[00:00:10] Ray Latif: Hey, folks, thanks for tuning into the Top Podcast for the food and beverage industry. That's Taste Radio. I'm Ray Latif, and you're listening to Episode 162, which features an interview with Adam Hiner, the co-founder and CMO of Boochcraft, a fast-growing brand of high-alcohol kombucha. Our conversation explores the origins and business strategy for Boochcraft, which operates within a rapidly evolving market for better-for-you alcoholic beverages. Tune in on Friday, May 17th for episode 34 of our Taste Radio Insider Podcast, which includes an interview with Darren Marshall and Ravi Krosan, the CEO and head tea maker of super premium tea company, Smith Tea Maker. Just a reminder to our listeners, if you'd like what you hear on Taste Radio, please share the podcast with friends and colleagues. And of course, we'd love it if you could review us on iTunes or your listening platform of choice. As consumers have come to expect more from what they're eating and drinking, demand for healthier and functional products has permeated every aspect of the food and beverage industry, even alcoholic drinks. Often promoted as lower-calorie or low-carb, better-for-you alcoholic beverages are finding a receptive audience among a growing number of consumers, particularly those who live a healthy lifestyle. That's certainly the case for Boochcraft, a three-year-old brand that's made waves in Southern California with what it promotes as quote, high-alcohol kombucha. I recently met up with Boochcraft's co-founder and CMO, Adam Hiner, at the company's brewing facility and headquarters in San Diego County, where he discussed the origins of the brand and shared his perspective on the trend of healthier drinking. Adam also spoke about why Boochcraft is resonating with consumers beyond those that are regular kombucha drinkers, the challenges of forecasting demand for a nascent category, while he sees the company as competing against itself. Hey, folks, it's Ray with Taste Radio. I am in San Diego, and in front of me is Adam Hiner, who is the co-founder of Boochcraft. Adam, thank you so much for being with me. Thanks for having me. We're here in your wonderful, beautiful brewery. When did you build this place?
[00:02:15] Adam Hiner: Originally, we started building in 2015, and we opened our first facility, the 5,000 square feet over there, in 2016, March of 2016.
[00:02:24] Ray Latif: When was the first time you were exposed to kombucha? How'd you get into consuming the product?
[00:02:29] Adam Hiner: Kombucha came in shortly after I moved to San Diego, and really the move from Virginia to San Diego just started bringing on all sorts of life changes, including trying yoga, starting to shop at the farmer's market, eating organic, learning even what organic was.
[00:02:43] Ray Latif: You never did any of that before coming to San Diego? No. Jeez, listeners, you should go to San Diego.
[00:02:49] Adam Hiner: Look at all the wonderful things that can happen to your life. Yeah, I mean, I can actually thank my sister because she, we were living together in an apartment early on in our time here, and she got a job with a nutritionist, and I was working for a mortgage company at the time, and every single day she would come home with a new thing that I either had to eat or couldn't eat. So it was like, one day it was like, I need to sprout my nuts. The next day it was like, we can't eat bread anymore. And I was just like, oh no, not bread. But then shortly, you know, over time I found my way and learned how to cook, got involved in the food business and really just fell in love with organic food and things that were not as highly processed.
[00:03:25] Ray Latif: This is amazing, you know, from being a mortgage broker, which sounds like the worst job you could possibly have, apologies to anyone who was actually a mortgage broker out there, to sprouting your own nuts and now running a kombucha company. The kombucha itself though, very divisive in terms of its flavor. A lot of people will try it the first time and say, I never want to try this again. What was your approach to saying, okay, well, we've got a kombucha, I can, you know, I'd love to create a kombucha that people like to taste and has broad, broader appeal than what is currently offered.
[00:03:55] Adam Hiner: So for the kombucha business, it was a long tail. I mean, first of all, we didn't just jump right in and say, hey, let's make high-alcohol kombucha. That wasn't my first idea. I originally got into the kombucha business kind of on the side by brewing regular kombucha at my restaurant. I had a farm-to-table restaurant here in San Diego. And I started selling my own home-brew kombucha on tap. Everything in the restaurant was made from scratch. So I said, hey, if we're going to make everything from scratch, let's make all of our beverages from scratch, including our sodas and our kombucha. And we were one of the first restaurants to have kombucha on tap. And I just saw the crazy demand for kombucha flying. People were rolling in with growlers, filling them up and like we couldn't keep kombucha in stock. That wasn't the thing.
[00:04:38] Ray Latif: To be clear, this was low alcohol kombucha or just regular kombucha? Just regular kombucha.
