[00:00:10] Ray Latif: Hey, folks, I'm Ray Latif, and you're listening to the number one podcast for the food and beverage industry, Taste Radio. This episode features an interview with Kabir Jain, the Chief Growth Officer of Erawan, a Los Angeles grocery chain known as Ground Zero for cutting-edge food and beverage concepts. Just a reminder to our listener, if you like what you hear on Taste Radio, please share the podcast with friends and colleagues. And of course, we would love it if you could review us on the Apple Podcasts app or your listening platform of choice. During the course of our conversation, Kabir Jain mentioned that some Erewhon customers, inspired by the retailer's large and remarkable selection, will spend 45 minutes wandering through a single aisle of one of its stores. Stimulating product discovery is a point of pride for the upscale grocer, whose focus on offering the most innovative, better-for-you, and unique brands has made it destination number one for natural brands and consumers alike. A seven-store chain with locations across Los Angeles County, Erewhon attracts legions of health-centric consumers who are drawn to the thousands of trendy, local, and sustainable products that line its shelves. The retailer's in-store cafes, stocked with fresh and nutritious prepared foods, are also a major draw for Erewhon's customers, who represent a cross-section of LA's celebrity scene, wellness culture, and bohemian community. I sat down with Kabir for a wide-ranging interview about all things Erewhon, including its emphasis on being first when it comes to carrying new and unique concepts, how the retailer defines innovation, and why he describes brand selection as both an art and a science. He also discussed the through-line for fast-growing food and beverage categories, the prototypical Erewhon customer and its unique membership program, and how the company is supporting its brands with highly actionable sales data. Hey, folks, it's Ray with Taste Radio. Right now, I am extremely honored and excited to be sitting down with Kabir Jain, who is the Chief Growth Officer of Erawan. Kabir, how are you? Hey, Ray. Great. Thanks for having me. I'm excited. Well, I know our listeners are really excited to hear from you, Erwan, one of the most respected grocery chains in the country. You know, before we get into the nitty gritty of what you guys do and what you're all about, I'd love to hear about some of the brands and products that you are digging these days. You know, when I'm at the grocery store, I always love peeking into folks' shopping carts and, you know, seeing what they're buying. It helps me to kind of see what's happening on sort of a consumer level. But since we have you here, what's in your shopping cart these days? What's happening from a product and brand standpoint at the Jane household?
[00:02:58] Kabir Jain: Two come to mind. The first, my favorite product at Erewhon Chief called Doux, D-E-U-X. It's an enhanced cookie dough. It's a vegan, it's gluten-free. You can eat it out of the jar. It tastes incredible. I'm a little biased. My wife started that brand, but it's still delicious and I'm a huge fan. The second, you know, actually the product that I consume literally seven days a week is called Tia Lupita. It's a hot sauce brand. We sell it. They sell in Whole Foods. They're across the country, but it's a phenomenal hot sauce. It's so delicious. It goes on everything.
[00:03:27] Ray Latif: Yeah, yeah, Tealupita, it's interesting you bring them up because I just did an interview with one of the co-founders of Renewal Mill, which makes and sells upcycled ingredients that they share with or sell to brands, including Tealupita. And yeah, yeah. As I mentioned, you're the Chief Growth Officer of Erawan. What is your day-to-day like? What are your roles and responsibilities in that position?
[00:03:56] Kabir Jain: It's a good question. So I kind of split my time in sort of two big buckets, I would say, day to day. And of course, every day is different, like all of us kind of at this point. But two big buckets. So the first is thinking about, you know, what are the big areas of growth for Air One? And this is sort of outside of new store expansion. So what are the things we should be doing? What are the businesses we should be getting into that we're not in today? Currently, that's really two things I'm focused on. So one is, you know, e-com. So both online grocery and then also, you know, traditional e-com around shipping products. And how do we think about that business? The second is our membership program, which I'm sure we'll talk about at some point, but how do we continue to drive the Arrow One membership program, which is a big part of our business and a really important part of our business today. And then the second component is around marketing and branding. And so thinking about what is the Arrow One marketing strategy and what is our branding strategy, and how do we think about developing this brand as we continue to grow? How do we continue to deliver content and education to our customers, and how are we talking to them, and how do we continue to grow that side of the business?
[00:04:52] Ray Latif: Yeah, a lot to get to later on in this podcast. How did you actually come to this role as Chief Growth Officer? What was your background?
[00:05:02] Kabir Jain: Yeah, I never envisioned myself in the grocery world, but I'm here and I love it and I'm going to stay forever. But my background was actually in private equity. So I was in consumer private equity for a number of years before Air One. I was investing in food and beverage companies, a lot of the ones that we sell today and a lot of ones that are sold across the country. So it reached a point where I decided I wanted to move out of investing and into the world of operating, like I like to call the real world, where I could learn how to run a business or at least small parts of a business and continue to build sort of that skillset. And so I was in LA at the time and sort of exploring different opportunities and got very lucky to get connected to the team at Air1. And after spending a little bit of time here, got so excited about this business, its trajectory for growth and all the opportunity that Air1 has in front of it. It's funny, I was an Air1 consumer before, We invested in a lot of brands that everyone obviously sold, but never thought of them as an employer. And the minute I did, it kind of everything clicked. And so that was, you know, almost three years ago now, and I hope I'm here for the longterm.
[00:06:00] Ray Latif: It's interesting that you called them an employer because it's a grocery chain, but I think it's so much more than that. I think people look at Erewhon as much bigger than a place to shop for food and beverages and supplements and things like that. In fact, a recent Instagram post on Erewhon's account described the business as an idea to inspire and motivate others. Not a store, not a company, not a business, an idea. Why does Erewhon describe itself as an idea?
