What Gives a Brand Acquisition Energy with Amrit Richmond

Amrit Richmond

So I think a strong founding team in the first year, even the day zero of a brand, is how much can that team do before they hire other teammates and agencies? Can they design some Facebook ads themselves? Can they create packaging as cheaply but thoughtfully as possible to give the brand a chance in that first year? Do they understand how the industry works? Honestly, do you know what a UPC code is or how to position something for retail?

Do you know what drives people to subscribe to something online? Maybe it's what you did in the past. I really admire founders that used to work in advertising because I come from that world too. And this new brand that they're creating is kind of a blank canvas for unsuppressed creativity that maybe they've never had in their careers. And I find that they kind of run through walls and can do all these different get the brand off the ground things that make a huge difference in their business.

Mike Elp

Hello, I'm your host Mike Elp, and this is the consumer VC podcast brought to you by propeller Industries, the leading strategic finance and accounting partner for venture stage companies. On this show we discuss the intersection of venture capital and consumer innovation. If you're enjoying this show, please subscribe on YouTube or wherever you're listening. Spotify, Apple. And if you want the full experience, I highly recommend checking out the newsletter@theconsumervc.com you'll receive all the latest fundraising updates.

You'll also receive every time a new episode drops. It's great. That's www www.theconsumervc.com. Content episodes are for informational and entertainment purposes only and is not investment advice. I am delighted to have on my friend Amrit Richmond on today's episode.

You might know her from indie CPG. She also is the founder of Super Mercado Insights, where she studies the past and future of the industry for clients and her own curiosities since 2017. If you're in the world of consumer brands, I would be stunned if you haven't heard of her or at least seen her research online. IndieCPG helps support brands through community content and intros to collaborators. I highly recommend learning more@ndcpg.com.

And recently Amrit joined the board of SecurecpG. SecureCPG is building the founder forward approach to product insurance. Well, we focus this conversation on the road to the exit, what probably every founder wants. But what gives a food or drink brand in today's market? Acquisition?

Energy? What are the different profiles of acquirers today? Why acquire emerging brands? For all the answers, and without further ado here's Amrit.

Amrit, thank you so much for joining me here today. How are you? You're welcome. I'm good. How are you?

I'm doing great, thank you. So you've produced incredible research and I love all the posts that you create that I think is so helpful for founders and folks, particularly in the CPG industry. And I know that we were talking last fall about acquisitions and how maybe the acquisition landscape has changed over the past few years and thought we had an awesome conversation and so really excited to kind of dive into this more on this episode. Yeah, I'm excited too, especially because you study the space like a sport, like I do. So it's always fun comparing notes when we catch up.

That's kind. I mean, your notes are incredible. Let's start from the basics. Why does a company acquire another company in the CPG space? Sure.

Amrit Richmond

I think the thing that's changed the most is acquiring something for an opportunity versus a threat. In the past, if we look at some of the first acquisitions in the better for you space, like an Annie's Mac and cheese or kettle chips, the people that acquired them had similar products, but these were the organic, slightly healthier versions of them. And those brands are still on the shelf. I think they're great case studies. But now it's more about acquiring an opportunity.

Maybe the brand has access to a new customer base or a way to engage with that customer base that the corporation just doesn't have the expertise around. Obviously IP something that's very defensible against the other smaller brands when you're comparing potential acquisitions. But also that gives this corporation a new tool in their tool belt or something defensible that says this is a really special product and we're the only corporation that has something like it. So I think corporates in food and BEV are thinking about companies their size as threats versus these smaller companies now. And it's cool to see CVCs making more investments, making more distribution partnerships as part of their investments.

They're making a lot more effort to be active in the earlier stage. Ecosystems. Someone like Mandela has snack futures program and it gives them a chance to support brands that they may or may not invest in or acquire in the future, but helps them understand where all of this is going. And I think it's positive for the ecosystem that there's over 70 corporates investing in food and beverage companies. I love this concept of now corporates are looking at when they're thinking about the M and a landscape in terms of what to acquire.

