The food and beverage space is full of innovators and disruptors at every turn, but no matter how novel or useful your product may be, it takes many factors for it to do well in the retail store. Saj Khan is an absolute expert on these things, having been in the grocery industry for more than sixteen years. Saj is the Vice President of Grocery Operations at Nugget Markets, a family-owned-and-operated retail company based in Northern California. In this episode, he joins Elliot Begoun to give some constructive criticism to the product pitches of four emerging brands in food and beverage: Amazi Foods, Manukora, Qula and Tia Lupita. For five minutes, each brand’s representative pitches their products to Saj, who then gives his honest feedback. If you’re a new founder in food and beverage, this episode is a good stopover to learn about positioning yourself to win a prized spot on the shelves. Listen in!
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Food And Beverage Retail Pitch Sprint With Saj Khan Of Nugget Markets Elliot Begoun
Food And Beverage Retail Pitch Sprint With Saj Khan Of Nugget Markets
Joining me is a good friend of mine, Saj Khan from Nugget Markets. He’s been in the industry for a long time and has a unique background in the fact that not only does he have the grocery bent, but he also understands the entrepreneurial angle. What we’re doing is we’ve invited four brands to join us to present to Saj as if they were presenting any other retail buying experience. Saj is going to ask them questions. After the four presentations, we’re going to talk and try to give some constructive feedback as to what could be done differently. What was good that was presented in both form and in content, and try to make this as educational as we can. Before I invite our first presenter, let me pass over to the Saj and let him introduce himself and tell you a little bit about his background. Saj, it’s all you.
Thanks for having me, Elliot. My name is Saj Khan. I’m Vice President of Grocery Operations and Purchasing at Nugget Markets. It’s a family owned business. It was established in 1926. I’m working with fourth generation and I’m loving it. It’s great being in retail right now. I’m glad to be working. I came up through store level. We have a high-end natural grocery store chains that some people call hybrid, but we also have some box stores that are considered price impact mass. I came up through our food for less format back in 1999 and did all the buying. I worked my way up from a checker all the way to assistant store director, grocery buyer. I did that both roles simultaneously. I’ll be on the store.
Luckily, I worked for a company that empowers you. I was responsible for the entire P&L of the store. I set my own retails. I did my own buying. As long as I hit the numbers, everyone was happy. After about 3 or 4 years of doing that, I was asked to come to corporate and start our category management program. At that time, we only had six stores. We’re on the verge of opening up our 16th store. When I came to corporate, my responsibility was to start getting some consistency and continuity between the stores. The owner of the company had a vision to grow one store a year.
We had to start thinking not like a bigger company, but a little bit more of an organized company that had a little bit more systems in place. I’ve been fortunate enough over the years to help create, break and remake those systems. I’m Vice President of Grocery Operations and Purchasing. I still oversee center store, but I’m also a mentor and oversee a lot of our corporate directors, meat department, produce, deli, bakery, coffee bar, specialty cheese. I assist those leaders in our company as well.
If you haven’t been to one of Nugget stores, it’s an experience that everyone should have. They’re very cool stores. You took the pretty normal approach. You majored in this in college.
I went to college and wanted to be a forensic scientist. I have my degree in Biochemistry. I started working for UC Davis, which is a local university that I earned my degree from. I started working at the Primate Research Center for the university. I never left the grocery business where I was working, putting myself through school because I loved it so much. The culture, the energy and the family environment at this company was infectious. For three years, I worked in virology and immunology, working with other scientists, trying to find a cure for SIV, which was Simian Immunodeficiency Virus, which is where they feel HIV came from. I worked on monkeys. I can officially say I’ve been in the monkey business and now I’m still in the monkey business.
First of all, thanks for doing this with me. When I thought about doing this episode and giving an opportunity for those founders and those new in the business a sense of what it’s like to present, I immediately thought that you’d be the perfect person to do this. You’ve always given honest, tough love feedback. You’re both an ardent supporter of the early brands and the entrepreneurs that are behind them. You’re also a mentor in your own team, but you’re also a mentor to a lot of these brands. You’re not going to give them a bullshit answer. You’re going to give them feedback and they’re going to walk away sometimes feeling a little worse for wear, but they’re going to know what need to go work on and how they’re going to get better. That’s why I thought this episode would be constructive.
Without delaying it any further, I’m going to invite our first presenter. The way our format is working is that each of these entrepreneurs have to tell Saj why their brands and products should be in his stores and then Saj will ask them direct questions to which they’ll respond. We’ll go through all four presenters and then once done, Saj and I will have a little debrief after and give everybody some input, feedback and good lessons. I’m going to welcome, Renee Dunn from Amazi to join us now and tell Saj a bit about her and Amazi.
Thank you so much. I’m Renee Dunn. I’m the Founder of Amazi Foods. Snacking is generally mindless activity. You pick it up. You scarf it down unsatisfied and disconnected, but now more than ever before, people are craving connection in what we consume daily. There’s a call for purpose and transparency. There’s a big opportunity to shift that status quo. We think snacks could be that change agent, taking me from mindless to mindful. Enter Amazi Foods. We’re on a mission to help you snack on purpose through our made in Uganda plant-based tropical snacks. Every bite you take directly supports sustainable and more equitable supply chains, and closes the gap between source and consumer. We help you eat good, feel good, and do good too.
