BRAND SECRETS AND STRATEGIES

PODCAST #34

Hello and thank you for joining us today. This is the Brand Secrets and Strategies Podcast #34

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. Throughout this podcast and all of my content, I talk about the new trends in the marketplace. I talk about how leading disruptive brands are really making an impact by helping retailers meet the needs of their consumers and their shoppers, by providing the items that their shoppers want to buy. The next focus is how to help the retailers merchandise and take advantage of these strategies, these products, how to leverage them to drive traffic in their store and profitable, sustainable sales across every category. Then to follow up, how does that retailer use those products to drive sales across the entire store? What I mean by that is that consumers that buy healthy products, whether it be organic, plant-based, etc., tend to spend more money buying other products, premium products, across the entire store, because those consumers understand that if you are what you eat, then eating food that properly provides nutrition for your body is going to fuel you longer. In the long run, even though it's a few pennies more at the register, it's actually cheaper for you, and that's the basis of everything I teach, everything I talk about.

Today's guest helps me amplify that message by helping consumers understand why these products are important, why they matter, and then also helping the retailer understand how to leverage these products to help those consumers find the solutions they want. My guest on this episode is Mike Cooke, the VP of Sales for Daiya Foods, a plant-based brand that is revolutionizing the way that consumers think about plant-based products. Here's why it matters. Consumers are looking for healthier options, and plant-based is one of those options that consumers are flocking toward.

It's one of those solutions, one of those product solutions, those meal solutions that consumers are actively choosing to add to their diet. Not because they're trying to become vegan, but rather because they're looking for other products to add to their menu that help support them in their goal toward becoming healthier. We also talk about the Plant Based Food Association, which is driving this conversation not only at retail, but across the entire food ecosystem, across all CPG, and helping to support it with legislation. That ensures that plant-based foods have an equal voice with retailers, and within all of CPG. Here's Mike Cooke. Hello, Mike. Thank you for joining me today. I'm thrilled that you're here. Could you first start out by telling us a little bit about yourself?

Mike: Yes. Thanks, Dan. I appreciate it. I've been in the industry for about 36 years. Started out with the Quaker Oats company. Various positions in sales. Did a brief marketing stint in Chicago, while I was on Gatorade. Left Quaker after about 24 years, and that's when I entered the natural food business back in mid-2000, 2005. Sold a lot of MaraNatha nut butter. Also worked for Yogi Tea. Had a small startup called Caveman Foods that was based on the Caveman diet. Did that for a few years, and now I've been with Daiya for the last six years.

Dan: Tell me a little bit about Daiya. What does Daiya do, and then how, what do you do with them?

Mike: I'm the Vice President of Sales. I lead the sales effort. Daiya is a 10-year company. Just celebrated our tenth anniversary on January 15th a couple of months ago.

Dan: Congratulations.

Mike: Thank you. Daiya was started by a couple of lifelong vegans who did not like what was out there, felt like some of the dairy-free cheeses didn't really deliver in taste, texture, mouthfeel, didn't stretch, and quite frankly, didn't melt. They set out to try to make something better, came up with some ideas in their kitchen, got together with Paul Wong, a renowned food scientist from Western Canada, and came up with the initial Shreds, some initial products. From there, it's kind of, so to speak, history.

Dan: Again, I love the brand, and I'm a huge fan of the brand. What's great about it is that you're growing into a segment that is the new future of food, I think, in CPG. Meaning that, as I was sharing with you at some of the Expos, that it's the natural organic, the plant-based products , etc., that are driving sales across every category, across every channel. What are some of the challenges that you've run into in that arena?

Mike: Yes, I look back to even my early days with MaraNatha and trying to source organic almonds. Organic almonds were about twice as expensive as conventional almonds. You started looking at the organic movement, the OTA a few years ago, and then we came into some more ... Natural started growing. The natural conventions, Expo West started growing. Gluten-free was introduced. A lot of more free-from. As they've gone through their evolution, there's been various iterations where the products have become better. I think whether it was organic or gluten-free or even dairy-free, the early iterations of the products, I think the packaging tasted better than the product.

Dan: Agreed.

Mike: That's kind of what Daiya's whole theme is, is we want food first. We want flavor forward. We wanted to deliver and to have no compromise, and so one of the issues has been getting products that actually taste good that are also plant-based, or dairy-free, or what have you. That's one of the issues. Then the other issues, trying to get this message out to the masses, what I call the tree-huggers or the true, original natural people, the Birkenstock crowd. They've gotten it for a long, long time. They understand it. Better for you, better for the earth. Whether you're a vegan, vegetarian, philosophical or religious reasons, they kind of get it, but getting the masses, the biggest part of the bell curve, to buy into this, has taken a little bit of time, and through the Plant Based Food Association and other associations out there, the word is gradually filtering out beyond the Whole Foods and the Natural Grocers and the Sprouts of the world.

