CPG Week: UNFI SNAFU And Beckham’s Buzzy Business Bet

[00:00:05] Monica Watrous: Welcome to the CPG Week podcast by BevNET and Nosh. I'm Monica Watrous, here with my co-host Brad Avery. Now here is the latest in food and beverage industry news. Wholesale distributor UNFI was hobbled by a cyber attack last week, leaving many bare grocery store shelves across the country as it worked to bring its systems back online. The company shut down some of its computer systems on June 5th, following the discovery of unauthorized activity, and began working with third-party cybersecurity professionals to assess, mitigate, and remediate the issues. The following day, UNFI, which is Whole Foods Market's primary supplier, had locked down its entire network and on Monday, June 9th, disclosed the incident in a filing with the U.S. Securities and Exchange Commission. During a third quarter earnings call on Tuesday, June 10th, UNFI CEO Sandy Douglas told analysts the company will likely incur elevated costs as it works to safely bring its systems back online and support its customers during the disruption. He declined to provide an estimate of the financial impact of the incident or timing of a resolution, but based on the latest reports we've seen, UNFI has made significant progress in restoring its electronic ordering systems and warehouses are shipping and receiving again. As our friend and grocery guru Errol Schweitzer put it, when a wholesaler like UNFI sneezes, the grocery industry catches a cold.

[00:01:32] Brad Avery: Now, we haven't heard yet, correct me, if there was any data stolen, if anything was compromised. All we know is there was an unauthorized activity in the system.

[00:01:44] Monica Watrous: As far as what UNFI has disclosed, I don't believe there's any stolen information. I think that the biggest part of this was the disruption to the supply chain. And I was receiving pictures from some of my colleagues in the industry over the weekend of out of stocks at stores across the country.

[00:02:04] Brad Avery: I certainly saw people on LinkedIn talking about this was impacting their brands. The effect was pretty immediate as far as how it was felt. And I'm not sure if you've talked to anybody since then about how they've been managing in the time, or is it just you got to sit and wait till everything gets back up and running?

[00:02:24] Monica Watrous: Some advice that we saw from Luke Abbott, the founder and CEO of Vee Driven regarding this UNFI outage is that brands should be closely scrutinizing incoming POs to ensure that they make sense and product may have fallen off shelf as supplies were depleted at store level. So look for stores with voids and consider using merchandisers to get back on shelf quickly. Luke also recommends if brands were delivered at UNFI to be prepared for extra carrier detention charges as potential logjams slowed receiving at distribution centers. And he recommends working with UNFI to reimburse any of these charges, which are not the brand's fault.

[00:03:04] Brad Avery: Yeah, if I got charged because you and if I got hacked, I would be pretty upset and I would definitely want to call the manager about that.

[00:03:14] Monica Watrous: Yeah, yeah, it's pretty, pretty messy, but hopefully things are back to normal very soon.

[00:03:20] Brad Avery: Well, in investment news, Taste Tomorrow Ventures, the newly launched fund by CPG incubator LA Libations, has taken a minority stake in better for you candy startup Better Sour. The deal is the second investment from the firm, which officially launched last month. I talked to them at the time and wrote a little story on that on BevNET. And they raised a $30 million fund one and made their first investment in just iced tea. Now, the size of the check and better sour wasn't disclosed, but founders Bella Hughes and Samira Nyuku said the brand is raising a seven figure round. Taste Tomorrow said that at the time of the launch, they intended to focus on the broader food and drink world, not just beverage. And they said that they wanted to make a statement with this second investment to confirm that, that food and snacks are absolutely on their radar.

[00:04:08] Monica Watrous: Yeah, and I spoke with Scott Guthrie, who's the managing director at Taste Tomorrow Ventures. And another thing that really excites him about the investments that they're making are the founders. In the case of Adjust Iced Tea, they've been big fans of Seth Goldman and have had a good relationship with him for many years. Scott was telling me that he's known Bella Hughes, who was the co-founder of Shaka Tea.

[00:04:31] Brad Avery: Yeah, don't forget that just a few years ago, Shaka Tea was in LA Libation's portfolio of brand partners. So before the sale, there's a history here. So when Bella went on to start Better Sour, these connections have stayed open. And now we're seeing some of that come full circle.

[00:04:48] Monica Watrous: And Bella Hughes was also telling me that L.A. Libations is a major broker for Better Sour.

[00:04:55] Brad Avery: I think it's exciting too that Taste Tomorrow just came out the gate with their announcement at the end of May, really, and just a few weeks later they're already announcing the next investment they've made. And there's a lot more to come after that. I know that they said these are probably checks in the range of $500,000 to around $1.5 million when I spoke with them. So we can expect that they'll have a pretty robust portfolio by the time this fund is all finished.

[00:05:22] Monica Watrous: Yeah, well, and also, I think it's worth noting that Sour Candy is receiving a lot of attention from investors lately. We just saw last week that Joyride, the creator-backed Sour Candy brand, secured $30 million in funding. And a few weeks before that, Final Boss Sour raised $4 million. The Hershey Company, at the end of last year, acquired Sour Strips. It's a huge trend right now.

[00:05:48] Brad Avery: Gen Z in particular really loves Sour Candy.

[00:05:52] Monica Watrous: Well, speaking of younger demographics, former professional soccer player, David Beckham has co-founded a brand targeted to active children and youth sports. The brand is called BeUp and he co-founded alongside serial entrepreneur, Sean Neff, who is behind such personal care brands as SunBum and Moon Oral Care. The concept was spun out of Beckham's beekeeping hobby, which was showcased in a 2023 Netflix documentary series about him.

[00:06:22] Brad Avery: Yeah, The Beekeeper. I saw that movie. Uh, different movie. Jason Statham was also in it.

