[00:00:03] Ray Latif: Hey, you're listening to the BevNET Podcast. I am Ray Latif. I'm here with John Craven and Jon Landis, and we are in downtown Los Angeles in the Arts District at the new headquarters At Califia Farms. We're here with founder and CEO, Greg Steltenpohl. Thanks so much for having us, Greg.
[00:00:18] John Craven: You bet. Great to see you guys again off the show floor.
[00:00:22] Ray Latif: Yeah, seriously, it feels like we see you most often at the Expo Easts and Wests, and it's not enough. You know, we did see a fancy food show.
[00:00:30] John Craven: Yeah, don't forget that.
[00:00:31] Ray Latif: Yeah, it was great. You guys launched the Nitro, which was fantastic. BevNET Live? Of course, BevNET Live.
[00:00:36] Jon Landis: Sure.
[00:00:36] Ray Latif: Yes. Yes. Good plug there. Coming up. Yeah. We just took a brief tour of the office. Looks great. Really cool area that you guys are in. Why'd you pick downtown LA as the area for the new headquarters At Califia Farms?
[00:00:52] John Craven: Yeah, well, it's a good question because I think place is part of the brand and, you know, nowadays with companies that get hatched, where they get hatched out of definitely informs, I think, some of the essence of the brand and we're a California-based company. We're in kind of a historical produce area. Only a few blocks away was the first produce market in California. And it's over in a building development called The Row, just a few blocks away. And it's where the first terminal was set up. Back then, the trucks were small bobtails and come hooking up next to rail sidings. And they outgrew that once tractor trailers came in. So they located a couple blocks over. And that's where the big produce terminal is. So we're kind of on the outskirts of both the fashion district and actually the jewelry district and the produce district. And it's an interesting place because the architecture is, you know, from mid century back to turn of the century in the 1900s. And it's, it's human scales, not high rises. There's a lot of variation in architecture and there's a lot of creativity going on here.
[00:02:11] Ray Latif: I'm sensing a lot of parallels between the area and your brand or your company. So really interesting.
[00:02:15] John Craven: Right. And fun for the employees, you know, we have a generally, you know, pretty youthful crew and there's this LA is discovering food again after, you know, kind of a long desert period. And there's just stuff popping up all over. So a lot of cross fertilization of ideas.
[00:02:32] Ray Latif: Yeah, for sure. This is your fourth decade in the beverage industry. You started at Walla in 1980, which I didn't, I was, full disclosure, I didn't really know it was that long ago that you started it. And it was, it's a well-known, someone might say an iconic brand right now. And it's really cool to talk to you and the fact that you're still in this industry and still in this business is really interesting. And I kind of wanted to get your perspective on what's changed and why it's changed so dramatically since that time.
[00:02:59] John Craven: Well, thanks, Ray. First of all, I wanted to appreciate you guys for allowing me an opportunity to take more than a soundbite approach and really sit down and talk to you guys about trends and where some of these things come from. Because usually in a show, you got a job to do, got to talk about what's new and all that. And it's great. But it's also good to reflect a little bit. And so appreciate these kind of questions.
[00:03:26] Ray Latif: No problem.
[00:03:26] John Craven: Thanks for being with us. But thanks for reminding me four decades. But it's not yet 40 years. So, but if you look back at the landscape of what food and beverage was like in 1980, it was very, very different. And there's a sea change has already happened, but I do feel the biggest changes are yet to come and honestly feel that way. So a lot of what's going on at Calphea in my mind is preparing for those. And again, I've said it consistently, but I will say it again and we'll talk a little bit more about why. We're trying to build long-term value here and build an enduring company. And I know that I mean, it's fun to see things go from nothing to just something and get sold, and entrepreneurs have success and all that. And that's an exciting part of what we're all a part of. But here, we are trying to do it a little bit differently. And part of the reason is what I have seen. And part of what I've seen is directly my own experience in seeing what happened when Odwalla Brand got run by Koch for a long period of time, what happened.
[00:04:42] Ray Latif: And while being purchased by Coke in 2001.