Dan: How can we help with that? Because I agree with you, one of the biggest challenges, like you said, it's like the ripple in the pond. I make that analogy a lot in the podcast and some of the other content I put out there, and the whole idea is that that ripple in the pond that starts with the core natural consumer that looks beyond the label, that reads and understands everything about the package, probably knows the ingredients in the package far better than even the retailers do, that core consumer is driving those trends. How can we help, or how can we help educate people about the benefits of a plant-based diet?

Mike: I think it was Coca-Cola about 80 years ago had this theme or this saying that they wanted to have a Coke within arm's reach of anybody that was thirsty or whatever. I think we've got to make these products, first of all, more available at the right price, and that are easily understandable. That may be through education. It may be through podcasts such as this. It may be through demonstrations of product at consumer shows or trade shows, or in a grocery store where we're getting the product in people's ...

I'm amazed how many people try our cheesecake or our cheeses and their first question is, or their first response is, "Wow. That tastes like real cheese," or, "Wow, that tastes like," with our recent product, "new ice cream," or, "It tastes like a block," or, "It tastes like a pizza," or, "That pizza tastes like a real pizza." That's our goal, is to get products that are free from that actually taste good and that people will consume and are plant-based, obviously.

Dan: The quality's absolutely there. In fact, I was amazed a couple years ago, when I first tried your products at Expo West, there's really no difference. I love the taste, the flavor profile, and the texture, which oddly enough, and you guys talk about that on your video for us, your about, and you mentioned that earlier, in terms of that is such an important part of the experience.

What I'm getting at is that if you eat cheese that has a weird texture to it or weird granular feeling to it, whatever, then you're automatically put off, but the fact that you guys have been able to craft a product that actually has a very similar texture profile, flavor profile, etc., so it's just like cheese, but yet it's plant-based. What are the things that you've seen, and even going back to the Plant Based Food Association, that have helped you communicate this message?

Mike: Well, what we try to say is this ... First of all, I mean, Daiya has a tremendous research and development department that tirelessly works on these products so that there is no compromise, so there really is a stretch, so that the cheese pools and things like that. I think one of the things is, that when I got here about six years ago, we were in almost every natural food store, but we were only in about 10% or so of conventional stores, the Krogers of the world, the Safeways of the world, so it really wasn't readily available to the masses. There's 1,500 or so natural food stores, and there's 30,000 conventional stores. Now that Daiya products and other products like Daiya are found in your average Kroger, or your Ralphs, or your King Soopers across the country, more and more people that may not have a Whole Foods or a Sprouts close to them now have the ability to walk in there and try some of these products.

They're reading articles and they're seeing more of these podcasts. The things, the Google searches about what's better for you, the Meatless Mondays, the substituting more meals for plant-based. Our VP of Marketing is always saying, "I don't really think there's a mass gravitation of people to veganism or vegetarianism, but there is a mass gravitation of people to wanting to eat better." It may be philosophical, it may be religious, like I said before, or it may be free-from, because they have a dairy allergy or a soy allergy or something else, or a milk allergy, so they have to do this, but most of these people are just saying, "Hey, this is better for me. This is better for the planet. I care about methane gas and other things," and whether you're that or not, it's getting put to more people, and there's a lot more word of mouth, too, driving people to these categories.

Dan: Love that. I appreciate your getting into this and diving down so much and to the core, "This is why it's good for you." Let's go a little bit further into that. When you're talking about methane gas and some of the other things, I don't think everyone understands the argument, if you will, for plant-based foods versus their counterparts. Could you go into that?

Mike: Yeah, and it's an interesting phenomenon, I mean, of the amount of gas and the amount of water that is needed, for a cow on a daily basis, a weekly basis, or other animals where milk products are derived or beef products or whatever, and Daiya quite frankly has stated very clearly, "All of our products are vegan, but we're not necessarily a vegan company. We're a dairy-free, soy-free, gluten-free company that wants to make products out there that have no compromise too, and that are very close to their regular pizza counterparts, cheese counterparts, and other things like that. But by the same token, we're all for animal welfare, and we want to see that animals are treated humanely and that we're leaving a good carbon footprint, and that we understand that if the products we're using and the ingredients used in our products are better for the environment, that's a really good thing, so not only are we delivering a good-tasting product, we're doing something that's good for the planet as well."

Dan: Love the whole holistic approach. I mean, that is so important, and going back to, I'm always saying that if you are what you eat, then what you eat matters. The point being that cows are not designed to eat grain and hay, and so for you to really get into that, if you will, help consumers understand that having an alternative to a product that isn't associated with some of the different issues, the allergens and stuff like that, that are found in other foods because of the way the food is produced, that's great. What other things are you doing at Daiya to help communicate that beyond the four corners of the package?

