Elan Halpern - Dealing Yogurt Via Citibikes and Backpacks

Speaker: 00:00
Welcome to Shelf Help. Today we're speaking with Alan Halpern, co-founder of Sour Milk, NYC-based functional and Greek yogurt brand that's been making a lot of waves as of late. Before jumping in, the CPG World Alan was a Stanford CS Grad. I spent a lot of time at Facebook, Instagram, and Silicon Valley. Earner co-founder, Kiki. I think they've sold close to 10,000 units of yogurt originally on bikes across New York City. Excited to dive into this stuff. But um yeah, Alan, just for uh first off, just for kind of listeners that aren't all that familiar with sour milk, love to just kind of get a quick lay of the land just in terms of kind of the origin story and the why behind the brand and what the kind of core product lineup looks like, and then uh we'll go from there.

Speaker 1: 00:44
Yeah, absolutely. And thanks for having me on, Adam. I'm excited to chat. So my co-founder Kiki and I met at undergrad. We went to Stanford together. Um we actually met during a nutrition class taught by a professor named Christopher Gardner and sort of bonded over our shared passion for food and health systems and how kind of those things interact and went on to do totally separate careers. Like you said, I studied computer science. Uh ended up being a product manager at a fast-growing uh Web3 tech company in in 2020, was there for four and a half years, and my my co-founder Kiki was in private equity for the same duration. Kind of throughout that post-grad experience, I was going through some like, you know, pretty um, I would say, like intensive gut health issues that kind of affected affected me on a daily basis. And so these were things that are standard and common and normal pertaining to the gut. So things like chronic bloating and inflammation, and then other downstream things like brain fog and hormone disruption and all of these things. And what I realized is that all roads led back to the microbiome, and a lot of how you feel every single day stems from your gut and what's going on in your microbiome. Um, and so I was actually an athlete in college. Uh, I played, I was on the rowing team, so developed a habit of eating Greek yogurt every day after practice because our coach would line up Greek yogurt bowls after we got off the water. And I had been eating Greek yogurt every single day because of that habit. And what I realized in the process of trying to heal my gut and fix all these issues was that the Greek yogurt I was consuming every day was actually doing nothing to contribute to my microbiome health. And there's a couple of reasons for that. Number one is many, many yogurts will pasteurize after they ferment. And so that kills off all the live and active cultures, but it extends the shelf life. So you get this really long-lasting yogurt. Number two is the specific cultures that are used in yogurt are they're called the yogurt cultures. So coccus, thermophilus, lactocils, bulgaricus, they're great at making yogurt. They're not probiotic cultures that are designed to be really good for your gut. So you're not actually getting those benefits that you get from other probiotics. And then number three is even yogurts that do have probiotics in them, they just like don't generally tend to have enough. Your gut has a hundred trillion bacteria in it. To make a dent, you need billions and billions and billions on a daily basis. And so you I wasn't getting sufficient amount from that freaked yogurt. And so I started making my own. And really, the goal was I'm already eating this thing that has an incredible potential for being really probiotic, right? Yogurt in itself is a is a really good vehicle for getting probiotics. But the yogurt I could buy on the shelf wasn't actually designed to do that. So I just started making my own that had the right probiotics in the right quantities so that I could eat the thing I wanted to eat every single day and get the benefits my body needed. And that was really the inception of sour milk. It was sort of a like self-problem that I myself was trying to solve. So it's kind of a self-fulfilling need here. And what Kiki and I realized is that two-thirds of Americans have digestive issues, not too dissimilar to what I was experiencing. And simultaneously, yogurt has a 92% household penetration in America. And so if we can take this thing that people are already eating and familiar with and design one that's truly good for your gut, almost a probiotic supplement disguised as a yogurt, you can actually reach way more people than if we tried to sell a pill or a powder or a supplement. And that's kind of the mission behind sour milk is like, how do we actually help people achieve awesome gut health outcomes in a way that doesn't force them to change their habits?

Speaker: 04:32
Looking back at those uh early days of formulation and product development, I imagine like most, you went through a bunch of iterations to kind of get that final product. And I think I read you really were kind of focusing on trying to get uniquely fluffy and light texture. Love to just get a sense of what that journey looked like in terms of the key variables that were top of mind for you as you were playing around with formulation, what it looked like from you know, between that first version and the final version, and you said, okay, this is right, we feel good about selling this to customers.

