[00:00:03] Ray Latif: Hello, everyone. This is the BevNET podcast. This is episode 47 of the BevNET podcast. I'm Ray Latif. I'm here with John Craven and Jon Landis. We're in the friendly confines of John Craven's office here at the BevNET headquarters. It's March 3rd and Expo West begins next week. Are you guys prepared? I'm scared.
[00:00:20] John Craven: I was going to say your office seems really small. Oh, wait. I made it smaller recently. That seems like a weird thing to say. Where did this wall come from?
[00:00:26] Ray Latif: Yes, there was some construction done over the last month or so. Got to fit more bodies in here. Yeah, your office is literally cut in half. That's cool. You got the bigger half. Back to Expo West. Thanks, Landis. How are you guys feeling about that?
[00:00:42] John Craven: Aside from being scared. Well, I think there's like just looking at the BevNET list and haven't, I guess, looked at what our folks for Project Nosh have yet. We've got like 200 booths that I guess at least you and I are going to be hitting for new products.
[00:00:57] Ray Latif: Me as in Ray Latif. Excuse me, thank you. That's okay.
[00:01:00] John Craven: I'm a little unfamiliar with this audio medium here that Ray and I will be hitting. And yes, it looks crazy. Lots of new stuff. And I'm sure we'll have some pretty awesome coverage out of it.
[00:01:10] Ray Latif: Yeah, we have a show planner coming out for folks. I think it's going to be coming out next week prior to the start of the show. So definitely want to download that and use it as your guide. It's a very, very handy guide. We see folks at these shows with their show planner and they're always checking things off and glad some people get some use out of it. It is a helpful tool.
[00:01:30] John Craven: I mean, if you're looking for all the beverages, there they are.
[00:01:33] Ray Latif: There they are.
[00:01:33] John Craven: Tried to make it easy for you.
[00:01:34] Ray Latif: Yeah. Yeah. So one company that's going to be there, I think they were there last year, but they haven't necessarily had a presence there in the past, is Talking Rain. Talking Rain is the maker of Sparkling Ice, and they're going to be showing off their essence of Sparkling Ice products to show. It's timely, because about a week or so ago, I met up with Kevin Klock in New York City. He was in town. for a few different things, but he was very kind and generous with his time to sit down with me and Barry Nathanson at the office of Barry Nathanson. I like to call it the office of Barry Nathanson.
[00:02:05] John Craven: It should be like the office of Barry Nathanson Esquire.
[00:02:08] Ray Latif: Exactly.
[00:02:08] John Craven: It sounds like where you go to get divorced or something.
[00:02:13] Ray Latif: We had this wide-ranging interview conversation with Kevin about all things Sparkling Ice, including the recent launch of their new marketing campaign, Be Not Bland. Sparkling Ice is a $600 million brand, and they're trying to get it to a billion in sales. It's a little bit harder than it sounds, but Kevin and his team sound like they have a pretty good plan.
[00:02:34] John Craven: Yeah, pretty impressive story. I mean, they've obviously had some phenomenal growth. I think we've covered that many times over the past couple of years. And Kevin's always a great guy to talk to. So glad we finally got him on here.
[00:02:47] Ray Latif: Yeah. And just a couple of tidbits in this, you know, we get into Kevin's background a little bit, but then we get right into the meat of it. And he shares some pretty interesting comments about their ambition to acquire companies to fit into their distribution network, their national distribution network, as well as some of the internal innovation that they're working on.
[00:03:05] John Craven: I always thought that that distribution network that they built, the DSC network, is what's most impressive. They're just everywhere, nooks and crannies, up and down the street.
[00:03:14] Ray Latif: Stay tuned for his thoughts. Let's roll tape. All right, we're once again here in Manhattan at the offices of Barry Nathanson, the publisher of BevNET Magazine, and we're joined by the one and only, the president and CEO of Talking Rain, Kevin Klock. Thanks so much for joining us, Kevin.
[00:03:28] Jon Landis: I'm thrilled to be here, and I appreciate the invite. And to get to see Barry's office is probably one of the highlights of my career.
[00:03:33] Ray Latif: And Barry's with us, I should mention, in case people didn't realize. But Barry, yeah, you're sitting to my right. And how are you doing, Barry?
[00:03:40] John Craven: Well, this beats work. I get to sit around with friends for an hour and talk about the industry and understand what's happening. So I'm happy to be here.
[00:03:48] Ray Latif: Fantastic. Kevin, you traveled across the country primarily to see us, right? Absolutely.
[00:03:53] Jon Landis: Number one on my agenda. Again, when I heard there was an office invitation and I get a chance to see all the brands from history that are all stuffed in his office. You know, it's like living the past.
[00:04:03] Ray Latif: Is there any Sparkling Ice in that office? There is. There is.
[00:04:06] Jon Landis: And actually it's the original acrylic box that we sent out when we actually started to market as a company. So it's a little bit of legend there.
[00:04:13] John Craven: And I have that in a section in my office of live companies because... As you see when you walk in, I have a 12-foot wall shelving of companies and brands that have died. I keep it as a cautionary tale for people who come in with high aspirations and no reality.
[00:04:32] Ray Latif: Yeah, well, Sparkling Ice is very much alive and well, a $600 million brand at this point and on its way to a billion dollars, right, Kevin? Absolutely. All right, fantastic. So I wanted to get, you know, we've talked to you extensively at BevNET, on stage, for the magazine, for the site, but I don't know if our listeners, our viewers, our readers really know who Kevin is. And I kind of wanted to get, you know, your background and how you got into this business. Your education is in chemical engineering. How'd you become the president and CEO of a beverage company?