[00:04:42] Adam Hiner: let's say, a half percent. And we couldn't make enough of it. I mean, I was only making five gallon batches. It was a far different operation than we have here. So fast forward two or three years, and I've sold the restaurant, and another buddy of mine was looking for business ideas, and up popped in my mind the idea of a kombucha brewery. And that's when I also decided we need to get my brother-in-law, Andrew, involved. And Andrew was really the person that came up with all the flavors was in the lab, quote-unquote, garage, coming up with all the flavors and really the process to brew high alcohol kombucha, which is what we have here, which is definitely a more approachable flavor than some of the more vinegar-forward kombuchas out there.
[00:05:26] Ray Latif: So to be clear, what is the difference between high alcohol kombucha and regular kombucha? And I know, I mean, there's an obvious answer. One has more alcohol than the other, but how is the process different? How is it, how is it regulated in a different kind of way than say regular kombucha?
[00:05:40] Adam Hiner: Well, for anything over a half percent is considered alcohol by the United States. So everyone over a half percent, whether even that's the 1% kombuchas, they have to get an alcohol license, a brewing license, just like anyone else that's making alcohol. For us, we're going regular kombucha just naturally comes out at 1%. if you just kind of brew it in the wild. We're going all the way to 7%, so we're doing a secondary fermentation with an organic wine yeast and more organic cane sugar. And then we ferment away all of that cane sugar to get a very dry, high-alcohol kombucha. And finally, we flavor with organic cold-pressed juice, which we make in-house along with herbs that we extract at the end of the process.
[00:06:16] Ray Latif: So, you know, you talked about moving out here, you were in the mortgage business for a time, you started a restaurant, you also operated a catering business for a time, right? Yes? Yeah. You know, what spurred your interest in entrepreneurship? And how did you align with other people that were also interested in entrepreneurship? Was it something that was just a burning desire that just kind of opened up when you saw the opportunity? Or is it just something you've been thinking about for a long time?
[00:06:41] Adam Hiner: I think I was raised to be interested in entrepreneurship. My mom and dad are both entrepreneurs themselves. And then coming out here and even being in the mortgage business, although I was working for someone, it was a very entrepreneurial kind of business. There was a lot of loan officers that were doing their own thing in the company we worked for. And very quickly, I worked my way through to the top of the mortgage company and eventually started an online version of the mortgage company that I was working for alongside with the owner there. And for me, it was just always about learning more and more and being an entrepreneur was an opportunity to continue to learn about business and finances and marketing and all the things that make a business tick. It's easy to have an idea.
[00:07:24] Ray Latif: It's another thing to sell your idea to a retailer, to an investor. What was your approach for getting investment? What was your approach to funding the idea for Broochcraft?
[00:07:35] Adam Hiner: Well, in the beginning and even to today, we've been self-funded through my co-founders as well as two friends and family. But really, you know, there was a challenge to get certain people to accept the idea of high alcohol kombucha. There was no market for it at the time. Distributors were not aware of this category because it didn't exist. This is only, you said, like three years ago? Yeah. Yeah. You know, there was another brand out there from Michigan at the time, but no one knew about them. And they were very, they were distributed very thinly throughout the country. So yeah, it was a challenge to get bartenders to want to put it on tap at their bars. But then there were some wins that were easier going into Whole Foods and saying, Hey, do you want some high alcohol kombucha? They're like, yeah, we'll take every bit of it that you can make because they were very familiar with the kombucha market and how well it was doing.
[00:08:20] Ray Latif: So particularly in the, in Southern California.
[00:08:22] Adam Hiner: Yeah, certainly. And that's where we started. We were lucky enough to have a great distributor in the beginning with Stone Distribution. And they bought into our idea early on, right before we even had our brewery built. So we had some backing there as far as a great distributor. But a lot of it was around education. And then it was around persistence and going into a bar that you knew would sell a ton of Boochcraft and every week for a year just going in there and saying, you guys really have to put this like all the stores around you are selling a lot of this product, you really should put it on tap here and just getting no a thousand times and then finally getting a yes and then that bar doing really well and then the next bar hearing about that and kind of spreading that word of mouth.
[00:09:01] Ray Latif: Was it sort of a streamlined approach in like okay this is one package or is it here's kombucha and hey it has the added benefit of alcohol or vice versa?
[00:09:10] Adam Hiner: It was funny, in the beginning, we were doing the farmer's market from the get-go, and we had a really nice experience of going out there in the very beginning with a branded tent that just said, Boochcraft Kombucha. And people were walking by our tent, like, oh, kombucha? No, I'm good. I don't want that. I've had that, or it's gross, or I don't want any kombucha right now, or whatever. And then we were saying, no, it has alcohol in it. And they're like, oh, OK, I'll try some. And then so then we changed our tent to say high alcohol kombucha, as big as you could possibly write it on the front of the tent. And then all of a sudden, we had crowds at our tent. So there was an intrigue of there being alcohol in it, whereas everyone either already drank kombucha and was OK with it, but wasn't that interested, or didn't want anything to do with it. And then once we said the word alcohol, people were flocking to us.
