[00:00:03] Ray Latif: Hey, thanks for listening to the BevNET podcast. I'm Ray Latif. I'm here with Jon Landis and John Craven, and this is the February 24th edition of the BevNET podcast. We're here recording in the conference room at our headquarters in Watertown, Massachusetts. How are the Johns doing? Pretty solid.
[00:00:19] Jon Landis: Is this episode 46? We had this conversation last time, right?
[00:00:22] Ray Latif: I think it is 46. If it's not, if it's episode 45 or 44, then sincere apologies. No, it's definitely 46. All right. Yeah.
[00:00:31] John Craven: I ate lunch before this. I feel like oddly satisfied and, you know, clearheaded. I did not. Okay. Thanks for rubbing that in.
[00:00:38] Ray Latif: Yes. A packed edition of this podcast for those of you, once again, that are not familiar with the podcast. The BevNET podcast is a weekly show that explores current trends and news from the food and beverage industries. We have discussions with the BevNET team as well as interviews with founders, industry experts and other interesting people. VIPs, as we mentioned last week. There you go. Yeah, a lot to record going forward as well. In this edition, We have an interview with Michael Schwartz. When we were in New York about three weeks ago, John Craven and I visited with Michael. He's the founder of Bao, which used to be Badass Organics, a maker of fermented food and beverage products. And he's also the founder of Organic Food Incubator. which is a small incubation lab and kitchen in New Jersey. They recently made the jump from- Long Island City. Long Island City, and now are located in New Jersey. We also have the Landis Corner, which is the latest- I like the Landis Corner. It sounds very distinguished. Yeah, it's the latest new segment of the podcast. And in this edition, Jon Landis has a conversation with Project Nosh senior reporter, Megan McGinnis, about protein. Give us just a hint of what's in this conversation, John.
[00:01:54] John Craven: We talk about like protein waffles and ice cream and putting protein in everything where it doesn't belong.
[00:02:00] Ray Latif: Donuts, I think I heard. Yeah. Yeah. Yeah. All that stuff. Okay. Coffee.
[00:02:03] John Craven: Is that protein vape yet? I don't know. But if you know where it is, you're in. Jlandis at BevNET.com. You know that's going to happen. Remember they had those energy vapes? They have the caffeine ones, yeah. Smokable protein? Which actually, I told them, you know, they try to make it taste like an energy drink, and I think it would be more effective if it tasted more like a cigarette, because the people who are actually vaping that product, the caffeine, you know, their vapor is more than energy drink in some ways. You're going to start a vape cast at some point. Does that exist?
[00:02:33] Jon Landis: It must.
[00:02:34] Ray Latif: Yeah, I wasn't prepared to hear you say it should taste like a cigarette, because I don't think anything should taste like a cigarette.
[00:02:39] John Craven: No, it should taste like mint or menthol or whatever, you know? I mean, the whole idea is the only people that would actually be attracted to vaping caffeine are people who are comfortable vaping, not people who drink energy drinks. And also, we've seen way too many energy drink knockoffs, like Red Bull knockoffs that try to taste like Red Bull, and it just misses barely, and it's unpalatable.
[00:02:59] Ray Latif: Coming to your convenience stores, Newport vapes, so...
[00:03:03] Jon Landis: Also, if you wanted a clickbait headline for this podcast, quoting Landis with, it should taste like a cigarette. We should not do that.
[00:03:11] Ray Latif: That's going to be the headline for this podcast. It's podcast episode 46. It should taste like a cig. All right. Let's start things off right and move on to the interview with Michael Schwartz. All right, we're here with Michael Schwartz, the co-founder of Organic Food Incubator and also the co-founder of Bao, formerly known as Badass Organics, a fermented food company. Michael, thanks so much for being with us.
[00:03:35] Michael Schwartz: Thanks for having me.
[00:03:37] Ray Latif: I wanted to talk to you for two reasons. Jon Landis, who you know from BevNET, who's a frequent, he's part of the podcast team.
[00:03:45] Jon Landis: He is the podcast— Yeah, I guess we've never called it a podcast team, but sure. Let's call it that. He's definitely on it.
[00:03:51] Ray Latif: He's definitely on it. He's sung your praises. He's known you for some time. I think his exact phrase was, an amazingly awesome dude. That's very generous of him. So I wanted to kind of talk to you about what you guys are doing for small entrepreneurs and from early stage folks and brands. Let's talk about OFI and how you guys got started Organic Food Incubator and what it is and what you do for entrepreneurs and brands.
[00:04:14] Michael Schwartz: Okay, so the OFI, the Organic Food Incubator. The short story was a result of our lack of success with our original brand, Bao. Bao was doing well, but not well enough to support the huge real estate that we had rented and the associated costs that come with that. So we started to share that space.
[00:04:39] Ray Latif: This was in Queens.
[00:04:40] Michael Schwartz: This was in Queens, right? And it's in Long Island City in Queens. And it was a really old building. We kind of lucked into it because the space had been a bakery prior to our inhabitants. It was really easy for us to move in there. So we didn't have to do a lot of build out when we moved in. And when we couldn't support the bills with Bao, we started to look for some other like-minded, health-oriented startups. like Temple Turmeric, Raw Apothecary, Love Grace Food, Alchemy Creamery, and it just kind of snowballed. And it became very successful. And at that point, we decided that we needed to form a second organization. So we separated the Organic Food Incubator from Bao and made two separate companies.
[00:05:31] Ray Latif: And Bao itself is a company that you brought in these wonderful, amazing shots that we're going to try during the podcast. Tell us a little about what you guys produce and what you've been doing of late.