How exactly? Let me backtrack. I studied abroad and did my thesis research in Uganda. While living there, I was blown away by the organic tropical fruits that were bursting with flavors unlike I’d ever had back at home, but then saw them sitting stand after stand by the roadside. What I came to learn was that I knew that cocoa farmers had never seen a chocolate bar. I heard those stories, but I realized that anecdote summed up our supply chains as a whole. The people at the resource level were completely separated from the opportunity and the innovation that existed in the global market. Not only did that result in very high unemployment and food waste, it was also a big missed opportunity for satisfying a growing consumer market back at home.
There’s been a huge rise in plant-based diets and emits that people are looking for even more unique fruits and flavors. As snackification grows as a part of the US diet, we’re becoming even more demanding in clean and healthy options. Above all of that, brands with purpose are driving traction more than their competitors. As 67% of consumers say, they search for brands with purpose. We thought, why not connect to the ingenuity, drive and bounty of Uganda with the American consumers who crave both good food and story? We partner directly with farmers and small business in Uganda to make our snacks from start to finish there.
We’re not only innovating on the supply side, but also committing to introducing innovation on the US side. Amazi Foods is committed to offering a much-needed twist to the dried fruit category. Although each product is made with three simple ingredients, the flavors and textures are anything but simple. Big globally inspired tropical flavors and unique textures. Our plantain chips are dried and roasted, never fried. They’re unlike any others on the market. They have almost a caramelized texture. They’re subtly sweet, grease free. My favorite line is the jackfruit chews. They taste like grown up fruit rollups. They’re sticky, chewy and sweet, but they’re made with fruit and spices, nothing else.
We offer purpose-driven people a purpose-driven snack, with sourcing as intentional and functional as the products themselves. We’re able to compete on flavor, health, story and price, taking simple and making it far from boring. Each of our product lines has three unique flavors. They come in packs of six with an SRP that’s competitive at $5.99, but has room to support our retailers as needed. They’re all certified vegan, paleo, and now certified woman-owned as well. To this point, we’ve grown close to 500 doors nationwide including Sprouts Farmers Market. Not to mention we’re cute on the shelf. We have vibrant colors and a very clean, approachable look. We also do quite well cross-merchandising different areas. At Sprouts, for example, we’re nice right there in the superfood set, but we’ve also seen success cross merchandised in produce.
You don’t have to take our word for it. People have been very excited by our offerings, tastes unlike they’ve ever experienced before, the convenient resealable packaging, the three simple ingredients. They also use it in many recipes and share it with their families. More than a new snack, we’re offering our retail partners the chance to create change on your shelf. Together, us and our retailers and our consumers, we’re creating over 150 jobs, relationships with thousands of farmers and an additional $13 million into the Ugandan industry over the next five years. Saj, we invite you to snack on purpose and carry Amazi in your store now. Thank you.
Saj, it’s time to grill her.
First of all, Renee, thank you for the presentation. I love your packaging. The packaging is awesome. You nailed it in terms of it popping off the shelf. I love that you have it very streamlined. You’ve got two sources, plantain and jackfruit, but then you got some flavor profiles under each one. Some questions that I have is, and I’m not trying to be Debbie Downer on this. I love the packaging. I’m not even worried about your SRP. You said it’s $5.99. How many ounces of product is in the bags?
It’s 2.3 ounces.
I would say in terms of the retail, it’s a sweet spot but it’s probably the highest that I would be wanting to have in that category. I don’t think you’re out of whack with a $6.99 or $7.99. Hopefully, with scale you’re able to come down. The sweet spot for that category is the $3.99, $4.99 range. It’s a conscientious product and there are a lot of conscientious products out there. My question to you is, how do you plan on getting that message out?
The storytelling on the shelf is the greatest challenge. Our approach has been to invite people into it somewhat on the front of the bag and tell the story in more depth on the back of the bag. We have a call out to it being organically grown and made in Uganda on the front. On the back is where we have snack on purpose and big. It shows a picture of our farmers. It tells the story of Amazi. It has our Amazi seal of sourcing that talks about our core values of transparency, opportunity and connection.
The reason that they’re an invitation on the front is exactly as you said, we find that many people are almost sometimes numb to claiming a mission on the front of a bag and letting that be the only thing pulling people in. We’re much more about the look of the bag, the feel of the bag, the overall brand pulling people in, and then being able to tell people our story. Off the shelf, we have a robust marketing strategy, social media and our website. We go into much more depth, anything from IGTV series, where we show our production team and do interviews with them and talk about it and other like-minded brands, things like that. On the shelf, it is still somewhat subtle.
If you were coming in and we were having a presentation in person, one thing that I always like for anyone that’s coming in and presenting product to us, whether it’s a CEO or a founder or even a broker, is I like them to have already walked our stores or at least walked one of them and already be knowledgeable on my category and what I carry. If I was to ask you, who would you see yourself competing with or replacing? Let’s say you know that I carry everything. Who do you feel you do a better job than who I already have on the shelf, even though I know you don’t know who I have on the shelf?
