[00:00:10] Ray Latif: Hello, and thanks for tuning in to the number one podcast for the food and beverage industry, Taste Radio. I'm Ray Latif, and you're listening to episode 173, which features an interview with Cliff Morgan, the creator of G Fuel, a gamer-focused energy drink brand whose growth and popularity has exploded in recent years. Tune in on Friday, August 2nd for episode 45 of our Taste Radio Insider Podcast, when we sit down with Ray DeRosa, the founder and CEO of innovative dandelion beverage brand, Lion Tea. Just a reminder, if you 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 the Apple Podcasts app or your listening platform of choice. For an energy drink brand that debuted just a few years ago, G Fuel's Rapid Ascent is nothing short of remarkable. Immersed in the business and culture of esports, GFuel's growth has been aligned with that of competitive video gaming, an industry expected to top a billion dollars in revenue this year. Sales of GFuel, which markets a range of sugar-free and vitamin-enhanced energy powders, and recently introduced a line of ready-to-drink beverages, reached $25 million last year and is growing at 133%, according to founder Cliff Morgan. I recently spoke with Cliff about the brand's development and how it has been able to sew itself into the social fabric of the gaming community through influencer marketing, partnerships, and unique content. He also discussed the importance of constant and focused interaction with its consumers through digital platforms like Twitch, and why he's personally involved in social media initiatives. Hey folks, it's Ray with Taste Radio, and I am on a call with Cliff Morgan, the founder and CEO of Gamma Labs, the maker of G Fuel Energy. Cliff, thanks so much for being with me.
[00:02:09] Cliff Morgan: Thanks for having me, Ray. I appreciate the time.
[00:02:11] Ray Latif: Of course, of course. G Fuel is the official energy drink of esports. That tagline is trademarked. That being said, the past few days must have been pretty busy for you. The Fortnite World Cup, a competition based on the gaming phenomenon that is Fortnite, that was held over this past weekend. To give listeners a sense of how big the competition was, two million people watched it. And the winner took home $3 million. Were you at the venue? Were you there?
[00:02:39] Cliff Morgan: I was. I was there Saturday and part of the day on Sunday. So I was there for duos on Saturday and then part of the solos on Sunday.
[00:02:47] Ray Latif: Amazing. So what was the atmosphere like?
[00:02:50] Cliff Morgan: It was electrifying and it was definitely, I've been to big arenas filled with e-sports events, including one in Korea. And I didn't think that would be able to get topped, but the electricity that was in the arena, people are really identifying and know who these hundred guys are that are competing up on this giant, crazy stage in the middle with insane sound. And it was just, it was electric.
[00:03:13] Ray Latif: Yeah, when you think about esports, you don't necessarily, I guess as an outsider, don't necessarily realize how big the industry has become. Can you give us a sense of the size of the gaming industry and why it has become so popular?
[00:03:31] Cliff Morgan: So the gaming industry itself has really been growing exponentially for the past several years. I think what's happened more recently in the last two years with Fortnite is the spectator entertainment side of streaming gaming has really taken the forefront. And you have people's parents and other kids that aren't playing but want to see their favorite competitors or athletes. These young gamers are athletes in the truest sense of the word. It takes the same amount of determination and competitiveness and focus to compete at this high level. And as you just mentioned, these are millions and millions of dollars on the line that are won and lost in milliseconds. So they take it very seriously. The whole entertainment aspect of the industry has grown so much in the last year or so, that it has become just as big a spectator sport as I think almost any other sport.
[00:04:24] Ray Latif: I can only imagine what it's like to see your 16-year-old son win $3 million, and that was the age of the person who won the World Cup.
[00:04:31] Cliff Morgan: Yeah. And we had some of our sponsored guys who had family in the audience. And some of these guys were as young as 13 competing. And some of these young kids under 15 that some of the phase guys, they took home hundreds of thousands of dollars. So while first place might've been 3 million, you know, first 15 guys got paid. Actually, everybody got paid. So if you qualify for the world cup, you made 50 grand before you walked in.