[00:05:42] Michael Schwartz: Okay, so Baal started in 2009 as a kombucha company. The goal was to make eventually healthy sodas. And after we grew out of our really tiny shared kitchen space in Hell's Kitchen and found the space in Queens, it was right around the time of the big kombucha recall. right, when that summer when everybody got pulled off the shelves.
[00:06:04] Jon Landis: It was 2010, I think?
[00:06:06] Michael Schwartz: I think it actually might have been the summer of 2009, but I can't remember at this point.
[00:06:10] Ray Latif: But yeah, 2009, 2010. Interesting you bring that up. I think that case was just settled. Oh, really? Yeah. So, well, there was a big lawsuit. You can read about it on our website. Yeah, you can read about it on our website. Good call. Good call.
[00:06:22] Michael Schwartz: So in order to kind of mitigate our risk, we started to branch out. So we didn't know what was going to happen with Kombucha. We bootstrapped the entire business. We put out all of our savings into it, and we had just enough money to make the product. We didn't have enough money for expensive testing, and nobody knew how to do the testing correctly back then. I have a culinary background and for years I've always made sauerkraut, kimchi, various other fermented products in restaurants where I've worked. And it was really easy for us to, since we were already fermenting tea, it was easy for us to ferment some other things. So we're like, okay. We launched three cultured vegetable flavors, then we launched a couple sauces, a cultured hot sauce, and eventually it bloomed into this huge line where, for a long time, kombucha was a very small part of our business. And now, recently, we grew into the keg business. So now the kombucha aspect is kind of growing again. So now we have, I think, close to 30 SKUs of fermented products. And through the OFI, we do contract manufacturing for three other fermented food companies. You know, we've kind of become the small batch fermented food experts in the area.
[00:07:38] Jon Landis: And what's the demand like for that type of thing right now? I mean, it seems like every trade show we go to there's more and more fermented food, but kind of hard to really get a sense of really where it's at.
[00:07:49] Michael Schwartz: Right. So there are quite a few companies like Bao that have small production, a few smaller than us. There isn't really a big player yet. It's kind of hard to gauge, but everybody seems, you know, we have a bunch of friends that have companies in other parts of the country and everybody seems to be about the same size. And there's a huge demand for it, but it still hasn't hit the mainstream yet. So there's obviously it tastes unusual. weird. And so there's a lot of education that goes along with selling some of our products. Like this fermented energy shot is not something that someone's just going to pick up off the shelf, right? We have to get- I would. You might, right. But we have to get them to taste it. It's a pretty big learning curve for our customer.
[00:08:35] Ray Latif: It's funny you say taste it. I'm going to try to open this right now with one hand.
[00:08:38] Michael Schwartz: That's a spicy one. That's our new entry.
[00:08:41] Jon Landis: Want me to open it for you? It's labeled as a liquid pickle hot boost.
[00:08:46] Ray Latif: Are you supposed to shake that up a little bit? Oh yeah. You want to shake it up.
[00:08:48] Jon Landis: I'm going to be careful here so this doesn't ruin your blue shirt. How do you know I'm wearing a blue shirt?
[00:08:55] Ray Latif: You have been involved in a pretty emerging category for a long time. It was bleeding edge and sort of nascent. Now I think you can call it nascent and emerging at this point. And you've been involved in a lot of categories like that through OFI. It sounds like the market for your services at OFI have really changed and evolved over the years. Where are you seeing the most interest for what you guys do and provide?
[00:09:20] Michael Schwartz: Still, it's a lot in the small batch manufacturing of drinks, right? Well, drinks and sauces.
[00:09:28] Ray Latif: So, co-packing.
[00:09:29] Michael Schwartz: So, co-packing, yeah. I mean, people coming into the industry in 2017 are a little bit more educated than we were when we entered the market in 2009, right? So, they understand that the machinery is not something that they're going to buy. We started Bao on 46th Street and 11th Avenue, and we made the kombucha, we flavored the kombucha, we put it into bottles by hand. I think it took us an hour for two of us to make our first case, right? And then we scraped up enough money to buy our first very rudimentary filling machine. And it took a really long time before we could ever buy anything that was a little bit more advanced. Because we didn't know, right? We didn't know. And CoPackers, you know, we approached a bunch of CoPackers, we're like, oh, why don't you make our kombucha for us? And they're like, the first question is, well, how much 50-50 goes in there? My question is, what's 50-50? And it's a 50-50s high fructose corn syrup. Well, I don't use it. Well, we can't pack your stuff, right? So that was like the kind of answers that we would get from CoPackers back in 2009. Now, there are more co-packers that are more educated and they understand that, you know, there's a shift towards a little bit healthier products and they're more flexible with the ingredients, but they're not so much as so flexible with the size. So to set up the machine, to tool the machine, to fill the bottle right, to put the label on right, it takes a lot of time. And most of them don't want to touch batches that are under 3,000 gallons. You guys know this, right? So somebody calls us up and they're like, what's your minimum? And I say 50 gallons. And they're like, wow, that's awesome. You know, so we can help those really tiny brands get started. And so we're seeing like yerba mate, we're seeing a lot of CBDs, we're seeing a never ending stream of cold brew coffee startups.
[00:11:23] Ray Latif: We've seen those too.
[00:11:24] Michael Schwartz: Yeah. And then, and then hot sauce after, which you might not see unless you're talking to the folks at Nosh. I don't know how, how much you guys interact, but we see a lot of hot sauce. We see a never ending stream of the best hot sauce. And, and I mean, they're all good and they all have maybe have a place and we're happy to fill them for them.