I have unfortunately not been able to walk the store, but I do think we have good landscape in our Sprouts set, for example. In that set, you have the Rhythm Superfoods, which are offering the dehydrated veggie flavored, chips and such. You also see some dried fruit varieties. The goji berries are there. RIND Snacks keep the peel on dried fruit snacks. We love them. They’re a competitor. I could see us sitting nicely on the shelf with them as well. Especially for the plantain chips, that’s where we’ve been adamant about not putting it with other salty snacks. It does much better in the dehydrated functional snack set. It won’t sell or set expectations like it should if it’s with the other plantain chips. That’s been something that I’ve worked with buyers on before.
If you take one brand out, who would it be?
I’d take out Mavuno Harvest. I don’t know if you carry them, but we have similar mission. We crossed paths in Uganda, but very similar story. I love what they’re doing, but we take it a step further both in terms of the product offering and in terms of the mission. The fact that we train people on innovative niche production helps. The teams that we work with are 30 people who are in their youth and have no sense of any flavor preferences outside of what is local. I get so excited to see us creating recipes beyond what they’ve seen before and they’ve seen dried fruit. To be able to learn other food science and other techniques has been exciting. Again, that’s from the mission side and also the flavor experience from the consumer side is better as well.
Where are the plantains fried in? What oil?
They’re not fried. They’re dried and roasted. We have two flavors made an olive oil, which I found to be pretty catchy because not many others are in olive oil. We have coconut oil is in one of the flavors.
Renee, thank you very much. We’re going to bring on Mike Bell from Manukora. He’s triggered, loaded and ready to go. You’re on.
Thanks, Saj, for your time. It’s a great opportunity to be able to catch up with you. We’ve been looking forward to it. I’m Mike, the Founder of Manukora. We are also a family-owned business, fast growing, purpose led, with our roots deeply on Mānuka Honey. We’re about nature, rich nutrition and wellness. We believe in plant-held health for a bit of daily life. We think nature is awesome. We’re on a mission to create Mānuka powered health products that promote the longevity of our world.
I wanted to introduce our brands at the moment, Saj. We’re running more traditional packaging that’s being used around the globe. We’ve managed to make it work online in the US over the last few years. We’ve got hundreds of thousands of customers online. We have arranged that we are launching into retail. We have launched into retail two grades of Mānuka Honey, the MGO 50+ Mānuka Honey and the MGO 100+ Mānuka Honey. The SRP range from $12.99 up to $29.99. They fit well into the grocery category.
We also have some other food available for vitamins or supplements as need be. Some important points about our product, we’re non-GMO verified. We’re one of only two brands in the United States to be glyphosate residue free certified. It becomes quite important as consumer awareness around residual sprays and honey products is rising. We’ve put a lot of work into our packaging. We’re in a 100% recycled PET plastic with our jars. FSC certified card and labels and some more exciting progress to be made shortly.
As I mentioned, we’ve launched into California retail after a few years online in the US. We look for a spot thinking here once we go narrow and deep, and we chose California. It’s our largest state by number of customers, by transactions, by revenue, and our third largest per capita across the country. We are in approximately 60 doors from cool accounts such as Erewhon down to Rainbow Acres, Canyon Market, the Whole Wheatery, and many other great accounts. We are available in both with UNFI. We’re getting close to that and we’re ripped by duty hands.
I understand Amy was with you chatting to you about the brand. It’s a great opportunity to talk to you a little bit more about the brand now. We’re already nearby your stores. I’ve put all fifteen locations on here. I realized that at least one of them is Food 4 Less. It’s cool to hear you mentioned a bit about them before. We’ve got hundreds of customers in close proximity to every single one of your locations. It was quite cool getting the team to map out each of your locations and looking at our existing customer heat map. We can do some cool stuff with those customers as we engage with you.
We’ve got a pretty cool approach to retail partnership. We’ve been leveraging our digital team in-house. We know a lot of digital activation and brand awareness level drive the store. We’re still trying to draw customers to engage with us. We’ve been doing a lot of work during COVID around staff education, coupon programs given we can’t get into stores so much. We’re trying to understand how we can work around to be in store as much as we would like to be. We’ve got a strong promotional program, whether it be through the distributors or retailers specific.
Amy introduced the existing brand. That’s the brand that’s going well already, but we’ve decided to change things up through a lot of consumer work. We’ve decided we need to meet consumers with a set of eye. The brand wasn’t looking quite right for the health and wellness category. We’ve re-cut the legacy range in the middle there. We’ve also got an exciting new product launch coming in November 2020, herbal and botanical supplements delivered on Mānuka Honey. These are the products here and we can talk about it more if we got time, therapeutic doses of herbals and botanicals. We had a little pilot mocking it up on one of your shelves.
First of all, thanks for at least making it look like you’ve been in the store and mocking that up. Your packaging looks great. My entire time as a buyer, I’d heard about the benefits of Mānuka Honey and the antibacterial effects of it. I’ve always heard that there’s also a lot of bad Mānuka Honey that’s out there or stuff that has false claims. How do you feel the average consumer feels about Mānuka Honey? Do they understand it? Does Mānuka Honey belong in the health and wellness area? In our stores, we call it healthy living, which has a healthy living specialist there, which is where a lot of our homeopathy products are. Do you feel like you want to break into the mainstream inline honey set?