[00:04:54] Ray Latif: I'm in the wrong business. I really am. I mean, Um, we should back up for a minute. So, you know, how'd you get involved in the beverage industry and how'd you come up with the idea for G fuel?
[00:05:07] Cliff Morgan: So our roots are strongly founded in health and wellness and sports nutrition. Uh, and almost 15 years ago, I invented a all natural testosterone booster primarily for myself. And then, you know, ultimately GNC and vitamin shops and some other stores came knocking. And in 2006, I started doing it full time. And we got good at digital marketing quick. I was always a small company competing against much bigger companies with big pockets. So we are learned digital marketing in the age of my space. And we got pretty good at getting some brand recognition early. Then we switched and also came out with a pre-workout and added to our line of products. Pre-workout seems to be the most popular thing in sports nutrition. Everybody drinks something before they go to the gym. Women drink something before they go to Pilates or yoga. So it was just kind of a natural progression. And then we had an opportunity, one of my junior marketing guys was a competitive Halo player. I don't know if you know, Halo is a video game similar to like Call of Duty. It's a predecessor kind of. And he said, look, there's a new call of duty that comes out tonight at midnight. And my friend manages these 11 game stops in Los Angeles. And I always drink your pre-workout before I compete at Halo. So I think it would be great if he gave all the same samples that you usually give out at these sporting events. Why don't you hand them out at these 11 game stops while all the kids are waiting online for the game to release? So we have product out in Los Angeles and we have the girls they usually go to the sporting events live out there. So they visited the 11 game stops. And this was back in the day when we were trying to have at least one sale e-commerce every day. No zero days per month was the goal and we were just missing it. And when I woke up in the morning, the first thing I did was look to see how many transactions we had online. And, you know, one would be satisfactory. Three was a busy day. And I woke up and saw 300 transactions. And then after I realized that it wasn't fraud and they were legit, they were tracked from the people that got the samples, drank them, and went to Twitter and told everybody about their experience. Not paid. None of these were big, giant influencers. But the community believe them and that alone triggered an action which was buying something from our website which as you know is difficult to get people to do that on an unknown brand and over 300 people purchased it that night. So we knew right away influencer marketing and this market specifically was a good target and within a week we hired the first 19 YouTubers and influencers and gamers and started getting rid of some of the athletes and the bodybuilders that just were negative returns for us.
[00:07:33] Ray Latif: Did you promote the function of G Fuel or was it sort of promoting a lifestyle? What did these gamers really latch on to?
[00:07:42] Cliff Morgan: Uh, it was really the functionality because there wasn't so much of a lifestyle in 2012 This is you know going back a while So we started selling the pre-workout which we call ptf directly and targeting the gamer market and youtubers And within a few months we had some critics that said hey the same exact product that you were selling to bodybuilders and fighters Maybe some of those ingredients can be tweaked a little bit. So we listened to the community and we took out the muscle building ingredients, which are creatine and arginine. And we liked our scooper that's very handy. The top of it's beveled so it fits in the water bottle and you don't spill any powder. So we added antioxidants and vitamins so we had the same size serving. called the G Fuel. The G could have been for gamer, could have been for gamma. We know we wanted to target the gaming market, but we didn't want to overly exploit the name. So we came up with G Fuel, launched it in three flavors at the end of 2012. And two weeks ago, we launched our 33rd flavor. We are today a 100% e-commerce business, although we'll probably have some kind of growth cycle that'll bring us back to retail shortly with the launch of our new RTD, the G Fuel energy drink in the cans. So obviously, that's after seven years of successfully selling the powder direct to consumer, with the demand from our audiences, the overwhelming hundreds of people daily ask us, you know, hey, when can we get this ready to drink? So we took our time, and we really feel like we came up with the best formulas, the best flavors, and a beautiful design. And we recently launched our G Fuel in a can, in four flavors.
[00:09:15] Ray Latif: I want to go back to what you said about a week after you saw those online sales, those 300 online sales, pretty much a week after that, you decided to go all in with how you would market the brand to the gaming community. That seems like a pretty big leap in terms of your business strategy. Why did you believe so strongly that this was the right direction for the company and for the brand?
