Harvey Simmons

VC funding in CPG: A Cautionary Tale 🚨 1 year ago today, as a fractional CMO, I was in a classic standoff: The CEO wanted: Top-line revenue at all costs I fought for: Unit economics & contribution margin The pressure was real: • Rapid expansion backed by millions • Unlimited inventory to "never miss a sale" • Aggressive marketing spend to hit revenue targets The harsh reality unfolded: • Growth that crashed when funding dried up • Warehouses full of aging inventory • Profitability destroyed by acquisition costs What this battle taught me: Sustainable growth > Rapid scaling The winning formula I now swear by: 1. Obsess over unit economics from day one 2. Maximize contribution margin religiously 3. Let cash flow (not funding) dictate growth Yes, it's a slower path. But it builds CPG brands that actually last. What's your strategy for sustainable CPG growth? Share below 👇 #ConsumerGoods #StartupStrategy #CPG #DTC #VentureCapital

61

12 Comments

3 in-the-trenches lessons scaling a CPG drink brand 300% (so far). from $47k in June to $167k last 30 days (steal it or AMA) 1. Biz model or bust CPG is one of the hardest niches to scale IMO. We’ve done many over the years and it rides or dies by the biz model. This particular brand was selling a single pack + running ads. Their contribution profit per order was 2% No ad or strategy will fix a broken model No one can scale that profitably. Something has to change So naturally the only thing to do is either sell more per order raise prices bundle In this case we did price increase and then changed th default first order from a 1pack to 2pack. That increased contribution profit 10x to 22%. Now that we scaled. 2. Throw the brand book out the window for ads Having worked with 15 CPG brands I can confidently say in many cases branding guidelines gets in the way more than helps. I know. I know. Sue me. My team is hired to scale brands and make them money. THE MOMENT we were able to say “let’s ease up on the branding just for ads and see what happens” things starting working better + the increase in CM. It worked so well they were 100% cool with making any ad we wanted because they saw it working better. 9/10 when a founder sees it making more money they never go back. lol The less on brand the better. I think everyone should consider keeping branding loose for advertising. It usually works better in my experience. 3. Positioning In CPG land, this is so hard to land. Unless you have a truly uniqueness to the product you’re kinda just in a shouting match with the next CPG brand like yours. In this case, the thing that is working for them is Positioning less on what’s in it Positioning less on branding Positioning more on who it’s for Positioning more on ideal outcome desire i.e. drink with Dandelion root, ginger, chicory, etc vs i.e. This slimming drink took me (a plus size girl) from a 16 to 11. Feeling proud they are up 300% and it’s not ever Black Friday yet. Christmas is coming early!!!

22

8 Comments

I strongly resonate with this. I've written about this before, but when you're doing something, it is not easy to separate context from first principles. Heuristics then tend to masquerade as laws, and when you try to transpose them outside your context, you fall flat on your face. As I've told Shashank Mehta a few times, I would have killed the magic of The Whole Truth Foods with incessant frameworks and a burden of unnecessary sharpness if it weren't for his conviction on what felt right and the fact that I didn't have a voice till the brand was established. One of the blessings of shifting from a behemoth like Unilever to a fledgling like The Whole Truth Foods has been the compulsion to learn unlearning, and the framing of this articulation of heuristics vs first principles. I now have a deeper appreciation for Rory Sutherland's talisman: the opposite of a good idea is often a good idea too. There are many wrong ways to do things, but we can tend to forget that there is more than one right way to do things too. Figuring this out is so much fun! #marketing #firstprinciples #heuristics

42

6 Comments

Cotopaxi has so much potential but needs to evolve to be different from everyone else (Patagonia), and their stores need more experience. Companies get stuck with the "textbook mission" and must innovate but remain authentic. Their sale during BF told me there is something amiss. https://lnkd.in/gAdNX-_q

2

Modernizing legacy brands for a new generation of consumers is no easy feat. Earlier in my career, I was fortunate to work on teams that accomplished that for two legacy Kraft Heinz brands: Jell-O and Crystal Light. Critical to those successes were the same lessons Gail Hollander discusses in this article: * how to successfully update a brand by understanding its role in the culture and category without walking too far away from the brand truth and its DNA * creating winning marketing strategies by leveraging the art (creative thinking) and the science (data-driven decisions); and * breaking down silos to align the entire organization around long-term brand building I took these lessons I learned and recently wrote an article about how integral they also are for building successful CX strategies: https://lnkd.in/ecPhFpMz