[00:11:43] Jon Landis: So I was just gonna say, when you're dealing with these entrepreneurs, how kind of involved are you in helping them just flesh out what the heck they're doing? Because I mean, I guess just based on your comment about the never-ending stream of cold brew, I assume that if someone calls you and says, hey, I want to come in and produce a cold brew, there's probably, you know, the wheels turning in your head of like, okay, another cold brew.
[00:12:06] Michael Schwartz: Right. Well, so I'll have that conversation with them if they want to. Right, so it all depends on what they want. Some people come in, so like, a lot of times we'll get approached by a roast, a coffee roaster that wants to launch their cold brew. Well, they already have a brand, so they're not- True, that makes sense, right? It makes sense. It's just a brand extension, right? It's not as risky for them. And so, fine, I'll run with it. But somebody new coming in that has to buy the coffee from a roaster and has, like, what sets you apart? If they wanna have that conversation, I'm happy to have that conversation with them. But some of them, know what they want to do, this is their passion, they're going for it, and fine, we're happy to make it for them.
[00:12:44] Ray Latif: Sure. You'll make it for them. OFI also kind of supports these brands in different ways in helping them locate ingredient suppliers and things like that, some consulting as well. Other than that, what other things do you do and where are you seeing most demand for those types of needs?
[00:13:01] Michael Schwartz: It's the transitional people that come in, right? The people that aren't from food and beverage. They come in, they were a lawyer, they were an accountant, they were in finance, they're tired of it, and they want to do this. They have this recipe that they want to make, right? Those people. We'll do, we have a coaching program where we'll basically structure it however they want. We'll work on budget with them, we'll work on margins with them, we'll work on flavor profile if that's what they want. And it's kind of a month to month coaching plan that they can take it or leave it, you know, if they're After three months, they're like, OK, we're good. Let's go into production. Fine. You know, it's over. They're not locked into any crazy time frame. We do some educational classes around food safety and how to start like a seminar on how to start up your business and regulations that you're going to need to follow and ideas of where to find ingredients. But the classes are interesting because you'll get one person that has an idea for pickle juice. and another person that's making a power bar, right? So it makes for a really interesting seminar.
[00:14:08] Jon Landis: So for people who are approaching you, or even maybe in those seminars, what sort of state are they in when they're coming to you? Is it something that is like, I made this in my kitchen, or is it I have an idea, is this possible? And I guess as a follow on to that, what is like the best way to come at someone like the OFI?
[00:14:28] Michael Schwartz: It's both. It's from one extreme to the other. It's people that have an idea. They've never made it to people that come in with a full blown sample label in a package ready to go. And they just don't know how to do the margins, right? Figure out what their margins can be. So it can be any variation of that.
[00:14:46] Jon Landis: I guess you see like a better approach, though, I guess, you know, just sort of thinking about this from the perspective of maybe listeners who have ideas, you know, should they go off and try to do all this stuff on their own? Or do they just come to someone like you and try to figure it out? Like, what's the most like efficient way?
[00:15:02] Michael Schwartz: Hopefully, I think that we definitely cut through some of the huge learning curve. Now, I've made every mistake you could possibly make, right? So if you come to my seminar, you're gonna get the benefit of not making those, seeing my mistakes rather than making them yourself. So it saves you some money, right?
[00:15:21] Jon Landis: Gotcha.
[00:15:22] Michael Schwartz: But there's some people that have to reinvent the wheel, like my brother, right? He helps me out at work and he's got to reinvent, like I could have the whole thing laid out and he has to reinvent it from scratch, right? So, you know, there's some people that have to work through that process.
[00:15:36] Ray Latif: Sure, just to learn, sure.
[00:15:37] Michael Schwartz: Yeah, yeah. And that's fine too.
[00:15:39] Jon Landis: So either way.
[00:15:40] Ray Latif: You mentioned fermented foods, you mentioned cold brew coffee. What are you seeing right now as some of the ingredients or categories that are drawing the most interest from entrepreneurs?
[00:15:51] Michael Schwartz: We've had quite a number of CBD products walk in the door over the last- Can you elaborate?
[00:15:57] Ray Latif: Can you tell our fair listeners what CBD is?
[00:15:59] Michael Schwartz: CBDs are products containing cannabis, hemp. They won't get you high, but they have all the benefits of hemp and- What are the benefits of hemp? So there's a lot of research out there that shows that hemp products, the cannabis families, has a lot of anti-cancer properties. There's a lot of associated health benefits with that, anti-inflammatory, you know, relaxation. And we've had quite a few come through the door over the last couple of months. We're about to run, I think, two brands. over the next three months.
[00:16:30] Ray Latif: Interesting. Any other ingredients at this point that are kind of on your radar?
[00:16:36] Michael Schwartz: We get a lot of startup kimchi companies coming in the door.
[00:16:39] Jon Landis: Kimchi?
[00:16:40] Michael Schwartz: Yeah. I would say we've had seven or eight since the new year. not all going to go into production, but with questions, with maybe the idea of having us make it for them. I mentioned already cold brew. We've had a couple like chutney companies, but drink wise. It's mostly cold brew. We have a new yerba mate company that's coming in. They make a really nice product. They've been in market, but they needed to expand. They couldn't do it themselves. They couldn't figure out how to do it themselves, so they came to us.
[00:17:12] Jon Landis: Well, I guess you touched on before that you had worked with a few cold-pressed juice companies. Right. Is that something that you still see demand for?