[00:09:44] Cliff Morgan: So it's a great question, and I think I have a really solid answer. I paid the heavyweight champion of the UFC $100,000 that year, which is a lot of money for a small self-funded company. And when he would go on a pay-per-view UFC as a main event, he might register six sales. Six. And then I had a bunch of unknown people talk about how effective and great our product was in a random community. And that generated hundreds of times, thousands of times more volume in business in a 24-hour period. So, I knew it wasn't an anomaly. I saw what the community was. We dug into it right away. We said, you know, there's nobody that's really targeting this market for products. And outside of hardware and computer and gaming companies, nobody even really cared about the industry. And right away, we saw that, hey, these guys have a voice. They're a tight-knit group. As we looked into it, it was a really powerful community. They treat Twitter like a never-ending text message or chat group. And word gets around quickly. And if you're doing something that they like, they tell their friends about it. And if you're doing something they dislike, they also tell their friends about it. So getting involved in the community and authentically integrating us into the space when we were early, so it was easy to quickly become part of the community. And I think that we've kind of helped mold that gaming community because we've been so involved with it for the better part of a decade. there's still a lot of room to grow within the gaming world for us. It's easy to stay focused because I have a team that is really ambitious and driven, and we really feel like this is just the beginning for us as a brand. And we are laser focused on building a large beverage company and not getting distracted with the rest of the noise in the space.
[00:11:32] Ray Latif: We'll be right back with more from Cliff Morgan after this quick word from our sponsor.
[00:11:37] Gamma Labs: What makes Rye's Nitro Cold Brew Coffee great? Some would say the organic ingredients. Some would say the variety of great tasting flavors. Others might say the sound it makes when they open it makes them smile.
[00:11:53] Ray Latif: Are you laser focused on a specific consumer? And obviously that's a consumer within the gaming community. But is there a segment within that community that you really hone in on?
[00:12:05] Cliff Morgan: So I would say now it's broader strokes in gaming but previously it was more of the first person shooter games as the expression for games like Call of Duty. And that's where we're really strongly rooted. So as we started getting into the gaming world of e-sports the Call of Duty was really the anchor for us. And that's really where the communities on YouTube and Twitter sprouted up from at least in North America through Call of Duty. So our roots are really solid there and we had to deal with the lead for several years. And then over the last two or three years we're taking broader strokes and other games because there's so many more people have come into the industry. There are more communities popping up and there are other opportunities. And so we're continuing to expand into other games and there's always, you know, just like when we launch a flavor, that's usually the top seller for a few weeks. Just when a new game comes out, there's usually a lot of eyeballs on the new game. And we have the benefit of not worrying about whether a new game is successful, or, you know, we, we obviously have deals with teams, but we're not reliant on one specific team to be successful either. We want the exposure more than that. We want to see that the athletes that we are doing business with It's important that G Fuel is part of their life and part of what they do, not an add-on just because we're paying them or hanging a banner. These guys are actually using our product. You can see them using it all the time, whether it's on Twitter, when they're streaming, when they're making YouTube videos. So getting that natural integration, the authentic integration within the gamer lifestyle is very important to us.
[00:13:37] Ray Latif: So you're talking about the influencers that you work with and it's clear what they offer you, but what do they want from you? How do you negotiate those deals and how does that partnership work?
[00:13:48] Cliff Morgan: They're all different. So we have lots of different influencers from different areas of media and all of their deals are unique. So sometimes there are coupon codes involved in commissions. Sometimes we have monthly payments. Sometimes there are royalties involved if we're using their IP on a label or a shaker cup. So all the deals are different and we value them. because we have a good history in the space and we know how to value these deals. And there's definitely a science and an art to it. And it's not an exact algorithm or math equation. It takes a lot of skill and knowing the space.
[00:14:24] Ray Latif: I mean, that's a really good point about, you know, knowing the space that you're in and, you know, you really got to understand your consumer and how to communicate to those consumers. And given that it seems like a big part of your base are younger folks, you know, how do you talk to younger consumers in a way that is going to resonate with them?