16

1 Comment

Keurig Dr Pepper to acquire GHOST lifestyle for $1.6 BILLION 🤑 Ghost sales have quadrupled over the last 3 years after launching a joint venture with ZX ventures (Anheuser Busch) to launch the brand into energy in 2020. Let's break down the deal👇👇 1/ First, a brief history on GHOST Founded in 2016 by Dan Lourenco & Ryan Hughes & based in Chicago (shoutout!), GHOST was the original ‘label transparency’ pioneer that differentiated it. I think of the brand as somewhere between gym shark & liquid death. GHOST did not raise much money until 2020 when it launched a joint venture with ZX ventures (AB-Inbev). The partnership with AB was a joint venture, and purposeful to launch GHOST into the energy category. Unclear the valuation at that point but my checks say 10 figures. 2/ Deal Structure There are two bites here. First, KDP will buy 60% for $990m in cash - a $1.6B valuation / 3x FY24 sales In the second part of the transaction, KDP will buy the remaining 40% in 2028 at a valuation that has already been decided depending on 2027 financials 3/ Comps Valuation - this is the largest private bev M&A in recent history. I've been tracking headline M&A in a database since 1/1/2023, and this one dwarfs the rest in beverage: 👻 Ghost - $1.6B ☕ La Colombe - $900m ⚡ Bang Energy - $362m 💪 OWYN - $280m Revenue - Ghost is the most scaled private & independent asset in energy outisde Red Bull. KDP told us the valuation was 3x FY24 sales, imputing ghost has $530m. I describe a 3x sales multiple in the category as 'good not great' as there are a handful of recent precedent transactions that have a higher multiple: 🥜 Nutpods - 4x 🏺 Humm Kombucha - 3.75x 🌡 Celsius currently trading around 4.4x The 'good' sales multiple leads me to believe that Ghost also commanded a 'good' ebitda multiple - which would be around 13x in my comp set. This would imply that Ghost had very strong EBITDA margins in excess of 20% after KDP accounted for synergies/addbacks 4/ Time to Value (IRR) 1 thing that has stood out recently is the age of the businesses being acquired. GHOST was founded in 2016, 8 years ago - this is an outlier for a transaction of this size. HUGE time to value. OWYN was around the same age and was acquired for $280m - a huge success in its own right that gives you some reference for just how well Ghost has done. 🛀 Aesop - $2.5B / 36 yrs 🚬 NJOY - $2.7B / 17 yrs ☕ La Colombe - $900m / 29 yrs -- I'll be going deeper into the deal & providing the data/comps I used to make this analysis, + my notes from the earnings call in my newsletter going out tm Yes I woke up to listen to the earnings call, so please subscribe to my newsletter at the link pinned to my profile 🙂

121

10 Comments

For CPG brands, transparency with buyers is critical. You need to be transparent about what your capabilities are, as well as what they ARE NOT. Promising a buyer you can do something and then not delivering on that promise is the surest way to lose their trust forever. I was reminded of the importance of transparency by the latest of Ryan Holiday's books, titled, "Right Thing, Right Now." It's part of his Stoic Virtues series, and it focuses on the value of doing good in this world. One quote from the book on this topic really stood out to me: "How many marriages would survive our spouse looking at our phone? Or our boss seeing what's in our email? How many reputations would survive a lawsuit that made it to discovery? If we are inclined to hide it, we probably shouldn't do it. If we dread the publicity, maybe we are not living or doing right. " We should strive for the opposite. We want people to see what we are doing. We want to be the city on a hill. We should be the kind of person [or brand, in this case] who the more they hear about us, the more they respect and admire us." Can your company survive being an "open book" to your buyers and consumers? If not, perhaps it's time to take a look inward. #business #smallbusiness #cpg #retail #ethics #ecrmrangeme ECRM RangeMe

31

19 Comments

Are you aware of the programs out there for emerging brands? More and more, retailers and distributors are becoming very aware that consumer demand for new and emerging brands is higher than ever in CPG. BIG guys are looking for the LITTLE guys that might be the next BIG thing. Here are just a few: 🌟 McLane Company, Inc. Emerging Brands Marketplace powered by Mable 🌟 US Foods Direct Marketplace available through Mable 🌟 7-Eleven Brands w/ ❤️ 🌟 Target's Forward Founders and Target Takeoff 🌟 Walmart Open Call 🌟 Sprouts Farmers Market Innovation Center 🌟 If you know of others not listed - please let me know in the comments! If you haven't read the recent article from Nosh.com's Shauna Golden about retail chains sourcing exciting emerging brands, then be SURE to read the article in the comments. You'll read valuable insight on a few of these emerging brands programs from Yasmin Curtis (Two Fish Foods) , Sabeena Ladha (DEUX), Emily Knapp (Stellar Granola), Israel Moreira (Doughp), Scott Gutche (Walmart), and me (Bon Bee™ Honey). And BONUS heads up! The application for 7-Eleven's Brands w/ ❤️ is live NOW through November 3. Check out the link in comments to apply. (pic here from our recent stint with Brands w/ ❤️ ... now THAT's a Slurpee.) #LeaveNoRockUnturned #emergingbrands #retailgrowth #cpg #veteranowned #womenowned #familybusiness #sharktank

