He explained in today's competitive environment it is tougher to slowly but steadily build a business like he did when he began Honest Tea 10 years ago and "raised about $10 million to get to about $20 million in sales. A lot of people will say that's relatively slow, and I think the marketplace now and the financing roadmap doesn't really afford us that luxury. So, I certainly feel more compelled to go faster. I think the opportunity is there, takes more money for sure, but the space is open right now."
During his session, Goldman also shared advice on how startup brands can survive in today’s market, stressing the importance of getting a brand to “plus 30% gross margins after trade spend.”
"You also have to demonstrate that you're serious about making money as a business. You have to have gross margins. You can't make up in volume if you don't have good gross margins to start with. You also have to be serious about how you invest your money."
When it comes to cutting costs and investing safely, brands need to focus on the activities that’ll promote a sustainable business and not chase after trends or simply do one form of promotion just because retailers and the market might be pressuring them to do it, Goldman recommended.
“One reason we're not spending billions of dollars on celebrities is we're trying to build something enduring, so I'd much rather put money into tons of demos which are cost intensive, but we know the results of those every time. We're getting engagement with the consumer.”
When it comes to promotional activities, Goldman also cautioned against simply doing buy-one-get-one offers or heavy discounts to improve gross margins, which can run in opposition to what retailers might want out of a new brand.
CPG companies also need to be careful about how they launch in retail and might need to push back on the placement if it doesn’t align with the brand’s long-term goals, Goldman noted. During his time at Beyond Meat, Goldman helped bring Beyond Meat to Walmart stores, but initially, the retailer wanted to place the brand in the produce department and not the meat department.
"[Beyond Meat's] goal is to be in the meat section, and we're going to say no to even Walmart until we do that, and that was a little bit of a game of chicken, but they went with it, and it's obviously paid off. So, you have to be able to understand what your brand and your long-term goal is and stick with it, not just to get that quick opportunity."
Can format cracks opens new opportunity in take-home, on-the-go
Following the discontinuation of Honest Tea from Coca-Cola, Goldman and his business partner at Eat the Change, chef Spike Mendelsohn, quickly developed a line of beverages that utilized the same supply chain and tea gardens as Honest Tea.
"More than half of our team were former Honest Tea people, the whole supply chain, all those relationships, I still owned. Even though Coca-Cola was the buyer, most of the supply chain found out that Honest Tea was being discontinued from my LinkedIn post, not from Coca-Cola, so they reached right back out."
Following news of the discontinuation of Eat the Change’s mushroom jerky, the company is now expanding distribution and growth in the Just Ice Tea brand, which will be available in a can format next year. The brand is using the new format to appeal to more on-the-go consumers and those looking for a lower price entry point over the premium glass bottle, Goldman explained.
"We're not going to leave glass, but we think there's an important opportunity in the take-home side of the business, so a multipack. We wanted a multiserve, but we're not going to plastic," Goldman said. "Eat the Change is all about trying to make leading-edge environmentally, climate-friendly, and flavor-friendly foods and so plastic just doesn't resonate with that proposition."
