CPG Week: Oats Overnight And Unpacking The Ozempic Craze

[00:00:05] Monica Watrous: Welcome to the CPG Week podcast by BevNET and Nosh, your source for the latest food and beverage industry news. I'm Monica Watrous, Managing Editor of Nosh, here with my co-hosts Brad Avery and Lukas Southard. If you're enjoying the show, please subscribe on your listening platform of choice. On the podcast today, we're discussing Ozempic Era overnight oats. But first, we have officially announced our Nosh Notables class of 2024, which folks can read at Nosh.com. And we had a lot of fun sifting through all the submissions, whittling down the final selection. But there are so many more notable individuals in this industry beyond the two dozen listed. Which honorable mentions would you add, Brad and Lucas?

[00:00:51] Brad Avery: I'll give a quick shout out to AumSum co-founders Vanessa and Kim Pham, who we recognize Norma Chu, the CEO of Day Day Cook, which acquired AumSum earlier this year. Props to the founders who have really led a strong messaging campaign for AAPI brands and founders and culture through their social media and also just on a well-deserved acquisition. So that's my pick for an honorable mention.

[00:01:24] Jerry Seinfeld: That's a good one, Brad. I'm going to zag a little bit in a nod to last year'Nosh Notables where we had some celebrities, Snoop Dogg, Barbie, and the gummy bear, which I don't know if that's a celebrity, but I'm going to give my honorable mention to Jerry Seinfeld. No. Thanks, Jerry. Somewhat lackluster, in my humble opinion, Netflix movie, Unfrosted. He did bring to light an element of the CPG industry that I think a lot of consumers we're not really aware of, which in terms of how the R&D works, how the sausage is made, or how the Pop-Tarts are made. For that reason, I think he would be honored to accept an honorable mention as a notable.

[00:02:03] Monica Watrous: Yes, that's a good one.

[00:02:05] Brad Avery: If you want to know my opinions on that, you can listen to our episode where we talk about Unfrosted.

[00:02:11] Jerry Seinfeld: For the record, it was not my favorite movie of the year, but I thought it had some good moments. Monica watched it like three times. Four.

[00:02:20] Monica Watrous: Brad, are you still on your Pop-Tart strike?

[00:02:22] Brad Avery: Oh, no, I've had Pop-Tarts.

[00:02:25] Monica Watrous: You swore. My honorable mention for Nosh Notables would be Mike Kurtz, who is the founder of Mike's Hot Honey. This past year, just continues to trot out new partnerships with restaurant operators and other packaged food companies. This week we saw an announcement with Bush's Beans, Brad's favorite, and earlier this year there have been collaborations with Club Crackers, Utz Potato Chips, and even Cinemark movie theaters. You can now get your popcorn with Mike's hot honey drizzled on it. Brad, you wrote this week about Oats Overnight's Series B funding. Can you tell us more?

[00:03:04] Brad Avery: Yes, so this week, Oats Overnight raised $35 million. A round was led by Enlightened Hospitality Investments, which is a first-time investor in the brand, as well as a number of new and existing investors. This is in addition to $21 million that they raised last year. So that's $56 million in two years for a brand that is primarily still e-commerce focused. I was able to talk to CEO Brian Tate and Chief Strategy Officer Nina McKinney on Monday, and they told me that a lot of the focus is to support their new manufacturing facilities in Ohio and Arizona, as well as support for retail expansion. It's still only, give or take, 10% of the business. And so retail is going to continue to be a focus for this brand.

[00:03:54] Monica Watrous: It's interesting that a company at this stage is self-manufacturing.

[00:04:00] Brad Avery: Absolutely. And they're trying to also go vertically integrated. And a lot of this round is also for supporting supply chain and shoring that up. They have a very robust R&D schedule. They do limited time flavors constantly for their subscribers. So they're always innovating and that requires a strong supply chain. So that's where I think a bulk of the money is going. And then retail was also another big aspect of that as well as innovation.

[00:04:28] Monica Watrous: I used to subscribe to Oats Overnight. I don't anymore, not because I don't like it. I just eat different breakfasts. I get bored of the same breakfast. But I loved that LTO program. That was really fun because they weren't always forthcoming on what the actual flavor profile was. Sometimes it was like top secret or a mystery flavor and you had to guess.

[00:04:49] Brad Avery: And I thought it was pretty good, too, that we talked about other innovations beyond just flavor. Functionality and, in particular, protein is a big focus for them. And I asked, you know, why protein? Because we've been hearing a lot about that. And you mentioned Ozempic Era GLP-1 drugs being a big reason for pushing the growth of protein in the market right now. So that's something that Oats Overnight is definitely focused on.

[00:05:13] Jerry Seinfeld: What also stood out to me was just the sheer amount of staff that they have. I mean, they have a pretty robust labor force. In their story, they said that they have about 250 full-time employees, and they were expecting to hire a bunch more.

[00:05:27] Brad Avery: Well, last year, when we reported on their $21 million raise, they had 250 employees. Now it's about 350, and they're looking to keep hiring.

[00:05:35] Monica Watrous: A lot of that is production. It is. To have two facilities. I'm excited to see what comes next from Oats Overnight. I know they're experimenting with other form factors and product lines. They have a protein coffee available for their subscribers. I'm curious whether they'll get out of oats and do other things along the lines of protein enhanced products or other nutritional convenient products.