[00:05:02] Jon Landis: Well, it's kind of a roundabout way that has some reflection in today's politics. But when I graduated from college as a chemical engineer, obviously the main routes were to either go into pulp paper or go into the refining industry. And the first Gulf War broke out. And all the hiring went on hold. And the paper industry at the time was dealing with a problem called dioxin. So the paper industry went into a slump. And the economy was kind of tough. And someone said, you know, the one great thing about the food and beverage industry, you may never get rich, but certainly people have to eat and drink. And so it was one of those things you looked at and said, oh, you know what? After looking at potentially two very unstable industries in terms of oil and paper, chose to go into the food and beverage industry.
[00:05:50] Ray Latif: Yeah, one of our guests, our recent guests, had the same kind of perspective, and that man was Mike Rapoli, or is Mike Rapoli as well. So you guys are on the same wavelength in that regard.
[00:05:59] Jon Landis: Yeah, but I didn't get rich. You know, you'Be Not a billionaire. This time, Kevin, this time.
[00:06:03] Ray Latif: Yeah, yeah. You've been at Talking Rain for how long?
[00:06:06] Jon Landis: Just over 10 years now.
[00:06:08] Ray Latif: 10 years, and you've been the President and CEO for?
[00:06:10] Jon Landis: Well, the title of President and CEO, I think I'm coming on my fourth year. Been in charge since 2010. They called me a lot of names between that time and getting the title of President and CEO. Good names. Some were. They were long and sounded somewhat official, but weren't President and CEO until that point.
[00:06:28] Ray Latif: Okay. And, you know, I mentioned this before the podcast, you know, we had seen kind of a long succession of leaders at the company, some with shorter stays than others. What have you been able to do to kind of stabilize leadership at the company?
[00:06:43] Jon Landis: Well, I think some of that actually goes back to my engineering background. When I stepped into the role, or should I say I was given the opportunity by Don Klein and Larry Huebner to actually- The owners of the company. The owners of the company and gave me that opportunity. One of the very first approaches we took is we said, okay, we had been very entrepreneurial as a company and sometimes entrepreneurial can be poor for a business. And to that point, we really sat in and said, okay, it's time to be we want to be entrepreneurial in spirit, but we need to run this like a business. And so took the engineering approach in the sense that, you know, we can't do projects in engineering without paybacks. And so we started really paying attention to the business and, and looking at, okay, what's the best financial payback for this situation and obviously branded beverages are financially healthier than private label and co-label and all that. So we abandoned those businesses. And then we were really looking at, okay, pricing and all that to that point said, okay, how do we make this the right margin to be a successful business as well? And understood from day one that we were going to fight to stay in that spot versus not going down the route of just getting volume for volume sake.
[00:07:50] John Craven: For sure. Let me just add into that. I've been a follower and friend and fan of Talking Rain for 24 years now. And Sparkling Ice has been around almost those 24 years. What I think Kevin brought to the table, especially in these past four years, was to have a focus to say, we're going to live or die right now by Sparkling Ice. Because they always came out with fabulous brands. I can't think of their portfolio over 24 years that wasn't terrific. But they were here and there. And in the marketplace, Kevin brought the focus to say, we're going to live or die by Sparkling Ice. And we're going to put all our efforts, our energy, and our resources into it. And that's what those four years have accomplished.
[00:08:33] Ray Latif: Yeah, for sure. And, you know, Sparkling Ice is often referred to as that sort of 25-year overnight success. It's been a brand out in the market for a long time. You kind of pushed it to the forefront of Talking Rain's portfolio. And since 2010, I think, it's grown by 6,000% in sales. This is one of those questions that I'm going to ask for a specific answer. I know the answer often is, oh, it's all three things, but I want to see if I can get a specific answer from you. So in terms of the growth, the exceptional growth of Sparkling Ice, you know, do you attribute it to execution, to timing, or to luck?
[00:09:08] Jon Landis: Right. And you know, the obvious answer is always all three, right? Of course. But I would say execution. And the reason why execution is there's a specific point in time, if you look at the growth of Sparklines, where it took off, and what happened was, there was a change, a very functional change in the way the organization was run. And so, you know, that timing happened when it happened. But It's actually very relative to Execution because as you pointed out, it was a 23 year old brand. There was a very distinct moment in time when the company got an opportunity to reset itself and that's when it all started. So that's why it's Execution.
[00:09:44] John Craven: And the marketplace was right for it at the time, which was the key thing that they picked up that this is the time to really make the push for Sparkling Ice.
[00:09:51] Ray Latif: See, Kevin, you get to say execution, Barry said timing. I'll say luck, just to even it all out.
[00:09:57] Jon Landis: You know, I would be foolish to say there isn't some luck involved. There's always that element of unknown, right? So it's kind of like when you look at some of the great advertising things in history, like just do it or whatever. You go back and look and have the people been able to repeat themselves? Right. And that's always the question about the magic. If you really knew all the fundamental issues and you could repeat it, you'd obviously be very wealthy. There's very few who can do that.
[00:10:19] Ray Latif: So $600 million brand, you think there's a long runway for Sparkling Ice going forward and for the company itself. Let's first talk about kind of building for the future. Over the past year or so, you've really put in some efficiencies into place to help kind of guide you through future growth. You have a distribution network in place. What else have you done to kind of get yourself set for future opportunities for the brand?