Mike Elp

They're more thinking about opportunities rather than threats. And I really appreciate how you laid that out for us. But how does it actually, in terms of the opportunity side, what do you think about this kind of new landscape? What kind of comes to mind and what are the different levels or different maybe checkboxes per se, that has to have a corporation interested, or a company maybe needs to have that the corporation would think, hey, this is an opportunity for us. Sure.

Amrit Richmond

So there's table stakes, things that we all think about. It's most likely that the company has national, possibly international retail distribution. I think in the supplement space, a brand could only live online and get acquired if it's something that people buy and repeat on subscription. But if we're talking about fast moving food and beverages, where someone buys a single unit at Whole Foods or target, that retail distribution is going to be really important. And the corporates are much smarter about retail at scale than we are.

That's one of their core competencies. A lot of them even dictate what goes on in their particular aisle because they're responsible for a third of it across all of their core brands. So by partnering with them through an investment or acquisition, they can now distribute your product onto their aisle, or the adjacent aisle. And that's super powerful when you think about the long term partnership that happens after an acquisition. So they're looking for brands that can fit into the retail stores that they have the closest relationship with.

Huge bonus if you're already selling in those. But it's also important that your brand understands how to play online. Mike, you and I talked a little bit about how the team that might be getting new jobs at this acquirer is really important, especially if that corporate is looking to have that team maybe incubate some new, entirely new brands with them or some collaborative products. So we saw Mondeli's. They bought grenade snack bars that are high protein, and they did an Oreo flavor.

That's a perfect example of taking a nostalgic product that everybody loves and pairing it with something that's high protein. I like to call that functional nostalgia, obviously low education. It makes us smile just like we are now, but it gives Oreo access to an audience that maybe hasn't had that flavor in a while. That's a great example. And also a really interesting kind of way, too, to collaborate with the brand that you've actually acquired as well, and actually bring some of the brands that you're known for, the incumbent brands, actually, into the fold, which I think is really cool.

Yeah, I'm holding out for a cookies and cream who kitchen bar. I really want a who kitchen cookies and cream flavored bar. That'd be my dream acquisition collaboration. Well, I mean, in the last, maybe 1015 years, what to you were specific acquisitions that stuck out, that you thought, hey, this is actually maybe an insight into how corporations are behaving. I'll go back to Annie's and kettle chips and Justin's.

Those founders were my heroes when I was growing up. And we had their products in our house more recently in the last decade, of course, Rx Bar, Liquid IV, more recently, Cliff Bar. But then there were brands in 2014, like late July and Garden. And those founders are now building new brands, which I think is super cool. So the founder of late July is building Nixie sparkling water Gardine.

He's created a new frozen vegan sushi brand called Conscious Foods. I think I've bought it four or five times. It's incredible. So it's cool to see this lifecycle of a healthy brand that we all looked up to. They get acquired now that founder is building something new and standing alongside you in a booth at Expo west.

And it's something that gets me really excited about this industry because people don't want to stop building. Yeah, no, that's awesome. I think in your mind, because obviously, like a lot of brands, part of the goal is to be acquired. I'm sure you talk to many brands that they kind of say that the goal is for an acquisition down the line. I certainly talk to brands that say that the goal is to be successfully acquired.

Mike Elp

What gives a fast moving brand acquisition? Energy. So we talked a little bit about the defensibility of having good distribution. And that also tells the potential buyer that your brand has a stronger hold on that region or that aisle than the other brands of similar size to you that are still indie. Of course, a mass appeal product platform.

Amrit Richmond

I talk a lot in my content about low education, low priced products, and low price doesn't mean a dollar 99 for a soda. It just means this is a price that people can add to their cart, ideally every time or every other time they're at the grocery store. I've also written a lot about the connection between a customer listening to a song or having a favorite band and the products that they buy at the grocery store. You want people to kind of listen to your snack or your beverage on repeat. You want them to tell their friends about it, whether it's on Instagram or in person.

But even if they tell nobody about it, if it's just the secret connection that they have to your product because it aligns with their fitness diet and they're angry when you're out of stock at the store.

