. On that note, Sonoma Brands. You mentioned Dang Chips. I've had the privilege of doing some work with them, and I've had the privilege of connecting with and talking to a lot of the different people that you work with under Sonoma. Can you tell a little bit about Sonoma, why it exists and what does it do?

Jon: In addition to the two brands that we've talked about, we also are investors in other emerging brands in food and beverage and personal care. Under Sonoma brands, we have an investment team that we've invested upwards of 75 million dollars, and we're a growing firm. We're very new. We bring a unique toolbox to the table. So if I'm an entrepreneur and I've got my product, there are a lot of different investors that are available to you.

We encourage these entrepreneurs to really get to know their potential partners and understand the value, the tactical value, the strategic value that they're going to bring to the relationship because the game has changed where the entrepreneur is the rockstar. Make no mistake. And as an investor, we are big believers. That's what makes us different, because we're entrepreneurs. We're basically saying that we believe that great companies are built on great entrepreneurs.

We can relate to them. We can help them in various areas, whether it be sales or marketing, because we're bringing a larger team to the table. But Sonoma Brands is an investor now in five different companies, including Dang.

Dan: Great. It's so important. Brands need the support. They need the help. One of the things I've talked a lot about on this podcast with everyone is how to have a mastermind group to support and nurture their brands and, more importantly, help them stay within their guardrails and stay true to their mission and help them when they're feeling down and a little defeated and, more importantly, provide that necessary boost not only in capital but in support and nurturing and guidance and mentoring.

That's so critically important. Do you have any stories about some of the brands that you've worked with and some of the success stories that Sonoma Brands has been able to cultivate?

Jon: Sure. Our first investment was with Dang, and Vincent and Andrew-

Dan: Great guys.

Jon: ... the two brothers and founders of this beautiful brand really had never brought in outside capital and had bootstrapped their business from the beginning and, in my opinion, epitomize the great origin of the founding story and that great epiphany of having a real, authentic, differentiated product and having connectivity to his mother's recipe, which gives it just a more realness. And these guys are great, charismatic leaders.

So they have all of the fundamentals of being terrific founders. And, again, we're jockey investors, so we look to the founding team and the executive team as the first area of what's going to interest us in this investment. It just so happened, too, that as our first investment, we did want to step into a space that we understood the most, which is snacks. And because of Krave, we had a pretty good network of folks that we know in the snack-buying space. So I felt like I could leverage some of our relationships very quickly.

In the first six months of investing into Dang, the Sonoma Brands team were able to step in and really design a go-to-market strategy at conventional retail where we targeted, geo-targeted, very specific stores within a broader network of a banner. I won't name names, but think of a major national banner that we're trying to gain authorizations into, but not only gain authorizations into, but gain best shelf space. We all know how important where you are in the store can be: death if it's not the right spot.

Everybody in our space knows that the data, the report card, if you will, is available. Every month, it refreshes. So whether you're buying SPINS data or Nielsen Data, every month, that data refreshes. And if you have distribution in a certain store where you're not turning, the velocities aren't there, it's a death warrant because the marketplace will read that as a brand that's not working. So we got dirty with Vincent and Andrew and literally got right into this particular banner and this geo-targeted zone and drove what we call an off-shelf merchandising strategy-

Dan: Great.

Jon: ... which creates a tighter relationship with the store managers. You're creating incentives. You're working the system outside of just the consumer because if you can create a win-win scenario where you're driving penny-profit incrementality to the store, you're rewarding store employees with incentives, and the consumer is discovering a new product like a health coconut chip, it's a win-win all the way around. That's what we were able to do.

We have a real case study that we showed just jumping in with our marketing and sales teams, driving targeted focus in one area not only created amazing data in those stores, but that data bubbled up to the larger banner that did give a broader authorization and better shelf placement.

Dan: This is exactly where I like to play. In fact, I say it's one of the initial projects I kind of help do, point being is that a lot of people really don't understand how the numbers matter. Let me back up a little bit. A lot of people, a lot of brands, are led to believe, unfortunately, that any distribution is good distribution. That's not true. There's a peanut butter jar company that was trying to sell $11-jar of peanut butter in a depressed area that was all blue collar, my point being is that that's not their market.