[00:09:55] Ray Latif: You literally created a buzz around kombucha? I see what you did there. So, you know, right now it seems like within the industry, within the beverage industry, there is a lot of interest around high alcohol kombucha. You again, you know, ahead of that trend, ahead of this interest in a better for you functional alcoholic beverage. So when you're creating a company like that, when you're creating a brand like that, how do you forecast demand? How do you run the company? What is it like to forecast for that kind of demand that you don't fully understand?
[00:10:31] Adam Hiner: If you ask me what one of our biggest problems is today is forecasting demand, I would tell you, yeah, that's it. It's really hard to say. The more we do and the more markets we go into and the more territory launches we do, the better we have gotten at forecasting demand, but we're still working really hard to figure that out because we don't know. what is going to happen in Oregon versus what happened in Southern California. We don't know what's going to happen in Texas. There's so many variables beyond the fact that we have a new product in a new category that's just kind of coming about, but we're also going into places that aren't Southern California where this kombucha bubble existed. You just opened up Arizona. We just opened up Arizona. It's a little too early to tell what's going to happen there, but we think because people travel back and forth between Arizona and San Diego, there's going to be some affinity, just like there's affinity for the beer brands here. And because our beverage is delicious in warm weather, we think that it'll do well there. So we're doing a lot of guessing and using as much data as possible to make the smartest choices we can, but it's tough to say. How do you evaluate risk?
[00:11:35] Ray Latif: How do you assess the opportunity versus the risk of losing everything you invested?
[00:11:40] Adam Hiner: I mean, we think that this facility only scratches the surface of the demand for this category for high alcohol kombucha.
[00:11:47] Ray Latif: And just for context, how big is this facility and what do you have here?
[00:11:50] Adam Hiner: So we have a total of 23,000 square feet currently producing, and then we have another 5,000 square feet slated for offices. It's not fully built out. We can add some more tanks in 18,000 of the square feet. We could probably sell all of this kombucha in California if we went deep enough in California. So our goal is to go really deep in the territories we go and to be on tap. at every bar and to be, you know, found in every little local liquor store in addition to all the big chain stores, but then to continue to expand regionally, but not to get so far out ahead that we're forgetting about our home market or forgetting about the people in California that we think there's plenty more people that will buy the product that don't even know about the category yet.
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[00:13:08] Ray Latif: Going back to this idea of getting people into the kombucha category via alcohol, via an alcoholic beverage, what other attributes about the product were you trying to convey or are you currently trying to convey about Boochcraft?
[00:13:22] Adam Hiner: I mean, we like to really focus on the ingredients. You know, being an alcoholic beverage company, first of all, we can't really make health claims or talk about what the product is going to do for you other than give you a buzz. To be clear, you can't talk about these health claims because? It's illegal, I think. Yeah, as an alcoholic beverage, making health claims is just setting yourself up for some problems, probably with the TTB, with labeling, as well as with, you know, lawsuits. And also, I think making health claims is problematic because we don't know how this is going to interact with this person versus that person, and we're not spending millions of dollars on double-blind studies to see how rose hips is going to affect someone. So what we can do though is talk about the ingredients, the quality, the source, what we're doing in the community, the fact that we're cold pressing all of our juice, it's raw, it's going into the product with all of the natural enzymes, and so you're getting the full benefit of cold-pressed juices, you're getting the full benefit of the probiotics that are in there, and you're getting the full benefit of both a cold alcohol as well as water extraction of all the herbs. and the product is certified organic and gluten-free, so people can make their own decision as to if that's good for them or what the benefit is.
[00:14:35] Ray Latif: Does that make it hard to sell kombucha though? I mean, is it more that you're selling a delicious alcoholic beverage if you can't promote the health benefits of kombucha?
[00:14:46] Adam Hiner: Luckily for us that regular kombucha market has taken off and people are well aware of the potential benefits of kombucha. So we can kind of ride that wave of people's knowledge of regular kombucha. So yeah, regular kombucha is currently at around 800 million USD and projected to go to 1.8 billion by 2020. So I think we've got a lot of runway ahead of us in the high alcohol kombucha market.
[00:15:13] Ray Latif: Are most of your consumers currently kombucha drinkers or are you starting to see mainstream consumers who aren't necessarily kombucha drinkers bleed into sales and consumption?
[00:15:22] Adam Hiner: It's funny because in the beginning we thought that our consumer was going to be a kombucha drinker, that we were just going to go out and convert all these kombucha drinkers to alcohol kombucha drinkers. And we were blown away by the diversity of consumers that we've attracted, some of which have never even had kombucha. They don't pronounce it correctly. They say cambucha. And we love it. We love the diversity of people that are coming our way because it's broadened our scope of the way we could talk about the product and the way we can market it. And we don't have to just appeal to this super health conscious kombucha drinker that we can actually appeal to a broader market.