[00:10:45] Jon Landis: I think one of the more key things we've done is business intelligence. So we've tied in electronically all our distributors. So we have 85%. We can see the distributors, what's going on, account by account sales. We buy a massive amount of data. And we're using that to try and get better at forecasting so we can model what we're doing. We're also using that to get insights into the business. So in the past, you're kind of running blind. And so now as we move forward, we actually have some vision as to what will happen when we do things. So, creating that business intelligence team has been awful important. Getting into category management, it's a very expensive undertaking, but very key if you want to understand your category. You'll learn a lot by being involved in category management. It's not something, you know, many people can undertake. And not only that, you have to have the retail relationships to be able to do that. Those are probably a couple of the key things on top of, we didn't have a marketing team two years ago, for the most part. In our marketing team today, there's 30 and 26 of them are in less than two years. So that's another piece that's been late in coming.
[00:11:47] Ray Latif: Led by Brian Kuz, who's actually at the table with us, along with Nina Morrison. And it's interesting because the company itself is something that you are really highly focused on. We had breakfast this morning and you talked about We'Be Not just building a brand, we're building a company. And the distribution network is a big part of that. You have an independent distribution network that you guys have created that covers the entire country. And at this point, you think that the company has the ability to build and stand on its own brand, the Sparkling Ice brand, yet also undertake some other brands as well through acquisition or otherwise. What's that looking like at this point? How seriously are you looking at acquiring another brand or plugging another brand into your distribution network?
[00:12:30] Jon Landis: So we've actually, about six months ago, created a business development group. And actually we have two groups, a business development group and a skunkworks team. The business development group's job is to go out and look at business opportunities within the United States. They are actually at the moment looking into some foreign stuff as well. So that is active. They're analyzing the opportunities within the United States and seeing what's available. Part of the challenge, obviously, we talked about that earlier, is the multiples that people want is a little bit kind of crazy because thanks to the buy acquisition, the expectations have ramped up.
[00:13:02] Ray Latif: You mean everyone wants a billion dollars at the buy? Exactly.
[00:13:04] Jon Landis: Everyone wants a billion. On the other side is our R&D team. We're trying to Be Not in the forefront of technology and hope to be able to create our own brands as well going forward because obviously creating your own brands, you create a lot more intrinsic value for the company if you can do it yourself. But some places we don't belong and we recognize that. So you'll see a couple of categories where we're likely going to make a partnership or acquisition just because we don't belong in that space and branding is important.
[00:13:31] Ray Latif: There's a handful of spaces I can think of that you have already played in or that you could get into. None of them are refrigerated, obviously. Are you looking hard at sea at this point?
[00:13:41] Jon Landis: Yeah, I would say still tea and coffee are two categories where you got to have a brand identity and a brand culture already existent. And it's very difficult to create a new brand. Sparklines, maybe if it's carbonated, you know, could play in that space a little bit. And tea really, finally, more as an extension is Sparklines. But to go actually play in the tea category, More than likely it would be something where we'd be looking to joint venture or acquire or make some kind of movement. That is a space as we see our opportunity to be a healthy beverage company. That's a space we see the consumers continuing to shift to.
[00:14:15] John Craven: Would it be taking over a brand or partnering with a brand? Would it be putting the Sparkling Ice name on top of the brand?
[00:14:23] Jon Landis: More than likely not the Sparkling Ice on top of the brand because, again, we want to be a multi-branded platform. So it would be, depending on the size, it could be a joint venture if it's somebody who's already got significant scale but needs us to come in there, or if it's a small player that has caught on a really great brand name and got some cachet and just needs some oomph. So, for instance, the one I always remember from BevNET is Cocoa Cafe, right? Sure. Made all the sense to when that acquisition was made that that's a perfect example of things we might look for.
[00:14:52] Ray Latif: No, Vitacoco acquiring that company.
[00:14:54] Jon Landis: Yeah, when Vitacoco acquired them. That was a perfect example.
[00:14:57] John Craven: Remember, they were only out four or five months before they won at our BevNET Live, and Mike Urban was in the audience, and a month later, Vitacoco acquired Cocoa Cafe. And it was, you're right, it was a brilliant synergy. If you could do it along the lines of that, in bringing that brand into a portfolio, that's the type of thing you need to do.
[00:15:17] Jon Landis: Exactly. And the brand owners have to be willing to understand that there's enormous upside potential. And so it's not about the cash up front or being able to go tell the whole market you got this enormous valuation. I think they need to recognize the potential value that we can bring to them and be willing to ride that upside of that value rather than trying to take a lot of cash up front.
[00:15:35] Ray Latif: Somehow, I think you're going to get a lot of phone calls next week.
[00:15:38] Jon Landis: Yeah, we do get a lot of them and I can honestly tell you and I know We had the comments this morning, Kevin, is it going to take four years to negotiate your first deal? It is surprising how long they take, but it's certainly one of the things we're being very cautious because we know it's extremely important for us to, when we put our first foot out there for our distributors and our retailers, that we're doing something that brings value to the table. And we know that if we don't do it right the first time, then that second time may be a lot harder. So we were being very diligent.
[00:16:08] Ray Latif: Let's shift to internal innovation. You mentioned that already with the Sparkling Ice brand, you've come out with lemonade, you have a tea, you have that Sparkling Ice line as well, which is just an unflavored Sparkling Ice, no sweeteners, no color. Where are those three line extensions in terms of growth and where do you see them going?