That's the kind of energy that you need to get acquired. And when you can do that, sometimes you can do that even in your third year of business, if you can keep up that connection with your customers. What you launch next, kind of like launching your next album, they're going to trust it. They're going to want to buy it, they're going to listen to it, they're going to want to eat it. But that trust takes time.

One of my favorite brands is Bonza. I love their pasta. When they launch pizzas, I bought those. Haven't tried the waffles yet, but I know they're going to be good because I like the taste and texture and nutrition panel of their other products. They've done that trust consistency really well.

Mike Elp

Yeah, I know. I love Bonza, too. I think also their Mac and cheese is incredible. It's so good. How do you define and think about mass appeal, for example, and, and if a brand actually does have mass appeal within your research as an industry?

Amrit Richmond

We talk about nostalgia a lot, but I think it can go beyond that. I like to think about functional products as how does it fit into someone's day? Does it help them wake up? Does it help them get through that slump right after lunch? Is it something that they relax with in the early evening?

Can they share it with friends? Does it help them sleep? There's four or five moments in someone's day that your product should fit in at least one of them. So going back to Bonza, most of their products were lunch and dinner oriented. Now they have waffles.

Their customers could be eating their product more than once a day. And that's part of the appeal factor for me. Part of that is also low education or as low as possible if you see something for the first time at a store, even if it's in the yogurt aisle, but you have no idea what that yogurt is made out of. That's a problem. And it doesn't mean you can't build a successful business or that you won't get acquired.

It just means that you're going to get less turns on the shelf and going to have to do more demos and spend more on the Instagram ads and marketing versus using ingredients that people understand at the same time. Over the last year or so, I've seen brands put more emphasis on the flavor of their products in the front and the function in the back. I've had some sodas where I looked on the back and I read that there was magnesium in it and I didn't know, and I was relaxed, I was happy, but it wasn't so in. Your face or that was, Mike, the main kind of selling point, that there was magnesium in the beverage? Yes.

And honestly, it was delicious and I would drink it again, but they sold me on the flavor of it first. So to me, as a CPG strategist, they want to appeal to as many potential customers as possible versus saying, only drink this when you're stressed. Are you finding that more and more in terms of brands today when it comes to some of the marketing tactics in that maybe tying it more so to an emotion or how you would be feeling? For example, instead of saying, we have this ingredient or something along those lines. Yeah.

Earlier, like 2019, 2020, we were seeing a lot of focus on this product is for you if you're stressed, and now it's much more focused on calm. Recess has done that really well. They don't remind you why you're drinking it. They just invite you into their world. What I thought was really interesting in your research, Elsie said, was also on the PE side of it, how you have this kind of new type of PE investors when they're pe, but also operators, too, they're kind of acquiring brands.

Mike Elp

And maybe traditionally they would only be investors in the brands, but they're actually now kind of acquiring the brands, but they have the operational expertise. They were entrepreneurs and were able to kind of exit and had successful exits that they actually have kind of come back, even though they still invest in brands. They also as well run brands, too, which I think a little bit of a hybrid type, where in traditional, like, you have your own kind of operations team and it's different. Yeah, and we're still seeing traditional pE. Some of the bigger exits were Alcaterton buying Kodiak cakes, TPG growth buying smart suites, and then we've also seen some new kind of house of brands or holding companies be pretty active lately.

Amrit Richmond

There's one called created that bought basis, clean hydration, Camp Mac and cheese, a functional beverage called Dune Human Co. I know that they made it. Yeah, Humanco. So they're launching their own brands, they're acquiring them. Love what they're doing.

So again, as you and I are looking at this document while we're on video together, when we look at this, these are a couple dozen first time buyers in the last four years where traditionally, before COVID it was the usual buyers of these brands. Yeah. And I actually think to the founders listening, who buys your brand might still be building their business right now. It might be one of these, what we would consider a unicorn in CPG that's managed to stay in business twelve or 15 years. That's later stage that has the ability to acquire you either for cash or meaningful equity in their business, and then one day you might get acquired together.