[00:04:46] John Craven: Right. So that we rented ourselves for 20, you know, 21 years. And then they've had it now for 16, 15 years, 15 years. And I would say the first 10 years, they actually did a pretty good job. I mean, they really grew share and got it out there, which was kind of the dream, right? And I think every entrepreneur wants to see their product get broader distribution and all that. And Odwalla was at about 100, a little over 100 million in trailing sales and a little bit better than that on a run rate when Koch took it over. So at first, it was really, the model was pretty hands-off. leave the headquarters out there in Half Moon Bay, and leave the manufacturing in the Central Valley, all of which we had set up prior, and leave the DSD system, which was the direct store model that we had put together, and still relatively short shelf lives back then. We're talking less than 45 days. We thought that was the holy grail at that time, getting it up to 45 days. So in point of fact, prior to the recall that Odwalla had, we were at 100 million run rate at that time, too, all raw juice. So we had basically built a just-in-time system with a 30-day code or less, 100% raw. $100 million piece of business, which I don't think even today with HPP, not sure everyone's got quite to that scale. And I think HPP is a little longer now than 30.
[00:06:33] Arts District: Some beverages, yeah.
[00:06:34] Ray Latif: Yeah, HPP can be, I think, about 60 to 70 in some cases.
[00:06:38] John Craven: So going back, technology evolution has been one, but I would say the biggest single factor is the readiness of a much larger portion of the population for these kind of beverages and foods that are A, crafted, B, have a healthful profile, And we can all argue about amount of sugar in juice versus other things. But in general, these are more minimally processed and have more whole food ingredients and may have some functional additive too. And that was something that Odwalla pioneered in the 90s. which didn't really exist on the shelf in the 80s. So 80s for us was first fresh squeezed orange juice, because people understood that. And that became a big food service business. And then as that became commodified, we shifted our strategy over into single serves. And from single serve, we went into broad variety. So first we had a citrus specialty, then we developed a carrot specialty, and then we developed an apple specialty. Once we got to those, that brought on blends and Odwalla was the first to really mass-produce smoothies. So, you know, that was how we got going.
[00:07:56] Ray Latif: And so, I mean, you touched on this sort of willingness for a public to accept more functional, more nutritious beverages and try new things has really been sort of that defining reason, that defining trend for what's changed over the last, say, 30 years?
[00:08:12] John Craven: Right, but not just accept, but like look for. In the days, this is when Odwalla started for the first 10 years and up even humorously until the brand was almost 20 years old, people would say, what, who's going to pay $2 for a bottle of juice? Because the going price at that time from a dairy reconstituted from every single served price was a buck. Whether it was a milk or a juice or a soft drink or whatever, everything was a buck.
[00:08:45] Jon Landis: Well, the things that you called juice back then for a buck probably wouldn't actually qualify as juice today, right?
[00:08:52] John Craven: May not by regulation even, but anyway, that being aside, that was the marketplace.
[00:08:58] Arts District: We heard a similar thing from Tom Furst in Nantucket Nectar is how he was... They were very fine.
[00:09:03] Jon Landis: Yeah, he was talking about... No, but he was talking about very fine, yeah.
[00:09:05] Arts District: Yeah, like how he was like deathly afraid of, you know, selling something at 99 cents because very fine was at like 59 or something. And who's even going to pay 99 cents for a bottle of juice? Right, right, right.
[00:09:17] Ray Latif: Again, you mentioned, Eduardo, you talked about being in the business and being in that juice business for a long time. When you sold the company to Coke, you'd been sort of out of the game for a little bit, but then came back with Adina and then back again with Calafia. What's been your personal drive to kind of come back to the food and beverage industry? Why do you, I guess, why do you put yourself through this?