[00:14:44] Cliff Morgan: So our fans or customers. like the fact that they feel that not only are they part of the brand because they see the products, but because through osmosis, a lot of our staff has developed their own online personalities, whether it's our photography team or our social media team, they also end up with their own followings on social. And we all engage and interact with all the fans at different bases, you know, different levels. So specifically like Friday nights and Sunday nights, I'll stream Fortnite and play with some of our fans online. And these kids can come into a public discord and ask me questions and talk about new flavors or what they like or don't like. And, you know, I don't think that the CEO of any other beverage company is going to be that accessible to the general audience.
[00:15:33] Ray Latif: Yeah, I noticed that you have a pretty serious following on your Twitter account. How many followers do you have?
[00:15:38] Cliff Morgan: On Twitter? About 150,000.
[00:15:41] Ray Latif: That's pretty interesting. And you're constantly active on Twitter?
[00:15:45] Cliff Morgan: I am. So I will say that because of my age, it wasn't really a natural part of, you know, and I wasn't, I didn't start out as a gamer or a fan of the space, but we've been in it for a long time. And I've made a lot of relationships and network and I understand our community. And I think that they wouldn't accept me as genuine if I wasn't really authentically engaged in part of the community. And I think that's, what's helping our brand continue to grow and have success is the fact that everybody here, including myself is very, very much part of the community.
[00:16:14] Ray Latif: You mentioned your age. How old is the average employee at G Fuel?
[00:16:18] Cliff Morgan: Under 30. Most of the guys I hired, I hired straight out of college. So some of them have been here six, seven, eight years and they're all approaching 30, getting married, buying houses, buying new cars. One had a baby. It has been really great to, you know, and I, it's also, we have a hundred employees. I'm sitting in the same 400 square foot office that we started in, by the way. So my personal office that I'm talking to you from is what used to be the entire business. And at one point there were three of us in here. So I've never moved in 14 and a half years. I am sitting at the same desk, or at least in the same office. But we have expanded everywhere around here. We've gone from 400 square feet to a little over 30,000 square feet. And we've taken all the adjoining spaces and knocked down cement walls. And it's kind of been 14 years of construction. And I think we're looking at like another 15,000 square feet now for the cans. So we're just continuing to grow. It seems like it's a never-ending process.
[00:17:17] Ray Latif: So as you're growing, you know, how do you hire folks and ultimately rely on them when their personality and their age obviously is so dissimilar from yours?
[00:17:28] Cliff Morgan: So, I mean, I got good at. I don't even want to say I got good. I think it's one of my personal character traits is easy to get along with and supervise. I came out of a career on Wall Street where I managed a few hundred guys right across 20 different offices. So relationship management, I guess, is one of my strong suits. And I hire guys one at a time. So I make sure that the chemistry is super important in the office. This is an atmosphere where everyone is talking with everyone. Nobody has private offices and sometimes new people are sitting next to people that have been here for a few years. So the chemistry is super important. I hire one person at a time. We're usually pretty good at it. Very low employee turnover. Occasionally we miss a little bit but For the most part, I don't mass hire and I either hire from the community. In many cases, we've gone to Twitter and collected resumes and hired people like that. I have some independent contractors that help us with influencer management that work remotely from their homes. So it's a one person and we've been lucky. But again, I think you kind of have a sense for that when you run a business and you hire people for part of your job and you get a pretty good sense for people after you have one or two interviews.
[00:18:37] Ray Latif: Digital platforms, digital media platforms are becoming much more prevalent in terms of marketing strategies. I think this is gonna be the first time that we've ever mentioned Twitch on Taste Radio. For folks who aren't familiar, Twitch is a live streaming platform really popular with the gaming community and by extension your customers. How do you think about, how do you evaluate new media platforms and opportunities to advertise on those platforms?