[00:06:36] Kabir Jain: Look, I think as a business at its core, we're a grocery store, right? We're a restaurant and a grocery store, which we can get into. But I think what Erewhon has developed into and what we hope to continue to develop it into is to really a place to inspire and motivate people to eat better, to live healthier lives, and to start to make better decisions for their own health and wellness. And that can take a lot of different flavors, right? It can take someone coming and trying, you know, one muffin in our cafe, which is something that they've never tried before, but that got them feeling better about themselves and makes them want to come back to our store. Or it could be someone buying organic produce for the first time in their life versus the, you know, maybe the conventional produce they would buy before. And so it takes a lot of different flavors, but I think what we found with the consumer, which we can get into is that, you know, all of our consumers, In some shape or form are prioritizing health and wellness to some degree in their life right like they're at that stage. And so we want to be that place for them right where they can come walk our aisles to learn about new products find interesting new ingredients that they hadn't seen before at other stores. spend time talking to our staff in the store who are beyond knowledge experts in each of their sort of categories and spaces that they play in, where people can just come spend time and learn. And that's the idea. And so to power that, we have products and recipes and dishes to deliver that experience. But at the end of the day, we're trying to create a retail experience for these customers.
[00:08:06] Ray Latif: One of the other really interesting things that I learned about the business from you in our pre-interview call is that you have a mantra of, we want to be first, which isn't too surprising, but it's still pretty interesting. I think there's a lot of brands out there that are attempting to be in that sort of space, which is, we're the first to do this, we're the first to do that. And Erwan is the sort of space that carries all those products. But in your words, I mean, how would you describe that mantra? I mean, when you talk about wanting to be first, what does that mean exactly?
[00:08:42] Kabir Jain: Yeah. So, and it's funny that we bring that up. So it's not, it's not a creed that we live by or anything like that, but it comes top down from, from the ownership of Erewhon that we want to be the first in everything we're doing. And it's a bit circular because we have the freedom to do so from our customers. And in some ways they've come to expect it too, right? And Erewhon has sort of the first to market with a lot of things. And so we see this across the whole business with the brands that we're bringing in. We like to be first to market with a lot of brands. In the cafe, we love to be first to market with new ingredients or new ways of delivering dietary-specific recipes that people haven't seen before. In terms of store design, we love to be the first in respect to designing, like I said, grocery stores the way we design them, which you don't see a lot of today in the country. with respect to the business. We love to be first in the grocery space around how we are operating the business. How do we think about the membership program. How do we think about e-commerce. How do we think about fulfillment. We want to just continue to push the envelope in terms of how we're doing everything. And like I said we have the freedom to do so. And the mantra kind of runs across the business.
[00:09:51] Ray Latif: Being first also requires typically a lot of education. And I know you talked about your employees as being experts in their particular fields, in their particular, I guess, category sets. But, you know, how much education is needed or how much education are you willing to invest in to maintain that first mover advantage, to maintain that first, that desire to be first in everything?
[00:10:19] Kabir Jain: A lot. I would say it's really important to us. You know a lot of the folks that are on top to bottom have been in this world for a very long time. So they like I said they are deep experts in nutrition in food trends in understanding specific dietary nuances etc. And so we are continually investing in expanding that education. And that's an area where we leverage our brand partners and work together with our brands quite a bit. A lot of the brands that we partner with are even deeper experts in their specific fields and they have their own educational resources that they love to deliver to our staff. And so we'll work together with brands to get smarter on their products and their categories and understand the science that they've already developed to help us because You know 100 times a day we'll have customers walking into our stores that are interested in categories or interested in products but just don't know enough yet to make the purchase or may not have the confidence yet to take one off the shelf. And that's where we want our staff to come in and walk them through it and help them understand whether this is right for them or what the right substitutes might be or what the right recommendations might be for each individual person. And so us having that deep education allows us to make that connection. And if a customer comes in and makes that connection with a staff member and buys a product, you know, we've got an Air One customer for life. We know that.
[00:11:37] Ray Latif: How do you discern whether a particular trend or trendy product is right for the store? I guess, what are the parameters of what you will accept and whether or not it will actually sell in store?
[00:11:52] Kabir Jain: Yeah, I mean, that's the magic question, right? And everyone will say it's art, not science, which is 100% true. And a lot of it is gut field, right? So as we think about any new product coming in the store, we've got a team of experts in our nutrition and grocery purchasing departments that are looking at new products on a daily basis. And they've come to understand the characteristics of products that we think will sell well. Taste is obviously very important. Packaging is important. Ingredients profile is important. The story behind the brand and the founder is important. You know the dynamics of the category itself is important as to how is that category performing as a whole. So there's a lot of factors that come into play. But you bring up a good point around brands often setting the trends. I mean I think you know as everyone we are constantly looking to be out in the market understanding what's evolving. You know what's new. What do we want to bring into our store. But we also have thousands of brands across the country that are doing the exact same thing in our sending us product where we are learning from them as to what's working what's exciting and what's new. And so it's a little bit of both in terms of us determining what do we think future trends are that we think we can put on our shelves start to inform customers about and start to grow categories.
[00:13:07] Ray Latif: Let's talk about one of the hottest trends in food and beverage, which is keto. I wonder, when did Erewhon realize, or when did you make your first bet on keto as being a sustainable trend, or at least one that was going to reap rewards for the stores in the short term and potentially the long term?
[00:13:25] Kabir Jain: Yeah, that's a good question. I don't know the answer. Probably several years ago, but I couldn't tell you. I think one area worth mentioning where this comes into play is our cafe. And so in some cases, unless you live in Los Angeles, the cafe is sort of an overlooked part of Erewhon, when in reality, in some cases, it can be the engine of Erewhon. So we have a fully staffed, high powered, very extensive grab and go cafe in each of our stores where we have a deep culinary team doing daily R&D to continue to deliver new recipes, new dishes, new ingredients to that cafe. And so you bring up keto as an interesting example where we would offer 15 different keto dishes in any given day and types of foods that you couldn't get anywhere else in the city. And so we do the same with vegan, with gluten free, with whatever dietary components might be or specific ingredients might be. And so you know the culinary team is doing their own R&D on a daily basis to understand how can we incorporate new ingredients into new recipes that we think people are going to get excited about. And so it works hand in hand with our grocery nutrition teams to understand you know if something's moving in the cafe that follows a certain trend. Let's think about how do we start to merchandise that in grocery or vice versa.