[00:16:00] Ray Latif: Why do people say cambucha? I will never understand this. There's no A. C-O, I'm sorry. K-O. I said C-O. It's K-O-M-B, not K-A-M-B. So how is it Kambucha? I'll never understand this.
[00:16:16] Adam Hiner: I can't figure it out. The guy that originally designed our labels called it Kambucha. Okay. And he never got it right. So I was always like, maybe it's like one of those things that they can't hear the syllable or we would correct him and he would just always say it wrong. And I don't know if he was just messing with us, but yeah, one out of every five people says kombucha and I don't. You don't correct them. I've stopped correcting it. I just, yeah, I used to, but no, I think it's funny.
[00:16:41] Ray Latif: It's, you know, different strokes for different folks. You call it, you know, some people call it booch, right? You know, that's not wrong either. Potato patata. Speaking of which, why'd you call it Boochcraft? Where'd that name come from?
[00:16:52] Adam Hiner: We went through a bunch of names early on, and mostly we turned them down because of trademark issues or, I don't know, we just couldn't come to consensus and didn't like them. We actually, our first name that we were going to come out with, I don't know if anyone ever knows this, but it was Kombucha Revolution. That was our first branding that we came out with before we had product or anything available. And we quickly realized that that wasn't a good name for a product. And then somehow we had made a list of names and I was sitting at home one day looking at the spreadsheet and the name Butch Craftwood had been on the spreadsheet the whole time and it popped out at me. And I went to our trademark attorney and I said, I don't care if we can get the trademark, we're going with this name. And she was like, oh, okay, well, I better try hard to get the trademark. And I was like, you're going to get it, trust me. It just fit. We're a craft beverage. We also wanted to appeal to the craft beer crowd and let people know that this was alcoholic. Booch is the kind of common name for kombucha, and it just worked, and it felt good.
[00:17:50] Ray Latif: It's a beautiful package. The logo, the name works really, really well. went through a slight rebrand, slight revamp a little while ago. Who designed this package? And I guess, what does this design mean at the top? The triad. The triad? Okay, I haven't seen this before. What's that all about?
[00:18:10] Adam Hiner: Well, I can revert back to our original package. It was designed by a buddy of mine that has designed other brands for me, and the original design was slightly different. It had a little bit more busy patterns on the front, and the original logo was a Triskelion, which is a Celtic symbol, which means a lot of different things, but stands for mind, body, spirit, or balance. And so when we were first starting, we couldn't come up with a logo that we really liked. And so we literally just found the Triskelion online and just sent an email to our guy that was doing our labels and said, here, use this. And then when we went to do the rebrand, we wanted to use that same idea, but we wanted to make it our own. So we had our designer, his name's Adam Renfri. And he's also designed a number of other brands, House Beer, Clover Juice, Verve Coffee. So we loved his package design. And he came up with the triad that we use today, which was our own version of that trinity. And basically for us, it means a never-ending journey. It also has the three parts, so there's three flavors in every bootch, there's three co-founders, and so it had a lot of different symbolism for us.
[00:19:20] Ray Latif: Let's talk about the co-founders for a moment. You've said the word we a lot, which is great because, you know, when co-founders are saying I a lot, I assume the other co-founder is getting kind of upset about that. But how did you assess, how did you figure out what each co-founder's role should be within the company?
[00:19:40] Adam Hiner: You know, it's kind of like tossing water down a mountain and seeing which way it goes and kind of takes the path of least resistance. I feel like when we first started out as an entrepreneur starting a new business, you wear a lot of hats and a lot of us, you know, we all three wore multiple hats and we had a lot of overlap. And as we've grown the business, we found our niches within the business currently taught as the CEO and driving the vision and kind of helping to keep everyone on task and charge forward. Andrew's our brew master and he's responsible for innovation, new flavor development, as well as new process development. And I'm the chief marketing officer responsible for all things marketing as well as kind of still overlapping into the finance world and helping to manage some of the finances. So we all just did what we knew best. Todd's run manufacturing companies and other businesses and has also been an entrepreneur. So he did a lot of logistics and a lot of admin stuff and a lot of finance stuff overlapped with me. I run marketing and sales for the online mortgage company, for my catering company, for my restaurant. So that's kind of where I fit in. And then Andrew had been a home brewer of beers and meads and ciders at home, just constantly experimenting in his lab. He's also my brother-in-law, so I had a lot of experience hanging out with him in the garage and just knew that he had an amazing palate and loved tasting beer and loved brewing beer but had become allergic to beer and could no longer drink the beers he was brewing. So this was a perfect fit for Andrew to be able to continue his passion for brewing but not have an allergic reaction every time.