[00:09:38] John Craven: Yeah, what's wrong with you, Greg? Sounds like my wife asked you to come here and ask me these questions. So, I mean, the truth is like, you know, for lack of a better word, and I don't like people that are on a mission, but I kind of have a mission, a personal mission in my own just life that I feel like The food and beverage business has a social functional purpose. And yes, part of it is just refreshing people when you're hot and thirsty, but it is to feed the human body in a legitimate way. That means honest, authentic nourishment, and it should be what's good for you. Now, it can be fun to drink, and it can have carbonation. There's all kinds of accoutrements that we can put in it to make it exciting and fun. But at its heart, it should do its job. And its job is to make the human body run better and run further and make the owner of the body feel better. So that job, to me, is kind of a sacred trust, that if you're in the food business, that's what your job is. Your job isn't to pollute. the body. It's another thing to have something that's like an entertainment, a celebration, a diversion. So I'm not mad at, say, Ben and Jerry's for having ice cream, which you shouldn't eat all the time, but to have a birthday celebration, have some ice cream. awesome, and have a beer at the end of the day, awesome. But feeding people and actually marketing the consumption of things that do not promote the welfare of the human body is not, to me, the right thing. And if you look at a guy like me who's been in it for multiple decades, you see things come and go. So you do understand the phrase shiny object a little bit differently than when you're 26. When I started Odwell, so I was a young guy who started from nothing. And it was bootstrapped. And all my initial partners, none of us had any assets. We did it the hard way the first decade all through just saving up literally every buck and reinvesting in it and growing something that was deserving of investment, but to get it to investment grade, so to speak, that took over a full decade. So it's just a different perspective. And maybe it's a different generational perspective, too, around expectations that, in my own mind, generationally have been somewhat shaped by dot-com-ism and just the expectation that just everything has to happen faster.
[00:12:22] Jon Landis: Well, it sounds like you're really, yeah, I mean, you're really talking about, you know, building something that has longevity, right? I mean, I think, right.
[00:12:30] John Craven: I would throw out the word enduring this cause you know, yeah, something that lasts. And that's why when the topic of selling and all these things are selling your company, I mean, yeah. When we're talking about building companies, isn't really for in my seat, the desired outcome, because I think Nowadays, to let something last, if it becomes partnered or coupled to a strategically very large multinational company, it has to have strong legs to stand on. It's got to be authoritative in its own field. And it has to have a sense of drive and momentum and professionalism that even exceeds the type of professionalism that would be brought in by a so-called parent company or strategic. So that's the goal here, and that's what we're trying to build. And that makes it a lot different than starting something in your 20s and, you know, then just trying to get it sexy enough that it will be bought.
[00:13:31] Jon Landis: Well, doesn't that approach that you're describing, like, basically put you in a better position for a sale anyway? I mean, it seems like if you're just focused on building something that's enduring and whatnot, like, that's going to create a better, healthier business than building something to sell, at least in the food and beverage industry.
[00:13:52] John Craven: Yeah, well, I mean, in theory, John, but in reality, it's hard to do both because it's hard to ramp your business so the ramp looks right while you make all those investments. You know, for our company, I mean, I have these discussions a lot. I mean, if we want to lay the right infrastructure in place to build the company to be growing in the upper double digits year after year when you're past $100 million in sales and stuff, those investments are costly. So you can't only invest in the growth curve, right? So in a way, it's not on paper it is the right thing because, wow, you've got a better company. They're going to pay more for a better company.
[00:14:38] Jon Landis: Well, I guess my point was more, you know, whatever we talked to tons of entrepreneurs or prospective entrepreneurs that are eyeing this industry, and they're already talking about the potential for exit of their, you know, business that they haven't even built yet. And, you know, that seems like a really sort of dangerous thing to just exclusively be thinking about, like they seem to be forgetting all the stuff you have to do to like get to that point, you know? And I think it seems, again, just from our perspective or my perspective, that the ones who are just focused on actually, you know, the buildup and the ramp or whatever word you used are oftentimes like the ones who succeed. as opposed to the ones who were saying, Oh, you know, Coke's gonna just to pick a random thing, you know, pay billions for my energy drink company or something like that.
[00:15:28] John Craven: Well, the ramp, like, yeah, I mean, to stay on the metaphor, which is, you know, there's the ramp and the foundations for the ramp. So if you keep building those good foundations, maybe the ride doesn't have as steep, uh, you know,
[00:15:43] Arts District: Well done. There you go. I think it's really interesting to think about the passion and your mission, right? And how that kept you going for a decade, building Odwalla. And talking about entrepreneurs now and the difference between those who are looking to build a company for an exit and those who are looking to do something good for a societal gain, provide better food, and how when you have a mission like that, it sustains you through and I think that there's a kind of a inference to be drawn there is where your success can come from with the foundation of the ramp in that aspect as well.