[00:17:22] Michael Schwartz: Yeah, I mean, it's kind of become a commodity, right? So once Whole Foods starts to press juice in-house, it kind of takes the bottom out of the market. So when juices were commanding $12 a bottle, And, you know, Blueprint was still independent and making their product in Long Island City and everybody was pretty small. They could charge a lot much higher price per unit. And now I've seen that most, almost everyone has had to drop their prices to compete with what's going on in Whole Foods. And I would assume that the same thing is going to happen with Cold Brew Coffee.
[00:18:01] Ray Latif: Which Whole Foods also does their do. And most of these brands, I mean, Whole Foods is their first go-to.
[00:18:10] Michael Schwartz: Well, it doesn't have to be, but it tends to be. So once they see that all of a sudden their margin is shrinking, they have to do something to try to compete with that.
[00:18:20] Ray Latif: Excellent segue because I was just going to ask you about retailers and you're right. Everyone asks this, how do I get into Whole Foods? What's my best way to get into Whole Foods because that's where I want to be? And you just mentioned, you know, it doesn't have to be your first retailer. Do you guys work with retailers and sort of helping to get placement for the brands you work with? And how do you advise them on getting that first retailer?
[00:18:41] Michael Schwartz: So I am all about bootstrapping. I'm trying desperately to run two companies and I follow the path of least resistance. So we aren't in Whole Foods. I mean, I have 30 SKUs. I don't have one SKU. I think we have about 15 products that we make other brands that are in Whole Foods, but my product's not in Whole Foods because when we first approached them nine years ago, they didn't like our label and various reasons. I think part of it has to do with the fact that it said badass on the label, but I don't really know that for sure. But anyway, that's. Feel free to share.
[00:19:18] Ray Latif: Everything's fair game on the podcast.
[00:19:20] Michael Schwartz: So I mean, right. It's great. If I got into Whole Foods, I'd be happy. I'm not there. I'm fine. Right. So I like the path of least resistance and the least expensive path. So what we did and what I think is the easiest way is you go into the market that you know. wherever you shop, right? So we were brewing in Hell's Kitchen, and we went into the bodega that we went to for lunch every day. And the owner made us lunch every day, and we shopped there. And when we finally had a product, we walked it in. We're like, here. Well, you put this on your shelf. And he's like, oh yeah, you come. Well, not this, but our kombucha.
[00:19:55] Ray Latif: Well, no, I'm sorry. You just put down a liquid pickle beet boost. I'm definitely drinking this.
[00:20:01] Michael Schwartz: That one definitely don't get on your shirt. How was that?
[00:20:04] Ray Latif: Outstanding. I'm sorry. I'm interrupting. The hot boost. It wasn't as spicy as I thought it would be, but there's some spices down here. It's a little spicy. Really, really good. All right. Beet boost it is. Please continue.
[00:20:14] Michael Schwartz: All right. Don't drink too many of them because they're full of lactobacillus. They're really good for your digestion. I mean, very good for your digestion.
[00:20:22] Ray Latif: I guess I'll just have a sip then.
[00:20:24] Michael Schwartz: So, you know, we went into the closest store where we knew the owner and it was an easy sell. He's like, of course, I'll take it. We'll give it a shot. And it sold. And then we went to the next store down the street and the next one. And so we kept our distribution really small. that we could manage it. And then all of a sudden, like a small distributor approached us in the store while we were making a delivery and like, oh, we've seen your stuff all over town. We'll take care of that for you. And so that to me is a much better sell. I'm in the driver's seat at that point. Right. Whereas if I call up UNFI and say, pick up my product, they're going to say, why? Right. So this distributor approached us because they saw our stuff all over town. It was easy. Right. And so we were, you know, as far as negotiation goes, we were in the strong strong seat because they wanted our product. They saw that they could move it. And so we went with them and then we picked up more distributors along the way. So what we do at the OFI is we suggest that model at the beginning and then Once they have a list of clients that they sell to, then they will introduce them to one of our distributors that we like. And we have some stores where we have nice relationships that we, there's a store called Health and Harmony, and there's five of them in New York City. And so that's our go-to store, right? The owner's awesome. He's super nice. And he always wants a new product. And he comes to pick up from us. When he walks in the door, he's like, what's new? I'm like, here, take a case of this, take a case of this. And then all of a sudden people have their first store.
[00:21:59] Ray Latif: And take a case of this, take a case of this. And you're, are you giving them free products? I give them a free fill. Yeah. Okay.
[00:22:04] Michael Schwartz: And then he puts it on the shelf and then next time he comes back, he orders five cases, 10 cases, whatever.
[00:22:09] Ray Latif: I mean, do you feel like it's easier to do that to sort of create a sort of seller's market, you know, in New York city versus any other market at this point? I mean, because there is such an, There are so many people for one thing and like the aspect of health and wellness is so strong here.
[00:22:23] Michael Schwartz: Yeah, it's interesting. Yes, to the first point, because there's so many people. So there's so many stores and there's so many options. So yeah, it's a lot easier. As far as health and wellness, we've found that there's much more demand for our type of product in Massachusetts and down South and in the West Coast than there is in New York City. It's interesting. I don't know why, but it seems like New York doesn't really get fermentation quite yet.
[00:22:54] Ray Latif: I mean, they're getting there, but... They already drink a lot of fermented products anyway. So, you know, it's just sort of, you know, you just go from alcohol to non-alcohol, right? So, yeah. With all these relationships you guys have had and built over the years, I have to think that some of these suppliers and entrepreneurs might've asked you to invest in their company. Have you considered an investment arm at this point and are you looking to create one?
[00:23:17] Michael Schwartz: Yeah, we've talked about it. I also am looking for investors. So, I mean, I'm still a bootstrapper at heart, so I don't really have the capital to invest in anyone else. But we're talking to a couple of people right now, and yeah, that's definitely something that's on the horizon.