[00:21:15] Ray Latif: When you're hiring, and it seems like you're in hiring mode right now as you're growing, do you look for folks that share similar personalities as you and your co-founders or is it something where you're looking for the right person for the job regardless of personality?
[00:21:30] Adam Hiner: I mean, I think there's always a balance between cultural fit and values and ability and skills within that job. And for us, it's a balance. We want great people that are talented in their field, but we also want people that are cultural fit, that want to be in this culture that we're creating here, that want to be in a more open culture where we eat together and we, you know, cook organic food and we do volunteer days at a local nonprofit and we want to be a family as well. So it's a balance and it's not one that we figured out, but it's one that we're always trying to improve on. And yeah, we're hiring rapidly, so we're getting better each time.
[00:22:13] Ray Latif: So is it pedal to the metal time right now? I mean, and I ask because the market for better for you alcoholic beverages, functional alcoholic beverages like hard kombucha seems to be expanding pretty quickly.
[00:22:25] Adam Hiner: It is a race for us to be at the top of our game. I don't really look at it as a race against everyone else. I look at it more as just us always constantly competing with ourselves to be the best high alcohol kombucha, the best butch craft that we can be. And, you know, we don't want to be in too much of a rush and make a lot of mistakes and build something on a weak foundation. So we're really focused right now on building the team, on figuring out our process in this new brewery, and on properly communicating our message. But there is some urgency to get out there and to get into new markets and to not get left behind. So there's a balance there, but we want to make sure we do it right.
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[00:24:18] Ray Latif: Where's this all coming from? From someone who's in the trenches on the ground? Where is this better for you alcoholic beverage market coming from and how is it expanding so quickly?
[00:24:29] Adam Hiner: I mean, it's kind of funny, but I think we can thank Michelob Ultra for the, you know, for being the first better for you alcohol.
[00:24:35] Ray Latif: I'm not going to make that. I'm not going to thank Michelob for anything. I mean, you know, when people talk about water, beer, good Lord, that is like, sorry, Michelob. You know what? If you never want to come to a BevNET live conference, I don't know what to tell you. I don't like Michelob Ultra. Sorry.
[00:24:52] Adam Hiner: I'd never personally drank Michelob Ultra. And I used to laugh at the ads when there was like a runner drinking McUltra after a race. And I'm like, why the hell? But I also wasn't very healthy into health back then. But where is it coming from? I think it generally is coming from a demand that people just want to know what they're consuming. I mean, look at 95% of the alcoholic beverages on the market and there's no ingredients on the label. that's like a bare minimum that you should put the ingredients of the thing that someone's consuming. And to think just because it's an alcoholic beverage and so it's slightly bad for someone that they shouldn't know what's in there is crazy. So I think that is the very start of things is like we should know what we're consuming. And beyond that, people want better ingredients and they want things that aren't processed. And we're seeing it in food and we're seeing it now in alcohol. And I think that it's going to become much bigger.
[00:25:44] Ray Latif: It's just the start. That being said, I'm going to put you on the spot. You don't have the calorie count on your cans that I'm holding, and these cans are brand new. Thank you again for sharing them with me. You do have the alcohol content, which is a healthy 7% right on there. Is there a point at which you feel like you need to put that kind of information, a calorie count, carb count, things like that?
[00:26:05] Adam Hiner: Absolutely. Yeah, we're actually working on that right now. We don't want to put anything on the label that's not 100% accurate. So we're working diligently to test. We're one we're building a lab here and we're constantly investing in the lab, as well as making sure that we get our products tested so that we really know exactly what's in there. In the meantime, we've put a range of calories on the website on our flavors page, so you can go on the website and find the range of calories that currently exists and then once we hone that down and know exactly what's in there, then we'll have the calories and the nutrition facts on the label.
[00:26:38] Ray Latif: What's the hierarchy at this point for consumers of hard kombucha or again using this term better for you alcohol? Is it lower calorie count? Is it a function? Is it organic? You know, what's really resonating with consumers?
[00:26:52] Adam Hiner: I guess it would be different for different groups of consumers. I mean, I think that there's your calorie consumers that are watching calories and there's some zero calorie options out there that they might trend towards. There's the people that trend more towards organic and you know, raw organic juices and the ingredients and the source of those ingredients. And we're one of the few on the market that can tell you where all of the fruit and the ingredients are coming from because we're buying from farms. So that we're going to appeal more to that consumer. There might be someone looking for functional benefits. And then, you know, we've got some of that with some of the herbs in ours and the raw juices. And then you've got others that are putting more of the kind of superfoods in theirs. So I think that there's a lot of crossover, but there's also different consumers looking for different things. It's hard to say that it's one or the other or that there's a hierarchy, but we definitely attract the customer that wants to know the ingredients and the source, I believe, at the top.