[00:19:03] Cliff Morgan: So YouTube has kind of become almost like the old black and white reruns of yesteryear. And there is so much content on YouTube and a lot of it is not new. And in many cases, you have to sift through tons of old stuff to find what you're looking for. Twitch is real time live broadcasts. So anybody that wants to be, you know, a talk show host or an entertainer and sing or whatever you want to do, you can do it live in front of your webcam. And as many people want to can watch you do this. It started for video gaming and now it's really kind of transcended into entertainment although it is still predominantly gaming and that's how a lot of these kids that qualify for fortnite became so famous over the past few months is because they play the game and they stream on twitch so hundreds of thousands or tens of thousands of people can watch them play and they also can interact with them so they can see the chat so people can write text in the chat and the kid that's streaming can read that and and interact with his audience
[00:20:08] Ray Latif: And G Fuel has its own Twitch account. What kind of content do you put up there?
[00:20:12] Cliff Morgan: Almost all video games. Although every other Wednesday we have a trivia show now called Duel for Fuel that's hosted by Alex Mandel, Howie Mandel's son. And it's a very interesting, it's like HQ meets Jeopardy. So we actually cross platform, but I don't want this to get too complicated. It's really not complicated. It just sounds complicated. Discord. is like Skype. Are you familiar with this court?
[00:20:38] Ray Latif: I am not. No.
[00:20:40] Cliff Morgan: Okay. So everybody within the gaming genre, they use discord to talk to each other while they play games. So discord is very much like Skype, just a little bit more advanced and you can open up lots of rooms and you can have public ones in private rooms. So we have a G fuel discord. And we have people that are watching Alex ask the trivia questions live on Twitch, but there's also a release that they can download and sign up to be the next contestant. And there's a small delay on Twitch on the broadcast, which prevents cheating. So we bring one person at a time into Discord. Alex asks them trivia questions. If you get five in a row correct, you can win $5,000 at the end of the show. And so far, we've only had one $5,000 winner. There's more than one person that has five in a row where we have a little shootout at the end. And it's a one hour show and we probably have 30 contestants or 40 contestants. And then people that are just in the chat can also play along. First person to type in the correct answer in chat can win stuff. So it's a truly interactive trivia show where the people watching on Twitch can be the next contestant in the game.
[00:21:50] Ray Latif: Much more from Cliff Morgan after this word from our sponsor.
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[00:22:09] Ray Latif: So in terms of live streaming, that feels like the medium that is most popular with folks who are fans of the brand, fans of gaming. Is that how you see the future of marketing content? Is that where you see the future of marketing content in terms of what's relevant is live streaming content and not necessarily, say, a static ad?
[00:22:32] Cliff Morgan: Yeah, it seems to be this whole demographic wants to be up to date right now. And I'm not at all saying that people aren't going to watch YouTube videos, but a few years ago, it's about two and a half years ago. that we decided that we needed to have our own Twitch presence. When our business first started, YouTube was the place where we were generating the most traffic from influencers that were making videos and putting tags above the fold right below the video. And that was the place that was driving the most traffic for us. And we were late to the YouTube game. And while we do have G Fuel YouTube channels, they don't get the kind of views that the influencer channels get. But over the past several years, we've built up our Instagram and our Twitter accounts. And as you referenced, my own personal accounts. So we have millions of people that we're reaching directly just through our channels. And when Twitch and live streaming started to become super popular several years ago, and Amazon bought Twitch for almost a billion dollars several years ago. So we knew that that platform was here to stay because we could see the landscape evolving. And we thought rather than always paying influencers that have big channels this is our opportunity to grow a channel on our own just as the industry grows so we made a real commitment to twitch and live streaming and we have a program director that puts out a schedule every week of different streamers that we have streaming on our channel i made the commitment to stream on fridays and sundays and we rented a magnificent new house on long island to do this entire thing because it's difficult to a lot of this happens late at night and as beautiful as our office is a lot of people don't want to come to the office at you know nine ten o'clock at night so we have this house that started out with one bedroom that we used for streaming and now it's you know three out of the five bedrooms in the house have computers and microphones and green screens and we had the boot camp there for phase during the fortnight cup and we shoot videos there and it is very very much a part of our business And we're thrilled that we have like 170,000 of our own followers on our own Twitch channel that has, I think somewhere in the neighborhood of three or four million views. So we have, we have a top Twitch channel and we take it very seriously.