[00:23:34] Ray Latif: So for companies that come to you and say, okay, where is the best way for me to get funding outside of you, which it sounds like you're getting there, but it's not there yet. Where are they able to find funding? Is it still just angel investment at this point?
[00:23:47] Michael Schwartz: Yeah, it's angel investment. There's, you know, there's Excel and a number of food, yeah, so foods and a number of, um, There are a couple others like them that are really interested in investing in and nurturing small food brands. Cost-wise, if somebody wants to get started, and I might be jumping ahead a little bit, but it's not a huge investment to get your first production done. with a small, either a incubator kitchen in New York that has shared kitchen space where you would make it yourself or someone like us that would run a small batch for you. It's not as cost prohibitive as you might think it is, right? It's not hundreds of thousands of dollars, it's $10,000, $15,000.
[00:24:31] Ray Latif: And staying on the investment track, have you seen, we hear all the time, oh yeah, there's a lot of money out there for brands, there's a lot of money out there for brands that have proved themselves in the market. Are you seeing that at this point? Are you seeing, you know, a lot of money ready to be spent?
[00:24:46] Michael Schwartz: It seems like there's a lot of money ready to be spent. I'm not a financial guy at heart, so I don't really know how to find it. And if you want to send them to me, if you find them, I'm happy to listen to them. But yeah, it does seem like people do not have a hard time when they put their mind to it, finding somebody that'll pitch in.
[00:25:06] Ray Latif: Okay. We're almost out of time. Two more quick questions. Again, having worked with a lot of brands, what are some of the most defining qualities in entrepreneurs that have been successful in launching or working with OFI and then scaling beyond that?
[00:25:22] Michael Schwartz: It's really believing in your product. I think of it sometimes as stubbornness. You can't give up. The people that eat and breathe and sleep their product are the ones that succeed. You have to be out there. You have to be selling all the time. You have to be on all the time. Those are the people that really get it done.
[00:25:43] Ray Latif: You're your own best salesman.
[00:25:44] Michael Schwartz: You're your own best salesman. Nobody can sell your product like you can.
[00:25:49] Ray Latif: Let's talk very briefly about the move. You guys moved from Queens to New Jersey. We wrote about it on BevNET a few weeks ago. Talk about how that change has taken place and how the move has been received and how it's gone.
[00:26:04] Michael Schwartz: Our rent basically doubled in Queens in October. If I had signed a new lease, I never would have been able to succeed. So last spring, I started looking for spaces all over the five boroughs. I really wanted to stay in New York. Between the cost of rent and a new build-out, it just, it didn't work. So at the same time I was looking in New Jersey, we looked probably at about 20 spaces in New Jersey and the space we found, it was a food facility already. So there wasn't a lot of build-out needed. It was, huge refrigerator and a freezer and it was like basically turnkey almost. So September, the last weekend in September, we packed up four 53-foot tractor trailers, 80 pallets of product, packaging material and equipment. Had it driven from Queens to Bloomfield, New Jersey, unloaded it, and we were open October 3rd.
[00:26:58] Ray Latif: So about two days.
[00:26:59] Michael Schwartz: Yeah, I think it was more like a Friday to a Tuesday, maybe four days.
[00:27:04] Ray Latif: Impressive.
[00:27:04] Michael Schwartz: Yeah, it was insane. And I would never do it again. but third quarter is our busiest, busiest time, third and fourth quarter. I mean, everybody wants product made for holiday. So I couldn't shut down. And so we hobbled through that and we were up and running and a lot of my staff came with me. We found some great people over in New Jersey also. And so now we're almost back to normal, right? We've kind of recovered from all of that and we're almost back to normal. And the space is, you can't even compare the two spaces. The new space is clean, it's bright. We're in the process of getting SQF certification. There's much more space, there's parking. We don't have to fight the traffic to unload trucks. It's just a completely different world. That's the good side. The downside is of our well resident tenants in Queens, only one of them made the move with us. So that has been a struggle. And so what we've found over the last three or four years is when we get contacted either by phone or by email by a new potential client, from that first contact to their first production is generally four to six months. So October to now, we're starting to see people coming. We're starting to see all of those first contacts start to do production runs. So it's been a really tough third quarter, first quarter of this year. And so now it's starting to ramp up again.
[00:28:40] Ray Latif: And so I think we'll be okay. I think it's, we're going to start to see more CBD beverages. Oh yeah, for sure. Cool. Cool. We always ask this and it's kind of putting you on the spot. Brands and specifically beverage brands that you've really come to love over the past year. What are those brands and why?
[00:29:00] Michael Schwartz: So, I mean, there's so many drinks out there. I think one that stands out in my head is Wandering Bear Coffee. There are a lot of really good cold brews out there and theirs is one of them. It's really good, but I think their packaging is really unique and really user-friendly. The bag in the box. Yeah. So I really like how they do that. And they're good guys to work with. I mean, a lot of our clients are good people, but they happen to be good guys to work with and their product, I think is really good. And it's, it stands out and no one else has tried to, I mean, somebody will eventually, but no one else has tried to imitate that.
[00:29:33] Ray Latif: Yeah. Well, it sounds like you're a really great guy to work with, Michael, and I really appreciate your time. I'm glad I haven't fooled. You know what? This beat product is pretty fantastic. You're staying in the table, huh? I stay in the table, but I didn't get in my shirt. I don't think so, and I better not have. But Michael, thanks so much for coming out here. I really, really appreciate the time, and we've got to come out to Bloomfields at some point.