[00:16:27] Jon Landis: Yeah, and I think one of the things I had hoped when we came out with tea was that we would be able to establish some grounds in the tea set. Doesn't look like the tea category was really ready for that. And the other thing is this shelf space is such a premium right now between tea, energy, and Sparkling Ice. So one of the things that happened is we would actually Be Not there and our consumers say, wow, we love the tea, but I can't find it because they were going to the Sparkling Ice set. So one of the things that we probably made a mistake with on tea is that we went to try to just gain more shelf space. Because the problem is you're going to bring it back into the set. Now you're going to rob more space where space is already very limited to begin with. Sparkling Ice, I think, you know, the struggle we've seen out of the gate with Sparkling Ice, it's just, there's this, thanks to Pepsi Clear, that there's a concept of, there's clear versions of the same thing, and so we've got to get the consumer past that it's not, that it is truly an essence water, and it's essentially what Talking Rain was founded on, just branded as Sparkling Ice, because in the Northwest we still have Talking Rain as an essence water.
[00:17:29] Ray Latif: And you mentioned also that Talking Rain could be a brand for future innovation as well, right?
[00:17:35] Jon Landis: Absolutely. It will stay in the Northwest where it is. We have it in Japan at the moment. I see it potentially as a large brand overseas. Whether it will become large in the United States, part of the challenge in the Sparkling Ice market or essence water market is that it's such a commodity market. Most people who are able to play at that price point, it's because they have lots of manufacturing plants that are close to retailers who can pick up the product and make a squeak margin out of it.
[00:18:01] Ray Latif: You know, one of the most interesting things I took from this morning's conversation is, you know, you talked about some of the big strategic soda manufacturers and companies as, at this point, they're managing the decline of the soda business. The opportunities that you see, you mentioned convenience stores as being a really big opportunity for Sparkling Ice. You know, what do you have to do to continue to grow and win in that channel?
[00:18:25] Jon Landis: I think what you're seeing now with we launched the Be Not Bland campaign, aided awareness is like 4%. And it's one of the most frustrating things for a brand owner to go to somebody and say, I work for Sparklines. They go, I don't know what that is. And then you show them a picture and they go, oh, I have that in my fridge. I drink it all the time. And so we have not had a real identity to this brand. So now that we got Be Not Bland out there, we're able to really go push. And it's pretty amazing that we got to $600 million without having to do that first push. So you can imagine, we're pretty excited that with that brand identity, that will hopefully start pushing the execution level at C Store.
[00:19:03] Ray Latif: Right. C-Stores still sell a lot of soda. Is there a way that you see, you know, what's your strategy for kind of like educating retailers about why soda is not necessarily something to hang your hat on going forward, whereas your brand is?
[00:19:17] Jon Landis: Yeah, there's a couple of things that are helping that. One, we're seeing, and I'm not sure why, but energy is coming to a screeching. slow down. And so they're going to have to look for growth elsewhere. So that will help drive it. The other thing is the advent of soda taxes in the United States where we see sugar tax already. If you take a 20 ounce soda and suddenly you put two cents tax on it and jack it up 40 cents from a price comparison standpoint. these retailers are going to have to find alternatives to fuel growth for them. And you know, you're seeing it on the food side in these C stores. You have not seen it in the beverage aisle yet. And so they're going to have to start getting more progressive and we're starting to see that.
[00:19:59] Ray Latif: As far as Be Not Bland, let's get back to that real quick because you just launched the campaign. Brian Kuz, who once again is here at the table, he spearheaded the launch of it. He came from Red Bull and spent some time and has been a longtime marketing executive. The focus of the campaign is really to kind of, like you said, be that driving force, that tagline for the brand, not just now, but going forward years from now as well. With Be Not Bland, though, you have this cachet that is really, really big, and it's bold not to use your old tagline, the bold side of water. What are you trying to get out of it in terms of excitement in the category? You mentioned that this kind of marketing campaign can go from 0 to 100. I'm assuming you were talking about in terms of age demographic. What kind of things do you want to align with the brand in terms of consumer mindsets?
[00:20:51] Jon Landis: We're still playing off on what we've been saying all along, that we're that fun, refreshing brand. And that's what the imagery, the consumer has responded to when we started showing them the spots, was it just brings that level of, they feel good about themselves. And Be Not bland, if you think about what's going on out there in the retail environment today, we're seeing it in food, we're seeing it in beer with all the flavored beers, and we're seeing it in liquor, so I hear, that there's some flavored liquors out there. And if you look at this, the aisle, it's just boring, right? It's a sea of sameness, as Brian would say. And so what we're trying to do is really reach out, and especially if you look at the millennial generation, they want to be who they are. And we're saying that's great, because we're just who we are. And by the way, we're going to have fun doing it. So I think the ad campaign does a great job. And life's not perfect, and no one needs to be perfect. So let's go have a good time.
[00:21:46] John Craven: Also, I think the campaign will appeal to not only the millennials, but the generations that preceded them, and even us older people. I mean, they're fun spots. I enjoyed watching them. And I think it'll bring, again, Ray said it before, the brand has been around 23 years. Everyone knows the brand. But you're right, people didn't know the name, didn't associate. I think the campaign is going to enable the consumer and the retailer to have that brand identity.
[00:22:15] Jon Landis: I know that when Be Not Bland was said, everyone immediately eyes went up and said, that's it. And I was talking to Barry earlier about this. I said, you know, what's really interesting is every marketing person who is probably everybody who's walked into our door in the last four years have said, we need a brand identity. And we've been searching. It's not that one day, We were just not doing our job and suddenly someone come in and said, guys, you need an identity. We've been searching for an identity. And it's hard because you want to do it right. You want to do it lasting. We are not a company that was willing to go out and lose money. So we didn't want to put any significant energy into a marketing campaign. until we were on something solid that we had, you know, think about it, it's great, Be Not Bland and all that has a call to action, right? So now all of a sudden we're gonna hopefully get consumer generated content because people hopefully are gonna start sharing their Be Not Bland moments. And it's something we can do at retail, it's something, it really can live. And that's what's exciting.