Mike: Well, one of the things is that we have a very large digital effort, social media effort, and as Daiya has grown very quickly, some of our communication and some of our marketing ideas and actions haven't grown as quickly, so we're putting more money into that area, helping to communicate that better, working with the Plant Based Food Association to communicate what we're doing, what other companies like us are doing in this field, and really getting it out there that these are no-compromise products. I mean, there are several meat alternative companies out there. If you try their products, you'd think you were having a real burger, and you have that real burger with a piece of our sliced cheese on it, and you really aren't compromising. You're getting the melt. You're getting the taste, and what you said earlier, Dan, is the mouthfeel. We want to make sure our products are delivering what people remember as dairy-based or other animal-based products are in a plant form. We are working really hard in that area.

Dan: Just so everyone's listening, this is not the tofu that we had several years ago. This is something entirely different. I think I heard you laugh a little bit. The point being that it's not a rubbery, spongy block. It's actual food. I don't mean to disparage tofu, but the point being is that this stuff tastes like, looks like, feels like real cheese, real dairy, real everything else. By the way, I do agree with what you were saying earlier at the show that your new yogurt is one of the more dense products, and so the fact that you're getting into a lot of different categories, can you talk about some of the different categories that you play in? Where I'm really going with this, Mike, is, if a consumer is looking for other products to try, what other products could they look at? What other categories do you play in?

Mike: Thanks, Dan. When I started, like I said, nearly six years ago, we were pretty much only in dairy. We had dairy shreds, and we had dairy blocks. We went on to slices and cream cheese, and from there we're into the pizza category, and now we're getting ready to come out with not string cheese, but it looks like string cheese. It's a cheese on the go type product. The yogurts have come out a few years ago. We have a cheesecake that is absolutely to die for. In fact, if you were trying that product, most people actually believe it must be milk-based, because it's hard to get that milk, cream, ice cream type texture without actually using milk or cream. We think we've gotten that.

We've taken that one step farther. This summer we'll be launching our ice cream bars, and you almost have to think Dove or Häagen-Dazs bars or something like that. Dark chocolate coating. Obviously milk-free, and then the ice cream style, the product in the middle, it's not ice cream, but it's as close as you can get to ice cream without being ice cream. I was quite shocked. My parents, years ago, tried to fool me with ice milk, and ice milk is not ice cream ...

Dan: No.

Mike: This product is very close to ice cream, and I think people will be very, very pleased with it when it's launched this summer. In addition to that, our pizzas have done extremely well. We're very close to having the number one line of frozen pizzas within the natural channel, and that's a product that's only four years old. I-

Dan: Wow congratulations.

Mike: It delivers not only with the dairy-free part, but obviously the gluten-free. 71% of the people that have a problem with gluten also have a problem with dairy, so it only makes sense for those two products to be together.

Dan: Let's back up a little bit. The indulgement piece. You guys have actually hit the nail on the head, the point being that it's a really, really good-tasting product. My wife is a cheesecake connoisseur, so she was pleasantly surprised when I said, "Hey, try this." I'm looking forward to the ice cream. You were talking about gluten-free and allergen-free. Can you get into a little bit more of that? Where I'm going with this is, for consumers that have food allergies, that have different specific requirements in their diet. My sister has celiac's, etc. What can they look forward to in terms of plant-based and with your products?

Mike: Great question. It's interesting. I think I'm getting very close to 60, and it seemed like when I was growing up in the '60s, you almost never heard of anybody with an allergen. Nobody even knew what an EpiPen was. Peanuts weren't banned on flights, and peanut butter sandwiches weren't banned at lunch. You just didn't hear about it. I think there's a lot of debate on exactly why this is, but I think as you mentioned earlier, Dan, when you think about some of the things that are put into some of our poultry and our beef and some other things with some of the antibiotics and other things they use to make cows and chickens come to market, there's a lot of concern out there that these are being passed on to us through those vehicles.

Our products are designed to help people with any of those allergies, because we're free from all the top allergens. The only thing we have that can even be slightly construed as an allergen is, we use some coconut oil. Coconuts are not actually a nut. They're a seed, but the FDA does say that it is an allergen you have to watch for, but we're free of, obviously, soy, of dairy, of obviously free of gluten, which allows everybody with some of these issues, and there are several things out there, esophagal issues, renal issues, diabetes, autism, that a lot of doctors recommend a diet that contains Daiya-type products, plant-based products in their diet. With autism, they recommend that you avoid dairy so our products, as well as, obviously, the fluid milk help in that area.

Dan: Going back to what you said, I agree. I remember way back when, we didn't have all those issues with food allergies, and all the people who had gut issues. At least, you didn't hear about it. I don't know if that's social media or whatever, but the point is, that the fact that people can have a healthy diet that doesn't go back to some of the foods that were, if you will, I think created in a laboratory, and my belief, my hunch is, and obviously it's not proven, is that some of the things that we've done as far as introducing new ... how do I want to put this? Adding synthetic hormones and stuff, and adding synthetic things to our diet, I think are responsible for this.