[00:27:45] Ray Latif: And I'm looking at the ingredients. You have raw kombucha, cold-pressed, in this case, grapefruit juice, hibiscus, heather flower, dried ginger, and yeast. All organic. What's heather flower again?
[00:27:55] Adam Hiner: Heather flower is interesting. It's actually this beautiful, fluffy flower that actually dates back to the most ancient Celtic beers and Celtic beer recipes. So there used to be a beer called a Heather Ale. And this is kind of a throwback to that. It also has medicinal benefits that I can't disclose.
[00:28:16] Ray Latif: Well done, Adam.
[00:28:16] Adam Hiner: But you can look up heatherflower online and look up the medicinal benefits of heatherflower. It's a nice throwback to the old recipes of beer, and it adds a beautiful, just slight, subtle floral hint to the nose.
[00:28:29] Ray Latif: Within the kombucha space itself, there's some, what's the word I'm looking for? Dissension, I guess, in terms of what kombucha should be and what it should represent. What do you think kombucha should represent? And how do you convey that in a way that you feel, as you mentioned, is positive to the development of the category?
[00:28:49] Adam Hiner: I mean, I think that kombucha should mean what people would typically think when you think kombucha. So first of all, I mean, you know, it's fermented bacteria, you know, using sweet tea to ferment bacteria and yeast and you get a probiotic beverage, right? But I think that there's a lot of products out there that are pasteurizing the product, boiling it, killing all the bacteria and yeast and cultures that were created and then adding powder probiotics in the end. And to me, that is a little deceptive because the consumer wouldn't think, oh, you're going to boil it and then add powdered probiotics. The whole purpose in fermenting in the first place is not to get a vinegar taste. The whole purpose in the fermentation is to get those probiotics. So for me, I think at the very least, the kombucha should be raw and unpasteurized. Beyond that, I think if you're fermenting a product with a SCOBY, with a bacterium yeast, and you're ending up with a probiotic tea, or maybe you're not using tea and you're using like a tisane or herbal tea, that's cool, you know, and I don't want to be the one to say that I know everything, but for me personally, if I was the consumer, I would want it to be unpasteurized and raw.
[00:29:54] Ray Latif: At this point, though, does the mainstream consumer care enough about an unpasteurized or raw kombucha versus, well, what is commonly available?
[00:30:03] Adam Hiner: I mean, I think there's a lot of consumers that do care. I mean, look at GT's sales. They're doing pretty well in the kombucha market. They're the leader, and they have an unpasteurized raw product. But yeah, there's lots of people that don't care. And I think that there is a product for everyone. And I'm not getting up in arms and saying we should go and regulate the word necessarily. But I think that we should regulate the label and say, hey, if you're going to pasteurize it, then maybe that should just be written on the front of the label. consumers I just think the more we can tell and share with consumers the more we should and so the more transparent we can be so let's not lie let's say yes this is kombucha and then we boiled it and then we added probiotics.
[00:30:41] Ray Latif: Yeah, I mean, it sounds like there isn't really kumbaya right now. I mean, there's there's a general sense that everyone wants the industry to grow. But again, as you know, having that influential voice, what's your approach to talking to other brands within your category within the industry? And how do you get them to see your side of the story?
[00:30:57] Adam Hiner: As far as the community and the kombucha community and even the more more niche high alcohol community? I like to keep open lines of communication with the other brands and have discussions and meet with them. I mean, we go to KombuchaCon, which is the big kombucha conference. And one of our scientists, Kyle, was on a panel there speaking about the future of the kombucha industry. And yeah, I mean, I had a meeting with some of the co-founders of another brand here in San Diego just last week. I just like to keep those communication lines open so that we can be on the same page and at least understand what the others are doing and not think that we have to just battle with each other, that there's places where we can work together and there's places where we can find common ground to grow the industry that's going to make everyone do better.
[00:31:47] Ray Latif: Are you at all concerned about strategics getting to the mix, bigger companies, bigger brands? It's been out there that Samuel Adams is launching a kombucha brand at this point. What's your take on all this? What's your take on all these companies getting into the mix when it comes to high alcohol kombucha?
[00:32:03] Adam Hiner: I think it's better for the category overall. I think that there's a lot of education to be done. We've spent a lot of money educating Southern California when we first launched about the category. And I think the more people out there, the more education and the faster this market will grow. And so if someone goes into a market that we're not in and educates the market, and then we come in behind them and they've warmed it up for us. then I'm all about that. I also think that our product sits kind of by itself in the fact that we're the only ones using cold-pressed juice that we're making in-house. So I believe that everyone's kind of marketing to different people. And so there's going to be the broad awareness of high-alcohol kombucha, which is beneficial as more come into play. And then we're going to be attracting a certain consumer in Tura, which is Sam Adams kombucha will probably attract a certain consumer, and then Kombucha, which is Budweiser's version, they'll have their own people there, and I think that there's a lot of room for more high-alcohol kombucha. So that they can enjoy the party in the day after. Exactly.