[00:23:07] John Craven: And if you're at the ACV of 98%, will this campaign reach the 100% of the populace?
[00:23:15] Ray Latif: You know, it's interesting, we- ACV and grocery and mass, right.
[00:23:18] Jon Landis: Yeah. If you look at the channels that it's on, we're going to reach a large consumer base. So originally, where do we index in terms of do we focus specifically in on, say, a 25-year-old woman who lives in New York City? No, at the end, if you look at the buy for the actual ad campaign, it's very cross-demographic.
[00:23:38] Ray Latif: One of the other things that I thought of this morning, you mentioned sort of the villainization of artificial has kind of come to a halt or has kind of really slowed down. I mean, artificial used to be public enemy number one. Now it seems to be added sugar. You still formulate your products with some artificial ingredients. And we also talked about, you know, I keep bringing these things up that actually we talked about before the podcast started, but You mentioned that not too far in the distant future that we may see a completely natural or Sparkling Ice made with all natural ingredients. Can you give me a time frame? I mean, are we looking at this year? Are we looking at next year? I mean, what's realistic, I think, and why?
[00:24:17] Jon Landis: Well, I think I probably won't give you an exact answer because that is obviously something that's dear and dear to our heart. What I will say is we're investigating whether the increase in consumer base as a result of that change will justify the cost. And in the United States, If you go out there, I know Diet Coke and Diet Pepsi have gotten villainized, but there's a lot of artificial sweeteners in a lot of products throughout the country that are doing just fine, and some of them in beverages. So when people start looking at it, it's kind of interesting. It's what's been used to pick on Diet Pepsi and Diet Coke. With Diet Pepsi and Diet Coke, one of their biggest issues is cola fatigue. So in the category of full sugared beverages, there's great offerings of different flavors that allow the consumer to shift. And that's also what's led to like even, and then the caffeine they can get from energy. So we are certainly well positioned in this space and doing very well. The question is, how many more consumers will we add by making those changes? Now, if we can make those changes at cost neutral, Because historically, it's been much higher cost than you do it in a heartbeat. And I will tell you that we have a team of R&D of nine, and we are out there in the forefront. We launched a green color naturally in Europe, and we were the first to do it. And we've got a patent pending on that. So we're getting into the technology side of the business. So we are working on taking, you know, if you can take out things that maybe consumers have a perception about, we're going to do it. And I think a lot of people are all, the big guys, I assume, are pursuing the same thing. So I just don't want to give up a timeframe, but I will tell you at least the first piece color is possible. It's just a question of, and we know we can do our colors. We've been working, we've actually worked on it. So it's just a question of when do we want to do it?
[00:26:01] Ray Latif: Do you really feel like that is going to be, that's going to move the needle in terms of reaching customers who you hadn't been able to reach before?
[00:26:08] Jon Landis: I think that's the big question. And then there's some retailers that might be more attractive too. There's a couple of states, schools you can't get into right now because of having artificial color. So if we see the, if the studies say that, yeah, it's a significant increase in the base, then absolutely we'll head down that path.
[00:26:26] Ray Latif: I mentioned added sugar. You talked quite a bit about, you know, how added sugar is something that is really at the heart of the obesity crisis right now. And that's something that you guys are really focused on and trying to be a part of. But you're kind of stymied by, in some places, by soda taxes, which you mentioned earlier. What's your criticism of these soda taxes? And what do you think they should be focusing on, regulators and politicians, that is?
[00:26:50] Jon Landis: We've seen in Europe, they're being much more progressive, right? So they're taking the stance on added sugar, and the companies did not choose to fight back. And so what they are doing is reformulating and trying to make their adjustments to their formulas. Obesity is a very complex issue, but certainly added sugar and portion size are a big thing. And beverages are something people consume on a regular basis. Someone usually eats one candy bar a day, but there's people who will drink a whole six pack. There's a reason why I think that the attention has come to this industry, where the United States is kind of getting messed up as we're starting out municipality at a time versus a much more structured approach. And we're also seeing that in some circumstances, they'Be Not only going after added sugar, they're just making a tax on beverages to ultimately fund something within their municipalities. So I think The U.S. 's approach to this is not healthy in terms of it should be a more general unified approach. And I think, you know, the only way you're going to get change is if these taxes start to take. You know, we've tried to be an advocate. We think there are other issues. I mean, look at the grocery cart. So it's not just beverages that probably needs it. But certainly I think we're one of those that that's going to we're going to see it. It's coming. And obviously, Sparklines is well positioned for it.
[00:28:05] Ray Latif: The Sparkling Ice is well positioned for it. And I kind of want to get back into this, this idea of you're building a company. You have that distribution network. What are the qualities of some of these brands that you're looking at? Are they, do they have to be zero calorie? Some of these brands that you might consider acquiring, do they have to be a zero calorie? Do they have to be zero sugar? Do they have to be functional in some cases? You know, what are you looking for in terms of brands that you want to align with?
[00:28:30] Jon Landis: Obviously on trend with consumer is sure, first and foremost, but I think, you know, you look at the categories, you know, the way we see it, you know, things such as coffee, tea, enhanced. and the future of enhanced, not necessarily even where we're at now, things such as protein, maybe fiber, those kind of things, where we see the consumer shifting to a much more, you know, trying to be on the more health-oriented side of the business. And we want to make sure that what we do is actually legitimate, healthy, and not that we won't have stuff with sugar in it, but certainly if we can do something that helps part of a balanced diet, that's kind of the direction we'll head. I don't think, you know, Energy at this point in terms of being that's not, it's been done and done very well. So it's not somewhere we wanna go, but it's certainly in some of these other categories where we don't see maybe the bigger guys being as able to go in there and command the respect that maybe a small person have or someone who be seen more so authentic. That'd be the area we'd likely go.