Speaker 1: 05:03
Yeah, I would say that the yogurt that you know is on the shelf now, the sour milk that is on the shelf now, tastes a lot better than the one that I was making for myself and eating. That's like kind of a huge variant. Obviously, the the recipe developed from the yogurt I was making myself, but this one is like actually tastes really yummy. And so that's actually where a lot of the iteration came to be. So the way we were thinking about recipe, it wasn't necessarily like, how do we make a really yummy tasting yogurt? It was like, how do we create a probiotic? And then how do we make that taste good? So how we approached it was like, okay, there are a you know 40,000 different bacteria strains. Of those, like a hundred to three hundred, less than one percent are like probiotic strains. Of that subset of probiotic strains, very few of them will survive in a yogurt form, right? Because yogurt's highly acidic, it has a lot of water content. So there are awesome strains out there that actually really only work in a pill form, not in a food form. And so those have to get eliminated. And then of those that we're left with, which ones actually yield a taste that we think tastes good? And so it really like windles down to what we're able to use. So within those constraints, we were doing a ton of iterations on sort of the ratios, the amounts, the combinations, and and kind of what textures and flavors that product yields.

Speaker: 06:22
I feel like I've heard you say something along the lines of most yogurts kind of fall into one of three, one of three traps. Can you assuming I got that right? Like what are those three traps? And how did you kind of go about intentionally avoiding those three?

Speaker 1: 06:38
Yeah. So this isn't this is a bit of what I was mentioning earlier. It's a couple of things. It's the pasteurization after fermentation, right? And that helps extend shelf life of yogurt. And that's really like you see that in in the traditional yogurts, those types of Americanized yogurts. You'll see that they just don't have any live and active cultures. Then it's the culture choice. So the yogurt cultures are awesome at making yogurt. They're not necessarily the best for your gut. And then the third thing is quantity. Creating a really high probiotic requires longer time, longer fermentation durations. It requires more expensive cultures than the typical yogurt ones. And so it's not the yogurt companies today are optimizing for how do we create as much yogurt as quickly as possible. We want to optimize for like super high quality. And that just yields to slightly less efficient production lines and higher costs of goods and all of these things that help us make an awesome product that makes you feel good and has all these benefits, but maybe is less like optimized on the cost-effective side that some of the larger yogurt brands care about.

Speaker: 07:42
In terms of manufacturing, finding copackers and whatnot, was it hard to find ones that kind of align this align with your vision? Totally.

Speaker 1: 07:49
I mean, the hardest part about finding a copacker in our industry is that it's so old fashioned. So nothing's online. Like I come from tech where if there is a problem you're trying to solve, you open up Google. I mean, not now ChatGPT, but if you open up Google, you punch in that problem, and there's like 10 software solutions for finding that problem, very well SEO'd, very clearly broken down. Like it's so easy to find solutions to problems. If you're at it, like you can try looking up like dairy cobacker, like you are not gonna find it. Like these things are not on the internet. And so a lot of the process of finding a cobacker was like calling random numbers, not not like calling them and being like, Do you know anyone? Can you do this? And they're like, no, but try so and so, and they're like, no, but try so and so. And it just kind of was a domino effect until we found someone that that could do what we wanted to do. In terms of like the actual process, lucky for us, a lot of the yogurt, like if you're making a plain yogurt, you know, a clean, plain yogurt, there should be two ingredients. It's whatever milk you're using, in our case, it's organic grass-fed milk. And then the cultures that you're using, the culture combination. The process of making the yogurt, and this is really cool about this, is kind of part of the reason why we're so excited about this product, is that the process is actually something that you can literally do in your home, and you can do with 2,000 gallons of milk in a factory. And like the process itself is generally the same. That's not the same as like a potato chip or a protein bar or like a snack, like those types of things cannot be made in your home kitchen. I think there's something really cool in going back to roots of like, you know, packaging a product and making it really easy and accessible, but it's also something that if you wanted to make at home, you could. That's how I started making it. The process is very similar. And so, really, like the the changes that we're making in the process are that culture combination that we're using, the temperature that we're fermenting at, the duration that we're fermenting at, but the equipment required to actually do that will be the same as like another yogurt on the shelf.

Speaker: 09:48
Yeah.

Speaker 1: 09:49
And so that made it easy to fit into existing copackers.

Speaker: 09:52
Oftentimes when I talk to other brands, they'll find that copacker and are ready to really scale up. Oftentimes they have to make maybe sacrifices is a bit of a strong word, but formulation changes to be able to transition from a kind of a small batch production to, you know, copacker level production. Did you guys have to make any kind of hard decisions around that? Or was it pretty much, you know, you're kind of your what you had envisioned, they're able to do exactly what you had in mind?

