The Exchanges

Q meet an unexpected demand for sparkling water. We had Gary Erickson and, and Kit Crawford on the co-owners, co-founders of, um, Clif Bar. And they had like, there was like a run on Clif Bars. Like people, you know, it was like toilet paper and Clif Bars. And they just, there was just a massive spike in people buying up shelf stable products. Did you see anything like that initially?

A We did. We absolutely did. When the initial push came, we saw anywhere from, you know, sort of two to 400% lift. Shelves suddenly blown, you know, a huge push to get trucks pulled forward. At the same time, I think the hard thing, and really the hard thing for our brand, especially, was that our food service partners obviously felt pressure the other way. Suddenly, you know, they didn't have business to, to fulfill, um, and so what we struggled with was really, you know, kind of balancing being a good partner for the food service, you know, many whom are friends and longtime colleagues. And really helping them or thinking with them through how to respond as well as servicing the rest of the business that was having this huge uptick in sales.

AI assessment note: “We did. We absolutely did. When the initial push came, we saw anywhere from, you know, sort of two to 400% lift.”

Q And, and I guess Like, when you started wholesaling products, like, at that point, you kind of, um, you met someone who really set your business off in a completely different direction, is that right?

A Almost, yes. So one of the products that we were featuring in the catalog was called Nantucket Offshore. Seasonings, and it was a dry rub for grilling. It was in a silver tin, a really colorful label on the outside, and, and it was started out on island by husband and wife, uh, had kind of a cult following, maybe a half a million dollar business, and so we were really fulfilling his customers orders in the beginning. Um, and what ended up happening, which was really sort of unexpected for us, is that He was a real creative guy, was always thinking about different ways to provide seasonings, and he stumbled one day upon a cocktail seasoning, so a salt for margaritas, and we put it in a tin just like the other seasonings, and suddenly the consumer just sort of woke up, and it, at the time, cocktails were just beginning to become interesting, and, you know, it was the time of sex in the city, and mojitos, and this sort of thing, and The idea of, like, a colored salt on the rim of the glass was actually pretty new at the time, and, and it was exciting to us, and the consumers seemed to think it was pretty fun, and so that's how we got into the business.

AI assessment note: “Almost, yes. So one of the products that we were featuring in the catalog”

Q you prefer that they not drink soda, because it's gonna rot their teeth, and, um, it's really bad for them, and they won't eat their dinner. Um, but just full disclosure, I do let my kids have soda on vacation. Um, so in your mind, you have this idea, maybe there's something in soda, and then how does it, what's the first step you take towards trying to make something?

A Well, so I, so going back to my, my childhood, I mean, I was really interested in, in ingredients. You know, I started to look at taking real ingredients that, you know, something you would start a meal with, a lemon, an orange, a grapefruit, and what if this could become the base for, you know, a sparkling beverage? And, um, so I was, I was in my house with a soda stream. I was cutting up fruit and squeezing it and seeing how it Responded and settled in carbonated water and tasting it with my wife and our kids, and I mean, the idea is not complicated. Everyone has lemons and, you know, has access to sparkling water, but the flavor that, that this created was just, as anyone that's ordered a sparkling water, you know, with a wedge of lemon at lunch or whatever, I mean, it really is quite unusual. It has a lot more dimension of flavor. It's got A little bit of sweetness, a little tart, earthiness to it. It's very different than, than what was out there, and so I began to research whether this was a unique idea or not, or something that had been done before, and that was really the genesis of, of Spindrift.

AI assessment note: “I was in my house with a soda stream. I was cutting up fruit”

Q Alright, so explain to me what you were gonna do. You were gonna bring in bay scallops and, and bluefish pate and ice creams and, like, on boats from Nantucket, and you were gonna do what with those products?

A Yeah, so we, we were excited about really kind of storytelling around their product, and, and so we created a catalog, literally, you know, four, and then eventually eight, sixteen-page catalog featuring their products. We would mail it out, and the end of the summer is, as the tourists were leaving the island, and, and, um, what we learned is that people really, you know, other than maybe a birthday or a special occasion, the big time for mail-order food was really kind of going into, uh, Thanksgiving, and then, you know, for, for that all of December, it was just crazy. Every day, we'd pack hundreds and hundreds of these things, and drive them up, you know, just as the UPS door was closing, and, or the loading dock was closing, and, and so, yeah, we were, we were literally receiving orders in the morning, packing things by hand as, as much as many as we could get out, and then, um, we would sort of count our shekels at the end of December, and hope that, you know, we'd sort of Broken even.

AI assessment note: “we created a catalog, literally, you know, four, and then eventually eight, sixteen-page catalog”

Q So at what point did you say that this was, this was gonna be a completely new brand?