[00:14:39] Ray Latif: So if I'm following this, if you're an entrepreneur who wants to know what the next hot thing is or what you invest your time or resources in, you just visit Erwan's Cafes and you'll have a good sense of what to create.
[00:14:52] Kabir Jain: Exactly, exactly.
[00:14:54] Ray Latif: Well, I mean, you know, there's trends and then there's innovation, right? There's innovation that's born from trends. How do you guys define innovation? How does Erwan assess, you know, everything from taste to ingredients to package design? What are you looking for when it comes to an innovative product?
[00:15:12] Kabir Jain: In my opinion, the lines are pretty blurred. And it's hard to discern when you see something, whether it's a trend, a fad or true innovation. And innovation can come in many forms, right? Like there is scientific innovation at the furthest end of the scale. And there is maybe packaging innovation at the other end of the scale. And so, you know, as we look at new products and new brands, we are looking for things that are interesting, new and different. And in my mind, if it meets any of those criteria, there's some level of innovation that is coming into play. You know, I think what often gets remissed at the store is for in general, For every new product that comes in, in some cases, a product has to come out. There's a limited shelf space. That's not an air one phenomenon. That's just a retail phenomenon. And so, you know, as we think about bringing new products in, we have to think about, are they innovating in any way, whether it's the packaging type, the story that they're telling on their own channels, you know, the ingredients, the taste profile, reinventing a category. Are they doing that enough to warrant them coming in and an existing product, unfortunately going out. And that's, that's the nature of the business. The other component at the end of the day, though, is our customers have come to expect new products. I mean, they want to, you know, spend 45 minutes in the store browsing through the aisles to see what are the new products in specific categories that they're seeing that when they were here last Friday, they didn't see. So that's part of the beauty of AirOne, that we are, you know, willing, able, and really excited to work with small brands, to take chances on new brands, and to get them into market really quickly. And again, we have the freedom to do so because we've now developed a customer base that's come to expect it and gets really excited by it.
[00:16:50] Ray Latif: Let's talk about that customer base for a second. You talked about keeping your customers happy by always bringing in new products, by always thinking about the next thing, by having really educated staff members to walk them through innovation or interesting ingredients. At the same time, I wonder who that prototypical Erewhon customer is. You know, from a demographic standpoint, what do they look like? You know, what's their backgrounds? You know, what parts of the world do they come from? Can you share any of that information or is that pretty proprietary at this point?
[00:17:24] Kabir Jain: we can share it, I mean, at least from a qualitative sense. And we ask ourselves this question and try to understand this question on a weekly basis. And it's actually really hard to answer for our business because a lot of different people shop at Erewhon. You'll have folks that shop at Erewhon because it's trendy. And Erewhon has become a little bit of a cultural phenomenon, at least in the Los Angeles market. You'll have folks that shop at Erewhon because it's luxury and they appreciate a grocery store that has a valet. Or you'll have folks that shop at Erewhon because we are the only store in the entire SoCal market where they can get a specific varietal of a reishi mushroom in a specific tonic drink and you can't get that anywhere else. And you'll have lots of flavors of people in between. And what we found is these people look entirely different. from an age perspective, from a household income perspective, from a psychographic perspective, they all look very different. And they all have different reasons to come and get excited by everyone. Now, what we know is there is one link between all of them, which is that in some capacity, they've decided to prioritize health and wellness. And so they've decided to take a step where they are interested in putting something in their body that is better for them. And in some cases, that might mean just one coffee a week or in some cases that might mean you know every grocery and they buy on a daily basis. But it's a really different type of person that comes in. So the way we think about it is how can we continue to deliver for all of these customers. Well one customer service for any retail business customer service is key. So how can we ensure that any time a customer comes into our store they're getting best in class a plus customer service. That's number one. Number two, how can we keep them excited about coming back into our stores over and over? And that's what we've talked about before, right? So continuing to innovate in terms of the products we sell, continuing to innovate in our cafe with new dishes and new recipes and getting them excited to come back. And then the third is education, right? And so, you know, we've built this audience of folks that are really excited about Erewhon and going back to something we touched on earlier, we have a really deep bench of content experts across our business. So how can we continue to educate this customer base around the things that they're interested in. To get them coming back to our store, to get them engaging with our staff more often, and eventually get them shopping more categories and more departments across our store.
[00:19:50] Ray Latif: And part of that education and part of that connectivity with customers is via your membership program, which you talked about earlier. Describe what your membership program is all about, because it's a little different than, say, a typical grocery store. And, you know, how do brands get involved and incorporated into that program?
[00:20:09] Kabir Jain: So, yeah, it's very different than a typical grocery store membership program because it's a paid program. You are paying to be an Air One member. And with that, you get a host of benefits. discounts on purchases, you get access to events, you get special drinks at the tonic bar, discounts on certain brands. And so we're continuing to build out this sort of suite of benefits for being an Air One member. And then I think more importantly, you are part of an Air One member community that is continuing to grow across L.A. of like-minded people who have again decided to take a step towards their health and wellness and decide this is something that I want to prioritize for myself. And that might mean I'm just eating at that cafe more often. That might mean I'm starting to do grocery shopping here just for my produce. Or that might mean I am an Air One evangelist, and I come here three times a day, every day, for everything I need. And those people definitely exist. So it's a big part of our business and something we're continuing to drive harder and harder for a couple reasons. One, we've proven out, and it's pretty obvious, that an Erewhon member is very valuable to Erewhon because we have delivered the products and experience that they want. And in turn, we are now their primary destination of choice for a lot of their shopping. So how can we continue to grow the funnel of Erewhon members? How can you continue to engage members by getting them more excited about Erewhon, continuing to deliver them more content and more benefits. And then on the other side of the funnel, you know, how do we continue to retain customers or retain members throughout their membership program sort of lifecycle? You know I think getting brands involved in the membership program. We're just in the early sort of innings of that. I think that's a really big opportunity for us to not only deliver benefits and discounts and stuff like that but allow brands to also tell their own stories directly to this member base. This very engaged very valuable member base who are already probably customers their rent.