91

15 Comments

🌟 The Return of Fiber: CPG's Next Big Wave Who would have thought fiber would be making headlines again? But here we are in 2024, and this humble nutrient is having yet another turn in the CPG spotlight. The timing couldn't be better. As conversations around GLP-1s dominate wellness circles, consumers are rediscovering fiber's natural role in appetite regulation. Data shows searches for fiber-rich foods are up 29% this year – and smart brands are taking notice. Remember the protein-and-fiber boom of the early 2000s? This time feels different. We're seeing fiber show up in unexpected places: sparkling waters, smoothie boosters, and even sodas. Even though brands like poppi and Jones Soda Co. already contain fiber, there's a fascinating consumer psychology at play. While terms like "prebiotics" and "probiotics" can feel scientific and distant, everyone understands fiber. It's familiar. It's trusted. And yes, we all know exactly what it does for our digestion 😉 Leading the charge in the beverage space, pioneers like Bruno Gorgulho Rodrigues at vibi+ and Tom Bushkie at hellowater are revolutionizing how we think about functional hydration. They're proving that getting your daily fiber doesn't have to mean choking down supplements or forcing down another bowl of bran cereal. The innovation opportunity here is massive. As we look toward 2025, expect to see fiber-fortified products expanding beyond traditional categories. The real winners will be brands that can make fiber both functional AND delicious. #CPG #FoodInnovation #Wellness #ConsumerTrends #ProductDevelopment Photo by Vanessa Loring

20

5 Comments

The brands driving the highest engagement from customers are doing some really cool things right now! People who are leaning into automation are freeing up time for their teams to to focus on what we do best, creating connections with other people. Three creative ideas that stood out to me: 1️⃣ Routing all refund requests to phone calls. The top brands are saving 20-30% of refund requests by chatting with the customer to understand the problem. They're helping them exchange or find the product that works best for them 2️⃣ Finding their top customers and reaching out to them for a check-in call. They chat with them about what they like best about the brand, what they would like to see more, etc. They're seeing this increase the number of orders from the customers they connect with 3️⃣ Having team members staff live chat or prioritize pre-sale questions. They're giving each team member a personal discount code and running competitions to see who can sell the most. They are showing a leaderboard and giving prizes to the top team members It's really cool to see the creativity driving impact. At the end of the day, we're best when we have the time to create connections with others

51

3 Comments

I'm taking so many insights home from Braze Forge 2024. One of them is a question Seth S. Gourson shared with us this afternoon: "Does this campaign move the needle in value perception?" He evaluated every email in their welcome flow through that lens—sounds simple, huh? But oh, so impactful. I'd add a follow-up question to this: How can we make this email memorable—and not boring? ▫ Making the experience valuable will help increase engagement ▫ And making it memorable will impact future open rates Can't wait to review all our flows through the value-memorable-boost lens. #BrazeForge2024 #Marketing #EmailMarketin

22

2 Comments

If you’re an emerging natural/organic CPG company, UNFI distribution to Whole Foods Market is going to be a cost center for you, not a profit center, especially if you have plans to grow your brand there (why wouldn't you). This is something that not many people in this industry really want to say nor admit, but it’s true. It can be good for marketing and visibility but don’t plan on making much money that way or using that model alone to scale to meaningful profitability. The more you scale that model the more it will simply cost you. This isn’t meant to throw shade at either of those companies (there are distributors and retailers that can be interchanged there). These are just factual elements of the system that has been created to get products on the shelf. Know where you can make money. Know where you can't. Choose your path wisely.