[00:33:03] Ray Latif: Where'd you come up with that tagline?
[00:33:06] Adam Hiner: That was one of our first taglines, enjoy the party in the day after. You know what? I honestly don't know who came up with that. I remember one of us, I believe it was actually one of my sister's friends that came up with that tagline when we were writing kind of some of our first copy for the labels.
[00:33:21] Ray Latif: Is that a real or perceived benefit?
[00:33:23] Adam Hiner: You know what? A lot of our consumers on Instagram say that they don't get a hangover. I personally don't get a hangover, but I also don't get blacked out anymore. And I've moved on from that in my life. There was a guy recently that smashed two bitch crafts and poured them over his face. on an Instagram post, I'm not sure if he was blacked out, but I can say that a lot of people say they don't get a hangover, they feel better, and that's why they drink Butchcraft. And so, all signs point to yes, but... Living that health life, you know, you can't get blacked out anymore.
[00:33:59] Ray Latif: Amazing stuff. It's such an interesting category. It's such an interesting time for these Better For You products for hard kombucha. And I'm really interested to see where it all goes from here. So perhaps we'll have a part two with Adam Hiner down the line, but really excited to see where this all goes and offer you and wish you the best of luck going forward. So, and thank you so much for sharing this wonderful facility with me and for talking to me today. Thanks. Thanks for having me. Right on. Cheers. Cheers. That brings us to the end of episode 162. Thank you for listening. And thanks for our guest, Adam Hiner. You can catch both Taste Radio and Taste Radio Insider on Taste Radio.com, iTunes, Stitcher, Google Play, SoundCloud, and Spotify. 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.
[00:35:09] San Diego: Hello, I am Melissa Traverse here for the Taste Radio podcast, talking about some of the biggest tension points that CPG brands and founders face when they're scaling a brand, and those are financial accounting and inventory management. I am joined by Matt Lynn, inventory accounting guru from Belay Solutions, and he is going to shed some light on all of this that is going to help everybody out quite a bit. Matt, thank you so much for joining us today.
[00:35:39] Michelob Ultra: Thank you for having us, Melissa. It's great to be out here at Expo West and it's great to sit down and be able to chat this because it's kind of a passion project of ours, working mainly with CPG brands and hoping to help them scale.
[00:35:51] San Diego: It's been such a pleasure chatting with you and the team and learning all about what you do over there at Belay Solutions. Can you tell us a little bit about yourself and what your role is and the kinds of solutions that Belay gives to CPG brands and founders?
[00:36:06] Michelob Ultra: Yeah, absolutely. My role with Belay, I'm actually our inventory accounting manager. I run our inventory department, so we work with CPG brands, taking them from spreadsheets, putting them on inventory management systems, and really helping connect their tech stack between their sales online marketplaces to that inventory management system, even down to their financial systems like QuickBooks. Belay overall is kind of an outsourced accounting firm. And with that, we're helping teams. We have different levels with bookkeeping, controller level work, even high level into CFO type items. So we really help those brands in any way that they need financially. And then I just have a subset of a department where we're really just laser focused on inventory.
[00:36:49] San Diego: It's certainly a complex topic and there are plenty of places to go wrong. Let's start by going right and start super simple. Can you tell us what some of the biggest red flags are that would help a founder understand or, you know, the person running a brand understand that it really is time to get some help with some of these areas?
[00:37:10] Michelob Ultra: and they're kind of just piecing it together and doing their best. And what they'll see is that reconciliations take forever, if they even happen. they have a lot of transactions that don't get coded or they just put them into placeholders to just get rid of it so it's not an eyesore. They'll notice they have revenue but no cash or they notice that they have a good amount of cash but their blind spot is really seeing the vendor invoices that are sitting there just needing to be paid and so they just lack that clarity that's going to really be around the corner.
[00:37:47] San Diego: You know, you were talking about one of the red flags that comes up that I think makes so much sense. When somebody asks you what your numbers are and you can't come up with the right number, that's a big problem because that's something that you really should be able to share with decision makers who, you know, you're ideally looking to do business with. What should you be able to call up at a moment's notice?