So similar to how the food and beverage corporates are thinking about what could we potentially acquire or partner with today that isn't a threat, that's an opportunity. These later stage brands that are platforming through acquisitions are thinking the same way. They make a snack, maybe they own their own production facility. What else could we be making in this facility? Maybe we do an equity deal with those brands.

Maybe we acquire 25% of them. We give them line time, everybody wins. We need more of that right now. Yeah. And I think to your point as well, in terms of what you acquire, it's maybe in the adjacent markets.

Mike Elp

In terms of what you currently have adjacent markets, yes. But I still think any buyer, large or small, should have a checklist of what can we teach this company.

Amrit Richmond

Why are we acquiring it? Yes, it has mass appeal. Yes, they have distribution. Yes, it's a product that people listen to on repeat. But how are we going to make an impact on this brand so that we can get a return on our time and investment?

Also, so it might be the same way an investor is looking at a brand and only investing in founders and products that they feel like they could make an impact on.

Everybody needs to look in the mirror and say, can we really make something meaningful together? Otherwise you're wasting your time. Right. No, that's a great. In terms of how can we also add value?

Mike Elp

If we went through our distribution, for example, and got them into maybe a different type of retailer as well, to kind of expand their distribution, would that actually be valuable or would they actually appeal to that type of customer as well? Yes. So imagine your food brand gets acquired, you reduce your cogs by 20%, and you get into your dream retailer, not with a broker, but through the DSD of your new parent company that can dramatically change your business. Huge. I wanted to also touch on cogs for a second because I remember that when it came to kind of like the criteria.

Now, when it comes to being attractive, if a company has acquisition energy, the cogs or the supply chain needs to be maybe more simple, that's more attractive and not as complex, how do you then think about innovation. Not to say that the most complex supply chain means that you're the most innovative, but at the same time, if there is complexity, that maybe that you're producing something that's fairly different to maybe what was already in market, for example, that maybe there is more complexities to it. How do you think about if you're a brand and you're really trying to innovate and you're, and you're trying to be pretty cutting edge and, and produce a product that is very different and you actually, your cogs are going to be a lot higher than the incumbents. How do you kind of think about and manage when it comes to innovation? And then of course also wanting to also maybe be acquired or be attractive to acquirers.

Amrit Richmond

Going back to what we were just saying post acquisition, what impact could quarter corporate make on the business? If your cogs are higher than you want them to be, but they're not putting you out of business, that could be a problem your new parent company can help solve. They might be buying a double digit percentage of the chocolate, let's say, in the industry or in the country, or just have access to suppliers that you don't know about that only work with corporations. So I don't think that the most important thing is cogs or the big profitability word. It's important for sure, but it also depends on what kind of conversation you're going into when you're getting acquired.

Are people approaching you because they see that you've created something super valuable or are you trying to sell your business?

There's different negotiating levers about your cogs and your valuation. In those situations, sometimes a company gets acquired and the supply chain changes significantly because it needed to, or because the new company wanted to do it their way. And that's a moment when you really have to consider the customers, because the customers of these organic, natural, better for you products. We are smart. We read labels, maybe because it's our diet or because of allergies, but also we bought these products because of the supply chains and because they're ethical.

So there has to be a certain consideration when you reduce the cogs and you scale a product post acquisition to not take away what made people fall in love with it. Yeah, no, that's a great point. I remember when I had on Mark, the founder of Zico, he was saying that when Coke bought Zico, they actually changed the formula to make it a lot more cost effective for Coke.

Mike Elp

And I remember their competitors kind of pounced on that too, because they knew and so I think that also, when you do get acquired, I think that it's also important to know as well if the product would actually change too, right. And making sure that if you obviously believe in the product and you obviously built the product, and making sure that that is still kind of consistent in terms of the ethos of the company that you originally created. I think there's also ways that a corporation can make a product better post acquisition. They might have access to certain equipment or certain, again, certain ingredients that just aren't on the market for these earlier stage brands or the quantity or scale of them. They might have incubated an innovation that no one knows about, and they launch it through this younger brand that they've acquired, because that brand can play in retailers and spaces that maybe they're not in also.