290

87 Comments

CPG Brand Marketing Leaders, As I try to find instructive lessons from the rollercoaster of the last week, my first "duh" is that across the political spectrum we were all emphatically reminded of inflation’s dominant impact on voter/consumer decisions at the grocery shelf. Marketers know price is only part of the value equation and can’t breed loyalty alone. Nowhere is this more evident than with the recent phenomenal success of Private Label food brands, now trustworthy, sustainable, “real” brands in their own rights. In H1 2024, overall PL dollar share topped 20% and grew at 2x the rate of national brands. The WHY is pretty obvious. But a recent webinar by Hunter Thurman of Alpha-Diver dug into HOW private retailer brands are garnering enviable loyalty. Here are 3 ways they’re crushing it. 𝟭. 𝗖𝘂𝗿𝗮𝘁𝗶𝗻𝗴 𝗣𝗿𝗶𝘃𝗮𝘁𝗲 𝗕𝗿𝗮𝗻𝗱 𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼𝘀   Mass /Grocery retailers are simultaneously investing in multiple brands to address the gamut of shopper needs at multiple price tiers. Target has been successfully activating this strategy for years with their trifecta: 🍪𝘎𝘰𝘰𝘥 & 𝘎𝘢𝘵𝘩𝘦𝘳: the $4B food/bev brand of 2,500+ items touts quality ingredients, culinary inspired flavors, and clean labels. G&G shoppers are highly valuable, making 4X the # trips with 8X higher spend per trip vs Tgt’s typical grocery shopper. 🍨 𝘍𝘢𝘷𝘰𝘳𝘪𝘵𝘦 𝘋𝘢𝘺: the "fun sibling" brand is Target’s celebration play, with snacks/treats that “make life’s little moments of indulgence even sweeter,” from ice cream and cake decorations to mocktails and mixers. Don't recent days give us license to make every day a Favorite Day…Mixer Monday, anyone?! 🥫𝘔𝘢𝘳𝘬𝘦𝘵 𝘗𝘢𝘯𝘵𝘳𝘺: the veteran no-nonsense, family friendly OPP brand priced 10- 30% below branded equivalents has long been meeting the "economy stupid" moment. 𝟮.𝗢𝘂𝘁𝗽𝗮𝗰𝗶𝗻𝗴 𝗶𝗻 𝗜𝗻𝗻𝗼𝘃𝗮𝘁𝗶𝗼𝗻 & 𝗣𝗿𝗲𝗺𝗶𝘂𝗺𝗶𝘇𝗮𝘁𝗶𝗼𝗻 Another brand defying the PL as Knockoff paradigm is Walmart’s bettergoods, their biggest owned brand launch in 20 years. The 300+ line of premium quality, trend-forward foods, most <$5, tout plant-based, gluten free and “made without” claims. It’s proven incremental to the OG Great Value brand, capturing trips from outlets like Trader Joes. 𝟯. 𝗙𝗿𝗼𝗺 𝗧𝗿𝗮𝗱𝗶𝗻𝗴 𝗗𝗼𝘄𝗻 𝘁𝗼 𝗧𝗿𝗮𝗱𝗶𝗻𝗴 𝗢𝘂𝘁  Alpha Diver shared their recent buyer persona/decision making work showing Price is NOT the key driver of Value, but rather Reliability, fun Experiences and removing the work of Price Shopping. Amazon Aplenty (launched in 2021 in response to Favorite Day) offer products “crafted to be craveworthy,” and was designed “not as a flanker to advertised brands but as a competitor to them.” Smart stuff, huh? While upending some classic marketing principles, these examples will make me rethink my autopilot shopping list to include "PL" choices. How have your shopping habits changed to incorporate retailer owned brands?  #insights #foodandbeverage #brandgrowth

12

5 Comments

There's a subtle but HUGELY important trend playing out in CPG that may have ripple effects across the entire industry: Modern consumers are starting to care less about legacy brands. This article was specifically about Kraft Mac & Cheese, but I think it's indicative of a wider trend happening across the CPG landscape, and in alcohol in particular. Many multi-national, household name brands don't carry the same weight with consumers that they did even five or ten years ago. So, what does this mean & what are the implications? Well, it has lots of implications but two things I feel strongly are true: 1. This is a particularly interesting time to be launching and scaling challenger CPG brands 2. Big CPG conglomerates will need to get aggressive in shaking up their portfolios Going to be an exciting and interesting few years in the space!

28

13 Comments

As I gear up for my 2025 travel, which starts next weekend, I wanted to ask our CPG Founders out there what kind of questions you'd like me to ask buyers and brands during my interviews at ECRM Sessions as well as virtually. During our Founders' Innovation Day event last month with retailmediaIQ, I learned that many of the founders in attendance, in addition to seeking advice on success at retail, also wanted to get insights about various aspects of entrepreneurship from Founders with more experience, who have "been there and done that." These included insights around team building, securing funding, marketing and social media, and even about finding some sort of work life balance as an entrepreneur. This year my goal is to bring you these insights on a regular basis! So, drop a note in the comments below with a question you would like to have answered from one of the retailers or brands I interview during the year. Last year I did close to 150 interviews, and I plan to do more this year, so there will be lots of opportunities to get your questions answered! #entrepreneur #cpg #retail #foodservice #ecrmrangeme Sarah Davidson Kurt R.