Again, I wish someone would really dig more into this. I know they're trying, but to come up with a diet that is more like, what Mother Nature intended, I think is really the way to go. As you're focused on no allergies, are you communicating that, and how are you doing that, specifically?

Mike: Obviously, with labeling on our products. It's usually very clear. It's very clean, both on the front and obviously on the back. We do that through our social media, through our website. I think this is one of the areas that the Plant Based Food Association is going to help all of the companies that are plant-based and support this effort to get that kind of information out in the public domain, because you're exactly right, Dan. I mean, you look back at it to the human genome, give or take ... I think it's 10,000 years ago that the genome was kind of forming, our bodies aren't used to all these synthetic-type products, these synthetic things that make the product X, Y, or Z, and it's causing issues.

Daiya, through social media, through our marketing efforts, through the Plant Based Food Association, through organizations and people like you getting the word out there. There are products out there. It's amazing to me, because you've got ... I've taken several trips to Europe and several trips to Paris. There's not a lot of really good dairy-free or plant-based food over there. There's a lot of vegans, a lot of vegetarians. Even back at home here in Wisconsin, we sell a lot of Daiya in Wisconsin. That's kind of our cheese state in the United States. You'd think they would only want real cheese? If they can't eat it for religious, philosophical, or dairy-free issues, they want the next best closest thing, and they eat quite a bit of dairy-free cheese there.

Dan: Well, that's encouraging, especially Wisconsin. I used to work for Kimberly-Clark, so that's where they were based, and man, they love their cheese. I remember going back there several times. Now, you've talked about the Plant Based Food Association. I'm a huge fan, and in fact, I did some work with them at one point earlier on. Can you talk a little bit more about who they are, or what they are, and what they're trying to do, and how they interact with different brands, and how they're trying to get, what they do to try to help get your message across to other consumers and retailers?

Mike: Yes. I am not quite as versed on all of the efforts and all the actions of them, as Michael Lynch, our VP of Marketing is. Michael has been very active. He sits on their board, but there's quite a few things, and there's a lot of lobbies. Like I said, there's the milk lobby that is very versed, it's very well funded, that is fighting. There's been some legislation trying to push back on the non-milk milk people, the fluid, the soy, the cashew, the almond, the pea protein milk out there that are trying to help people with allergies and other types of things, give them an alternative to cow or goat-based milks. There's a lot of pushback, so the Plant Based Food Association is helping with some of those companies, helping with our company, getting the word out there, making sure there's legislation that keeps everything transparent, keeps the optics where they should be and probably where they shouldn't be so that things aren't said or done that aren't true.

Dan: Thanks for mentioning that. That's one of the things I talk about with other industry thought leaders - about how people don't understand and how there are different groups that are trying to put the thumb on the scale against brands like yours. When you're competing against those that are pro-milk that are against what you're doing, what would you like to say to people that are trying to understand what the difference is and why you matter?

Mike: Well, I think that Michael Lynch just said it in a recent interview, that there's a lot of products out there that are trying to latch onto plant-based or natural or organic. I think it was funny that they said that an Oreo cookie is plant-based. I actually personally like Oreo cookies, but I'm not sure how good that is for you. We want to make sure there's products out there with the right optics, with the right labeling, and that are not trying to pull the wool over on somebody's eyes. I think vetting the products by organizations like the Plant Based Food Association, like the OTA and other organizations within natural and organic foods, I think is imperative, because I think consumers, the whole non-GMO project, I think understanding that and getting consumers to understand that, that there's transparency, they know what they're eating, they know what the nutritions are. They know that we're working hard towards getting nutrient-dense foods, not just gut fill, belly fill foods that are just trying to make a buck.

Dan: Perfect, so you're not recommending the Oreo cookie diet? No offense, I like them too, but ... just kidding. The Plant Based Food Association then really, what's at their core is communicating trust and transparency to the broader audience to help them understand what this segment is like and what they can take to the bank, what they can trust - to be able to distill information so that people can understand it so that they have confidence when they feed it to their family and friends.

Mike: That is 100% accurate, and you look at almost any category, and you're always deep into the numbers, so you probably know these better than I do, but any category you look at in the grocery store right now, it is the little, and many, many, many of these are plant-based companies that are driving the growth in a lot of these categories.

Dan: Absolutely.

Mike: Conventional products are down one, two, three, or more percent in almost every single category. The natural, the organic, what we call the better-for-you products, are driving the growth. Many of these are up anywhere between 8, 15, or even higher, and that's what's helping the growth, because we're pulling people into the grocery stores, into the restaurants of the world, that want something different, something that's plant-based, something that, in their mind, is healthier, better for you, in a lot of cases giving something back to the earth. That's what's driving the growth, and especially with many of the younger people, younger families that they're very concerned. They don't want their kids to have bellies that hurt or skins that have rashes on them.