[00:16:22] Jon Landis: Well and I'm also just to be clear I wasn't knocking people building a business from the exit. Nothing wrong with that at all.
[00:16:28] Arts District: But just to hear the story of how it took 10 years for you to get Odwalla kind of even on the map and then another 10 to get it acquired and the driving factor was you're totally into that core mission.
[00:16:43] John Craven: Yeah. Right. Well, it was, you know, there's a certain fanatic, like the nice words, passion, and then maybe more fanaticism that goes along with it too. It's like dedication. It can border on sort of religious zealotry because you do things that aren't sustainable either, you know, just in terms of people burn out and all this other stuff. And part of the problem with that model is just that entrepreneurs, if they burn out, just personally get tired and need relief, and then the cash becomes tempting, the enterprise may be sold before the enterprise itself has reached that fruition level around the mission. So I think what's better in my kind of older man case is like, I'm not in a hurry to do that. It doesn't impress me that a company gets sold. I regard it more as something to try to outlast if I could. I like that you guys are asking those kind of questions, because I think on balance, you have a duty to report the news. But in the midst of all that, sometimes people looking at it and thinking about getting in go, oh, if I just get this out there, then I'll have, you know.
[00:17:58] Jon Landis: Well, I think a lot of times, you know, people who look into this industry only focus on the outcome. And I think you could look at things, you know, a vitamin water exit, or more recently, you know, what, say, Suja and Coke have done together. And those are things that people who are looking in that are not, they're not in your shoes where they've done it before. And they know the realities of these things. They say, geez, well, you know, I could get a piece of that. They did it quickly and it looked kind of easy, you know? So I guess, you know, some of, I think what you're describing about the experience of now Calafia probably is also because you've had success in the past. This isn't a thing that maybe is going to dramatically change your life if it succeeds, right? Nor are you probably going to be out on the street or something if it fails. And I think that is sort of a different dynamic, right?
[00:18:47] Ray Latif: What you were talking about before, which is building that foundation for Calafia, a foundation that's not only rooted in your passion for changing the food system, but also rooted in providing and quickly providing the kinds of things that consumers are demanding, has been really impressive for the company. I mean, staying as nimble as you have, staying and being able to deliver the kind of products that you have as quickly as you have. I mean, you started at Percalife, you started as a juice company, and now your biggest products, I would assume, are your almond milk products and your cold brew coffees. And the innovation that you've had with your cold brew has been really, really impressive in 2016. What's your perspective on that? How have you been able to stay on top of trends and be able to innovate and execute and deliver as quickly as you have?
[00:19:34] John Craven: That's really the fun part of it and, you know, being kind of a competitive type entrepreneur, which most of them are. you get kind of fired up by staying ahead of the big guys. And honestly, you look, I always feel it's totally fair because if you take these giant categories where decade after decade, because of scale advantages, the dominant players just had these enormous profit streams. And now, it's a different consumer, but they didn't invest in the innovation in order to keep feeding those products. Now, they're into the new emerging consumer groups. But then there's companies like Nestle, who you can criticize from certain directions. But if you look at Nespresso, damn good product, really launched it timely, at least in Europe, maybe a little slower in the US and all that. But they really started thinking about the new application, new consumer lifestyles, what they needed to do to get in front of that, and so on. And you even look at what's now the new incumbent, like Starbucks, at least the way Americans think about the coffee industry. Look at how quickly they adapted to cold brew, at least in featuring it from a marketing and getting it in their stores and reserve programs. So I mean, those of us that are outsiders or upstarts or disruptors or, you know, on the pure entrepreneurial side, do face by companies that are much smarter and much more aware of what's going on in the marketplace. And the question, the big question for all of us on the smaller side, though, is how quickly can we really capitalize on the inventions and the innovations that we make?
[00:21:36] Ray Latif: What's your lead time for launching a new product? So, I mean, in front of me, I have At Califia Farms Full Shot, which is just a phenomenal product. And I feel, actually, after drinking it, a little bit smarter. So, it's great.
[00:21:48] John Craven: Thank you for that.
[00:21:49] Ray Latif: Good questions. But, you know, what's the lead time for this kind of product, you know, from concept to reality?