[00:06:28] Monica Watrous: Yeah, no, different movie. This is about Posh Spice's husband. But that personal passion has since evolved into a broader mission to showcase honey as a natural cleaner source of energy in snacks for active families. Now the brand debuted this week with a line of fruit flavored snacks at Target stores nationwide and they're planning additional products across traditional snacking categories. I spoke to Sean Neff this week and he was telling me that there aren't a lot of snack brands that are targeting youth sports. It's a big white space and an overlooked market. So that really excited the target buyer, especially with the world cup coming to the US next year. The brand is planning a really big, robust marketing push and will be tapping a number of ambassadors and well-known people and influencers. But David Beckham himself is an internationally beloved icon and probably couldn't be a better face for this brand.

[00:07:30] Brad Avery: And soccer itself is on the rise in the U.S., obviously one of the most popular sports across the world. It's always been a bit of a joke that Americans aren't into it, but that is changing. It's rapidly growing. And as you mentioned, we got the World Cup coming up and it's from reality TV to changing demographics. This is definitely a strong play for an emerging market. Well, speaking of soccer, we've got more to talk about. Yerba Madre, the brand formerly known as Guayaquil, is making some big moves in the sports marketing realm with several futbol-aligned sponsorship deals. This week, the Yerba Mate brand announced it will be an official sponsor of the CONCACAF Gold Cup Tournament, where it will own extra time with name drops during live PA announcements and video board appearances. It also struck a multi-year deal with upstart New England team Vermont Green FC, which just formed back in 2021, and there's an official brand sponsor here. But that's just scratching the surface of what Yerba Madre is doing. The announcement also includes the launch of a cross-sport athlete collective of individual brand ambassadors that the company is now aligned with from across the world of sports, including NBA stars, pro skaters, surfers, BMX riders, and more soccer. Angel City FC players Madison Hammond and Casey Fair are among the inaugural class of players who are going to be promoting the brand. This is their first big marketing announcement since the rebrand earlier this year, so it's got a lot out the gate to help us re-establish this brand in the minds of consumers.

[00:09:15] Monica Watrous: You just caught up with Ben Mand over at Yerba Madre last week at BevNET Live, didn't you?

[00:09:20] Brad Avery: I did, yes. I introduced him and chatted with him on stage. He had a pretty good session. You can check it out on BevNET.com if you missed it live. But Ben talked about the rebrand and he's a seasoned CEO where he's come into existing brands, Harmless Harvest was his last job before this, and overseen big strategic shifts to drive growth. gave us some insight on stage into his strategy for that. With Yerba Madre, part of it was coming into Guayaquil and doing this rebrand, which is very radical. But he said it really fit with where they wanted to take the business next and the fact that most consumers, at least in America, had trouble understanding or pronouncing the name to begin with and would just call it the yellow can or Yerba. So he has done a lot of reorganization within the business and the session was great because he really just goes inside his point by point approach. So I definitely recommend it for anyone who is looking at how do I turn my own business around or, you know, readjust my own strategy when I've been locked in for so long with it.

[00:10:28] Monica Watrous: Insiders can access that session and all the other sessions from BevNetLive at BevNET.com. On a lighter note, Brad Avery you heard of Brad?

[00:10:37] Brad Avery: Yes, I'm right here.

[00:10:40] Monica Watrous: This, Brad, is a zero-sugar hard seltzer with 30 grams of protein. And it's just one of the many fictional but plausible products featured in the latest issue of Mize, a book of scenarios depicting the future of food. This is an imagined concept that is billed as the hard seltzer that goes hard. And the flavor is deadlift daiquiri.

[00:11:04] Brad Avery: OK, I'm glad it's fictional, which means I can call off my lawyers. for infringing on my name. But yeah, you know, I saw this and I thought it was real at first. And I was like, oh, you got to be kidding me.

[00:11:18] Monica Watrous: Oh, I'm sure it will be soon enough. The branding looks a lot like David, the protein bar, which makes me think that I just can't imagine that was an accident.

[00:11:27] Brad Avery: I wouldn't put it past somebody, is the thing. Of course, you would just call it Brad. Why not? And what's the name mean?

[00:11:34] Monica Watrous: We learned about this concept on LinkedIn. Blake Mitchell, the principal at Interact Brands, shared this post. And someone commented that maybe it should be called Chad.

[00:11:46] Brad Avery: Also on LinkedIn this week, Liquid Death wants their money. Five years ago, on June 16, 2020, a man named Seth, last name withheld, emailed Liquid Death to let them know that he thought their company and their product were, quote, the dumbest, most brain-dead scam I have seen in my existence so far. To take it a step further, Seth was so confident in the brand's looming failure that he said they should contact him again in five years, quote, if you're still employed by the same company selling the same product, and that he would give them $100 cash in person. So the company and CEO Mike Cesario are calling his bluff. On Instagram and on LinkedIn, they shared the screenshots from the email and demanded that Seth pay up and that they would even pick him up from the airport. They kept the receipts. You made a bet and you lost. I think that nothing would be more just and courageous than to give Liquid Death $100 cash

[00:12:49] Monica Watrous: Yeah, liquid death needs that money. Here are some other notable bits of news from the week. Kraft Heinz is kicking red dye and others to the curb as it aligns itself with key objectives of the Make America Healthy Again movement. Amazon is consolidating the Whole Foods leadership team under Amazon's worldwide grocery store, with former Whole Foods Market CEO Jason Buchel in the top seat. And finally, PepsiCo will shutter its Frito-Lay facility in Rancho Cucamonga, California, which has been operational for over 50 years and will result in layoffs affecting about 480 employees. For these stories and more, become an insider at BevNET and Nosh. And if you're enjoying the show, please subscribe on your listening platform of choice. That wraps up this edition of CPG Week by Bevna 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.