We feel that the category is still pretty immature up in the US. There’s a fair bit of awareness around the term Mānuka now. From last readings, it’s about 20% across the country and it’s elevated in California. People still don’t quite understand what the product is about or how to buy authentic product. One of the reasons we’ve gained a lot of traction over the last few years is that we have this unique technology on every single product that’s called trust codes. That’s unique product serialization. Fifty thousand jars have 50,000 unique codes and we will authenticate the product at point of purchase. We provide lab results, non-GMO certification, glyphosate certification. We’ve built trust with our customers. That’s what has driven that online category leadership.
We look at that as an opportunity rather than an issue and we’ve addressed it in that way. Secondly, around what category it fits. I do think it can set them both. We’ve specifically tried to arrange for the grocery category for our launch in 2020. They start at $12.99 and move up to $29.99. One of our products, which is our MGO+ 50 8-ounce jar, that was number 252 in the grocery category online in Amazon. We’re moving a lot of products at top grocery product online. It’s moving well in the accounts that we’ve launched into.
Let me ask you another question. This is a category that, from my standpoint, I just need to carry one. That’s the shitty thing about having something that’s this unique and specializes as a retailer. It’s not going to be something where I have like 3, 4 or 5 different brands competing for that Mānuka Honey guest. To me, I want to partner with the one that I feel is the best. It’s the one that I feel is the only one that I need because the inventory in my experience is expensive. The velocity on it isn’t similar to what other items in the grocery aisle I sell or how relative the other honey sell. If we are sitting across each other, why do I need your honey over any other Mānuka Honey that I have? Why would I only need yours?
I haven’t had the chance to get into your store, Saj, but I can assume that you’re carrying one of a few brands. It’s interesting because there’s not many New Zealand owned, the market leader in the retail is not writing the product for methylglyoxal, which is the key active compound in Mānuka Honey. I would be thinking very seriously about working with a brand that is proving the traction either online or in retail as providing products at a price point that meets the consumers in the grocery category and is providing laboratory results for the methylglyoxal in their honey products.
Let me ask you another question. I’ve heard this from different brands. Some brands are wanting to protect brick and mortar. The retails that they allow brick and mortar to be at are more competitive than what they’re offering online. What is your stance on, am I going to look foolish if I put it on my shelf? You started online? Where am I going to sit as a retailer when your brand started digitally online, but now I have it in a brick and mortar. Am I going to look foolish trying to compete online?
We don’t discount online. We give retailers full margin at SRP which matches online. What we’re seeing now through our retail, which is that retailers are sitting below our online price. A lot of brands that I’m seeing sometimes is up to 50% more in retail. This is the Amazon price. We’ve got much better control. We have seller control on Amazon. We are on Shopify. We’ve got very tight control distribution. You’d be very pleased with that result.
I appreciate that. I’ve heard a lot of brands are starting to do that because they still understand most of the brand equities is built still at brick and mortars. As a buyer, I’m always very reluctant when somebody comes in and tells me, “We’re in Walmarts across the nation.” My thought is like, “I don’t need it. If it’s already in Walmart, they’ve already established the retail price and I’m not going to be able to compete with it. I’m going to look more higher priced.” The other similar presentation that I always hear is, “We’re killing it online.” I’m like, “Where am I going to be positioned in terms of price when it comes to what people have experienced online?” I’ve heard a lot of brands now are wanting to protect brick and mortar. I appreciate that because the person shopping online is looking for more convenience. There’s a different amount of disposable income. I like the fact that brick and mortar is where it’s at.
That’s an important point. Convenience is something that people have to recognize as a premium online. I want to go on record before I say thanks to Mike and say that I’m showing great restraint when you mentioned pricing making you look foolish. I have a whole list of other shit that can make you look foolish. Mike, thanks for joining and being a part of this. We’re going to bring on our next person who’s also a fellow Kiwi and that is Rebecca Cass calling in from Wellington. We’ve got one from Auckland and one from Wellington.
I’m a little North of Wellington. I’m up on the coast. Saj, it’s great to meet you. Elliot has spoken highly of you for a long time. I’m going to be a little different to all the other people that are presenting because we launched the product on the eve of COVID and had to completely re-strategize and go direct to consumer. I don’t have any case studies or examples of us in retail. Go gently on me and my presentation will be more about the product and how we got to where we are.
You’re on now.
Qula came about from an idea that four people sitting around a table and drinking kombucha came up with. That was myself and three others, not at all from the food and beverage industry. We were drinking kombucha and we looked over at the trash bin and it was overflowing with bottles. We were like, “Was there a recycling bin?” We got talking about the single use bottles and the scourge that they are, and how they don’t get recycled properly. I’ve got a background in food and beverage. I have always been a bit of a disruptive thinker. I started to take away about, is there a way you can have a drink without a bottle? I came up with this concept of a tab that you drop into water and it transforms it into a kombucha. Kombucha, because that’s what we were drinking at the time.
The four of us decided, “This is interesting. Let’s have a crack at it.” We started developing and managed to pull it off at the world’s first kombucha cactus. What was interesting about this is at first, it was a real environmental. For us, we were thinking about this is being something that people could use instead of buying single use bottles. As I started to put the case together for it, I recognized that we were something new and disruptive, but we sat in the center of some pretty big categories. We evaluate to a pretty, amazingly big, huge water category. What we have is a bottle-free beverage that comes in a tab.