[00:21:55] John Craven: Yeah. We're in my office without anyone else around. And I love it when we can launch something in five months or less. The organization hates me if I propose that concept, but sometimes we can do it and we've done it quite a few times, but no one wants to do that.
[00:22:17] Ray Latif: I mean, it's very tough, but that's hard, but that's staying on top of a trend, you know, uh, bulletproof style coffees, plant-based protein, cold brew coffee, everything is kind of in this product right here. And to really be able to launch something that stays on top of the trend, staying ahead of the other guys, as you were mentioning, especially the big guys, It's hard, but impressive to execute.
[00:22:37] John Craven: This is such a good question, Ray. If you have another question, go ahead. Please go ahead. Because, you know, the question is, there's a deeper question, like, how have you done it, but then how do you keep doing it? I think it's so important that you don't kind of outgrow yourself and then have the same, the problems of old age or the problems of success or the problems of knowing something. Part of it is keeping the mental attitude, not just by me, but amongst the group as, you know, there's this old Zen phrase about state of unknowing or The more you're aware that you don't know, then the more you stand to do something that might be right. So that's one thing. It's just kind of a mindset. The other is actual structural preparation and the business model. And it ties back in, John, to your earlier question about building the foundations under a ramp. And doesn't that make it a better company and more desirable? So forget the desirability by somebody else. Just think about if the goal is to keep innovation and build the company as an innovator. not like just capitalize on an innovation you did, you know, milk it dry. Because the curvy 48-ounce bottle, I will guarantee you if I had a different board of directors and, you know, they were based from industry experts, That will probably be the only product we would have.
[00:24:11] Ray Latif: Interesting. And you know, you mentioned packaging the Kirby bottle, but in the last, especially with your with your Cobra products, you have different bottle shapes, different looks for almost everything, which is really interesting. And, you know, speaking about Calphi as a beverage innovation company is really interesting to hear as well. I guess, you know, that's sort of a good segue to what do you see as the next sort of evolution of beverages over the next five years? And it's also, I want to bring up an interesting point that you mentioned, Nespresso, because that at-home, high-quality kind of beverage, being able to sort of give that to a lot of different consumers, give that to a wide variety of consumers, is sort of the same approach that Juicero is attempting to kind of reach at this point. And we talked to Mark Rampolla earlier about that, too, and he's so impressed with the potential for that kind of product. So I guess my question is twofold. What do you think is some predictions that you have for what we're going to see in Beveragin? You know, how much of it is at-home consumption, at-home preparation?
[00:25:10] John Craven: Yeah, let's start with... First of all, singular answers are never going to work. It's just like, you know, even... I threw a lot at you. Like, vinyl's back, right? I don't know if the 8-track will ever come back, but vinyl's back. It's a shame, right? I love that. So my own... Thinking about the future has to do just with the approach to anything. And I was greatly influenced, like philosophically, by this artist that came out of the 60s, a guy named Joseph Beuys. And he coined this term, social sculpture. And I use it, I call it more culture sculpture. And what that means is, A company is a means by which you do something. And a product is also a means by which you do something. A company is a kind of an object and an entity in itself. But then it becomes a community. It's formed of this whole virtualness of just people that know each other and can do things together and all of that. And then the product is also something in its own. And once you get the idea that a product can be a sculptural object, And you think about it, it's not just good packaging, man. It's also like, whoa, that's actually a thing of beauty. I mean, it might actually still look good 20 years from now when the fashion has changed. So classical design elements and thinking about things kind of architecturally is one aspect of innovation and I believe of the future more and more. So, that kind of design thinking being penetrated throughout the organization and appreciated by the accounting department, for example. So, that's part of the future. So, the other thing that's, I think, when we started the conversation around this potential sea change, right, and what's going on, and I was opening comments saying, look, I think the biggest could be in front of us. So, what I mean by that is that if you look at the numbers And we're talking demographic numbers by age. And you look at the patterns, the lifestyle patterns, of millennials and post-millennials. I don't know the term you guys use. Is it Gen?
[00:27:36] Ray Latif: Gen Y? Is that right? Gen Z, I think.