Speaker 1: 10:15
Yeah, it's funny. So we everyone we talked to, we talked to a ton of CPG people about this process as we were starting and we were learning, we we got to, we got to learn so much and from listening to podcasts and all these things. And everyone was like, your first five command production runs are gonna be trash. Like, don't even like they're gonna be like something's gonna go wrong, it's not gonna be good. Like, just don't expect it to be like a good product for the first like three to five runs. And so going into it, I was really nervous. I had this product that felt very precious, and you know, like I was excited about where it was, and I was like, how is it gonna scale? I wasn't sure how that's gonna scale up on different equipment in larger quantities. And that first production run we got back was like amazing. Like we were like, we were like, this is so good. It's like exactly what we want it to be. And we had future kind of com-man hiccups down the line, and and it's very common to like have something go wrong in your production, but we were very lucky that the first one that we did went like very, very smoothly, and it was a product that we were super excited about. Our process is still like relatively manual with our command. And so, because of that, like our very astute customers will notice like, hey, this batch is like a little bit thicker than the last one, or it's like a little different, and that they'll notice that, which is just kind of fine. I mean, we're still small scale, so that type of customers have our phone numbers, like many of them are able to like just shoot us a note and text us, which is great. But as we sort of get more repeatable consistency, um, there'll be way less variance in that.

Speaker: 11:49
From a supply chain standpoint, from what I know, you based on the East Coast, so it makes sense you've been sourcing an organic grass-fed milk from some upstate New York dairy farms. Kind of curious what that supply chain looks like, I guess, in more detail. Like as you continue to scale up on you're getting to like, you know, national scale level distribution and you're in, you know, 10,000, 20,000, 30,000 plus stores at some point. What do you guys envision what that supply chain is going to look like once you get to that level of scale?

Speaker 1: 12:18
Yeah, it's a great question. So the organic industry is really interesting. For for non-organic farms, they're able to have like 30,000 cow herds, right? Because you basically can just like cram as many, as many cows as possible into a small surface area. And if they get sick, you give them antibiotics, all those things, these hormones, and and you can kind of feed them whatever. A lot of these like conventional dairy cows are fed like excess waste product from like other factories and candy and whatnot. So that side of things basically is there's like a bottomless tap of milk you can access if you're going the conventional route. That's it. There are some not like non-organic conventional farms that do an incredible job. The by all standards is like amazing milk. It's just there's no con, you know, there's no guaranteed consistency unless you know your farm and know your farmer. So I think there's ways to source really high quality conventional dairy, but a lot of it is coming from these sort of like KFO farms. The organic side of things, the kind of rules and requirements around organic make it much more conducive to having a large amount of tiny farms rather than a small amount of large farms, like it is with conventional. And there's a couple of reasons for that. One, like the food is more expensive. You have to, you can't use any pesticides, and the food has to be all organic that that they're getting fed. You can't use any antibiotics or medicine. So you have to use all preventative medicine to make sure that the cows don't get sick. And you know, if you do end up having to use antibiotics, like the cow can no longer be a part of that organic curve. It has to be sold off. And then number three is they are required to spend like every single day outside at some point. It's like some super, super large percentage of their time has to be spent outside, and 30% of their diet minimum has to come from pasture. And so you have all these like cow to land ratios that you have to meet, which means you know, if you have 200 acres of land, that actually puts a cap on the number of organic dairy cows you can have. So you can't just like endlessly grow because each of those cows have a certain acreage associated with it. And so it it basically creates this supply chain that's like, you know, a couple really, really huge conventional dairy farms that can kind of scale infinitely, and then like a bunch of really, really small organic farms. And what happens when you want to buy organic milk is they're they're usually contracted. And so a larger co-op like Organic Valley or Horizon or some of some of the other ones will basically contract a small dairy farm and say, hey, I will pick up your milk on this schedule alongside all of these other routes. And that enables this like teeny tiny farm that's maybe not producing that much milk milk to get pulled in with a bunch of others and then sold to like a larger co-op. So that's like, you know, that was probably like more than you asked for on the No, that's great. No, I love the detail. Yeah, the organic versus conventional sort of like dairy space. But it does pose a couple challenges for us as a new to-market brand, right? Because in some sense, we're too big to just say, hey, can we get a couple gallons of milk to make our to make our small batch yogurt? And we're too small to say, hey, let's we'll take over all of these contracts and like create our own supply chain and pick up route and do all of these things. And so that there's like sort of a growth stage here, which is part of the challenge with organic right now is that we have to kind of stitch together and find these really high-quality certified organic dairy farms that can sort of divert milk to us, or maybe they're not, they're not contracted and we can buy milk from them. As we grow in scale, the hope is that we can start to develop those direct contracts and relationships and partnerships with some of these organic dairies where we're getting, we're kind of producing enough volume where we can kind of guarantee that for them.