[00:29:30] Ray Latif: We only have a few minutes left, and I want to ask you a couple more questions. Rohan Oza came up in the conversation this morning, the famed marketer and investor at this point. He spoke at DevNet Live a few years ago, and one of his famous lines was, everything's niche till it's not. And this morning, you mentioned that if something is niche, you have to question it. Now, I'm assuming if it's niche, it's just not going to fit into your network, because you're looking for scale.
[00:29:56] Jon Landis: Yeah, I think the question is, what is your definition of niche? Fair enough.
[00:29:59] Ray Latif: Exactly.
[00:30:00] Jon Landis: So I mean, I think we'd be happy to have some $50 million brands. And if you look at the ACV, what we can command with our distribution network, we should be doing $50 million brands, because that's the scale we're at. So if you take someone whose brand's got a five ACV and they're doing $5 million, we should be able to take it up to 60, 70 ACV fairly rapidly, which should be a fairly good size scale of brand. So I think it's a question of, what's niche. Now the question is, and Rohan, you know, kudos to him. He's done a fantastic job, powered some brands up there. I think he does a great job of selling, so kudos to him on that as well. And you can send some money this way, Rohan, if you're listening. I think it's a good question and none of us are sightseers and if you've gone back in 2010 when we said and I'd come in here and say guys by the way I'm gonna grow a 600 million dollar brand by doing flavored Sparkling Ice with with what we have in our ingredient deck I think you all would have looked at me and said see ya when you come up with the next beverage and so you know it's hard to see that sometimes so But I think it's one of the things in general we do need to listen to the distributors and retailers because the other key aspect of that is we haven't been above the mindset of just throwing money at it. And sometimes, yeah, you've got to throw a lot of money at it to power it through. For sure.
[00:31:18] Ray Latif: There was a report in the Wall Street Journal, I think, came out, what, three years ago, two years ago, that said that Sparkling Ice or Talking Rain was about to be acquired, or there was an offer on the table. I took the offer off the table. Oh, you took it off. Barry was like, this is nonsense. I'm not accepting $100 million. And I think that was the reported number, $100 million, which was just kind of ludicrous at the time. And I got to wonder that you've had some offers at this point or until this point, you know, to buy the company, to kind of to take money off the table, what have you. What kind of interest are you getting at this point right now at the size that you're at? And have the owners seriously considered any kind of acquisition or at least some sort of way for them to take some money off the table?
[00:32:05] Jon Landis: You know, it's kind of funny to think people nowadays call us the hunter and the hunted. I think, you know, we owe it to, if someone comes with an offer, we owe it to the ownership to make sure we vet it out and they're businessmen at the end of the day. That's, you know, when we start talking about Kraft and Unilever getting together, that's the kind of, we're running out of companies to buy. So there's definitely going to always be a lot of interest, especially someone like us, who's one of the last independents in the industry. So we'll listen. Sometimes it may be born of a partnership. We're looking initially at something overseas and it may come from out of that. One of the things we always tell our employees when they start with us is that the minute they start, you know, we're going to be like monster buzz for so many years. We're always someone, you know, every day in the paper, they're going to read someone else's just bought us. So we, we've kind of prepared everybody that actually the good part is I think people have heard it so much now they've, they forget about it. And we know our job is to go out and create this beverage company. And so I certainly would say, if you watch our behaviors, we're certainly not behaving like a company that's trying to sell itself just to sell itself. We're building intrinsic value for our shareholders. And if that someday pays off in a nice, healthy way for them, kudos to them. And they get to go enjoy that. But you know what? On the other hand, I don't think it's not about money. And they're enjoying having a consumer products company, and especially one that's taken on two of the greatest companies in the world and winning. So I think they're getting a lot of satisfaction in their lives out of that.
[00:33:32] Ray Latif: But you'll take $2 billion. I absolutely will.
[00:33:35] Jon Landis: And I'll see you in Hawaii.
[00:33:37] Ray Latif: Fantastic. Thank you so much, Kevin, for being with us. This has been a lot of fun, really informative. And can't wait to see how the company and the brand continues to grow. We'll be following, and I'll be calling you, I don't know, twice a day, every day for the next six months until we find out exactly what you're going to be buying.
[00:33:53] Jon Landis: Yeah, well I hope, you know, we'll leave that teaser out there. There's something coming soon, I hope.
[00:33:58] Ray Latif: And if you want to be bought, email Kevin.
[00:34:00] Jon Landis: Exactly.
[00:34:02] Ray Latif: All right, that's the end of this segment. Thanks again for listening. Always a pleasure, Kevin.
[00:34:06] Jon Landis: All right, thank you so much for having me.
[00:34:15] Ray Latif: Barry Nathanson, he's becoming the semi-regular host, and I enjoy doing these with him.
[00:34:21] John Craven: I know. I didn't get to go to New York this time. It's like you found someone else. I'm a little sad.
[00:34:26] Ray Latif: I didn't find someone else. I just, you know, just testing the waters with someone else.
[00:34:30] John Craven: I at least know Barry does not like cocktail joints, so our relationship is still sound right.
[00:34:35] Ray Latif: This is true. Barry has not had a sip of alcohol in his life. This is a true story.
[00:34:38] John Craven: We make up for it.
[00:34:39] Ray Latif: Yes, we certainly do make up for it. Anyway, Landis, you did some pretty interesting interviews recently yourself and also with members of the team.