A So what happened was two things. One was that our partner That I mentioned had decided he and his wife were sort of ready to move on, and my business partner and I, Gil, just, you know, kind of asked ourselves, like, is this something that we want to pursue on our own? And we, we actually purchased him out of the business, so that was a big step, and then kind of within that, we recognized that Nantucket Offshore seasonings may not necessarily fully represent our, the full idea and the opportunity, and We sort of got together and, and engaged a whole bunch of people, anyone that would listen to say, you know, we want to create a platform and really just focus on cocktails. We want to be the premium cocktail business. And we ended up calling it Stirrings. We love the name and, and ultimately that, that was really the big idea that kind of catapulted us into, you know, kind of a national brand.

AI assessment note: “we recognized that Nantucket Offshore seasonings may not necessarily fully represent our, the full idea”

Q lot of the other brands were doing. And this was a huge challenge you had to kind of overcome, even though it may, it would have made, You know, you could have probably gotten away. I mean, there are lots of brands out there that do it with just using quote unquote natural flavors. Why were you such so hard line about that, about not, you know, not doing that?

A Well, you're right. I mean, you know, sparkling water is an old category. There are lots of products that were flavored with natural flavors. And so, you know, we really, first we thought it was important from a kind of a foodie perspective. You know, I am stubborn about ingredients. And in the beginning, that stubbornness led to all kinds of challenges. I mean, years and years of how do we do it, building a supply chain around it, you know, really kind of laboring against the odds. What ultimately emerged is really our, our key point of difference, and today, you know, we've really embraced that idea. We, we sort of stand still kind of on our own, but really is sort of where we believe, you know, food and, and ingredients should go, which is as, as unprocessed as you can make them.

AI assessment note: “we thought it was important from a kind of a foodie perspective”

Q I mean, it's kind of nuts, right? But you believe that, that in the long run, of course, that would pay off.

A Yeah, we, We had no evidence. It wasn't like we did, you know, a consumer study or we didn't, you know, talk to the market. It just, for us, you know, it was as sugar was starting to become more and more on people's radars, 2012, 1314, and, and really the people that were enjoying the sparkling water were in love with it, you know, couldn't get enough or buying it hand over fist. It was like a tiny group of really passionate people, and What I always refer to sort of the white hot center just seemed a lot clearer on the sparkling water than it did on the soda. The belief we have is that with the sparkling water, we are able to, to bring people along and have them not miss the sweetness, and it took some time. Obviously, here we are, 15 years after starting the business, but we think there's the opportunity with some of these other categories. Sugar is a very one-dimensional flavor, so if you can introduce other flavors alongside a little sweet, a little tart, We think you won't miss that big hit of sugar. Um, that's, that's really kind of the starting point for all of our development.

AI assessment note: “Yeah, we, We had no evidence. It wasn't like we did, you know,”

Q And how does he think about protecting the brand? I mean, if, if this really takes off, it's just a matter of time before, uh, You know, the other, other beer manufacturers produce a pickle flavored beer.

A And that's, and that's really, I think, why you want to go in. You want to move quickly. You want to lock up distributors. Ideally, if they're willing to, you want to try to get some sort of exclusivity everywhere you can. Maybe you can get a pickle beer exclusivity to your distributor. You know, you can, you can start to really become synonymous with that category. And, and I, I do think all of that's in front of you. What's happening now is these things are happening really quickly. Quickly, you know, with social media and, you know, virality, people are learning about products, so you just want to be ready to move, you know, so that, uh, so that there aren't two pickle beer players. There's only one.

AI assessment note: “You want to lock up distributors. Ideally, if they're willing to, you want to try”

Q the sale to Diageo, but, I mean, what was your limit? Like, at what point were you gonna be like, ooh, I cannot use any more of my money because I'm gonna blow it all on this thing? Like, were you, was there ever a point where you were a little nervous that you were just gonna spend all the cash that you had on this thing that might fail?

A Yeah, sure, I was terrified. You know, I'd come out of this now It was still very early and sort of the rebound out of the recession. So yeah, these were real fears and beverage is expensive. You know, I knew that even more so than my prior business, that this was going to be a capital intensive business. I mean, you just, it was clear right away that between the coolers and going up against the big soda guys and trying to do something really different in terms of the ingredients. All of that just was going to be challenging. So, you know, we, from a family perspective, you know, we invested as much as we could, and then we knew we were going to have to kind of make some lifestyle changes and also think about bringing in outside capital.

AI assessment note: “Yeah, sure, I was terrified. You know, I'd come out of this now”

Q Bill, when you think about, um, your journey, and you've had two successful businesses, which not, you know, one would be amazing, but very few people can say they've had two. How much do you attribute that to, to your intelligence and work ethic, and how much do you think that's just because you got lucky?