Speaker: 15:56
Yeah. Cool. That makes total sense. For let's just say you had another friend approach you and say, Hey, I'm thinking about starting a CBG company as well in the broader dairy space, maybe say ice cream or something. What recommendations might you have for like them in terms of and they're about to start the Copacker search? Like, what might recommendations might you have for them based on what your experience was like? And I guess, you know, eliminating some of the pain points that you had along the way?

Speaker 1: 16:23
Yeah, I would say get comfortable with answering unknown phone numbers. That was I like before this, I'd never, if I got an unknown phone number, I would never answer it with some spam or some now, every single one I gotta answer because it could be some subdairy farm. No, but in all seriousness, I think it's just like, you know, expect to be on the phone a lot. Expect like every person that you meet, even if they can't help you with directly what you need, ask them if they know anyone that might be able to. And that's really like how you um end up following down these threads and rabbit holes. I think it's been really fascinating to learn about the industry and listen to the challenges that that are being faced and the problems that are um that the industry is trying to solve. I think that dairy is a there's no better time to be in dairy. Obviously, like American consumers especially tend to swing a lot, but now there's a lot of like updated regulation and recommendations around dairy and and positive for dairy. So I think it's a it's a really interesting time to be in that space.

Speaker: 17:23
Yogurt, compared to a lot of other shelf stable CPG categories, is uh obviously more of a perishable product, I think. Shelf life is probably like I don't know, six to eight weeks-ish, is my guess. You can correct me if I'm wrong. Um definitely seems like that presents some some more delicate challenges, especially having a board dial-in and strategy from like, you know, demand planning. What does that look like in terms of yeah, what you guys have found so far in terms of the life challenges so far around that type of timing demand around expiration dates and that stuff? And how are you thinking about that as you really start to scale up as well?

Speaker 1: 17:57
Yeah, it's definitely something that was top of mind from the moment we started this. I think the in the early days we're like dang we should have just started a protein bar company that could live on the for a year. But the way we thought about it, especially in the beginning as a new to market brand, was that the moment we stepped into the factory and make, you know, a palette of yogurt, like 1200 to 2,000 yogurts, we had to know where that product was going. We couldn't just like conduct our first production run and then like market and try and sell it. We had to know. And so how we went about it is we built a wait list of 2,000 people before we ever even stepped foot in the factory. And that way, when we made that palette of yogurt, we already had this like virtual line up the door of people who were excited to buy it and sell it. And so after that first production run, we we went up, we we sent the palette of yogurt down and we sold all of it by hand on city bikes in seven days. And that really kind of helped us, you know, build confidence to then increase the size and increase the size and kind of continue to sell. Now that we're in stores, I think we're we're learning a lot. We've we've been selling out on shelves. And some things that we've learned is that grocery stores don't actually tell you when you're sold out. It's like usually we find out because a customer sends a photo and says, Hey, I tried to get this. And it's funny because as a customer, you're like, oh, why are you not on the shelf? And from us, like, we didn't even know. Like, we'd we'd love to be always on the shelf. So we're learning all of this in the CPG space and navigating the kind of process there. We want to keep a tight lock on like supply and demand. We never, we never want to be sold out. That's like never a goal for us is to be sold out. But we also don't want to kind of overstep our demand where we're jumping to these huge, huge production runs and not actually having the right distribution channels to do that. So part of our growth strategy here in New York City is like being very intentionally focused on New York City, on our backyard, and then expanding regionally once we feel like we've sort of dominated this market and our ubiquitous here.

Speaker: 20:00
Yeah. You kind of touched on it in terms of like, I mean, definitely there's obviously a lot of learning lessons billing in any company, whether you know the industry or not. But uh what have you felt like coming from the out of the tech space uh before coming into C BG? Anything that now that you've been in the space of it, anything that's actually proven to be pretty useful that you kind of brought over from your learnings and in the tech world into into CBG?