Amrit Richmond

So again, going back to that value exchange, when either you're working towards an acquisition, you're looking at people who might acquire, you really think about who can add value and who would benefit from what you've created versus who has a product exactly like my chip or my chocolate bar or whatnot, to say, hey, potential acquirer, together we could be more defensible in the market. And here's a slide or two about what our product roadmap is. If we were to partner up in this way, if any of this resonates, this could be a really great path for both of us. So that alignment is really important and I think understated when founders are putting together that m a history slide in their fundraising decks. I love helping friends and founders with those.

You guys can reach out. If you just want a quick list of acquisitions in your space, there should be some wild cards on there to say this corporation is diversifying outside of what you might expect them to acquire or partner with certain brands, I want to get close to them. Do you, potential investor, know that corporation? Did any companies in your portfolio sell to that corporation? Because I really, really want to work with them and kind of reverse engineering how you might get in touch with some of these buyers or just better understand them.

If that's really your goal, I think it's better to have a wish list in mind versus saying, my goal is to get acquired one day and I'm not really working towards a specific company or specific type of company, if that makes sense. This episode is brought to you by propeller Industries. If you run a high growth business and you're focused on profitability, extending your Runway, and improving your operational efficiency, you probably need a finance and accounting whiz that will grow with you? Well, instead of hiring someone full time, what would be cost effective is working with propeller industries. Propeller Industries is a leading strategic finance and accounting partner for venture stage companies and has partnered with over a thousand startups and high growth businesses across consumer products, consumer tech, and enterprise.

Mike Elp

Some of the brands that they've worked with are liquid death, Lollipop, hymns, farmer's dog away, movie pass, and Giphy. Propeller also provides specialized support for fundraising and M A with transaction advisory services. Propeller's TA team of former investment bankers and investors can step in on more of a project basis when pursuing full scale financing and M A. There's a link to Propeller Industries in the show notes if you want to learn more information in terms of actually creating the wishlist, right? So if you're a brand and you're looking to get acquired, or maybe this is down the line, right?

But maybe you have your wish list in terms of who you would love to acquire brand. How do you create that wish list? And maybe what should be like your own criteria for that wish list? And maybe what can brands get wrong? So for my clients and my own curiosities, actually, I want to write a book one day about the history of food and beverage in natural products.

Amrit Richmond

So this is a lot of ongoing research, but I've built a model that shows me the grocery aisles or attributes of products that corporations have the most concentration in, but also what we might consider to be their blind spots. So something like, let's say they're historically a pantry oriented corporation. My column for pet acquisitions is irrelevant. I hide it when I'm looking at that corporation's history, because unless it was a food topper for pets, it's really unlikely that they're going to acquire a pet product. But I try to think about, okay, they've made a lot of sauce acquisitions or seasonings.

I think about what else might either might be in that basket or what else is in that aisle. Because again, these corporations have really strong relationships with the big retailers and their aisle. Yeah, if you go down the pantry aisle, look at how many facings Campbell's soup has. Obviously, they're smart about soup, but they've been growing into other areas through acquisitions as well. When you think about getting dinner on the table fast, what else goes with soup crackers?

They have a lot of chip products now, too. It makes sense. These things taste good together.

These buyers, large and small, are also thinking about their portfolios in these ways. They don't need another soup. They need things that, again, play well with them because they want to have a stronger connection to this customer also. And if you think about that relationship between musicians and consumers or Apple computer and their customers, there are families that have grown up multiple generations eating some of these products. So if a big corporation puts their kind of stamp of approval on something that's new ish at a Walmart, they're going to trust it.

Also, they see it in the Super bowl ad or they see a celebrity is now endorsing this food product through the acquisition. These are all recipes for getting consumer VC trust the products. And I think at the same time I think these corporations are smarter than people think that they are. If you want to study what stays on the shelf, just go down those aisles at target. We can learn a lot from these classic nostalgic new Americana type products.

Beyond the inspiration to what to better for you attach. Let's look at their sales data. Let's look at their advertising history over time. Let's look at why my mom and I and my grandma love the same can of soup, which is a true story. So that's a multidecade generational connection to a product.