A I think it's a combination. So, you know, I've thought a lot about that question, and we talk about it even just internally a lot. We are all incredible workers, and our commitment level of the company is Is insane and has had to be for a long time. And what, what that allowed us to do is see opportunities, um, when they surfaced. You know, when, when the world was moving out of sweetened beverages and sugar, we were positioned well to be able to see that and take advantage of, of those changes. So is that good luck? Is that, you know, why did we, why were we positioned that way? It's not clear to me, but I think we needed We needed a good dose of, of both of those to get to where we are today.

AI assessment note: “I think it's a combination.”

Q I mean, was it pretty quick after you kind of created this line of products for Strings that it, it started to make money?

A What happened is the sales really took off, um, so eventually a number of, of liquor distributors ended up bringing it on, but it, it was a really expensive, challenging product to make, you know, just for us to be shipping it around the country and doing, so we, we were chasing break-even throughout the entire business, um, you know, that, the food business is really like that, you know, you're always, you Faced with the decision, do we want to go after the next level of growth, um, or be satisfied with where we are and try to manage it to more break even? And I would say we were, we chose to really sort of chase growth and make the brand, um, you know, the cocktail mix in the US.

AI assessment note: “we were chasing break-even throughout the entire business”

Q So I guess at the same time you decide to drop the, the sugared soda, you also decide to, to stop using natural flavors in your drinks. And I, when I see natural flavors, I'm assuming it's like essential oils, like essence of cherry or, or lemon, just like a couple of drops in, in the drink, and then you've got the drink. Is that what natural flavors are?

A So we were, at the time, we had natural flavors in our, in our drinks. Okay. We started to get people writing in asking what natural flavors were. Um, natural flavors is the word that the government asks you to use to kind of describe the whole world of, of these essences that you're, that you just described. So we, we actually reached out to our flavor houses and, and asked them, can you just give us a little bit more information? We're being asked by our consumers, is it really just the lemon oils that are being squeezed? You know, they, they would say, um, let me get back to you. Um, I just need to confirm that myself. Or they would say, we don't disclose that. And no one would tell us what they were. And so that's where, you know, we had to go rogue and, and really sort of start to investigate further on our own. I mean, I distinctly recall a conversation with a food scientist who was working for a flavor house at the time, and he said, let me go into a closet and Because I'm afraid if I have this conversation out in the open that I'm gonna get in trouble, and so here I was, you know, decade plus in the business, and I was putting an ingredient in that I couldn't totally be sure what it was, and it really, for us, was a problem.

AI assessment note: “natural flavors is the word that the government asks you to use”

Q And this was being made in Massachusetts, like, just outside of Boston? You had, like, a facility that would make your drink for you and bottle it and then put a label on it?

A Yeah, so we, so what I would do is I would bring a truck in, and the truck would take the batch, whatever we made, you know, 500 cases of each, and we would bring it to a cold storage facility in Taunton, Massachusetts, called Americal, and they would, you know, they had all kinds of other fresh items, you know, they were staging vegetables for the next day, or cranberries, or whatever, you know, they were huge, gigantic warehouse, and so we would Tuck our little pallets into their huge warehouse, and then whenever I needed a sample, I would just drive down there, I would put on a gigantic freezer refrigerator coat, go out and pull product, and then I would take it out into the market. Um, that food service focus with me and now my small team was really all we did for the first four or five years in our business.

AI assessment note: “we would bring it to a cold storage facility in Taunton, Massachusetts, called Americal”

Q was going to be your biggest year ever. I mean, I think it doesn't seem as if the economy will open up, you know, much more significantly as infection rates increase. Um, e-commerce may, may be increasing, but it may not actually increase as much as the decrease in sales at supermarkets and at, at big box stores. So how, how are you thinking about just keeping things in line?

A Well, it's an everyday, it's an everyday conversation. I think, you know, we see it two ways. I mean, it's, it's really hard just in general, the economy side, you know, the pandemic, the shopping habits, and so we want to be a sympathetic and supportive partner. On the other hand, we're optimistic. You know, our biggest challenge is getting people that used to drink natural flavor sparkling waters to try an alternative brand. That's all we want them to do. We just want them to try Our product, you know, and we believe that if enough people try our product and taste how different the liquid is and the flavor and the mouth feel, all those sorts of things that they, a percentage of them will stay with the brand. And so the great thing about, I almost caution using that word, but the shifting channels has really prompted consumers to try a lot of different things that they wouldn't otherwise try. Maybe because the product wasn't available. The brand they were used to, maybe because they're shopping in a channel that we weren't normally, you know, as visible as we are and now we're more visible. I'm not sure. There's a lot of different drivers. So we remain optimistic that as we go into the summer, that a percentage of the consumers that have discovered Spindrift are going to stay with us. On the ingredient side, because our product is about transparency and kind of knowing what yo…

AI assessment note: “the shifting channels has really prompted consumers to try a lot of different things”