30

1 Comment

Keurig Dr Pepper Inc. has named Drew Panayiotou as its new #CMO for U.S. refreshment beverages, overseeing a $9 billion portfolio, including brands like Dr. Pepper, Snapple Group. and Canada Dr. Drew brings deep expertise in #AI-driven marketing and #ecommerce from his time at Pfizer. His appointment underscores the growing need for enterprise-wide #data standards—ensuring consistency across brand taxonomies, proactively removing bad data, unlocking actionable insights and enabling seamless collaboration. These foundations empower marketers to deliver precise, #innovative campaigns that drive results. #datastandards #datagovernance #contentsupplychain #bigdata #CPG #digitalmarketing #Claravine

17

1 Comment

📢 New Take Command Episode: Nourishing People: Sowing the Seeds of Leadership🎙️“Our customers are supreme .” - Jason Buechel, CEO of Whole Foods Market Jason shares his journey from retail consulting to leading a company that’s revolutionizing the way we nourish people and the planet. As Jason puts it, “Leadership is about bridging an organization to its next #opportunity.” Jason’s leadership story is truly inspiring. His #servantleadership approach has guided Whole Foods through major transitions, including Amazon's acquisition, while staying true to their mission of #sustainability and care for future generations. Jason shares actionable insights, including: ✅ The power of real-time #feedback in driving solutions. ✅ Why you should always lead by #example—even in the toughest moments. ✅ How to take a panoramic view of stakeholders to drive meaningful #change. His wisdom is a must-hear for leaders navigating change while staying grounded in purpose. 🎧 Listen to the episode & take your leadership to the next level: https://lnkd.in/eKC3v3Kd 💬 What’s your biggest takeaway about servant leadership? We’d love to hear your thoughts! #Leadership #ServantLeadership #DaleCarnegie #TakeCommandPodcast #Sustainability

7

We're officially soccer moms 💁🏻‍♀️ Here's what you can expect with our new official partnership with the National Women's Soccer League (NWSL): 1. Lactation and feeding room support across the League 🤱 2. Sharing the stories and feeding journeys of the moms on the field 🍼 3. A Bobbie Box for our Bobbie subs to catch some NWSL games! ⚽️ 4. Our name in lights along the field ✨ 5. Formula donations and giveaways throughout the League! ♥️ When women own companies we get to invest in the women also changing the world--- the female-owned League and athletes showing our little girls how to rewrite the playbook and that yes, women's sports are worth investing in.

267

20 Comments

Why do Duopolies tend to dominate in so many aspects of modern business and what does this mean for emerging CPG? The news last week was that The Walt Disney Company and HBO are teaming up to offer a massive streaming bundle to complete with Netflix. It seems like a very predictable cycle unfolded here…After a few years of disruptive innovation, investors started to lose patience with negative EBITDA, which results in waves of consolidation until we have a De Facto Duopoly in streaming media. Nilesh Sharma wrote an interesting article on how this is common across many industries(link in comments)…there are so many examples: Coke/Pepsi, Apple/Android, and in national retail grocery distribution UNFI/KeHE is obvious. If not for antitrust regulations, these duopolies would more often than not eventually merge into monopolies until some disruptive force comes along to change the paradigm. 👉CPG brands: take a look at national market share in the subcategory you operate in. There is a good chance that it is dominated by two brands, and if not, there is at least trend toward this outcome. 👉Is your product different ENOUGH, to break this cycle? 👉Retailers, in any given metro market, who are the dominant two mainline grocery chains in your market by total share? 👉Are you differentiated ENOUGH from them to compel consumers to change their habits? We all have one thing in common as innovators: we’re trying to break the cycle and acquire market share from what tends to be the natural order of things. In order for us to disrupt, we need to think outside the box. Slightly better versions of what already exists won’t get it done. Pod Foods has been able to take so much national share in the past few years, BECAUSE it is so radically different from the inbumbent model…the same thing is true for ANY disruptive brand. I’ll be at Sweets & Snacks Expo this week and looking forward to seeing a lot of you there. What I’ll be looking for is the product that is the MOST different from the status quo and how we can reach early adopters with it. #disruptiveinnovation #Disneymaxbundle #emergingcpg #podfoods Flowspace Total Quality Logistics Green Spoon Sales Melissa Pashko Caroline Grace https://lnkd.in/d7dYis2C

29

2 Comments