We’ve got four different flavors skews. We have a guava rose, a raspberry cucumber, a mango pineapple and a blood orange and rosemary. The packaging was designed during a collaboration with different artists. We have artistic people behind this business and some musicians and all sorts. We collaborated with artists to create eye-catching, cool, fun designs for our packaging. Our saying is, “Change your water, change your world.”
I’ll go into a bit of information about the product itself, Saj. We’ve got the tabs in packs of six, which we plan to sell at retail. The SRP on those will be $11.99. We also have individuals. The individuals, we did some cool outer packaging for these. We recognize that this is a disruptive new product. We needed to invest and designing some cool stuff that caught people’s eye. We gave them some information about the product and also gave us some flexibility about where it could be displayed. It has a little thing on the top here. You could hang it on a clip strip in the water section, or you could put it at the register at the counter, or it could go into healthy living or wherever it is.
As far as the composition of the product and how we got to it, we went right back to basics. I love cooking and experimenting. Saj, I heard before you were a biochemist. I was a pediatric nurse with a love for food before I went into business. We started on the bench top with liquid kombucha, home-brewed kombucha as we worked through the process of this. It’s made up from a real kombucha. We’ve also added in some other great health boosting ingredients. We have an apple cider vinegar in there. We have some matcha green tea, which is for their L-theanine. You get a nice slow caffeine, but you get a nice energy hit from it, and the core kombucha ferment that’s in there too. We’ve got singles and six packs. It’s a whole new thing.
Rebecca, your packaging, everything from when you put the Qula up, the brand rolls off the tongue to how the graphics are is amazing. The packaging is off the hook. It looks like people were doing mushrooms coming up with that packaging. It’s awesome. I’m a huge fan of it. Your price point is awesome because a typical kombucha is anywhere from $2.99 up to $4.99 in the ones that we carry. We work in conjunction with the nutritionist from the local university. There are a lot of people that are still not believers of kombucha. You have those, and then you have people that are diehards of kombucha.
It’s a symbiotic relationship between bacteria and yeast, but the average person feels like a kombucha is a living thing. How do you convey that when they see it in a tablet form because you don’t think of it as a living thing? How do you break through on that? The concept is phenomenal. The packaging is phenomenal. The conscientiousness of wastefulness and plastic is awesome, but how are you going to get people to know that it’s kombucha and it could be from a tab? Because people think, “This is living bacteria that’s good for my gut health and everything spawns for my gut health.”
It’s the education that needs to go into it. We’ve revised the verbiage on the packaging to educate people a little more about that. I count my blessings that we had to pivot completely at the beginning of 2020 because it’s given us an opportunity to listen to what questions people are asking and adapt the information that we’re saying. We do microbial studies after every production run. It comes down to a process of messaging with people. What we did for our direct to consumer is we put a cool little insert that goes into each single in a fun way. It has information about the product so that when people open that first one, they get it.
For the next production run, we have more information going into our product about that. The other thing that’s been interesting, another great learning and it comes from a little bit of background for me. My history is in direct to consumer. I’ve run some big companies in that space. With the advancements in technology, we can do some exciting things around geo-targeting customers when they’re going into stores and different areas. We can plant some stories, giving people information, answering questions or feeding them through on a fun way some good valuable information that will help them understand the product more when they walk in and see it.
Right before COVID hit, probably 6 or 8 months prior to that, I started doing kombucha on draft with GT. At least, I know draft is still having to go into a cup and into plastic and different things, but have you thought about creating a vehicle like that where you’re still not investing in plastic and bottles, but there is a little bit of more sustainability perception with draft and using that as a method to get trial and to get it into people’s mouths. The other thing I’m thinking about from a retailer, I would always ask you like, “How do we get this into people’s mouths efficiently and effectively?” Since this is a shelf stable item, where do you see it living? What category would I put it in to where the kombucha consumer’s going to find it? I’m not going to waste refrigerated space on it.
It’s a good question and one that Elliot and I have debated for a long time. It could hang in the water aisle. You could put it on a clip strip there. You could go into the healthy living section where people are familiar with things like kombucha. It could go into areas where you’ve got other powdered beverages or hydration drinks and that type of thing. It’s going to take a bit of discovery. The dream for us would be to be near check out. That would be fantastic, but I know that’s a popular space for a lot of people.
Becks, thanks for hanging out with us. We’ll let you jump off and we’ll let Hector from Tia Lupita jump in. Hector, you’re bringing us home.
My name is Hector Saldivar. I’m the Founder and CEO of Tia Lupita Foods. Tia Lupita is better for you, healthy, Mexican-inspired food brand. We use clean, simple ingredients in all of our products. We have a line of hot sauces. We are proudly the first brand to introduce cactus or nopales as an alternative functional ingredient to the US market. Before I dive into the items, every story has a beginning. My story begins with my mom and sending me her family recipe for hot sauce. In Mexico, we don’t inherit houses, cars or jewelry. What gets passed down to us is our family recipes.