[00:34:48] John Craven: The three of us have been doing that, what are you drinking thing at the end of these podcasts. If you guys have been listening, you might recognize the segment, but we wanted to kind of open it up, give us an opportunity to introduce some other team members here that otherwise wouldn't have much opportunity to get on here and have some informal chat about what we do and what we're drinking. And everyone here, you know, has plenty of exposure to countless types of beverages, which is always the fun part. So we figured it'd be a good way to just get some other perspective aside from those of us who are regularly on the podcast here.
[00:35:24] Ray Latif: And I'm going to plug this one in for Adam Stern. Who are these people that you're talking about?
[00:35:30] John Craven: Well, this week I did a little phone in with Joshua Pratt and Jacqui Brugliera on our West Coast branch or San Diego office. So what does Pratt do? Pratt's our video guru. He edits these podcasts. I think he calls himself technical director. Technical director. He's at the events. He runs our AV team at the events, trade shows that we go to, a lot of the media that you get online as well.
[00:35:54] Ray Latif: And Jackie's our marketing guru.
[00:35:56] John Craven: Jackie is, you know, behind the scenes, the glue that holds everything together. She is very organized in helping us market our events and think of better ways to do it. Always kind of two steps ahead of me in that respect.
[00:36:11] Ray Latif: So there you go. There you go.
[00:36:13] John Craven: And we'll listen. Let's hear from their own mouths what they do here. So let's roll the SD card. Roll the SD card. All right, guys, I am right now on the phone with Joshua Pratt and Jacqui Brugliera in our West Coast branch of WCB in sunny San Diego, California. What's up, guys?
[00:36:33] Talking Rain: Hello. It's not so sunny today.
[00:36:36] John Craven: Oh, yeah. You guys been getting hit with a lot of rain recently.
[00:36:38] Talking Rain: Yeah, I've been blamed with it. Ever since I got here.
[00:36:43] John Craven: And you just moved there over New Year's.
[00:36:46] Talking Rain: Yes. Yes. Two months ago.
[00:36:48] Kevin Klock: And Josh, we started a West Coast branch, uh, cause you moved out there, right? Correct. Uh, I moved out here about four years ago and a year and a half ago, we got an office in, in old town, which is a great part of San Diego. Lots of, lots of food and lots of, uh, tourism.
[00:37:03] Talking Rain: Yeah. Yeah. It's a cool place. Lots of places to walk to lunch.
[00:37:07] John Craven: And besides like, you know, I mean, Kennedy's here doing the magazine, Nate's here doing the product photography, but that office out there is very media focused. Josh, you're doing a lot of media. We see you at the events behind the booth with the earpieces and running around the trade shows with the cameras. What are you up to most recently? A lot of these podcast edits. And that's something that we just kind of started on a whim. And I think episode one, I edited some of it, and then you finished it up. Correct, correct. And now we're getting a lot better at this, you think?
[00:37:41] Kevin Klock: Yeah, I really am really excited about where we've gone from a quick 15-minute podcast to we're up to almost an hour. There's specific segments now. We've got Ray traveling around collecting interviews. You know, you're doing more of the content instead of the editing. And I'm a full-time editor on this. And we also have someone who masters them and makes it all sound nice. Adds the chops and sizzles. Shout out to Joe, our podcast mastering engineer.
[00:38:08] John Craven: Audio Joe. All right, Jackie, and you're up to like all the behind the scenes marketing stuff that we do. And you look a little stressed out at some of these shows because there's so much to cover and you're in charge of our social media team.
[00:38:23] Talking Rain: So I think a lot of people know me from the trade shows. I'm the one running around, looking like a crazy person, not having much time to talk, but I'm in charge of all our social media. And there is a lot to see, especially covering both food and beverage with Nosh and BevNET. So yeah, that's what I do with the trade shows and we do have Expo West coming up next week. So I'll see you all there. And then aside from that, I do handle all of our digital marketing. So anything that you can imagine that goes into that.
[00:38:52] John Craven: But our social media really is kind of, we've kind of taken that up to the next level in the past couple of years since you started as well. I mean, it used to be a couple of us out of pocket, just tweeting whatever we find. And now it's really tight and we have a bunch of people working on it and you're just managing the whole thing. And that's really must change your perception of social media a little bit.
[00:39:14] Talking Rain: Yeah, it's really interesting seeing how we've kind of created a formula for it. We do have an in-house photographer who takes all our amazing product shots. I bet a lot of people see that on Instagram. But yeah, and aside from that, we do a lot of other things, but it's interesting. I don't like tweet as much. I don't post to Instagram as much. I'm definitely very involved in our social media and finding myself a little burnt out from my personal social media.
[00:39:42] John Craven: So guys, let's really get to the chase here. What everyone wants to know is what are you drinking? I want to ask you instead of John and Ray, because we want to switch things up a little bit. So Josh, what are you drinking out there in San Diego?
[00:39:58] Kevin Klock: Well, you know, what I am drinking is a lot of drink maple. I feel like my answer should be horchata. You know, we're in San Diego. I do love horchata, it's amazing, but it's not something I can have every day. But what I have been drinking a lot of is drink maple. I'm more of a generally a typical CSD guy. I do love my Mountain Dews and my Cokes. I know that's frowned upon in the BevNET space, but I enjoy it, keeps me going. It's my caffeine, but lately I've been drinking a lot of drink maple. It's just a little bit sweet, so it's not water, and I just really enjoy the flavor, and it's something that I can have and know It's not bad for me as compared to some other things that I drink from time to time.