You can't expect a company, a brand like that, to really survive and succeed. Identifying where your core consumer lives, the geo part, that's critically important. And then the other thing I find is that none of the different databases really segment around the way the consumer shops and to be able to provide those insights and then, more importantly, as you stated ... Thank you for doing this. Once you build traction, once you get great success at a retailer, it makes it that much easier for you to expand not only within that chain but at other retailers instead and in addition.

It goes back to that storytelling. You are more than just a red box or a blue box. You are the story that, in terms of who buys your product, how they buy it, where they buy it, when they buy it, and when the consumer buys your package, all the other products they buy with it. Thank you so much for sharing that. I want to make sure I put links to everything that you've talked about on my website and then the show notes. Are there any parting thoughts, anything that we missed that you'd like to share?

Jon: Yeah. This is sort of blindingly obvious, but sometimes growing great businesses in this space is the blocking and tackling of executing the simple things. So I try to remember this every day that I come to work, which is passion only gets us 50 percent of the way there. It's grit that gets us the balance of the 50 percent.

We're living in such an exciting time of food and beverage that I see a lot of people get so wrapped up in passion that they forget that even the best ideas and the most innovative concepts require an insane amount of grit. So fail fast, don't give up, keep on going, and I think success is always right around the corner.

Dan: I love that. I appreciate you sharing that. I would not pretend to be a football scholar or expert, but I remember ... I keep going back to the stories where, years ago, Vince Lombardi would start out the beginning of every season saying, "Gentlemen, this is a football," the point being is that it's the basics. You've got to stay true to the basics. And, to your point, execution is where I see so many brands struggle.

So thank you for sharing that, and, again, grit. I could not agree with you more. Jon, thank you so much for your time. I really appreciate it, and if there's anything I can help do to help support you and your team, please let me know, and my point being is that I'll make this podcast available and helping to support what you do because I'm a firm believer in the thought leadership that you bring to this industry.

By the way, where I actually had the chance to first meet you was when you were on the judging panel for the Pitch Slam contest at Expo West. I was on the Pitch Slam selection committee and a mentor. And, obviously, you played a huge part in that. So, again, thank you for all you do in the industry.

Jon: Thank you very much for having me. My pleasure.

Dan: Thanks, sir.

I want to thank Jon for making time for us today and for sharing his insights and being an excellent storyteller or, as he says, a master storyteller. This is something that is so critically important, and every brand needs to be effective at this. I'll be sure to include links to Sonoma Brands and all the wonderful brands that Jon works with on this podcast webpage and on the show notes. You can download the show notes at brandsecretsandstrategies.com/session52.

Today, we spent almost the entire time talking about the importance of an effective story and how you can leverage your story at retail to effectively not be an ATM machine. This is how you get your product on more retailer shelves and into the hands of more shoppers. The simple reality is that retailers don't need to know how you rank in the category. They want insights, actionable insights. They want to know things that they don't have access to. They want to know your story. They want to know who buys your product and how they buy your product and, when they buy your product, what else to they buy?

This is exactly why I launched my free Turnkey Sales Story Strategies course, to teach you these strategies. You can get to it on the show notes, on my website, or by going to turnkeysalestorystrategies.com/growsales. Thank you again for listening, and I look forward to seeing you in the next show.

www.sonomabrands.com

Www.smashmallow.com

Www.drinkzupa.com

Www.truebotanicals.com

Www.dangfoods.com

Www.guayaki.com

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Thanks again for joining us today. Make sure to stop over at brandsecretsandstrategies.com for the show notes along with more great brand building articles and resources. Check out my free course Turnkey Sales Story Strategies, your roadmap to success. You can find that on my website or at TurnkeySalesStoryStrategies.com/growsales. Please subscribe to the podcast, leave a review, and recommend it to your friends and colleagues.

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Until next time, this is Dan Lohman with Brand Secrets and Strategies where the focus is on empowering brands and raising the bar.