Speaker 1: 20:27
Yeah, it's I mean, so I'll give you, I'll give you a couple, a couple examples. One, like very tactical. Like I study computer science and coded our website, right? Like when we were when we were doing our pickup model, um, we're using Shopify for our website. And Shopify doesn't natively have this like concept of like a pickup, right? You order it and then they like you know partner with FedEx or UPS and they create the shipping label and send it out. And so I basically had to build this feature into Shopify that gated someone's checkout on them choosing a pickup location. And so we would kind of like hard code in these like locations, like pick up in Union Square, pick up in the West Village, pick up on the Upper East Side. And before you could actually go and pay for your yogurt, you had to make that selection. And so, like, you know, if I didn't have a software engineering background, like we probably wouldn't have been able to have that user experience of like conducting that model. And you know, we sold like over 8,000 yogurt that way. So that was like a good tangible tactile use for it. Um, I think the other thing is just like product product thinking. Um, so I was a product manager for four and a half years, and I think the way that um Kiki and I both sort of approach building a brand, building a product, the packaging, the the sort of criteria that we have of how users interact with it and and how they feel about it. All those things I think are very like startup and and tech forward, uh and maybe less so like traditional consumer. And a lot of that Sort of non-consumer thinking. Like, I think, put it this way, like, if we had had consumer experience, I don't think we would have done any of the things that we did. Like, some of the things that we're doing are like so wildly unscalable and and pretty untraditional. And I think had we had a background in consumer before and knew the way to do things, we probably wouldn't have done it the way we're doing it. And so I think that we've gotten a lot of value out of thinking out of the box.

Speaker: 22:26
I think you originally launched as, I'm not sure you pronounce it, Benny B-E-N-I-Y. And then you guys got some cease and desist or something from some energy drink company, assuming I got that right. And then you had to like obviously force you to rebrand. Yeah. Walk me through that, that process a little bit because I think you're not the only one that's that's experienced this and like how you kind of turn it into an opportunity.

Speaker 1: 22:48
Yeah, that was a a a tough moment for us. Uh we had been, you know, our previous previous name was Benny, and we had had that name um, you know, for like five five months or so. So it did in the grand scheme of a company, that's so little, but for us, it was like the only five months we had as that brand. And we had built up some brand equity online, thousands, thousands of followers and and subscribers, and people kind of, you know, we had merch and all of those things. And so when we got that cease and desist, we were like, you know, we're we're felt like the floor was falling from underneath us. And we basically had to decide a couple things. One was do we just like take this to legal and like spend, you know, thousands of dollars just like fighting this in a legal battle? Or do we basically like cut our losses and just like go through the name change now and you know avoid when we got this this letter? We were like days away from ordering a hundred thousand units of packaging, right? With our names and it was like, yeah, it was a lot. So we basically had to decide like, do we just say, do we ignore it and just say whatever we think that we'll we'll win on this discussion and and just keep going, or basically put a pause on everything and and figure out a good solution here. And I think we obviously chose to to just decide to do a name pivot, and that was probably one of the best decisions we've made. Um, so we went through this like two-week sprint of like you know, internally brainstorming, and then also externally, like everything is content for us. So the moment we got this, we like posted and we're like, hey, we got we had to change our name, like anyone have ideas, and just kind of pooled and pulled, got over 500 submissions from our customers about different naming ideas, which is really helpful. Um, and we ended up choosing Sour Milk. And there were a couple of reasons for this. I think it it came down to some criteria that we had around naming. At first, we were just trying to find another version of our old name, but then what we realized is that a name change is actually a huge opportunity. Like the name of a CPG or any consumer company is like a huge, huge aspect of their memorability, of their recognition, and all these things. And so we decided to take the name in a different direction. And the things that the criteria that we wanted were number one, the name should be easy to pronounce. I think there's so many yogurts on the shelf where people just don't know how to pronounce the name of their yogurt. It's like phage or faya and chobani and sig or siggy, like just all of them are just like so hard to pronounce. We're like, we need it needs to be easy to pronounce. Number two is it had to be memorable. And that I think is super, super important. So many brand names are very forgettable. And so to take up space and actually have a name that sticks is very, very high value. And then number three is we wanted it to tell you something about what the product was. We really admired and liked, you know, the liquid IV, the, you know, vitamin waters, like these, these types of brands that you read it and you're like, oh, okay, I kind of get what it is. It's not just like out of left field. And sour milk really checked all of those boxes. Super memorable, easy to pronounce, and helps you understand what the product is.

Speaker: 26:04
Yeah, totally. That's a great name. I think uh blessing in disguise having to change it to that.

Speaker 1: 26:09
100%. 100%.

Speaker: 26:10
From a visual identity and kind of packaging design standpoint, you kind of mentioned those names, like definitely competing in a category with some pretty big giants, Chobani and Siggy's and whatnot. What were the key variables that were top of mind for you in terms of building out the brand identity packaging? So you really focusing on really being able to stand out on the shelf against some of these legacy players?