[00:06:04] Jerry Seinfeld: I'd also like to point out, this is the second new investment that we've heard in the breakfast category. Evergreen closed a $5.4 million round recently. So they make frozen waffles and breakfast sandwiches. And so, you know, there, there is something to be said that as tight as it is to get new capital these days, there are some brands in the especially better for you breakfast category that seem to be doing pretty well.

[00:06:33] Monica Watrous: Well, Brad, you mentioned Ozempic Era that brings us to our next topic. We published an exclusive report for BevNET and Nosh Insiders featuring data from the Brightfield Group on the GLP-1 craze. And some of the highlights of the report here are that over half of Americans are actively trying to lose weight, and 69% of adults are classified as overweight or obese. Approximately 3-5% of the general population have been using semi-glutide injections like Ozempic, Manjaro, Wegovy, others in the market, some compound drugs for weight management over the past year. It's also a diabetes drug. And Breitfeld Group says that that rate of consumption or usage is comparable to products like oat milk lattes and matcha teas. So not an insignificant penetration here. Recent growth in semiglutide use has slowed. But the data suggests that another surge by January is possible, driven by increased consumer interest and new product development. And Brightfield Group uses social listening as part of their research. They're tracking conversations around semaglutide and reported that those conversations on social media have increased at a rate of 500% compound monthly growth rate this year, with content trending around success stories, transformation, pictures, before and after, community support, but also cautionary tales about the use of these drugs.

[00:08:08] Jerry Seinfeld: This Brightfield report is consistent with a lot of the conversations that I did have at IFT with some of the major ingredient providers there. A lot of them were focusing on this interconnectedness of gut health, low glycemic ingredients, and low glycemic diets. And that's effect on consumers' weight and helping consumers along on this idea of a weight loss journey. and a stronger desire and demand from consumers for more products that are GLP-1 companion drugs or alternatives to what we're seeing with Ozempic.

[00:08:51] Brad Avery: It's good to remember that none of this stuff happens in a vacuum, that people have various interests and will be combining these products with different uses. And in particular, something like gut health combining with GLP-1 drugs makes a lot of sense given what we know about the side effects of a lot of GLP-1 drugs. So, a emphasis on combining these makes perfect sense.

[00:09:13] Jerry Seinfeld: From my perspective, that the idea of prebiotics or gut health and brands positioning around this is almost like a dog whistle to helping consumers with their weight loss journey. And so some brands might not be saying necessarily that their product that's full of prebiotic fiber is. a weight loss product, but there does seem to be a understanding from the consumer perspective that the more prebiotics you get in your diet, the more fiber it might be helpful to helping you lose some weight.

[00:09:49] Monica Watrous: The way that brands are responding to this trend is bifurcated. We're seeing some brands who are embracing this idea of healthspan and holistic health and wellness, tying weight loss to other health benefits like gut microbiome and low glycemic index. On the other hand, we're seeing brands that are embracing messaging around weight loss as part of their communications. Belly Welly, the gut health brand, recently sent an email to its subscriber list with messaging around, do you want to lose the last five pounds? So it's concerning to me to see brands that are hyper focused on weight loss as part of their messaging and not considering the bigger picture of having a healthy lifestyle or longevity.

[00:10:45] Brad Avery: to the point that I wrote recently about healthspan and the focus on being healthy when you're younger in order to prolong your fitness throughout your life. And that messaging kind of moved away from weight loss. But now with GLP-1, as you said, we're seeing more brands re-embrace weight control. But what I think is interesting about this is that a lot of the legacy brands that made weight loss their identity are not coming back as a result. I have some Cercana data in front of me. In the 52 weeks ending July 14th, SlimFast fell 38.2% in US retail, Mulo and C-Store. It's still a $100 million brand, but compared to the brands that are fast rising in this category, you have Owen, you have Premier, you have Fairlife with their core power. So the brands that made their whole purpose to be weight loss are not catching up. Some of these smaller brands or rising brands that are focused on health are now reintroducing you want to lose five pounds into their messaging.

[00:11:56] Jerry Seinfeld: And I think the brands that are doing it well, so Supergut is the first one that comes to mind. I've talked to the founder, Mark Washington, who's a Nosh Notables this year, founded the brand in an ode to his sister, who was a diabetic and struggled with her weight. And when GLP-1 drugs became a really big trend, He found that this is exactly what his brand was already doing, and it provides a healthy eating alternative, a supplement, whether it's a bar or a shake, that can meet consumers that are looking to help on their weight loss journey, but also are just looking for a healthier meal replacement.

[00:12:36] Monica Watrous: There are a lot more insights and data in the Brightfield Group report, which BevNET and Nosh insiders can access. Here are some other notable bits of news from the week. Cultured protein maker taps beef industry vet, I's supplier role. Kroger and Albertson's update. Parties agree in Colorado to put mega merger on hold. And Keurig Dr. Pepper sees healthy Q2 growth amid coffee declines. For these stories and more, become an insider at BevNET and Nosh. That wraps up this edition of CPG Week by BevNET and Nosh. Thank you to our audio engineer, Joshua Pratt, our director is Mike Schneider, and our designer is Aaron Willette. If you enjoyed the podcast, please subscribe on your listening platform of choice, and we will see you next time.