[00:22:01] Ray Latif: It's been well documented that Erewhon Chief a destination for celebrities in L.A., lots of actors, musicians, et cetera. I wonder how many of those celebrities are part of your membership program. I wonder if it's some of those folks you discussed who will come into the store three times a day. But probably not, because you probably don't want to be, I guess.
[00:22:17] Kabir Jain: Yeah, we wouldn't know. I think any of the celebrities that are in the membership program are not using their real names. That much I'll know. They're all using aliases. Have you ever been starstruck by someone walking into a store? You know, it's funny, when I first started working here, So we're now sitting in and we have air one corporate offices, you know, prior to this, we all used to work at a stores. And so, like I said, I came from a hyper professional, very formal private equity environment to literally working in the back of a grocery store where I would walk through the dairy cooler to go to my office at our store in West Hollywood and Beverly. And I loved it because I was on the floor every day. Right. And so if there's one way to learn how the grocery world operates, it's to live and work in a store, which was great. But to answer your question, my first two weeks, there's paparazzi outside the store every day. And I couldn't understand this sort of phenomenon. I was new to L.A. at the time. And, you know, it was the air on way. It's it's calmed down a little bit. But, yeah, there's certainly celebrities that have come in and out of the store. And, you know, we see it all the time.
[00:23:12] Ray Latif: Did you ever get photographed accidentally? Were you on TMZ? It could be your Jane.
[00:23:17] Kabir Jain: No, no, they can take one look at me and they know that's not the guy they're looking for.
[00:23:22] Ray Latif: Well, you're the guy I'm looking for, as are our listeners. So thank you once again for joining us. Okay, so the paparazzi, they're probably not coming into the store, but I'm sure there's a stream of entrepreneurs coming to the stores on a regular basis. wanting to land their products, wanting to get their products on Erewhon shelves. Can entrepreneurs just do that? I mean, do you have to set up an appointment? Do you have to set a meeting? Or can you just walk in with your product, bring it to a staffer and say, hey, here's who I am. This is what I'm selling.
[00:23:50] Kabir Jain: Yeah, I wish the answer was yes. You know, a couple of years ago, probably yes. But at this point, no, it would just be unsustainable to do that. So we have a process for new vendor applications. We have an application that vendors can fill out. They submit samples. Our team reviews them on a periodic basis and goes over all the criteria that we talked about before. And again, we're very fortunate to get a lot of applications and have a lot of samples. And so there's a lot of product for us to look at on a daily basis on both the nutrition side of the business and the grocery side of the business. Yeah, we would love for the small vendor to be able to walk into the store and drop off samples and get it over the office. But as we scale, I think that just becomes harder and harder. But what doesn't change is, you know, that small vendor that's making hummus, you know, at the farmers market in LA, still has an equal chance of coming into the store as the large scale manufacturer, you know, that's going nationwide, because we are very excited and very eager to work with small local producers and sort of help them scale.
[00:24:50] Ray Latif: I think one of the reasons people probably think they can just walk in a lot of times because of the sheer variety of brands that you sell. They're like, I think that was the first thing that really struck me when I walked into an Aero On is, my goodness, they carry a lot of brands in, you know, a lot of brands per category. I think your kombucha set, I mean, this is before kombucha was really, you know, popular across the States, but. Erewhon had, I think it was like, I don't know, at least a dozen different brands, which blew my mind.
[00:25:18] Kabir Jain: Yeah.
[00:25:19] Ray Latif: How many brands do you carry in store? How many different brands do you carry in your stores?
[00:25:25] Kabir Jain: That's a good question. Brand count, I don't know, but we carry at any point in time north of 12,000 to 14,000 SKUs in any of our stores. So it's heavily merged. And again, the reason behind that is we want to be a place of discovery. We want to have categories that are merged with a variety of SKUs to give customers that choice. And again, we want every SKU to turn with some level of velocity when it's in our store. But we like the idea of having that level of merchandise variety for our customers. And one of the things that I didn't really appreciate at all among many things when I joined this business is how incredibly difficult that is to manage. That's one of the things that, like I said, when I came over to what I call the real world, you start to learn how hard it is to run some of these parts of the business. Managing 12,000 to 14,000 SKUs is incredibly complicated to not only keep them on the shelf, but understand what should stay, what should go, how to merge them, what to merge together. It's a really nuanced process, and there's a lot of people here working to kind of continue to perfect that.
[00:26:23] Ray Latif: Now, there are three questions I can think of that our entrepreneurs would love to ask you. So I'm going to ask you on their behalf. Number one, why would you say yes? Why do you say yes to certain brands when they are pitching you?
[00:26:36] Kabir Jain: Yeah, again, that's the magic question. Art, not science. And I wish there was an answer for it. But really, it's a it'd be an entrepreneur that has built a brand and a product that gets our team really excited. And that would be a variety of things. It has an amazing taste. It is in a category that we're excited about. It brings newness in terms of its packaging or its story or its ingredient profile and sort of all of those collectively would get our team excited to say yes.
[00:27:05] Ray Latif: So unfortunately you have to say no to some brands. What are the common reasons you would say no to a brand? Yeah, good question.
[00:27:12] Kabir Jain: So the most common would be the ingredients profile, right? So we get a lot of samples of brands and applications of brands that have ingredients that we just don't allow at everyone. things like maltodextrin, things like canola oil, and these are sort of ingredients that we don't feel comfortable allowing a product to merchandise on our shelves. They're ingredients that we would never use in our cafe. So that's the most common reason. But what I would say is a lot of brands come into Erawan after their first application. They'll try again six months later, or they'll try again 12 months later, and maybe something in the brand has changed, or maybe the timing is just better. And so we see that pretty often as well.