[00:29:53] Michael Schwartz: Yeah, thanks for having me, and absolutely, it'd be great to have you guys out for a visit.
[00:29:56] Ray Latif: We're going to start at BevNET Kimchi.
[00:29:57] Michael Schwartz: Okay, we're in. We can make a drink.
[00:30:00] Ray Latif: Okay.
[00:30:00] Michael Schwartz: I mean, here you go. We already have it for you. We can just white label it for you.
[00:30:03] Ray Latif: Perfect. All right. Thanks again. Thank you. You know, I really enjoyed that interview. Michael is a really down to earth, great guy. And I feel like he's the kind of partner that people need, especially these early stage startups. They really need someone who's had some experience as an entrepreneur and also someone who just knows the ins and outs of production and marketing and everything else that goes along with building a beverage brand.
[00:30:28] Jon Landis: Well, he's also not shy by things that might seem a little esoteric and complicated as evidenced just by his own product line too. So I think that's something that is pretty nifty, especially when, you know, he was talking about kind of the old co-packer that he originally went to where it was like, they just were so confused, you know? So I always think that's neat just to see how far like, you know, this industry has come too. For sure. For sure.
[00:30:54] John Craven: He's just one of the most generally wholesome people that I know too. He takes so much passion in the education and everything that he really wants to work with the people who don't know what they're doing yet. I actually sent someone to talk to him last week who's doing botanicals in water. Sounded to me kind of like what Balance does with the flower extracts. And he was telling me that it's really complicated and I'm like, well, I think Mike is doing some stuff that might even trump how complicated yours is. And I don't know, I have to follow up with them to see if they're talking, but hopefully they connect soon.
[00:31:26] Ray Latif: Hopefully there'll be a guest on the podcast at one point.
[00:31:29] John Craven: Yeah, possibly. Cool.
[00:31:30] Ray Latif: So along with his time, Michael offered us some samples of his liquid pickle line. These are fermented and probiotic two-ounce shots. I have a green boost in front of me, and I'm going to crush one of these on air. I'm assuming that Jon Landis and John Kramer, you're going to do the same.
[00:31:47] John Craven: Yeah, I have the hot boost, fermented and probiotic. Bio-cultured is tart and briny, always raw, organic, and GMO-free.
[00:31:55] Jon Landis: Well, mine doesn't have spice. The font's a little It looks like this is kimchi. Yeah, mine's like cabbage, carrots, I don't know.
[00:32:04] John Craven: Daikon, onion, ginger, garlic, chili pepper.
[00:32:07] Jon Landis: These things are interesting to me because I feel like it's like one or two ingredients away from being like a hot sauce more than a drink. Not like I've ever sat around saying, geez, I wish I had a liquified pickle. I love pickles, so.
[00:32:20] John Craven: I have to comment that the liquid has so many spices in it that when you shake it and swirl it, it kind of looks like a snow globe a little bit. Trippy. It's just the constant, I don't know. Yeah. Swirling of liquid in a bottle.
[00:32:32] Ray Latif: It's a swirling of spice and liquid, but yeah, John Craven getting back to your point. I see what you're saying. It'll wake you up though. The funny thing about it though is like, it tastes really good. And you know, that's coming from a palate of a guy who's tasted a lot of different beverages in a lot of different settings. And this, For some reason, this tastes like something I could drink every single day. And I wouldn't be offended by the flavor.
[00:32:56] Jon Landis: I think I'd have a hard time drinking this every day, but it's something that it's really neat just how unique of like a flavor sensation it is. And it's not something that's totally unfamiliar. I mean, it tastes like, you know, pickle juice almost. Yeah. But yeah, I feel like I'd enjoy this with some food. Yeah.
[00:33:15] Ray Latif: Perhaps some protein infused ice cream? I don't know about that. No, I don't think so either.
[00:33:20] John Craven: I have to comment though that, you know, that was really, that was my, that was my, I wanted to say one last thing, but I mean, I don't know. It really is very pickly. Yeah. It very much feels like, you know, you're just scooping out the bottom. And I think that's kind of what it is, isn't it? I don't know, but it is called liquid pickle.
[00:33:39] Jon Landis: The one that you got that has a spice, I actually prefer to this one, which is a little more like, It's called Deep Purple Boost. It's a little more cabbage-y. Personal preference.
[00:33:48] John Craven: Yeah. It's good. If it's this or the Good Belly shot, probiotic shot every morning, I mean, you know what? Maybe it's good to be able to switch back and forth between the two of these and have two different types of product. I know a lot of people drink that shot. I think that one's a little bit more palatable. This one's a little bit more hardcore, but You know, I could definitely see a lot of crunchy people digging this.
[00:34:09] Ray Latif: You just gave me an idea for a new competition for BevNET. Esoteric beverage comp... What's it called? Showdown? Esoteric beverage showdown.
[00:34:17] Organic Food: You can't say it. It's awesome.
[00:34:18] Ray Latif: Yeah, I can't. EBS1. There you go. Perfect. Yeah. All right. Let's try that segue again. Segue number two. Let's do it. Yeah. How about those protein-infused waffles? Landis, cue up your segment for us. All right.
[00:34:31] John Craven: Basically, we're seeing protein as the center of a lot of diets. It's a very hot trend that a lot of people seem to be keyed in on. The data is proving that it is continuing to grow. But I wanted to talk to Megan a little bit more about why consumers are being attracted to protein. Why is it the center of attention for everyone? And that's kind of what we got into.
[00:34:50] Ray Latif: Yeah. There's a cool Fight Club reference in this interview. So for those of you who are fans of the movie, stay tuned.