Speaker 1: 26:30
Yeah, we I mean we knew that the yogurt aisle was a sea of white, which actually made our jobs pretty you're our sort of criteria pretty easy. We did not want to have white packaging. That was sort of like the baseline thing was that if we're gonna stand out on the shelf, it's a sea of white. We need to have some sort of bright color that really like sticks out. And so we ended up going with this like royal blue, sort of our our like signature bright blue. Part of the other reason for this is that we knew that when we were launching, we were gonna launch with one skew. I know you you probably, Adam, know this, but we got a ton of advice being like you need to launch with at least four SKUs because you're not gonna take up shelf space and it's and no one's gonna see the product. And so we had sort of like a double header challenge of like, okay, we need to stand out in a sea of a sea of white, and um, we're only launching with one skew, so it like really needs to stand out because it'll easily get lost. Most of the yogurt brains you'll see on the shelf have like four to even like 10 different skews. Um, and so they're taking up a ton of shelf space. Yeah. And so we went with this like bright blue packaging, and I think that plus our name being sour milk really helps us like catch people's attention and grab their eye. The other the other reason why we we didn't necessarily want to launch with skis is because we felt like we knew who our sort of target demographic was, and we knew that that demographic buys a plain yogurt. Like most of the people who are maybe a little bit more health conscious and are looking for sort of the a clean label yogurt, they're buying plain and then they're adding their own fruit and they're adding their own honey and they're adding their own granola on it at home and sort of building their own yogurt bowls, or maybe they're using it for savory yogurt. And so that meant like if we as a new brand wanted to stay focused and speak to our target consumer, the only thing that matters was launching the product that they're looking for, which is a plain yogurt.

Speaker: 28:25
Totally.

Speaker 1: 28:26
I think that launching flavors, which we will do, we're actually in RD for flavors right now, helps us expand our market and and kind of attract different people that um that are looking for a flavored yogurt.

Speaker: 28:36
Yeah. It seems like from what I've read, you've kind of positioned sour milk kind of like you know, your favorite Greek yogurt disguised as a probatic supplement. Um I got that right. Like, how do you how do you guys think about kind of straddling the the food versus supplement category if that is kind of the goal?

Speaker 1: 28:56
Yeah, when we were first thinking about the brand and brand identity, we had these sort of like two diverging paths that we could go on. One was this like very serious, very scientific, kind of almost almost sterile health background. Uh, I think there's there's companies that do this well, like Z Biotics, Seed, AG1. Like these are very like this is clinically studied, here are our health and outcomes. And then the other was just like the opposite. It was just like super playful, super fun, just like be a fun consumer brand. And ultimately what we realized, even though we sort of straddle both, was that we'll be able to reach more people if we're just like a really fun, awesome consumer brand than if we're like a very health-focused product. And so we took a strategic decision to, you know, go for this more playful energy and really make it a yogurt that you want to eat every single day. And it just so happens to also serve as your probiotic, as opposed to something you're feeling like obligated to eat every day because it's your probiotic.

Speaker: 29:54
I don't want to say this the wrong way, but I feel like you've called it the drug dealer model, where in terms of what you talked about, Leon, delivering yogurt on city bikes and like brown bags before you guys entered retail. Would you recommend this model thinking back now? What do you feel like have been the big pros and cons?

Speaker 1: 30:08
Yeah, a hundred percent. I think if it's possible for you to do an execute, it was incredibly beneficial for us. And we did we did call it the drug deal model. And just to run people through what that actually looked like. So customers would come to our website and they would choose a location to actually pick up their yogurts. They would say, I want to buy five yogurts, I'm gonna pick up in the West Village on Tuesday, 5 to 6 p.m. And so when they go and they they place that order, we then fire over a calendar invite to their email that has that location and hold and date and time and their order details. Then, you know, when it comes to 5 p.m. on a Tuesday, you'll see either me or Kiki or both of us sitting with our blue sour milk backpacks. And you'll come over and we'll hand you a brown paper bag of your yogurt that has your five yogurt in it. And that was the exchange. And so you're really like coming to a street corner to buy your like brown bag of yogurt, which is kind of insane. But it it became known as the drug deal model because that's just kind of how how people would buy drugs. And so we there was a couple reasons why we did this and and uh and we gained a lot from it. So, first and foremost, speed. When you launch, especially a perishable dairy product, the traditional way is to you know, go produce a product, sign on to a distributor that has a reefer truck, and then you know, from there go to a bunch of retailers and sell it there. And we knew that was gonna take time, that was gonna take a lot of trust, a lot of build out. And ultimately we were like, our product is in a really good place. We have all this customer demand. Actually, the fastest way to get it to those customers into their hands is by doing it ourselves. And so we wanted to get our product from production into customers' hands quickly, and this was a really good way to do that. Number two is it enabled us to get feedback really quickly. So we were building these direct relationships with customers. We were giving every single one of them our phone number and we could get like immediate. That's when we learned people really love the texture of our yogurt because they would say, like, the texture is amazing. I haven't had any other yogurt like this, or I love the flavor, or I'm I'm now more regular by eating this yogurt every day, I'm having better bowel movements, like all that, all of that we got from having that direct relationship. And if we had sold through stores, we wouldn't actually have that direct relationship with them.