Dan: Very well said. To go a little bit deeper into this, and thank you for bringing this up, so for the 2016 Category Management Handbook, I wrote an article, a feature article, about how organic sales are driving sales, organic products are driving sales across to every category. Honestly, behind the scenes of this, part of the project was to try to help the Plant Based Food Association understand how plant-based foods fit into the category, so the gist is this. To your point, if you look at total sales across all outlets and you remove that small sliver of organic, then plant, then regular sales are flat or declining. If you look at plant-based food sales, sales are up even more, and yet that's a smaller sliver of the pie.

Going on that, where I wanted to go next with this is, when you're working with retailers, how do you work with them in terms of merchandising and understanding where do your products score in the category, how do you help to guide the retailer so that they can drive traffic into their stores and help the retailer grow profitable sales in their category? Because the other part of this, Mike, is that the consumer that buys the plant-based product is also going to spend more money in other categories, and they're not going to be as worried about price. They're going to buy the products that meet and support their nutritional needs and their families' needs.

Mike: Well said again, Dan. It's interesting. I have a 22-year-old daughter, a recent graduate, out on her own making money, but lives in the L.A. area where you've got to make lots of money to make ends meet. She is still willing to go out. She has an issue with gluten, with dairy, and some nut allergies. She has to be careful where she shops and what she eats. She is willing to pay a little bit more money for a product that she's sure won't hurt her health. I think that's very consistent with much of the public, and helping them understand that, where they can shop in the stores.

For years and years, there were several stores out there, grocery stores, that had stores within a store, a natural store within a store. They trained their shoppers who wanted natural, organic, other type products like that, to go within this little store. The trend these last few years has been to integrate those products into mainstream, which, I think, quite frankly, will help the masses, because they go to the nut butter section and they can see the conventionally made nut, peanut butter, almond, cashew butters, and then they can see, probably right over to the right or the left, a separate section that has natural and organic nut butters, and they now have a choice.

I want to spend, perhaps, a little bit more, maybe it's five or 10% more, but kind of feel like I'm getting something that's healthy, better for the family, that can be kind of their choice. They say you haven't really made it as a food group until you start getting the little signs over the aisles that say where it is. I was in a very large, very successful, about 100-store chain in the East Coast recently, and I was shocked to look up and I saw "plant-based" signs. They had an aisle for plant-based products, and I think that this particular chain has done a tremendous job. They were one of the first to have a gluten-free aisle.

Dan: Impressive.

Mike: Now it's very common for most to have a gluten-free section, or a gluten-free bin, or a gluten-free end for pastries, or dinners, or pizzas, or whatever. We're getting there, but it's an education, and it's training the shoppers. Whole Foods has been doing that for years. Their stores are set up differently, but their shoppers that shop there, know where to find the different kind of cheeses, the dairy-free, the milk cheese, the goat cheese, the artisanal type cheeses.

Dan: Something I've been saying for many, many years is that integrated, segregated, or store within a store, is not a good way to go. Integrated fully within all the categories in a similar segment. To me, that's the way to go, and I've always been a strong proponent about that. Going back to what we started with earlier, if you are what you eat, then what you eat matters.

The pricing argument, I'm always against that, because you cannot play the pricing game with anyone. You're going to lose. The point being is that if you took, and I always use bread as an example, if you use the top-of-the-line bread that is whole grain, etc., and you compare that to the organic bread at a few cents more, where I'm going with this is that even though you're paying a few cents more for the organic bread, it sustains you and fills you up longer, so in the long run, it's cheaper. I guess one of the frustrations or the challenges that I've had in this industry is that brands don't do a really good job of communicating the value that they bring to the consumer, meaning that if your product is more sustainable in terms of, "It fills me up, and it helps me fuel my body longer," then in the long run, you're better for me and you're less expensive. Can you talk a little bit about that and how you might fit into that?

Mike: Good question. It's funny you say that about the bread. My family started to move away from eating as many carbs, and especially bread, a few years ago. I remember, as a kid, when you bought Wonder Bread at the, at that time, the 7-Eleven or the grocery store, if you didn't eat it within a day or two, it got stale, and if you didn't eat it another day, it would grow something green on it that was kind of scary. We used to have bread that would sit out on the counter for it seemed like forever, and it would still feel like it was fresh.

Well, you look at the ingredients of those latest bread products, the non-organic and the non-natural breads, it's a very long ingredient panel, and there are some things in there that I don't know how much that you want to eat, but it keeps the bread fresh and from going bad for weeks on end. That has changed quite a bit, and I think when we look at the products that are out there, we have to try to keep the labels simple, as clean as possible so that people know what they're eating, know what they're getting, and so that we can be giving the public what they want and they desire.