[00:40:39] John Craven: Absolutely. And actually those guys are up in Vermont right now, drawing the waters from the trees because it's so mild and that just happens when it happens. And they got to be prepared to harvest for the entire year, which is kind of crazy when you think about it.
[00:40:53] Kevin Klock: It is, it is actually true story. I once was in Western New York and harvested some, some maple water. My, my family has some, some land out there and they were just doing it to extract the water and then you know, make the syrup. And I was like, you know, you could drink this. We didn't really, cause we didn't have a pasteurization method there set up, but it's pretty funny that I'Be Not only consumed it, but I've also, I've also extracted it. You basically just pick up a bucket full of water.
[00:41:19] John Craven: But did you hammer the taps into the trees?
[00:41:22] Kevin Klock: It was already set up for me, you know? I picked up a bucket full of water.
[00:41:29] John Craven: It's like hiking and you know, it's nature. Um, Jackie, what, what are you drinking recently over there now that you're a West coaster?
[00:41:38] Talking Rain: Uh, so I've actually been drinking a lot of mother beverage, which was our new beverage showdown 12 winner. It has two tablespoons of apple cider vinegar per bottle. And I do understand the different health benefits that come with apple cider vinegar. And that's one of the main reasons I drink it. It's also a lot more tolerable than what I usually do, which is put a couple of tablespoons and just a glass of water, which is not so tasty. I think it's interesting also being on the West Coast now and walking into my local sprouts and seeing a huge display of just Bragg's apple cider vinegar. And I think a lot of people are starting to understand the benefits of apple cider vinegar. And I can see that down the road, it's going to be very popular.
[00:42:19] John Craven: Yeah. I mean, that's a fantastic product. They have some really awesome flavors. They do a good job with them. And I love the sparkling aspect of it, which makes it a little bit more palatable for me. Yeah. I love that stuff.
[00:42:32] Talking Rain: Yeah, it's really tasty. And I think that's another thing that's going to help it out is the flavors. It's definitely a unique product.
[00:42:39] John Craven: Awesome. I'm drinking some chocolate milk actually, which is a pretty big deviation for me. Coco Metro single origin Peruvian chocolate milk. It's organic. It is decadent. It is thick and chocolatey and got notes of like caramel. And it really like the flavor, you can tell that it's like all natural. It doesn't have any crap in there because the flavor just stays really consistent throughout. It's really sweet though. And I mean, I think that's with it being in a resealable milk carton with a plastic cap here, they're telling you, you know, it's not maybe to be consumed in one sitting. It's got. Jeez. 250 calories per serving and eight ounces. And this is a 14 ounce. So that's almost 500 calories in this. So that is rich and decadent and sweet, but I bet it would be really good to use as a substitute for, you know, milk and brown sugar. If you're making cookies or something like that. Oh, that does sound good.
[00:43:41] Talking Rain: Sounds delicious. Send some over here.
[00:43:43] John Craven: Well, they'll be at Expo West showing this off and they're really cool team there with some, I mean, high quality product. Do you want high quality chocolate milk? Coco Metro is where you go. So excited to see them there and everybody else. And we'll see Josh and Jackie there too. I mean, you guys cover more ground than just about anybody. The camera and the iPhone.
[00:44:05] Talking Rain: Yeah, we'll be running around trying to find all the new products and all the fun stuff going on next week.
[00:44:12] Kevin Klock: You know, I've been seeing a lot of articles or a lot of things getting posted on BevNET or Project Nosh, or even some of our competitors or other sites in the industry, you know, talking about how to manage Expo West, how to get through the crowd, how to stand out. You know, my advice to all that? Shoe insoles. You know, the only way to survive Expo West is shoe insoles.
[00:44:33] John Craven: So I will say that Josh is definitely a big advocate for these and, uh, makes our whole team aware and, uh, encourages us all to go out and get them. And I agree. I don't have any stock.
[00:44:47] Kevin Klock: I don't own any stock in, in any shoes, insole companies. I'm just saying by, by the third day, even by the first day, at the end of the day, I am just my feeder.
[00:44:56] Talking Rain: Expo West is definitely a marathon. We'll be ready. We'll be ready to go.
[00:45:01] John Craven: Yeah. Is that your advice, Jackie? Pace yourself.
[00:45:03] Talking Rain: Oh, for sure. Yeah. Don't try to do it all in one day. Cause it's impossible.
[00:45:08] John Craven: Yeah. Well, uh, you guys will be there. And if any of you listening, spot them as they're walking by with their cameras and gear. And, uh, even if they're on a mission, give them a quick high five. Uh, they do a lot of really awesome work and we couldn't do what we do here without them. So, uh, make sure you show your appreciation to these two.
[00:45:28] Sparkling Ice: Thanks, John.
[00:45:29] John Craven: episode of What Are You Drinking?, and I guess I will be introducing you to other BevNET staffers in the future, so stay tuned. Thanks!
[00:45:39] Ray Latif: Well, that was very entertaining. I heard some things I didn't think I'd hear, and I definitely heard some things that I thought I would hear. Ree, Mountain Dew, and Josh's obsession with it.
[00:45:48] John Craven: And shoe insults. He's checking the boxes.
[00:45:49] Ray Latif: Yes, and shoe insults. Yes, of course. How could I forget? He's going down his list. I'm speechless. Yes, yes. Anyway, thanks so much for listening, folks. Really appreciate it. We get emails from a few of you who send positive comments, and it means a lot to us that y'all are listening. So thanks so much for that. This is the last podcast before Expo West. We expect to see a lot of you there. If you do listen to the podcast, stop by, say hi if you see one of us, and we'll talk about it on the next one.