[00:27:38] John Craven: Gen Z. We still don't have it now. But Gen Z, these age groups, and the latest study I saw around Gen Z, for example, is that they're less technologically obsessed than millennials. Because for them, they grew up with it, so they take it completely for granted. Millennials came of age while it was coming of age. And so the infatuation and the involvement, and they had to learn so many different apps and so many different operating systems and all this stuff that they became really good at doing that. The next generation takes all that for granted. And that's extra work, as far as I'm concerned. So, what I'm saying is that what people expect out of technology, we can't even look at technology necessarily as the future. Technology is to me so absorbed and so taken for granted in absolutely everything. So, integrated digital thinking and the digitalization of everything, including these home operating units. internet of things and all that stuff is going to start dovetailing, I believe, with human health biofeedback devices that are wearable. what that is going to start, which is already here. I mean, Fitbit watches and all that stuff are what they are. They're like the very first, very early wave. So what these devices already can do, but they're more complicated and not as mobile right now, but they already know how to do them, is you can give you instant biofeedback on what you just drank and tell you whether it actually was good for you. or whether it might affect any of your personal genome adversely. It is going to become not just fact-based selling or marketing, but everyone will have a personal feedback device beyond taste and how their stomach feels as to whether that thing was actually good for them or not.
[00:29:41] Ray Latif: You're blowing my mind. I'm actually kind of scared right now, but this is all really interesting stuff.
[00:29:45] Jon Landis: I can see you're shaking a little.
[00:29:46] Ray Latif: I am shaking a little bit. I mean, it's cyborg-ish, I guess.
[00:29:50] John Craven: Don't wear it while you drink beer, and then you'll be fine.
[00:29:54] Arts District: We're all unique. We're all unique individuals, and we all have different things that affect us positively and negatively. And what you're saying is that there will be more information that each of us as individuals will have and know than we will seek it out in products.
[00:30:08] John Craven: I mean, I want to take it home to the point because the point is the food system, as it's back to where we were talking about before, the food system as it stands now, which means how do 90% of, for now we'll stick to America, Americans get their food from very large corporations which are mass producing this food which has been deconstructed and then reconstructed according to principles that are not the principles of strict optimization of human health. They may maintain minimal standards, of food safety and of certain base nutritional requirements, but they're not designed to optimize how good it is for people.
[00:30:53] Arts District: The formula they use is designed to optimize their business.
[00:30:56] John Craven: Yeah. And I'm being pretty diplomatic here. Yeah. So the thing is that where is it going to go? Well, what's changed is that now people actually know things from the internet And we all know the internet tells lies and all kinds of other stuff, but in general, people can look up, if you're sincerely researching something, you can find a general summary of information around some basic things.
[00:31:20] Ray Latif: So is marketing just going to go out the window when people just know specifically what real function and real nutrition is?
[00:31:26] John Craven: Well, I think there's always, first of all, we kind of, as a culture, love marketing. And someone puts something in front of you, it's fun. I mean, you might try it. So I think there's room for all kinds of things. And then there's things that are going to take time to catch up to. And then there are things that might fool certain early systems. So there's a developmental pathway for all this stuff. Here's where I wanted to get to. You have the model of investment. for the larger food companies. And you have this concept of 3G and those type of ownership structures where zero-based budgeting and stripping down these income statements so bare that you're optimizing the dividends and the quarterly profit stream. So you have companies that are posting earnings of more than 20%, sometimes approaching 30%. Well, making 30% on food, I'm not sure if that's, you know, how much value are you really putting in the food for the person that's eating it if you're taking that much value out.
[00:32:33] Arts District: And where's the long-term gain in something like that?
[00:32:36] John Craven: There's the investment thesis, the market loved that while it's making all those gains. But what happens when you've squeezed the rock dry? Where does that money flow to? So when I say we're entering a big new world, it's a confluence of the money seeking other more better rates of return now that the stone has been run dry, and the consumer being ready for something very different, which actually optimizes their personal health.
[00:33:09] Arts District: Which is really important, because without that second half, the money side could come in. And once they squeeze that rock dry, they find another fast-growing company, and they continue to scale it and downsize it. But if the consumer is demanding high quality, then they can't really cut everything out. Then it loses the soul of the product itself and the reason why it's being purchased in the first place.