Speaker: 32:27
Totally.

Speaker 1: 32:28
And the third thing, which is really kind of related to that, is there is a world of a difference between going to a grocery store and seeing a product on the shelf for the first time and being curious about that product. Oh, what's that what's that new product? I've never seen it before, versus going to the grocery store and seeing a product on the shelf the first time and saying, I met the founders of that company and I've been eating that yogurt all summer. And we've now had this direct face-to-face relationship with every single one of our customers who bought our yogurt this summer, so that the moment we're in grocery stores, they are just excited, as excited as we are, because they felt like they were a part of this journey. They know us, they'd been eating the yogurt, they developed this habit of consuming it. And that was just like, you know, we had a hypothesis as that was going to benefit us in the stores. And we saw that play out from like day one when we launched into retail. Is our our customers, our loyalists, and we're our biggest advocates, and they were buying the yogurt.

Speaker: 33:26
I imagine sitting on a, you know, whatever street corner or whatever with a bright, you know, blue bag and you're handing people yogurt and bags. I imagine you had a at least a good number of people that you just saw that actual transaction happening and like learned about it that way, and then maybe came up to you and said, What is or you know, eventually then saw the bag and then like Googled it themselves or something.

Speaker 1: 33:47
100%. Yeah, we we had a ton of people. Um, you know, sometimes we sit outside at coffee shops, we had people being like, What are you doing? And that would be like, I'm selling yogurt, and you would they would buy it on the spot. It was definitely like a bit. We had people like meet at these drops, because you know, we would have like sometimes up to like 20 people coming to pick up yogurt from us in a given drop. And so there'd be all these overlaps. And I remember there's one time where um and we chat with everyone, right? Like you're coming to meet us. So so we we stay, we stay there and chat with everyone. We were talking to someone who just started a company and was looking for an engineer and and all these things. And then, you know, our next customer comes and he was like, Oh, I'm an engineer and I just left my company, like we should chat. And like they met and chatted. And I don't actually know if they're working together, but that would be awesome. That's so it just kind of became this like kind of community, community space, and everyone had this shared interest in in what we were building, and so people got to meet each other.

Speaker: 34:40
Fast forwarding a little bit, started getting into retail. Did it did it as it proven in those first retail conversations, having those you know, thousand plus really loyal customers, you could some level that data showing repeat orders, that kind of stuff. Did that really help you get on the shelf of that you know, first retailer or two?

Speaker 1: 34:57
Definitely. It it helped a ton. And I think beyond that, we had all of our customers like zip coded. So, you know, we we just recently launched with Butterfield Market on the Upper East Side, and we didn't really have a store on the Upper East Side to kind of capture that market. We told them, look, we have hundreds of customers in this zip code who have been asking to for us to stock here. We'd love to work with you guys on it. And that's really, really helpful in these retail conversations. And then you have proof points, right? Of course, like in our first two stores that we launched with, we like flew off the shelf. And so we can point to that and say, we launched with these stores, and this is how many cases we sold, and um we think that you also have a really good market to meet our customers and expand them.

Speaker: 35:41
Yeah, totally. And I think happier grocery was like the first retail partner.

Speaker 1: 35:46
Yeah, happier was our first retail partner.

Speaker: 35:48
Why do you feel like they were the right fit to the first one you wanted to approach?

Speaker 1: 35:52
Yeah, we were we were very we looked at you know a lot of different stores uh figuring out which one we wanted to actually launch with. We felt like happier was a really good product discovery and landing pad. So people generally tend to go to Happier and they're they're more browsing, they're more interested, they stop and stare at things as opposed to like if you're shopping at a Trader Joe's or a Whole Foods or some other stores, like your headphones are in and you're like, don't talk to me. And so it felt more conducive to product discovery. We also just like loved their mission, their vibe, they're very founder friendly. And just felt like it was a really good, splashy landing pad for us to start with.

Speaker: 36:31
Yeah. For other brands that are in, you know, a bit behind you, say like six months behind you, they're gearing up. Maybe they've got that commitment from that first retailer. Now they're kind of gearing up for that first launch and want to make sure it's successful. What's I don't know, two or three things that come like top of mind that you might tell them?