I think that's the ultimate acquisition energy. Look at something like Annie's. They've platformed into multiple different product lines and aisles since the acquisition. I hope it's a product that my future kids can enjoy with me brand that we can enjoy. I think that's the ultimate return on.

Mike Elp

Investment for an, I mean, those are excellent examples. I know another example that you pointed out too when we were talking earlier as well, that really stuck out to me was like Kellogg for example, buying Rx bar where why would know not they wouldn't. But why would they buy, for example, another cereal? It's more of like a breakfast bar that's kind of adjacent to them but still in that same, it's a different maybe use case for a person to one person might have cereal and then one might have a bar if they're on the go. It's also thinking about that if you're a founder, you're looking for acquirers of, okay, maybe this acquirer is predominantly known for these types of products.

Maybe my product would be actually a great addition to the portfolio because maybe you would consume them at the same time of day. Doesn't always have to be the case, but it is not a product that actually interferes with their current portfolio. And this is kind of going back as well to what you were saying about how these are kind of opportunities, all of them, and not threats. Yes, I absolutely see the RXbar acquisition as an opportunity for Kellogg when it happened. And now RX bar has cereals, they have high protein oatmeal cups, they have nut butters that they launched.

Amrit Richmond

Pretty sure all of that launched after the and, and of course it's still in business. It's at airports, it's everywhere. And I'm pretty sure that that's in part to the scale that Kellogg's distribution can bring to their portfolio of brands. For you, what makes a strong founding team as you work with brands? So I think a strong founding team in the first year, even the day zero of a brand, is how much can that team do before they hire other teammates and agencies?

Can they design some Facebook ads themselves? Can they create packaging as cheaply but thoughtfully as possible to give the brand a chance in that first year? Do they understand how the industry honestly, do you know what a UPC code is or how to position something for retail? Do you know what drives people to subscribe to something online? Maybe it's what you did in the past.

I really admire founders that used to work in advertising because I come from that world, too. And this new brand that they're creating is kind of a blank canvas for unsuppressed creativity that maybe they've never had in their careers. And I find that they kind of run through walls and can do all these different get the brand off the ground things that make a huge difference in their business in the earlier stage. It's being creative, it's being scrappy, but also in your own way, studying your aisle, kind of like a sport. Yes, you should see what acquisitions happened in the space just to kind of know what's out there.

But study what stayed on the shelf. Study who else is using the ingredients that you do. And as you put all this data together, it's going to give you ideas for potential partnerships. Either a collaborative product or maybe just a grocery haul giveaway on Instagram because you're both in the same store now and also be friends with those founders. When I'm not analyzing all of this data, I build community in the space.

I connect founders to each other, to different agencies and partners. I learn a lot from the office hours calls that I do, and that's why I'm so generous with my data when I chat with founders, because we really are both learning something. This is too much data for one of us in a silo to be looking at. We all contribute something different to, to the ecosystem. And I think the more we can compare notes about not just the path, but kind of where this is going.

We can all benefit from it. We, of course, have founders that are new to CPG, and that's incredible that they started out, certainly had an incredible roster of those people on the podcast, and they are awesome. We've also had as well, talked with founders that actually come from BinGCBG that then start their own brands.

Mike Elp

Can you talk me a little bit when it comes to the acquisition side of things?

Maybe like an advantage of working in big CPG prior to starting a business, how that actually, what maybe you might think why that actually might have an impact when it comes to actually when you're selling your business. Absolutely. And quickly going back to founding teams, I think someone who came from advertising and someone who came from big CPG would be my dream team. Because on someone that comes from big CPG, they understand supply chains, they understand how to rapidly launch new products. They were probably working directly or indirectly with those top five retailers.

Amrit Richmond

Also, they had access to sales data that probably none of us have ever seen.

They're their own swiss army knife of an operator. And again, the advertising analogy, this is their chance to work on a smaller brand, and they're energized by that. And they also know how to run a team that's honestly understated. As you scale, you have to hire more people. You have to do less of the fun, creative stuff, or you hire people to do everything else.