Dan: To go one step further, that trust factor. If you can understand what's on the label, then you can feel a lot better about what you're eating. Then beyond that, you're talking about the tree-huggers and the people that really get this, those, again, are the consumers that read the labels. They know how the product was produced. They know where the seeds were planted. They know everything about it, who took care of it. I mean, total transparency from seed to shelf, and that is the trend, again, that's driving sales across to every category. That's a trend that's catching on like wildfire, and that is why plant-based foods, organic, etc., are really responsible for all the growth across to every category.

In my recent podcast I did with Phil Lempert, we talked about the future of CPG and I've always argued that I believe that it's the small disruptive brands like Daiya that are going to become the big fixture, if you will, on the shelves in the future. Where I'm going with this is that, and you've alluded to this several times Mike, is that you're more closely aligned with your core consumer,. You're providing products or solutions, that better meet their needs, while a lot of the big brands are still talking at us and not to us, not having a two-way conversation like you and I are having today. What are your feelings or thoughts around that?

Mike: Well, good concept, and I think part of it is ... It's funny, when we first started coming out with our new products, we would make them. We would have people around the office taste them. We've now created some what we call sensory panels. We've actually trained people, some in the company, some outside the company. We have trained them how to pick out different things in a product, and this is part of our R&D development. This way, as we're developing the products, we're saying, "What does the consumer want in a cheese, or a pizza, or an ice cream, or whatever," and we're kind of tapping in, like you said, to the consumer and giving them what they want.

I mean, that's how you expand your portfolio. That's how you expand your business, how we're going to expand the entire plant-based concept is giving them products that taste good, so there is no compromise. There's a big difference between a cheese substitute and a meat and a protein substitute. There's a lot of protein substitutes in Europe, but they're not really meat analogs. They don't taste, look, feel and meet that need, and we've got to get to that place.

That's what we're trying to do at Daiya, and I think some of the big CPG companies that have to cost reduce, to your point earlier about the costing, they have to cost reduce to keep their bottom lines healthy because they're not growing anymore. They're down one, two, three points. We fully understand our products cost more. Our ingredients cost more, and when we use those we make a better product, a better-tasting product. It is going to be a little bit more expensive on the shelf, but we do believe people are willing to pay a little bit more to get something that, quite frankly, meets all of their needs.

Dan: Absolutely, and back to the no compromise, I love the fact that you keep stating it over and over and over again. That is what this industry is about, natural organic. It is the R&D, as I continually say, for the CPG industry, and the point being that no compromise means not only are we not going to compromise on our ingredients, but our standards, and the product we put out there, and our commitment to our end consumer. You talked a little bit about innovation. One of the things I've been challenged with for years is that big companies, when they think about innovation, they think about slapping a new label on something or putting it in a different aisle and calling it something else even though it's really the same product, or maybe sprinkling a different flavor on that and calling that true innovation.

Where I'm going with this is that consumers, I think, are getting wise to this, and they realize that this really is not innovation. That's just a gimmick or another slant on an old thing, so the fact that you're actually developing products, you're taking the time to develop products that consumers really want, is fantastic. You also talked about your focus panels. One of the things, again, going back to the way that big companies look at things, is, they have focus groups that come in where someone is paid for their opinion about whether or not they like products. Well, those aren't always all that great or that scientific, and the fact that you're using your actual consumers and people that try the product and love the product as your focus panel, to develop the testing, or to validate the testing makes tremendous sense. Can you go into that a little bit more, Mike?

Mike: Yeah. I think that the key is, if we want to get a cheese, a pizza, a cheesecake, or an ice cream that is comparable to the best in the CPG world, you can't just trot it out there and with a lot of hype convince people that they're going to try it, and they're going to try it, and they like it, they're going to come back, and they're going to repeatedly buy it. That's where we have to get to. To your point about innovation, it was funny, I saw a commercial the other day about Advil minis. These are smaller Advils with the same amount of ... I mean, Advil's already pretty small. The fact that they have to come out with a mini Advil that has the same amount of strength, there's not really any innovation there. They're just using less packaging, material, in the actual product. I don't know exactly the science behind it, but to your point, is that really innovation?

We want innovation to go to places where people can get healthy, better-for-you plant-based products in a format, in a form, in a flavor, in a new product we have coming out, or like some burritos and things like that, so that at all parts of the day you can have something that meets your needs. That's tough. That takes time. That takes research and development. That takes consumer input, not just throwing it out there — that's quasi-innovation.

Dan: Yeah, subbing a different label on something. I've never understood the reason that brands do that. That just doesn't make any sense at all. Now let's transition back to the retailers. Where can we find plant-based products? Are you next to the dairy equivalent, or are you in a different place in the store? Because one of the biggest challenges that I hear people tell me about and I see is that if you're not aligned with those other products, consumers can't find you. It makes it difficult for the shopper experience, and again, you're the one that's driving profitable sales across to every category, so where are you located in the store? Are you located next to your dairy counterpart, and how is that working, or how has that discussion been with retailers?