[00:27:47] Ray Latif: As you mentioned, if an entrepreneur hears no, typically they'll come back a second time or a third time. But I think persistence is the fine line between respectful and annoying. There are entrepreneurs that I've spoken with that say, we have a list of retailers that we will not take no for an answer. We are going to be laser focused on getting into this chain. And sometimes it works, and other times I think the buyers get really annoyed. What is the best way to be persistent in getting into your stores? Is it just getting to know the staff? Is it, you know, continuing to refine your product? Is it finding success at other retail stores and bringing those numbers and that knowledge to Erewhon?
[00:28:28] Kabir Jain: Yeah, well, first I would say power to them. If I were in their shoes, I'd probably do the exact same thing. So, you know, can't hate them for that. You know, it's a good question. I think, and this is hard to do, but if I were them, if you get customers demanding the product, We'll sell the product. Right. So if you've built enough of a consumer base and a consumer demand that loves your product and walks into Erewhon and asks our staff, why aren't you selling Ray's Kombucha? We're going to go find Ray's Kombucha and understand why we're not selling it. Right. Because then we have proven out there's at least some level of demand there versus for a lot of new products. We're taking a chance and we don't know. So if a brand's trying to get in, that's one thing I would suggest now. It's obviously a lot easier said than done. But we get customers coming in asking us for products all the time. And we'll take the time and attention to go understand who those brands are. Do they fit our profile? Could we sell them? Because we want to make our customers happy.
[00:29:22] Ray Latif: I said I had three questions. It's actually four. Apologies. This might sound like a question that has an obvious answer, but I'm not sure. How do you stay on shelf at Erewhon Chief know you talked about wanting your SKUs to turn, and if a SKU turns, it'll probably stay on shelf. But are there other reasons that you keep brands on shelf and products on shelf? I mean, what do entrepreneurs need to do to make sure that they will always be, or at least for the foreseeable future, be on shelves at Erewhon?
[00:29:50] Kabir Jain: Yeah, I mean, sales is the big driver, right? So every product has to sell to some degree and categories will have different targets depending on how fast certain categories will move. I think what gets overlooked sometimes though is, you know, and this is not just an Air One thing, it's retail in general, getting into the retailer or getting into Air One is half the battle, right? Maybe even less than half the battle. At the end of the day, you have to turn on the shelf and you're in a set against your brand competitors. And in a place like Air1, your kombucha example, there's a lot of competition on the shelf. And so then it requires the brand to do the work to move the product. As a retailer, as an Air1, for example, it's impossible to market thousands of brands at the same time. It's just not doable. So the brands themselves have to come up with their own avenues to drive velocity and drive demand for their product, whether it's marketing techniques, whether it's in-store demoing, whether it's promotional activity, whatever might be right for their brand, that's equally important to getting into the store. And the brands that are really successful at doing that end up having the most success at Air1, as you'd imagine.
[00:30:56] Ray Latif: Demos have been pretty difficult to pull off over the past year and a half, obviously because of the pandemic. But successful demo campaigns are typically a gateway to sales and customer awareness, etc. How do demos work right now at Erewhon? Is there a plan to expand it as the pandemic starts to wane? What are you guys trying to do to educate your customers from a taste, texture, well, from an eating or drinking standpoint?
[00:31:28] Kabir Jain: That's been really tough for brands in particular. Demos have sort of the strongest attribution to a lift in sales. And obviously, you know, when the customer is able to Taste Radio try your product right there, there's a lot higher likelihood of purchase. And so that's been tough for brands. It's also been tough for everyone in the sense that, you know, we love demos because they bring life and energy to our store. And pre COVID, a lot of the demos are run by local founders of brands who are the most energetic ambassadors of their brands. And consumers would love to come into our stores and expect, you know, four to five demo tables at any point in time. And it brought a lot of life to the stores. We're just in the early innings right now of bringing back demos and thinking about what is the right way to do it? How do we control the experience? How do we maintain food safety, COVID safety, et cetera. So I'm not sure we know the full game plan yet, but we're hoping to bring them back as soon as we can.
[00:32:17] Ray Latif: I want to go back to categories for a second. You talked about, or we talked about kombucha as being a really hot category a few years ago. I think it's leveled off a little bit. You would know better than I, but what are the fastest growing categories at your stores? And do you have any insight as to why they are so hot right now?
[00:32:37] Kabir Jain: Yeah. So kombucha is an interesting example. It's, it's probably leveled off a bit, but it's because of RTD beverage. And so, you know, the RTD beverage wall at an Erewhon store is, uh, is insane, pretty insane. Yeah. You know, we need to continue adding more and more sort of refrigerated cooler space to fit them all in. And there's just a ton of new brand entrance into RTD beverage. And, you know, part of you would think that might've slowed down after it's this crowded, but it really hasn't. And part of that is because. Customers love the products and customers are demanding the products. And so we are continuing to see more and more RTV beverage entrants come in. Going back to an earlier point, you could debate whether it's innovation or not, but there are new brands coming in. So that's a big growing part of the business for us. And it continues to be. What else are we seeing? Refrigerated snacking is big. You know, that's probably not just an air one phenomenon. That's probably happening at a lot of other retailers as well, where snacking has continued to grown. you know brands are trying to use less and less preservatives in their product meaning products more perishable meaning we have to dedicate more cooler space to the products which gets back into a retail and merchandising conversation around shelf stable space versus cooler space. But that's a big area for us. You know another I guess the third I would say is again not unique to air one but alcohol alternatives right has been big and so we're seeing a lot of new entrants coming in that's where we are seeing pretty interesting innovation as around how are the brands thinking about replacements or substitutions for alcohol.