And you're the chief vision officer of your brand. And I think that's beautiful, too, if that's what you're able to do at scale. But most of the time, a CEO's job is kind of staying on the shelf and making sure all these different pieces are moving and that you have people smarter than you doing the things that you used to do in that first year. So coming from bigger companies, just to recap, you know how to run a team, you know how to rapidly launch new products, you understand the everyday american consumer, and even better, if you built products for that corporation in another country, if your goal is to take your product to Europe and you already know how to operate in that country, that's a huge competitive advantage when you're building your food. I mean, absolutely.

Mike Elp

I think also, too, if you come from big CBG, not as well, and certainly many founders have learned this, but you probably have an idea in terms of manufacturers, potentially, maybe also you understand price in terms of how much you're paying on your cogs, and as well as also on the price side in terms of selling your product in retail. You probably understand that too. Extremely, extremely well. And on this note, we were talking earlier about repeat founders. I'm also starting to see more operators that were able to participate in an acquisition and now they're becoming founders.

Amrit Richmond

And again, it's this cool lifecycle in CPG that people want to stay in the game and they should. I think there's a place for everybody in this industry that wants to be here. And there's a lot of really strong talent entering the market now that are starting their own brands. We've also seen, as you pointed out in our prior chat, there's also been Mike know, the big CPG launching their own brands and kind of incubating launching their own brands. How do you think about innovation overall?

Mike Elp

Whether it comes from know, traditional entrepreneurs or if it actually comes, will we be seeing a lot more innovation kind of come through and be successful within big CBG on any given week? If you compared side by side to what the indie brands are launching and what the corporates are launching, more new products for corporations versus a brand new company. The indie brands are innovating with functionality with different high low protein combinations. Maybe first to market innovations, the corporates are mashing up their flavors on each other's products, which honestly, I love seeing them on Instagram, but it's a different kind of innovation. So we talked a little bit about Oreo collaborations.

Amrit Richmond

We've seen it happen with Girl Scout cookies a lot. My most favorite Corbett product is the Flintstones cereal because it started as a cartoon and then they had Flintstones vitamins and they have even Flintstones sneakers now. But they've kind of platformed this brand into all these different aisles and it's the same cereal flavor. I think that's how corporates think about innovation. How else can we take this flavor that hasn't changed in 20 years?

Yeah. This flavor that people trust for the consistency of it versus the functionality of it. What else can we put this on? Can we put it on waffles? Can we put it on ICE cream?

I think I mentioned, can we put it in an energy drink to appeal to a whole new audience versus the functional products that the indie brands are launching? A lot of indie brands also bring to market healthier versions of products that they grew up with that aren't junk food nostalgia. So I love global flavors. I'm really into korean food right now. In the house sauces.

I've ordered sobu Foods dumplings four or five times. So there's a lot of flavor innovation that's more global coming from the younger brands. Versus what else can we put Flintstones cereal, the fruity pebbles, on today? Yeah, that's a great point. From the corporates.

Mike Elp

How can we actually stretch this brand to new levels and almost, like, license it out per se, Mike, the flavor into different products. Yeah. I'm super fascinated when two corporations merge flavors or products for these collaborations that you wouldn't expect them to be friends, but they came together for the sake of nostalgia and the headline, and it works. Honestly, surprise and delight is really understated. Things don't have to be complicated for them to fly off the shelf, but they do have to taste good because for someone to buy it the second time, it taste really does matter.

Amrit Richmond

But sometimes people buy things just for the packaging that these bigger companies put out. If it's a limited edition or if it's collectible in some way. I have a whole wall of my favorite beverage collaborations in our kitchen. They're empty. I enjoyed them, but they inspire me to look at.

Mike Elp

Yeah, no, you did.

And it makes it a lot broader in terms of what the definition of innovation is. Right. From the indies versus the corporates, and also how the corporates are leveraging the taste that they already have, the flavors they already have, and actually be able to put those on other products and also do some engineering collaborations. Yes. And what's also been really fun to watch is a company like Hidden Valley Ranch and Truff.