Mike: Great question, and that is something that's something very difficult in that we obviously, until the name Daiya is on the front of these grocery stores, we can't tell them where to put it, but we can partner with them and collaborate with them with what makes the most sense. Part of the problem with a lot of these small companies, Daiya included, is, we don't have massive treasure troves of money to spend on research. When I was at Quaker, our Nielsen budget, or our IRI budget, was probably more than Daiya's entire marketing budget, and so to do a consumer tree decision making process with how the consumers go about buying it, we need some of that ... We think the Plant Based Food Association over time, or other groups like that in conjunction with our partner and people like you Dan, we can we can hopefully figure out how what works best.

To your point about dairy, when this first came out many years ago, the retailers didn't know where to put it. It was made of plants, so it must go in the produce section, so in almost every grocery store where there were dairy-free or meat analogs or tofu or kimchi or any of those type products, they would put them in a four-foot, or a three-foot dedicated section in produce, so gradually some retailers, and natural food retailers as well as conventional, have gravitated out of that, because with things like Silk milk, you don't find Silk milk over in the charcoal briquette section. You find it right next to regular fluid milk. You'll find other milks there, because I think when the consumer says, "I want to go buy milk for my family. I'm either going to buy animal milk or I'm going to buy plant-based milk," it's all right there for them. Left, right, whatever.

It is somewhat separated, but then again, so are, a lot of items, the two percents and the one percents, so that's how milk's sold. Gradually, with quite a few retailers, we're doing that with cheese, but it's also you have to kind of train, educate, make them aware geographically in a store where your products are, and that takes a little bit of time. It takes a little bit of money as well.

Dan: One of the things that I talk about a lot in my articles, my content, my podcast, and the free course I just launched, is how to do that. One of my areas of expertise is solving this exact problem by helping the retailers understand the consumer that buys the product. Let me explain. Most solution providers commoditize the consumer and the products. What I mean by that, and I use this kind of as a generic, not to be too sarcastic, but they think of the LOHAS consumer as someone who eats a couple salads and goes for a walk and, well, they're trying to be healthy, whereas in our world that core LOHAS consumer is someone, as you mentioned earlier, Mike, is concerned about their carbon footprint. They want to know where the product comes from. They want to know how it's made, how it impacts their environment. Is it local? How is it sourced? How is it produced?

It's understanding that core consumer and how they buy products which is really driving trends, so I've been able to have tremendous success in that arena, and that's a whole 'nother episode, but getting back to what we were talking about a minute ago, if you're not located next to the dairy equivalent, then consumers can't find you. Again, to any retailer listening, you're the one driving the sales, the profitable sales, in every category, and at the end of the day, your market basket, what a consumer buys when they buy Daiya or organic or any of the other products that are associated with the better-for-you movement, that consumer is worth far more at the checkout line than a consumer that comes in and buys cheap generic bread. Are there any other things that you wanted to add to this conversation Mike?

Mike: Yes. We've just recently done some studies on exactly what you're talking about, Dan, and that was basket ring. That's what both conventional shoppers do in a store, and these were several very large retailers. What they buy in a conventional basket, what they buy in a plant-based basket, and then the Daiya basket. The Daiya basket was very close, slightly higher than plant-based, but you're right. They're coming into these stores, and many, many years ago, when I helped sell Yogi Tea into Walmart, the leaders of Yogi were like, "Why would we sell to Walmart? They won't buy us. They'll laugh at us." I said, "No."

This was during the recession. This was back in '07, '08, '09, and my pitch to the Yogi leaders was, "There are a lot of people out there on fixed incomes, fixed budgets. The economy's bad right now, and if Walmart," at that time they had about 3,000 of them, "can get this to them at a better price, it's good for the industry. It's good for Walmart. It's good for Yogi Tea," and they were able to get that out there because that's what people wanted, and they were able to find it. We've got to get to where we're putting this in there, where people can find it, where the word of mouth is also telling a lot of people, "When you really want to find something, you can, you'll start asking for it," and they'll start figuring it out into the various sections. It just takes a little bit of time.

Dan: Well said. In fact, a good friend of mine, who has also been on my podcast, Bill Bishop, coined the term "personal supply chain," and this is why if a consumer walks into a retail store and they can't find the product they want on your shelf, they'll simply go elsewhere. A lot of retailers spend all their time trying to reacquire, and reacquire, and reacquire the same consumer over and over again as opposed to developing a loyal consumer base by giving them what they want and need.

Now, that's a challenging question, I realize that, but where I'm going with this is that those small niche items that feed this specific need, the allergen-free, the free-from, the plant-based, etc., those products have got to be on the shelf. You've got to be able to find them, and one of the challenges that I find with a lot of retailers is that they don't really understand natural organic, and they're not putting the products in the right place. Again, that is to their detriment, unfortunately, fortunately, however that works out.