[00:34:06] Ray Latif: Yeah, it's interesting you bring up that last category. There's a brand in your stores called Ferm Fatale, which is a probiotic mocktail that's founded by Julie Cielo, who actually was a participant in one of our brand competitions, the New Bedford Showdown, a few years back. Interesting stuff. That category does seem to be expanding pretty quickly. and they are all RTD beverages. And, you know, I know you mentioned that just the entire, I guess, segment of RTD beverages is growing, but is there something specific within that category, within that cohort that you can point to as being the reason that you're seeing so much velocity, that your reason that you're seeing so Chief Growth in that set? Is it function? Is it flavor? Is it bubbles? You hit it.
[00:34:51] Kabir Jain: It's function. It's function, right? And so this has been a trend over the last couple years, not just to their one right across the CPG space nationwide, which is incorporating function into food and beverage products. And one of the earliest in our opinion, one of the earliest categories to do it was RTD beverage. I think vitamin water, you know, over a decade ago. And so customers are now more and more attuned to incorporating some level of function into their beverages. And once you open that up, the type of function is in some ways limitless, right? And so as New brands come in they're thinking about what are functions that are not yet incorporated into beverage that I can then play in. And you know you bring that along with a good tasting product exciting packaging and a good story. It finds a space in our shelf and more likely not a consumer that's willing to take a chance on it.
[00:35:38] Ray Latif: How do you tell a good story, though, when you're relatively new, you might have a function that isn't necessarily well-known by even, you know, the Erewhon audience, and you have limited real estate on that package? I think that's, you know, another one of these million-dollar questions, but what have you seen in some brands that has really worked?
[00:35:58] Kabir Jain: On your list, you're missing the brand's own marketing channels, right? And so this comes back to the brands being able to brand and market themselves on their own channels. to create the demand for the consumer to come in and want their product, right? So if you're a new RTD beverage, option A is you get into our shelves and a consumer comes into Erewhon and they're browsing the hundreds of RTD beverages and they get excited about yours and take it off the shelves. And to do that, it's really packaging forward as sort of your best area of opportunity. The flip side is, outside of the air one stores you are creating buzz you are generating demand you're generating excitement for your products through whatever your own channels are. And so when the consumer comes into the store they've already heard of your product or they come into the store looking for your product and you're then a lot more likely to turn off the shelf. And so that's what I was sort of alluding to before where. You know, artsy beverage is a great example where the shelf is so crowded, right? And there's a lot of great products on there that the brands that are able to generate that excitement themselves outside the store, then perform the best in retail.
[00:37:00] Ray Latif: And you know how they're performing at retail quite well. And you're sharing some of that information with the brand owners via this platform called the Dashboard, which is pretty awesome. You talked about this on LinkedIn, on your LinkedIn account. Can you describe what it is and the kind of information that you're sharing with entrepreneurs?
[00:37:21] Kabir Jain: Yeah, sure. So the basic premise is we want brands to know how they're performing at everyone on a very detailed basis and ideally on a live basis, right? And so in many instances, what we found is brands are blind to how they perform in retail. And that happens for a couple reasons. One, you know, if you're selling through distributor, you may not have the most accurate or the most real time information around how you're selling because you don't have that direct connection with the retailer. Or two, you know, maybe you can't afford or maybe you don't have access to sort of like the larger market level data aggregators that are out there. And so our opinion was, well, why don't we deliver this data directly back to the brands and make it as easy and seamless and action oriented as possible? And so that was sort of the idea behind Dashboard, which was let's create this tool where any of the brands that sell into Air1 can log into and access their own sales data. So we can tell you how you're selling by SKU, by store, by day, by week, and kind of open the doors in terms of what we're giving to you. It does a couple of things. One, we think it really creates this symmetry of information, right? So, you know, I'll come back to the raised kombucha idea. You know, raised kombucha may not know how the other kombuchas on the shelf are doing, but in many instances, you know, your largest competitor knows how you're doing, right? And so that sort of creates this asymmetry of information where you're not sitting on an even playing field. So our opinion was, let's let everyone know how they're doing to really allow them to perform, which gets into the second point, which is, and this is kind of the theoretical view of this, but If we can tell the brand how they're performing and the brand can increase their own performance that will increase everyone's performance. Right. And so we can kind of rinse and repeat and kind of create that cycle where if a brand is hyper focused on how to drive their own sales at our stores that's obviously better for us and for the brand. And so let's create a mechanism for them to do that. So that was the impetus behind Dashboard. And the reception has been amazing. And I think the biggest reason why is, to my first point, the brands were blind. In many instances, they just didn't know where they were selling, or how they were selling, or what SKUs worked in one store versus another store. And so we're getting really excited about this. And I think we're just, again, in the early stages, what we're doing right now is delivering that sales information to the store. But I think there's a lot more that we'll be adding on soon. The next in line is the basket analysis. So I can tell you, hey, Ray, your kombucha happens to really sell with this keto gluten-free donut that happens to be two aisles away from you. I don't know why. You don't know why. But here's some information. And let's go figure out why that's happening and decide what we can do. Our membership program, we can start to tell you, hey, Ray, your product happens to really sell well with this type of member in this type of store that looks like this. And from your perspective, you can tailor that into your own marketing campaigns and your own marketing strategy to go back and drive demand outside the store, like we talked about earlier. So these are sort of nuggets of information that when a brand is selling direct to consumer online, they're more likely to have a lot of this information because they have that direct connection. But when a brand is selling into retail, in many instances, they don't know any of this. And the retailers know all of it, and they may or may not be using it. And so we thought, let us start to deliver this back to the brands, create that connection, and create a platform for them to continue to consume this information to make them smarter on their own businesses.
[00:40:38] Ray Latif: Amazing stuff. As it stands, and I know you're evolving the platform a bit, talking about basket strategy and how members are interacting with these brands. But as it stands right now, what's some of the most actionable data that you're sharing with entrepreneurs and brand owners and executives? And I think this is a question that could be useful for brands and other retail stores and other retail chains as well. But what right now are you sharing with them that they can take and incorporate into their business strategy or adjust their business strategy based on what they learn?