[00:34:59] John Craven: This week, I want to discuss protein, specifically added protein or protein boosted products. Since we launched this podcast, a number of our guests have pointed to protein being a hot trend that they're following. And with all the current hype on protein, I'm sitting here with Megan McGinnis, senior reporter of Project Nosh. How are you, Megan?
[00:35:18] Organic Food: Good. Hi, Jon.
[00:35:20] John Craven: I called you out specifically because not only are you one of our food reporters, but you're a CrossFitter. So let's just get this out of the way right now.
[00:35:26] Organic Food: I know, I know. Every office has one, right?
[00:35:28] John Craven: I guess so.
[00:35:29] Organic Food: It's kind of like the opposite of Fight Club. That's all we talk about. No, um, I am a CrossFitter and I am big into all the protein supplements and everything. So I'm excited to talk about this today.
[00:35:41] John Craven: Really what we're looking at here with infused protein is it's not just protein shakes or bars anymore. The protein category is growing. Other products traditionally not geared towards a fitness crowd are now having protein added to them. And we're talking ice cream, chocolate, pasta. So what's the deal? So many people are bullish on protein right now. I'm guessing a lot of them are looking at data, but what are the fundamentals behind what's continuing to push this trend?
[00:36:11] Organic Food: Protein has been on the rise as a food trend over the past few years. And it's been really popular for diet conscious consumers just because it keeps you fuller longer with more energy. But I mean, it's been especially big among athletes who are just looking to build muscle only now or fuel and recover from their workouts. The community of extreme sports in particular, you're seeing this rising awareness of just macronutrients and micronutrients going into your body. So they're becoming mathematicians of sorts and making their diet super scientific. You're seeing protein boxes, protein shakes, waffles, pancakes, ice creams, which is my personal favorite. But I mean, high protein in general isn't new to the diet world. Atkins was 2004. Then you saw the South Beach diet come through. Then you had paleo really start to boom in 2012. And retail sales of sports nutrition and protein powders in the US alone, it's projected to reach 9 billion by 2020. So you're really seeing this start to take a hold of the CPG world and you're seeing big companies, Hormel in particular, they just bought into both Justin's and Muscle Milk recently. So that's a huge protein CPG play for them.
[00:37:22] John Craven: Well, talking about pushing a trend forward, one thing that you said that stood out is that these diets all were very protein, high protein diets, Akin, South Beach, whatever is trending right now, paleo. Why is protein at the center of all these diets? What is it about protein?
[00:37:39] Organic Food: It's been a mainstay across all these trends because studies show that higher dietary protein intake during a diet with a lot of intense exercise, obviously, it leads to greater mass gain and fat loss. So protein has been something that brands for the past decade have been able to build across, whereas the perception of carbs and fats in foods that has fluctuated in popularity over the past 10 years. So protein itself is just transcending these fleeting trends. and they fit a wide variety of diets, whether you are an animal-based diet or eating a plant-based diet.
[00:38:15] John Craven: Okay, so let's back up a little bit because we're talking about added proteins. Before we can go into that, really, what are some of these traditional foods that people would typically eat if they wanted to have a high-protein diet before we started throwing protein in everything?
[00:38:29] Organic Food: The dairy industry has had a ton of innovation around these products. Greek yogurt is huge right now. You're also seeing a rise in products like cottage cheese, which you can tell by Moona's Super Bowl commercial. It's really just trying to become more trendy. And then there's also Icelandic cultured dairy products that has a super high protein content and they're trying to compete with Greek yogurt. Dairy as a whole, you're also seeing alternative dairy brands start to come out with products like these that have very similar protein contents. And then we can't rule out jerky and meat products. The consumption of meat snacks increased 18% since 2010. The most interesting aspect of protein trend that we're seeing for me though is this protein boost that we're giving products that may not have as high of a protein content naturally. And that's coming from just a both increased animal source proteins and through plant-based proteins, which I know that you've discussed a lot on this podcast recently.
[00:39:26] John Craven: And now that we're back to adding protein to all these products, I want to ask you as a consumer and someone who's covering this space, what do you find most interesting about this influx of protein added products?
[00:39:39] Organic Food: I mean, really, it's what's triggering it. So between obesity issues, extreme sports, and then what I think is the most interesting is that we're seeing in the food space right now is this rise in indulgences. So we idolize cheat meals. I live for my one cheat meal every week. That is my favorite day. And this just speaks to our evolving relationship with food. We don't have to cut out these super indulgent items anymore. They can just be better for you versions of them. I mean, look at Instagram or Pinterest. The more outlandish, the better. You're seeing burgers in between donuts and you're seeing milkshakes with slices of cake on top of them. You can literally have your cake and eat it too. So you're seeing products combine this high protein trend with this super indulgent trend as well.
[00:40:28] John Craven: But then this always brings me back to my original question here, which is just how much is too much? Do you need protein in every single thing that you eat? Where's the end? Where do we go from here?
[00:40:40] Organic Food: There's so much debate around this. I mean, from a nutritional standpoint, most Americans are already getting more than their recommended daily amounts of proteins from their food. And there's no long-term studies to tell us how much protein is too much or what the effects are of these boosted products or all of these powders, because they've never been consumed at this rate before. The recommended intake for protein is 56 grams for men. Most men are actually eating 100 grams of protein a day on average. But to put that in perspective, if I am eating off of my macros that I calculate, you know, that hashtag, if it fits your macro, it's where people have like a huge cheat meal.
[00:41:18] New York: Right.
[00:41:19] Organic Food: When I calculate those numbers and eat by them, I'm supposed to consume 125 to 130 grams of protein a day. When the daily value is around 56? For men.