[00:33:36] John Craven: Right. I think that old formula is going to not work as well anymore, which is buy, grow, and take out. essentially kind of watered down, whatever the concept was, and then have a big business and all the channels and huge profit streams then. But there's dilemmas. I mean, there's conundrums around this because you can't get those same margins if you're delivering a lot of the value to the consumer. So you need different business structures. So I think there's going to be a lot of innovation, a lot of interesting partnerships and all that.
[00:34:13] Ray Latif: We only have a couple minutes left, but I really want to ask you one question. It's like curveball, well, sort of related to what we've been talking about. There's a lot of marketing that sort of ties and synonymizes, if that's a word, organic to nutritious, to healthy, to better for you. And that's not always the case. You know, you don't have any organic products in your portfolio, and I just want to kind of get, your products are not in GMO verified, or I think all of them are. What's your perspective on, you know, organic and I guess why hasn't it necessarily been a key aspect of your beverage strategy?
[00:34:51] John Craven: Well, I'm a big personal user of organic and actually do think on a lot of vegetables there is proof that the nutritional delivery, like say a biodynamic carrot, you know, versus a conventional carrot, say. I think there's been some very interesting smaller scale studies that show amongst certain classes of vegetables that there is better nutritional delivery. But let's just take the first part of your point that for a lot of the big organic, that's not necessarily demonstrable, or at least it's still an open question. But I think that organic in general can be, if it's a soil building organic, approach, then it's actually headed towards sustainability. And our company has a five-year goal to be what we call net positive. So a net positive company means that from a 360-degree assessment that our net impact has a positive carbon footprint, total footprint. So that would include water footprint, carbon footprint, and so on. So, we're trying to put in place the structure for that. The reason we didn't start with that is because I started out with partnering with larger scale farmers and our first products were juice and they were not organic. And that farming group has a substantial commitment to organic produce now. And they will probably end up being one of the larger organic growers in California. Currently, they're not yet because their infrastructure is so large, it takes many, many years beyond just the three-year certification cycle. We didn't want to get into a supply chain problem. And we also didn't want to disrupt, in our case, the organic almond market pricing. It was already very price sensitive. And it was supply driven, limited supply, excess demand. And our entry into that market would have put additional price pressure on it, and would have just been what we call a product substitution. It would have been Calafia had the organic, but somebody else didn't have it, right? And I just think that First of all, I will publicly say we are going to get into organics. And it's a very important future for the company. But we're just trying to build a reliable, long-term supply chain that we feel we can believe in. And we're trying to do it in a way which doesn't disrupt the current part of the market.
[00:37:36] Ray Latif: Organic across your entire portfolio?
[00:37:38] John Craven: Well, OK, let's talk about coffee. Coffee is such a large part of our portfolio already. The fact is that the majority of our beans currently come from Colombia. And when we went over just recently met couple of months ago and visited the farms, we found that the average size in the co-op that we buy from, that there was a half hectare size plot. with a single family running that. They are not certified organic. From that co-op, we can buy a certain amount of certified organic. But in reality, these guys are all still farming the same way. And the majority of them are not using, and none of our people were using chemical agriculture. So they could be certified organic. But at the rate we've growing, we didn't have time yet to put in all that kind of infrastructure. And we felt that direct trade, meaning we have the direct paper trail certification, we know the specific farms where our product came from. So we are not buying out of a commodity pool. So that direct trade step was the first step we took. And that comes with other attributes of the coffee around quality. And it also comes with supporting those people with a greater amount of the cash. So we're kind of like certification later, verifiable verification ourselves first with traceable paper trail, then start getting these certifications. Because in reality, we're moving a little bit faster than our own ability to build all that. And when it comes to the nut side and the grain side, We are specifically making very clear moves. And we will be making those kind of announcements.
[00:39:36] Ray Latif: I'll bug you about a date on that pretty soon. But we covered quite a bit of ground. And you've been so great to talk to about everything Calphea and your background in the industry. And this has been a really fantastic podcast, one of my favorites already. So thanks so much for joining us, Greg. And I can't wait to see you next time.
[00:39:56] John Craven: Sure. Great. Thank you, guys.
[00:39:57] Ray Latif: Thank you all for listening.