In this case, mom agreed to pass me down her secret family recipe for hot sauce and that’s how it began. Thanks to those packages, I realized there was a wide space that needed to be addressed. There was not a Hispanic brand out there that was tackling issues like diabetes and cholesterol. They were still using artificial ingredients, high sodium junk, fillers and all that stuff. Our core consumers are the new generations. By default, this means Hispanics. Over 30% of new generations are Hispanic. Gen Zers and Millennials.
We’re paying attention to what we eat. We are paying attention to sustainability and if it’s better for us. We’re very tied to our heritage and our culture. We like innovation and we like to share that with new friends. All this ties well. I like to say that the market is coming to us with regards with the products. This is a bombshell for you, guys. Nobody has seen this, but I’m taking the liberty to announce that we are changing the label design of our hot sauces. We feel that with the new label, we will be able to pop more on the shelf and attract more consumers to try our product.
You guys already carry our hot sauce and our salsa verde. We have partial distribution of our chipotle. This is because some of the Nugget store sets are very limited in space. What I am excited is to present to you our habanero skew. I’m a huge fan of habanero, but it burns my mouth. After a couple of bites into it, it fatigues my taste buds, and then it’s all heat. The flavor is gone. We were able to produce a habanero using my mom’s recipe that is super flavorful, simple ingredients, non-GMO and gluten-free, with the right amount of heat, which is very important.
We are super happy to say that Tia Lupita is performing well in the hot sauce set. It’s driving category growth. Hot sauces are now the number one condiment in the United States, even outselling ketchup. The whole set is growing 20% year over year. What’s cool seeing in this graph is how the premium and super premium brands of hot sauce are what’s truly driving the growth here. For your consideration is you need to have your field soldiers, your value brands, but if you truly want incremental dollars in the set, you should give us more space to brands like ours on the premium side. The other thing is I might be helping skewing this by getting high on my own demand. I like to buy a hot sauce. I use a lot of the hot sauce. Nugget is down the road of where I live.
We are the first brand to introduce nopales cactus as an alternate functional ingredient. Cactus is the most sustainable plant in the world. It’s a superfood, has the same superfood properties as kale, moringa and goji berries. We do have a line of cactus tortilla chips that are better for you, light, crisp, packed some flavorful heat. It has four times more fiber than regular tortilla chip. We have corn and cactus blend and grain-free. Cactus have been performing well on Amazon, as we launched this during COVID era. We launched this online and they become the number one bestselling hot new items in the flatbread category of Amazon. We were using upcycle acara. Tia Lupita is part of the Upcycled Food Association. There’s a lot of intent in consumers buying up cycle now on. We are big supporters of Nugget here. We shop there all the time, not only in Tiburon, but in Corte Madera and in the city of Novato.
Hector, first of all, I love your product and your label refresh, I love it. There are two things that brands do that bug the shit out of me, which is they come out and they change their label and what happens is people are still barely getting familiar with the old brand. They change the label and it becomes unrecognizable. I’ve seen too many brands lose any base business they’ve had because they’ve changed the label. What’s unique with yours is you have the most unique bottle in that category. There’s a couple of knockoffs that I see that are boutique and they’re priced like twice the price of yours. The cool thing that the label refresh why it works in your scenario is the bottle is still the biggest indicator of catching your eye.
The upgrades that you’re doing on the label popping it needed that. You’re right on point with your label upgrades. I had written down a question to ask you and you answered it right out of the gate, which I was going to ask you which generation are you going for? I know you have a traditional background on working for bigger Hispanic CPG companies and so do I. I remember the volume that I used to sell of Teasdale, Juanita’s and Valori, and you hit it on the head. Those 2nd, 3rd, 4th, 5th generations, they eat traditionally like that back at mom’s house or grandma’s house, but there’s more interracial relationships.
There’s more everything going on. Those first-generation type recipes and formulas, the volume is not there. You’re spot on with catering to the newer generation, the Gens and the Millennials in offering cleaner ingredients. No one else is doing that. Some of the Valoris and these guys are now starting to come out with organic. You’re far ahead of that. Your hot sauces are a slam dunk. They’re going to continue to grow. I’m very happy with them. The thing that we got to work on is I know we only have the cactus chips at one store right now. You’re getting them to Dale Cox, if I remember right?
That is true. The whole Dale Cox have not come through for us. I was looking forward to this conversation to see how can we do the switch. I know also Dale Cox has a certain reach. You were sixteen stores now and so we need better service.
What’s stopping you from going into a UNFI. Is it the deductions and the pain of dealing with all the backside issues?
Sincerely, I have not gotten an anchor account at UNFI for them to bring the product in. We launched the line of flavors in January 2020. As we were getting ready to roll out in March with Expo West, all categories review came to a halt. It’s that, I’m being completely honest. We do have distribution in some of the Bay Area, local specialty stores like Mollie Stones and Woodlands Market, this and that. I’m using a regional tiny distributor and so they don’t have the reach to get to you. I don’t know if you have leveraged at UNFI by saying, “We want to bring this in and they can bring us up.”
I do. We don’t need to get into the details of it. I can get your product to launch out of the Rocklin Distribution because that’s where I buy from. You and I talked on this in the past. We’ve got to have that aggressive plan. I got to hit certain numbers with those guys in a certain amount of window. Otherwise, they’ll tell me, “We satisfied your favor, but now your favor is not performing. We’re pulling the plug on this.” I’ll tell you this, it costs you more to get your product back in than what it would have cost you to keep it there.