Speaker 1: 36:47
I think doing localized activations in that area can be really helpful. So if you're launching, you know, your first grocery store is is on the upper west side, find that local Soul Cycle, that local solid core or whatever local gym and contact them and see if you can if you can actually do a pop-up there or do damp demos there. Obviously, in-store demos are also great and you should be doing that in stores, but like thinking creatively beyond that, making it feel like the environment around that store is like you're everywhere within that environment. I think that can be really helpful because they're always gonna ask, where can I get? And you can say, actually, we're in this store, like down the ball.

Speaker: 37:28
I imagine probably doing pop-ups and that like a soul cycle, they're probably more friendly and don't charge you the way that retailers do, probably too.

Speaker 1: 37:34
No, yeah, exactly. Exactly. We've had we've had a ton of success partnering with gyms and other sort of tangential partners that our core customer base also kind of goes to.

Speaker: 37:48
Yeah. What's the retail expansion strategy look like from here?

Speaker 1: 37:56
We're focused on New York City at the moment. So we want to kind of capture there's there's like a thousand grocery stores in New York City. Um, so we want to capture those sort of local independents here and help sort of meet the existing demand. From there, we'll probably grow regionally, so within the Northeast and sort of expand and fold out. We'd love to be, you know, as far as California by the end of the year, especially because we have a lot of demand out there that that we haven't been able to meet yet, but in the short-term future, just again, kind of continuing to roll out in New York City.

Speaker: 38:26
Yeah. That's great. That's awesome. We have last uh last question for you. Uh I know you've been in this space now for for a bit. You're probably like tracking what's happening. Any just like specific brands or trends in general in the CBG space that have just kind of piqued your interest or things you've been just kind of tracking closely just for fun because they they feel exciting or interesting.

Speaker 1: 38:47
That's a great question.

Speaker: 38:51
Or maybe just brands that you admire think are cool too. If nothing jumps out, that's fine. You can delete this too.

Speaker 1: 38:56
Yeah, no, no, no. Um, so something that I'll I'll kind of make it more specific. Something that Kiki and I think about is how does the brand image and brand identity evolve at scale? Because there's something like very interesting and cool about like a small brand. Like right now, we're we're a small brand. It's very founder-led, we're like very scrappy. But once we're like in stores nationally, what does that brand identity look and feel like? And how do we maintain authenticity? I think the biggest thing that people lose is scale is authenticity. You start to create more distance between you and your customer.

Speaker: 39:30
Yeah.

Speaker 1: 39:31
And I think there's a couple brands that we're looking at that we think are doing a really good job at that. I'll call out one. I think this is maybe one you get a lot, but I think Grazad actually does a really good job at that. They're pretty much ubiquitous now, but their brand identity and online presence still feels very intimate and small and genuine and authentic. And so I think that we will consistently keep keep touch and try not to lose touch with our customers and our brand identity as we scale. And I think there's a couple good blueprints that we're looking at to make sure that we stay on that path.

Speaker: 40:03
Yeah. I feel like Fishwife is kind of a good example of that too, to a certain extent, too. I'm not sure if you're exactly.

Speaker 1: 40:08
Yeah. Yeah. Super, you know, if you look at our Instagram, it's like total spectrum. There's no like you look at Instagram to some of these big food corporations, it's like very sterile. It's not very engaging, it doesn't feel very human. Um, and I think we we like seeing that brands can be really big and ubiquitous and still maintain authenticity.

Speaker: 40:27
Yeah, I love that. That's a great point. Yeah, Alan, this has been awesome. What's the best place for people to follow along with you and all the stuff that's going on? I know you guys are kind of building in public, and then best place to follow along with the brand as well these days.

Speaker 1: 40:40
Yeah, so if you're in New York City, go to sourmilk.com slash stores and find a store that's closest to you. Um, we also partner with Farm to People on delivery so you can get it delivered to your door. In terms of kind of following and staying staying up to date, we have a newsletter called Gut Check where we go really, really deep on basically all the topics that you and I just talked about. We share everything that we learn. So anything from gut health to building a business to the name change, like all those things are shared there.

Speaker: 41:07
Perfect.

Speaker 1: 41:08
I post a lot on LinkedIn, so feel free to connect with me, just my name. And then my co-founder, Kiki, posts a lot of really awesome video content online. So TikTok and Instagram at Couch Woman. Um, and there's a lot of behind the scenes, really fun stuff on her account. And then the sour milk is at get sour milk. So yeah, that's all the way to that's for sure.

Speaker: 41:29
That's great. Awesome, great.

unknown: 41:30
Awesome.

Speaker: 41:31
Alan, this has been great. Really appreciate the time. I think that's the pod.

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