The core natural retailer does a phenomenal job of putting the products, like you said, with Whole Foods as an example, of putting the products someplace that consumers can find them. Mainstream retailers need to do a much better job of making these products more accessible, easier to shop, and make the shopper experience friendlier, and be able to provide more of the solutions that consumers want and need. I really appreciate your time Mike. I know we're coming up toward the end of our hour. What other things would you like to add?

Mike: No, I appreciate the conversation, Dan, and I do believe that as we become more successful, we will become more successful by taking a strategic category-based approach. We can't just-all be out there shooting. While many of these companies are competitors, if the category wins, we will win, and we're going to have to have category insights, better category insights, better consumer insights, so that we can explain to these large retailers. A lot of these large retailers are very worried about eCommerce. I think when it comes to fresh products, when it comes to produce, when it comes to the perimeter of the store, many of those products people like to look, see, feel, touch before they put it into their basket.

I'm not sure how much that's ever going to go to eCom. Center of the grocery store may go quite a bit to eCom over time, because it's products in a box that they've been buying for 30 years, but when it comes to a lot of these fresh, chilled, and even quite a few of the frozen products, they buy them a little bit differently. So the more category insights that we can drive, the more analytical we can be and the more strategic we can be, and to your point about merchandising within the store, educating that retailer why it makes more sense for these products to be grouped together, whether it's integrated, segregated, or completely, like a shotgun, set and all mixed, so that there can be accurate and good comparisons with conventional or conventional CPG products with the natural organic products.

I like where Daiya's going in this area. I like the people and some of the services we've hired to look at that will make us a better company and a smarter company as we continue to grow.

Dan: Absolutely. In fact, going back to what we were talking about, we're about the same age, I remember where better living through chemistry meant that you kind of stayed away from the center of the store because that's where all the processed stuff was. Point being is that when you're shopping, if you can buy most of everything you need from the perimeter of the store, that's where you need it to be, so to have a product on the perimeter, like yours, that drives consumers into the center of the store, that is a huge plus.

The Category Management Association recently reached out to me to put together a four-part organic webinar series to tackle this exact conversation, to help brands and retailers understand how not only are you driving sales to center store, but that shopper journey that you just mentioned is so very different. Again, if a consumer can't get what they want at your store, they'll simply go elsewhere.

I agree with you. Consumers are not going to be buying a lot of the fresh products online. I mean, you're seeing a little bit of transition, but the experience, the theater, as Phil Lempert, The Supermarket Guru, in my podcast episode 32, called it, that resides at the store level. For retailers to be able to capitalize on it, they've got to have the right products on the shelf that consumers want to buy. Again, thank you for bringing that up. Anything else you want to share? By the way, as part of this, could you please also talk a little bit more about how consumers can learn more about Daiya Foods and learn more about what you and your team is doing?

Mike: I appreciate that, Dan, yeah. We're stocked in pretty much most every conventional and natural food store in the U.S. and Canada, so you can find us just about everywhere. We have 47 products, give or take, on shelf right now. We're going to have many more new innovations coming up in the next few months, but Daiya is a company that's located out of Vancouver, Canada, and very proud of what we're doing. We just signed a new lease to move into a new facility that is about 10 times bigger than our manufacturing capability right now, so if any of you, your shelves are missing a flavor or two, in the very, very near future that will be never be a problem again.

Dan: That's good to hear. In fact, again, that's my secret sauce, being able to help retailers. My mission is to make our healthy way of life more accessible by getting natural organic products on more retailers' shelves and into the hands of more shoppers. This is why I do the podcast, and this is why I was so excited to interview you and other thought leaders in this industry, because we need to raise the awareness, we need to raise the bar, not only from the consumer's standpoint, but the retailer's. We need to help retailers understand that these products are the future, and they need to be focused on this and paying close attention to the trends in the market. Again, thank you for that. I will put a link to Daiya Foods on the show notes and on this podcast webpage. I want to thank you again. Anything else I missed Mike?

Mike: No. You did a nice job, Dan. Thank you.

Dan: Thank you, Mike. I really appreciate it, and again, thanks for your time. I want to thank Mike for coming on the podcast today and for sharing his views and his insights on this valuable growing segment that is revolutionizing the way that consumers think about food, about healthy, nutritious options to support their families and their healthy lifestyles. I will include a link to Daiya Foods in the show notes and on my website on this podcast page. You can find it at brandsecretsandstrategies.com/session34. Today's freebie is my course, Turnkey Sales Story Strategies, where I discuss a lot of the strategies and insider secrets that brands can leverage with retail to help them get their products on more retailers' shelves and into the hands of more consumers. You can sign up for this free course at turnkeysalesstorystrategies.com/growsales. Again, thank you for listening, and I look forward to seeing you in the next show.

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