[00:38:11] Michelob Ultra: Really at any time, you should be able to know an accurate margin. It's amazing how many founders we end up talking to that they can tell you their revenue numbers, they can tell you their selling price, and then the minute you start talking about cost or their cost of goods sold, they just get a deer in headlights look. So really it's very hard to tell, am I even making money? or if you don't know your entire landed cost. Maybe you know what the freight cost is, the duties separately, but you're not really getting that as part of your unit cost. So it's really hard to tell. Am I even making money or am I losing money from the very beginning?
[00:38:44] San Diego: And do you recommend that founders are able to call up a margin by channel?
[00:38:49] Michelob Ultra: Absolutely. And depending on the number of products and channels, you kind of want to know what are your best sellers, which ones are making the most and which ones maybe you're not making as much. But especially if you're branching out and you're doing D to C with B to B, absolutely want to know that.
[00:39:06] San Diego: Gotcha. You mentioned that when things feel really chaotic, that's probably a red flag. I would say that it probably almost always feels chaotic if you're running a CBD brand. And I know this may be hard to quantify, but is there a revenue number? Is there a number of doors number that would help a brand understand whether or not it makes sense to bring on a partner like Belay? Understanding that so many brands are bootstrapped or they might be tight for cash. What is that friction point?
[00:39:39] Michelob Ultra: a little bit different for everybody depending on where you're at in your process and sometimes just your level of understanding of financial aspects. You know, when you're first starting and you really cash conscious and don't want to spend that much money, you may keep it on yourself. But as you're growing, as you're getting into those six-figure revenue numbers, and especially as you're approaching seven, you want to make sure you've got good financials. Because as you scale to that point, most likely you're going to be looking to raise capital. And investors, the first thing they're going to look at is your books. And are they clean? And do they show a clear picture of your business?
[00:40:09] San Diego: You know, another area that folks might look to to organize some of the chaos are their systems. So many folks stick with Excel spreadsheets for a good amount of time. How do you know that you need to outsource some of your accounting to an organization like Belay Solutions versus maybe signing on to a Synth7 or a NetSuite or something like that?
[00:40:31] Michelob Ultra: Well, that's actually something we really help with when it comes to that cost question. That's something that trips people up. And sometimes if you just have a turnkey business, you buy and sell a finished good, you can maintain with spreadsheets. And we've had clients with million dollar revenue that can do that. But we see so many brands nowadays are using contract manufacturers. and they're just sourcing certain parts of their product. So when you start talking cost, they have no idea exactly what their unit cost is. So that's where we come in and we kind of understand, we'll speak with the customers and the clients and get their needs. And then if we think they're ready for a system, then we'll help put them on that system so they can get some of that clarity. And it's not something we force on anybody. There are plenty of times where founders come to us and we'll tell them bluntly, you're not ready for it right now, but we'll let you know when we think you are.
[00:41:18] San Diego: That sounds like excellent advice. What should a founder or somebody running a brand look for in an outsourced accounting partner? Are there certain checklist items that they should make sure that their partner be able to execute or be able to help them understand?
[00:41:34] Michelob Ultra: Absolutely. I think one of the keys, there's, there's a lot of outsourced accounting firms out there. Some focus on service-based SaaS companies, but if you're a CPG founder, you really want to make sure that your accounting firm has CPG experience. I would ask them, you know, what kind of brands have they worked with? And even beyond that industry specific, because there's so many subsets of CPG. And that's something that I think is great about what we do with Belay is that we kind of run the gamut. It's kind of like the insurance commercial. We know a thing or two because we've seen a thing or two across a broad spectrum.
[00:42:04] San Diego: Probably getting references is always helpful, right? Absolutely. All right. So this all sounds great. I think we have a really good understanding of would it make sense to hire an outsourced partner? You know, what some of the things you should be looking for are. What does offloading this kind of work mean for the brand? What can this do for lightening the load of a founder or lightening the load of a brand operator? Like, how does that help them in their everyday business?
[00:42:34] Michelob Ultra: It just tries to really help quiet the chaos. So what we're looking to do is just take some of the weight off that founder's shoulder, let them focus on building the brand, building the business, getting that exposure. If you don't have sales, you really don't have anything. So we want them to be able to focus on that while we take care of your back end office work. And we can just present that to you on a monthly basis, you can help make decisions, you can take that to investors. And really, you can just focus on growing your business.
[00:42:59] San Diego: I feel like I felt founders and the folks who are running brands collectively sigh. Breath of relief just hearing that. How can people learn more about Belay Solutions?
[00:43:10] Michelob Ultra: So people can text TASTE to 55123 for their free inventory guide to get started.
[00:43:16] San Diego: Matt Lin, inventory accounting guru at Belay Solutions. Thank you so much for joining me here at Expo West. It's been such a pleasure to chat with you and learn about what you all do over there to help founders and brands with their financial accounting and inventory management. For everybody else out there, thank you for listening to the Taste Radio podcast. I am Melissa Traverse and we'll see you next time.