People need to try it. Once they try it, they become believers. We count on supporting this at the store level with demos and with the pricing. They had it easy a couple of years ago floating with a $5.99, $6.99 price points. They’ve gone national. They’ve grown for us, the small guys, but we’re conscious of that. We have it in the P&L.
What’s the sweet spot on the retail for your cactus chips?
It’s $4.99 every day. For me, it would be $5.99, but market’s dictating $4.99 with promoting aggressively at $3.99. Saj, before Elliott kicks me out, the tortillas are set up at Rocklin. I know that your refrigerated tortilla set is growing. It has a higher velocity there. I would ask for you to consider bringing us in and we have that set up in Rocklin ready to go. That’s shipped frozen.
How many days has it slacked for?
It’s four weeks.
It’s good for 30 days?
Yeah. Is that longer than Syete?
It’s around par.
Why don’t you and I touch base and get this thing figured out.
It makes you feel better, I felt as nervous as I did many years ago when I was a field rep for class.
Hector, we’re dumping you. First of all, before we jump in and debrief, let me say one thing. It takes a hell of a lot of courage for these four brands and four entrepreneurs to come up and do this, not so much only because it’s presenting to Saj, but it’s because this is in the public forum. You know now that you’re going to hear some feedback and critiques. I want to call that out and acknowledge that and thank the four for joining and for being part of this. This is super important as we learn and educate. I’m going to turn it over to you in a second, Saj, for input.
Two things that stood out to me that I felt like were missed opportunities by everyone. One is, and you asked the question specifically of Renee, but when you’re speaking to a retailer, there’s a finite amount of space in the store. If you don’t have a suggestion for where you go in that store and what you’re going to replace, then you’re not giving them the information that they need to make a decision. They may completely disagree with you and think you’re full of shit and that’s fine, but you should always walk in the door with a game plan, a recommendation that you’ve sense where you go in the store and the item that you can replace.
Granted in this circumstance, everyone’s at a disadvantage. They don’t get to physically walk the stores except for Hector because of location, but still you can drive that. The other is no one asked Saj if they could follow up directly with him. No one asked if they could set up a call or a meeting and that’s a missed opportunity. Otherwise, I thought folks did well in a weird circumstance. Some information isn’t shared on a public podcast, but I wanted to get your thoughts, Saj.
I was impressed. It is nervous presenting your own product. It’s your heart, your body, your soul, your passion. You’re putting all your eggs in. There’s a lot of people that say they should have did this and should have did that. That’s where that old “you should” all over yourself. These are people that have done it. That takes a lot of balls to do and you have to respect that. There are a lot of buyers that are dicks and they don’t understand what’s on the other side. Unfortunately, enough an entrepreneur as well with two other partners. I know what it’s like being on the other side.
I know what it’s like being a small business. I know what it’s like to put your creative juices together and feel like you’re satisfying some niche that’s a void out there. To have a buyer not respect that and shoot it down and not be constructed with you, shame on the buyers. I want to commend you guys for doing it. I was very impressed with the presentations and obviously I would have had different conversations on promotions and the financials if it wasn’t available so publicly, but that’s something we can have after the fact.
These four brands were all in different stages, but when you’re sitting across from a founder, an entrepreneurial brand. An entrepreneurial brand is a different relationship. It’s a different dialogue than with an established large brand. What is it that you’re looking for beyond the product? What do you want a signal from them in terms of building a relationship with you and building a relationship with Nugget Markets?
The first thing I’m looking for is I always like it when the CEO or the founder is personally invested. I’ve had a lot of these examples and it’s tough because it comes with scale. I’ve had more success with brands where the founder has come and personally visited me or has personally stayed in contact with me. When I see them at trade shows, we know each other. I also have a vested interest in wanting to make them successful because they came to me, they launched the product with me, and I’m also a family own business. I’m a small guy in a big chain business. I always viewed their success and my success tied together.
What rubs buyers the wrong way is when the founders are not in the people business. They’re in their business. No matter what you’re doing, everything that we’re doing is a widget. First and foremost, you got to be in the people business. I have a very unorthodox style, but the style I developed in buying is I want to be memorable. I see so many different brands come and present to me. You guys go and present to tons of different brands. I forget people’s names and what brands they had. You guys probably forget what retailers they were and what their roles were, but I try to be memorable. I try to have that connection to where as a retailer, I’m going to feel responsible, invested to grow their product.
A lot of it starts with the relationship. What I need them to tell me is you got to sell me on or you’re onto something that I am not onto? This is going to be where it gets a little bit tough. With Renee and Amazi, I love the product. I love the packaging. I haven’t tasted it yet so I shouldn’t say I love the product, but I love the packaging. She has personal experiences in Uganda. She has tasted the product. She has the connection, but I see that being extremely difficult to get people to make that connection. I can’t get people to make the connection for paying a couple bucks more from buying something local down the street because that’s local, a small scale, and it’s coming at a premium.