Amrit Richmond

If anybody's listening and can get me a bottle from that archive, I'd love to try it because I know it's sold out. But how fun is that, that those two companies can come together for the sake of a collaboration and create a flavor that maybe someone's remixed on their plate for their pizza with two different sauces, but come together. And it's not necessarily an investment or an acquisition or anything like that. It's just one of them reached out to each other, I don't know who, and they said, let's make something fun that tastes good, that's collectible, that's headline worthy, that, again, that surprises and delights people in a different way than if a hot sauce brand came out with their own ranch flavor on their own versus a collaboration. We trust the consistency of Hidden Valley Ranch.

I saw them do a chili crisp. They did a lip balm with Burt's bees. A lot of people don't realize that Burt's bees and Hidden Valley Ranch are both owned by Clorox. So that's actually two acquisitions collaborating, which is also fun to watch. I saw that happen with Kellogg, Morningstar, Farms and Ego, which was also one of their collaborations.

They have a plant based waffle sandwich, too. So post acquisition innovation might be let's pair up these companies that we acquired together because customers trust both of them. Yeah, that's a great point. I mean, another way in terms of how you can add value. And also a way too, that for, let's say post acquisition, that it is the younger brand too, that might have a different audience to the other brands.

Mike Elp

It's a great way to kind of introduce that brand to one of the long standing brands as well, and vice versa. Yes. Staying relevant again like a musician, decade over decade is not easy. You have to keep putting out new products and albums and these different partnerships and flavors and things. I think they keep us talking about these corporations.

Amrit Richmond

I don't think it's to necessarily drive sales, but it keeps them top of mind. So the next time you're at Target, you might reach for that nostalgic product that you haven't had in five or ten years because of that collaboration that you saw. They're also kind of like an ad. You need to see things multiple times to either remember them or try them for the first time. So these, these partnerships between corporates and younger companies allow them to, again, talk to audiences that maybe they haven't spoken to in a while or that have never tried their product.

Mike Elp

Yeah, no, that's really great points. As we're wrapping up here. What is one trend that you believe is underappreciated right now? I think low sugar is underappreciated in the impact it has on someone's life. And Americans collectively, the more sugar we can remove from the diet, the healthier people will be.

Amrit Richmond

And it's not an acute trend or a fad or anything like that. I think it's one of the most mass appeal opportunities for food and beverage brands. And it doesn't have to be the main selling point on the front of your package. Again, with the flavor in the front, function in the back, it can just be removing the unnecessary sugar and looking for safe alternatives. I'm a big fan of perfy soda.

He's doing a lot of incredible work to create low sugar beverages. That's. That's awesome. Thanks so much for sharing. I feel like in the better world, the better for you.

Mike Elp

Health focused products, there's a lot of different this is better for you and that better for you. But I love how something that I think that probably has been marketed to us for a long time, low sugar products that still is underappreciated because there's so much kind of other kind of talking points or other kind of things that we think about. So it's really cool. Yes. When I worked in tech, I spent an entire year studying diabetes software and apps for a client.

Amrit Richmond

And when we think about what has mass appeal or what do Americans really need, just look at people's diets. Research what health challenges people have in creating products that can give them the joy of eating candy again or drinking a beverage or again back to high protein that can make a big impact on someone's life. And protein deficiency is a problem for a lot of people. I think those can have a lot more long term opportunities than the way we talk about these things as trends, because these are real problems that people have. Amrit, thank you so much for your time.

Mike Elp

I really appreciate it. Thanks so much for bearing with me. I know we're a couple minutes over here, but really appreciate you coming on. And there you have it. It was such a pleasure chatting with amrit.

Amrit, thanks again so much for coming on the podcast. If you're enjoying this podcast, highly recommend checking out the newsletter www.theconsumervc.com. You'll receive all the latest fundraising news and also know when new episodes drop. That's www.theconsumervc.com. Thanks again for listening.

Until next time, don't.

What Gives a Brand Acquisition Energy with Amrit Richmond

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1: Introduction

2: The Role of Opportunities in Acquisitions

3: Case Studies of Successful Acquisitions

4: Operational Insights Post-Acquisition

5: Closing Thoughts

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