[00:41:13] Kabir Jain: I'll give you a really specific operational example. We are telling brands, when was the last time we sold your product? When was the last time we received your product? And when was the last time a purchase order was placed for your product, right? And so that's an inventory management solution versus a sales performance solution, but arguably even more important. So again, most of these brands are coming in through distributors, right? And so they won't have the access to know, is their product on the shelf or not? And so if you're sitting in Boston, Ray, and you sell the air one in Los Angeles, we might have your product in three of our stores and not in four others, but you wouldn't know that. And so this allows you to then understand, you know, why are you not selling in four stores? Okay. It's because my product isn't on the shelf because the first order wasn't placed. Let me call my distributor and let me understand why that's happening. You may have a broker in LA who can do a lot of that work for you, but if you don't, we can start to deliver that information to you. Even if you don't live in the city.
[00:42:08] Ray Latif: That's really useful information. And I think it goes back to, you know, one hand washes the other. If you guys are on shelf, it's going to benefit Air1. If you're not, we both lose. Absolutely.
[00:42:18] Kabir Jain: And I think the basket analysis will be probably the most useful nugget to come out of this, both internally for Air1 and for the brands, right? So as we start to better understand what products sell with what other products, at a higher rate than you would have expected. That can lead to merchandising decisions that can lead to marketing decisions that can lead to co-branding decisions for air one. And for the brand it can lead to all of the same as well. I mean if your kombucha really was selling with a donut at five X the rate that you thought there's clearly something there. You're right. You and I don't know why that's happening but something is happening and we can go understand that and then take action against it.
[00:42:56] Ray Latif: Absolutely. And the brands as well, you know, cross marketing opportunities for social media or otherwise, that information could be very, very helpful. Now, Kabir, at the top of our conversation, you talked a lot about the future of e-commerce and how, you know, some of your focus is about how online fits into the future of Erewhon. You know, it's so interesting because when I go into Erewhon stores, there is that discovery, that is that tangible aspect of picking up a product and saying, wow, I want to learn more and I want to figure out how this fits into my life. It's very different for me anyway. It's very different when I'm shopping online. Is there a way to translate the experience, the current Erewhon experience to a website? It doesn't seem like it, but what do you guys think?
[00:43:40] Kabir Jain: Yeah, I tend to agree with you. It's very hard to discover a new product when you're online in your browsing Web pages. It's very different than shopping in the aisle. But at the same time we have to be able to deliver online because especially in the last year and a half two years everyone now demands it. Now what's interesting is in the grocery world online means two separate businesses that it doesn't mean for a lot of other businesses. So the first version of online is to deliver an experience where someone can buy groceries online and either pick it up in store or deliver it locally. Right. So we call that online grocery. So obviously March of 2020 really kick started. Each grocers need to have that service whether it's via a third party like Instacart. and or owning that experience yourselves. So at Air1, we own that experience ourselves, where we have our own online grocery platform, where we can try to mimic the in-store experience as much as possible. So to your point earlier, it's really hard to do. But we've now created this, what we feel exciting experience online, where any Air1 customer can go online, can shop for groceries, pick it up within an hour, we can deliver it to you within an hour all across LA, sort of online grocery 101. Through that, can we continue to tweak that model to incorporate membership discounts, incorporate product recommendations, incorporate brand promotions, etc., as we continue to evolve there? The other side of e-commerce is what most of the CPG brands are used to, which is fulfillment and shipping nationwide. And that's something that we've toyed around with a bit and we're sort of kicking the tires on now around how to launch that side of our business to send product out to you in Boston because you really love air one and you want to get a jar of our vegan granola. And so from a fulfillment perspective, I think we have the capabilities and from an e-com perspective, we have the capabilities to do it. The interesting part of this situation that's tricky is the perishability of our products. And so the most popular air one products have the shortest shelf life because we use no preservatives. In many cases they're cold chain and we just can't ship them. So for example our cold press juices have a two to three day shelf life. So even if we send it to you on dry ice in Boston we could never do it because more likely than not it'll expire. And so we're sort of thinking through what does that sort of merchandising and online strategy look like right now? Or can we deliver a robust enough set of products with a long enough shelf life that'll still get customers excited? And then how do we think about delivering Air One brand products versus non-Air One brand products in the same online experience? And so we're still kicking that around. I think that'll launch kind of early next year around delivering these products to folks kind of across the country.
[00:46:17] Ray Latif: Does online success or online sales that a brand might bring to you, does that help you make a decision on whether or not you're going to carry the brand in store? Or is it something completely different? I guess what I'm asking is, I've talked to retail buyers who will say, okay, you know, online success is great, but how do you perform at brick and mortar? Do you take online sales into consideration when determining whether or not a brand will succeed in your stores?
[00:46:48] Kabir Jain: you know I think we'd probably agree with the buyer that you referenced. You know a brand selling well online may or may not translate to retail success. It's a very different game. They're having a direct one on one connection with their consumer from a marketing perspective. So you know I don't think there's really any relation between success on a brand's DTC channels necessarily and retail. It could be good. It could be bad. It could be either. What I do think, though, is if a brand is able to sell DTC very well, then they've at least proven they have a marketing and brand strategy that works to some extent. Right. So they're able to generate enough demand for their product. And so that at least is a sign in a positive direction. I think that to our conversation earlier, if that product was to come into Erewhon, they know something around how to generate demand for their product. So we should hopefully expect some of that to translate into retail.
[00:47:38] Ray Latif: Would you ever carry products on your website or carry products on your e-commerce platform that you wouldn't sell in store? It's a good question.
[00:47:48] Kabir Jain: Uh, I don't think we've considered it yet. I think probably not from an operational perspective. Right. And so as we think about online, we're a long ways away from a dedicated physical fulfillment center that houses online products only. I mean, to date, our stores are our fulfillment centers. And so. If a product is online it would also be available in the store. Right. So today when you go to Erewhon online to shop you're able to shop anything in Erewhon and have it delivered to you. Now as we think about sort of that next evolution around shipping and real fulfillment that's what we're going to definitely have to narrow that ski set down.