That worries me a little bit. I do like the fact that she’s got plantain and jackfruit. The other thing I do want to comment to people is like I told Hector, you got to be very careful when you are changing your packaging. I’m experiencing it all the times when I’m in the stores. I’ll be in the stores. First of all, people always know for some reason, I’m there to help. I don’t have a uniform on or a name tag, but a grocer always looks like a grocer. People will be like, “Can you help me find this?” They’ll do that when I’m in competition. I can’t tell you how many times I have people try to describe something to me and they don’t even know the name.
They can’t even tell me the brand, but they can tell me what it looks like or what color it is. There are so many decisions that are made peripherally. When people start changing their packaging, you’re starting over from scratch again. I have probably once a month, when I’m in the stores, somebody telling me that they’re looking for a product and I’m trying to get the brand and certain things. I’m trying to extract that from them. They’ll be like, “No, it’s in a black package.” They’re pointing out all this minute little detail that the brand registers with them. That always bugs me because I’ve seen a lot of brands fail that way. The other thing is some brands start proliferating too early. They start having too many flavors. After a while, you start thinking like, “What is it that you do well.”
There’s always an 80/20 rule where if you got twelve flavors, that’s great. I still know four of them do 80% of the business. Sometimes people think more is better and the proliferation is better. I’m very anti that. There’s probably one category right now that I could say is anything will sell in it right now. It’s probably sparkling water. Sparkling water is going through a boom where people are trying to find what flavor is their next Coke or their Pepsi replacement that becomes their go-to.
Some people are still drinking water. If I looked at brands like San Pellegrino and LaCroix, they’ve got a huge part of their business, their units per flavor are extremely high on all of them, but I can run every other report for you and every other category. Whether I have a brand that has three skews or a brand that has twelve skews, there’s an 80/20 rule. I start becoming less interested in a brand when all they’re doing is proliferating. Last year, they talked to me about this brand, these skews and their passion behind it and what they were doing. The next meeting I have, they’re not even talking about those brands. Now they’re talking about this next thing. To me, sometimes that can come across as you’re trying to strike gold. You keep changing. You’re trying to keep re-inventing because you’re coming in and telling me nothing’s working so you’re swinging again and again. That’s frustrating.
One of the other things I want to mention, you were alluding to it with Hector. This is an important thing. One of the mistakes a lot of early brands do is they get into too many stores too quickly and try to manage that by not putting all the necessary arrows in their quiver. When you get into a store that’s going to support you and work with you, you need to have the tools, the strategic levers to get it off the shelf. It’s a shared responsibility. At the end of the day, that’s what everyone wants. It’s not getting on the shelf. It’s getting off the shelf and then into the cart, into the home and hopefully repeat. You were asking Hector, “You got to be willing to drive this with me. You’ve got to be willing to step it up if we’re going to do it.” If you had to give like the top 2 or 3 mistakes that young brands make as they come into distribution after you say, yes, what are those?
One is lack of follow through. It goes back to you have to grow at the scale that you’re able to manage. I’ve experienced that with my own brand and my own two partners. My partner is doing a great job of growing at the rate that they can handle to where you still are the face and name of the brand. Many people think of scaling up and I understand. Scale cures a lot of things, but people start passing things off to brokers. That’s where I said the connection is gone with me as the retailer and the main buyer. You’re putting your brand into the hands of a broker and the broker doesn’t follow through. As soon as the broker doesn’t follow through or somebody doesn’t follow through, I’ve been in this business for many years. I remember back when new items, it would be 10, 20 items I would see in a couple months or in a month. I get 10, 20, 40 items shipped to my office a day.
We’re soon to be opening up our sixteenth store. I can open up a store next to every one of my stores and fill it up with entirely unique products that the other store doesn’t carry. I could probably repeat that 3 or 4 times. That’s how many products are out there. The 1 or 2 things that set me off is the lack of follow through out of the gate. It is probably the biggest thing. Brands are going struggle. We as buyers get excited. We fall in love with the packaging or the taste, or there’s some type of nostalgia with what we’re doing, or we feel we’re onto something. We’re going to be first and we get vested into that. Nothing kills that more than when you start getting lack of follow through. You got too many other options right now. There’s too much competition in almost every category. It’s being slow and steady and following through. The cornerstone of execution is to follow through.
The other point that you made too is don’t cede you’re selling to somebody else. You can leverage brokers. They’re helpful. They’re force multipliers. They’re often necessary or fractional. When you have a key meeting with a key retailer who you’re wanting to partner with, you said it numerous times in different ways, it ultimately starts with building a relationship. I’ve known you for a long time. I know that one of the things that you do very well is those that work, build a relationship with you, and support you, you return that support tenfold. Those that don’t, you don’t. That’s the way it works. Thanks for joining. I’m going to ask this question for everybody. For those interested in doing business with Nugget Markets, how best do they reach out and approach?
They can go to NuggetMarket.com. They can scroll down to the bottom of the website and there’s a vendor information. You can click on that. You can make a request. You can request your product and fill out some forms. The admin that manages that will get that paperwork and that email sent to the respective buyer.
Source: https://www-tigbrands-com.cdn.ampproject.org/c/s/www.tigbrands.com/tig-talks/food-and-beverage-retail-pitch-sprint-with-saj-khan-of-nugget-markets?format=amp