[00:41:25] John Craven: Yeah.
[00:41:28] Organic Food: So that's where the conflicting narratives come in. Personally, like I feel leaner and stronger when I hit those numbers, but I don't know how this is going to affect me 40 years from now. And in an ideal world, I would be able to eat that amount of protein from whole food products, but then I'd be eating shredded chicken all day long. And that is just a really terrible mind space to be in. So if you want to hit those numbers and you feel good hitting those numbers and eating that much more protein, those scoops and powders and all the different products that are out there that have these extra boosts in them just really help people maintain that active lifestyle or the appearance they want without putting them in a place where they can't consume both those longtime products that they love and then some of these new innovative products on shelves.
[00:42:12] John Craven: So this is what I think I learned from all of this. Protein is really the flagship of the natural foods movement, really. And these diets are centered around it. Everyone who is exercising is eating a lot of it. And to give a lot more variety in what you're able to eat, they're putting it in everything. And when people are telling me that they're bullish on protein, what you maybe can take away from that is you're just bullish on natural living, natural foods, and healthier living in general. So that's kind of what I've taken away from this. And I really appreciate you taking the time to sit down and help me understand it.
[00:42:48] Organic Food: Thanks for inviting me.
[00:42:50] Ray Latif: You got it. As mentioned, lots of products with protein in them. I like protein. I don't know if I eat 56 or 100 grams of protein every day, but yes, certainly it's a big part of my diet. And I feel like it's easily understood. It's an easily understood function. I mean, can we call protein a function? you know, an ingredient that leads to the function of building muscle mass.
[00:43:15] Jon Landis: Well, we need to get that burger in between the two doughnuts or whatever she was talking about in here like ASAP.
[00:43:22] Ray Latif: I agree.
[00:43:22] Jon Landis: Because that sounds ridiculous. What they were saying about it just being sort of like an almost foundation of, you know, natural healthy living. I mean, it's like one of the oldest sort of functions in the space at this point. Yep. So it's kind of interesting to hear that sort of conversation where it almost feels like new again, even though like protein, I guess in beverages, whatever, probably, I don't know how old, like, you know, muscle milk and stuff like that is off the top of my head, but I mean, it's not new by any means. So, it's just interesting to see this constant evolution of it.
[00:43:54] Ray Latif: Yeah, I mean, I think the biggest thing is just added protein in good tasting beverages. You mentioned muscle milk, you know, how long they've been around. I mean, I think when they first launched, that was one of the first products that actually made protein taste good. Yeah, everyone remembers those. those snack bars, the protein bars from way back in the day, the power bars, and it was just like almost inedible. And now it feels like you can get 50 grams of protein in your shake and barely taste the grittiness that once was there.
[00:44:21] Jon Landis: Right. That lifestyle that Megan was talking about would be like absurdly painful if done, you know. whatever, probably 25 years ago or so.
[00:44:28] John Craven: There were two beverage brands that were constantly on my mind when we were preparing this, and I don't think either of them are around anymore. Ibex and Botan. When she was talking about dairy, drinkable yogurt, Ibex was a drinkable yogurt brand out of D.C. with a high protein content and probiotic, everything. And Botan, I don't know what those guys are up to right now. I haven't heard from them in a long time. They were doing a pea protein beverage And again, just thinking about how, you know, they were just maybe a little too niche, maybe a little bit too far ahead of the curve to, you know, have the mainstream appeal that they were looking for.
[00:45:01] Ray Latif: Well, I think certainly in the case of Ibex, maybe ahead of its time. I mean, you know, you're seeing lots of drinkable yogurts out there now. There's definitely shelf space that I hadn't seen before for a variety of protein. I'm sorry, drinkable yogurt brands. And you can see Siggy's now. Siggy's has their drinkable yogurt at Starbucks stores now. So much bigger space than when Ibex launched, I think. For sure. Yeah. All right. That's it for this episode of the PIVMED podcast. Stay tuned for much more great stuff coming from the podcast. We have interviews coming up with Kevin Klock, the CEO of Talking Green, the maker of Sparkling Ice. Nick Giannuzzi, who's a well-known attorney in the food and beverage space. He was the attorney for vitamin water from back in the day. A few other surprises coming up in the weeks to come. Also, gotta point out that upcoming is Natural Products Expo West 2017. Once again, if you are listening and you are a brand that's representing or exhibiting at the show and you have some new products, some new packaging, some new anything, you gotta let us know. In particular, please let Jon Landis know or just let the edit team know. You can send us news at BevNET.com Jon Landis at BevNET.com. Either way it'll get to us. Any other comments on Expo West? Are you guys excited?
[00:46:09] John Craven: Well, I guess not. We're going to be sending out an email to those of you who are exhibiting that we have your contact info, so you should be getting an email from me in the next couple days. Hopefully we'll hear from just about all of you, and we're looking forward to seeing a lot of you there. It's quite a crazy few days.
[00:46:24] Jon Landis: It's like the Super Bowl of the natural and Organic Food and beverage world. It's nerve-wracking and exciting at the same time. Yeah.
[00:46:33] Ray Latif: Is there going to be a big winner, though? Should we crown a winner this year? Hey, everyone wins. How about that? Well done. All right. Last but not least, if you have any questions, comments, concerns, ideas for future episodes of the BevNET Podcast, please email them to us at podcast.BevNET.com. I'll give you three different email addresses there.
[00:46:50] Jon Landis: So many to choose from. Just pick one.
[00:46:51] Ray Latif: Somehow it'll all get to us. The podcast will specifically get to the podcast team. So once again, thanks so much for listening and see you next time.