[00:48:23] Ray Latif: Well, one way to get products to folks like myself in Boston and not have them shipped is to simply open a store in Boston. And it's interesting, you know, the first Erewhon store was in Boston or was at least in the Boston area. I don't know why you guys left. It's very disappointing for folks like me, but you are expanding the number of Erewhon locations. Currently you have seven stores, I believe. What is the plan for new store openings, geographical expansion? What can we expect for the next, say, five, 10 years?
[00:48:57] Kabir Jain: Yeah, we did start in Boston, and it did close down, unfortunately. So today we are Los Angeles only. Sitting here right now, we have six stores. When this airs, we might have seven, because our seventh store opens in a week or two from today. Five to 10 years is hard to predict, that much I'll tell you. One to two years is easier. And so our opening plan is two stores per year. And so, you know, we have dedicated sites selected and leases signed across the Los Angeles area for three more stores. So that'll get us numbers eight, nine, and 10. And we're constantly evaluating, you know, new sites in LA. I don't even think we believe that we've fully conquered SoCal yet, and there are still different pockets of opportunity for us. And at the same time, we're obviously considering and thinking about outside of Southern California, you know, where do we go next? That's the biggest question we get, like your Boston one. And we hear the Bay Area, and New York, and Chicago, and Boston, and Dallas, and Miami, and Seattle, and all over. And all I can say is we're thinking about it. So we've got to find the right city, the right market, and the right way to enter that market. And one of the things that I didn't appreciate until I joined this business is just how hard it is to do that. To open a physical footprint in a new market is incredibly challenging from a supply chain perspective, a labor perspective, a operations perspective. There's a lot of moving pieces. And so we're thinking about how to enter a new market the right way and make sure it still reflects that really curated, really special Erewhon experience whenever it is that we do so.
[00:50:26] Ray Latif: Some of those cities you mentioned, including Los Angeles, are destinations for new locations for Foxtrot Market. I know that's one of the ways that we got to know each other was through my interview with the co-founder and CEO of that chain. And, you know, it's such an interesting store. And I think we referenced it as the Erewhon Chief convenience stores. Do you feel that kind of competition from innovative grocery chains like that or innovative convenience store chains like that? Or, you know, where does competition fit into your operating strategy, your expansion strategy?
[00:51:02] Kabir Jain: It's funny you bring that up. I knew you would bait me with that one. Sorry, Kabir. I'm just kidding. I'm just kidding. I haven't been into a Foxtrot yet, but I can say that if there was one nearby, I probably would. I feel like I'm probably the target demographic for that store. And they look fantastic and they're merchandised well. And I think they really hit the nail on the head on a concept that really makes a lot of sense around the convenience store. Foxtrot and Erewhon definitely have some similarities and then also have a lot of differences. You know, I think in reality, there's a couple things, right? So even me personally, when I buy groceries, I don't go to one store. I spread my groceries around several stores. And when I buy prepared foods for lunch or dinner or breakfast, I'm not going to one place. I'm spreading them around. And so — — Can I interrupt you?
[00:51:41] Ray Latif: That's really interesting. I guess the general assumption would be that if you work at Erewhon, why would you shop anywhere else? Why do you shop at different stores? That's a good question.
[00:51:50] Kabir Jain: I think it's just consumer habit and consumer behavior. Right. So even as a employee of Erewhon Chief mean, I will I will spread my shopping around other stores whenever I need to. even as an employee of Erewhon, when I need lunch or I need dinner, I'm not going to Erewhon every day. It's just sort of natural consumer behavior to spread it around a little bit. And so as we think about competition, whether it's existing entrants, whether it's existing competitors, let's say, or new entrants, it's all about share of wallet, right? So how many of the occasions can we get to come to Erewhon versus other stores or other restaurants or other cafes? But at the same time, you know, competition in this space is healthy for another reason, because As more and more stores start to dedicate their merchandising and their sort of mission and belief in marketing towards health and wellness, that tide continues to rise, right? And so as we continue and others continue to get more people thinking about innovative new products that are replacements for legacy products that have a better for you profile, that certainly helps Erewhon, right? Because we are along for that ride and we're continuing to work along with others to continue to educate customers around healthier options and living better and living healthier. And so it does help. It does help.
[00:53:01] Ray Latif: Yeah, I mean, you know, I shop at multiple stores, too. And, you know, I have reasons for shopping at different places. I mean, I think specifically for me in this area, it's Whole Foods and Trader Joe's. And, you know, you can certainly get certain products at Trader Joe's that you can't get anywhere else. And I think that's kind of specificity is pretty similar at Erewhon. When I go there, when I'm visiting L.A., There's just certain things that I don't think I'll see anywhere else. Not necessarily looking for, you know, one particular type of a reishi mushroom or anything else like that, but I just love shopping there. The shopping experience is so remarkable. And, you know, I would encourage anyone, I don't know how you have it at this point, but I would encourage anyone who's listening who has been to LA and hasn't been to an Erewhon, you need to get yourself to one ASAP. In the meantime, I just wanna thank you, Kabir, for just an incredible conversation. You shared quite a bit and you've been very transparent about everything that you guys are doing. And I know our listeners really appreciate it. I appreciate it. And I hope that the next time I'm in LA, which should be in about six weeks when we have our BevNET Live and Nosh Live events, we can catch up in person at one of your cafes or outside your cafe, or perhaps I'll buy a cocktail for you. Not alcoholic, right? That's right, yeah. We'll swing by our new store in Studio City. It'll be open by then. Outstanding, outstanding. Well, once again, Kabira, thanks so much again and good luck with everything going forward. Let's definitely stay in touch. Appreciate it. Thanks, Trey. That brings us to the end of this episode of Taste Radio. Thank you so much for listening, and thanks to our guest, Kabir Jain. As always, for questions, comments, ideas for future podcasts, please send us an email to askattasteradio.com. On behalf of the entire Taste Radio team, thank you for listening, and we'll talk to you next time.