[00:24:41] Ray Latif: Do you see that Twitch channel and some of your own content as slowly becoming more of a focus than the influencers that you're aligned with?
[00:24:50] Cliff Morgan: No, I don't think it's more of, I think it's in addition to. we need to continue to provide unique content on more platforms as they become popular, not instead of. So having a dedicated staff to deal with Twitch doesn't mean we're going to ignore all the platforms or do less on Twitter or stop using as many influencers. Right now we're going to obviously continue to do what's working and you know I've been lucky that I had some foresight in some of these things like you know Twitch has now gotten extremely popular and it's very difficult. We grind, you need to be In order to have a channel, just like Twitter and Instagram can verify a channel, so on Twitch you need to earn a partnership. And it's difficult to grind out a partnership that's based on the number of hours of streaming you do every week and the number of concurrent users you average during those streams. And two years ago, we grinded out our own partnership and earned it the hard way rather than asking them as a business if we could just get a partnership granted. And I think that that was well respected within the community. Today, it would be even harder to do it because there's so many more people. I think when we were grinding our partnership, there were about 7 million monthly users on Twitch. I think now there's probably triple that daily. So the platform has just exploded. And it brings even more value to the fact that we have a partner channel that we put out unique content on. And it's just another way that we help engage with the community and get our messages out.
[00:26:15] Ray Latif: So it was two years ago when you made the big investment into Twitch. Currently, you know, what do you see? What media platforms do you see as being critical for the future of your business?
[00:26:28] Cliff Morgan: So I don't see any new change, you know, at least in the next six to 12 months, I would say that, you know, Twitter, Instagram, I'm not personally on Facebook a lot, but it is definitely part of our business. Twitch, YouTube is still very much part of our business. We have huge YouTubers like Roman Atwood and PewDiePie. So we want to be as dominant as we can on every large platform. And we're always looking to see what's new and what's trending. But it doesn't always mean you can get your message out either. People use LinkedIn a lot, and some people self-promote on LinkedIn, but it's not necessarily the spot for us to do a lot of business. TikTok, which is very entertaining. And sometimes I end up going down my own rabbit hole watching people's TikTok videos. And we have done some one-offs with some TikTok guys and have a few small deals in place. But again, it's not necessarily the best platform to either get your message across or to get sales.
[00:27:22] Ray Latif: So it's really go where your customers are and where you can monetize that content?
[00:27:27] Cliff Morgan: Yes. And I would also say that we can't reach all our customers through these kinds of social media. You know, as you referenced earlier, it seems that our fan base and our customers are young. And it would appear that. And that's really primarily, so we've done a couple of surveys. We've done multiple ones with our customers. And we find that the average age of our consumer is substantially older than the average age of our consumer that's active on social media. So I think that the younger part of our audience is the most active on Twitter, the most active on Twitch, the most active on Instagram. But it does not necessarily mean that all of our audience skews that young. similar to how fortnight spread through a lot of parents that become interested to their kids into it we've been doing this for seven years so a lot of the younger kids that followed our brand as we just got into the space these kids are graduating college or their parents have heard of the brand now for a long time and they become fans and you know again all of our products are sugar-free so the older demographic that we reach is obviously a lot of diabetes and other things in the world so we have a very effective product and you don't need to be a gamer you could you know, be a coder, be up late studying for students, you could just work a long hour. So there's a big demand for high-performance energy drinks out there, especially ones that, you know, are a healthier alternative to some of the other stuff that's on the market that's sugar-free. So the longer we're out there, the more effective and the more well-rounded our audience becomes.
[00:28:53] Ray Latif: Cliff, in our past conversation, you mentioned that limited edition products are really important to your consumer base. Why is that? And how do you come up with new ideas to bring them interesting content?
[00:29:06] Cliff Morgan: So I don't know what made it become such a popular thing over the last year or two. But, you know, there are everything trendy seems to be really popular and things that sell out. It just drives new passion for people to acquire those items. And we've found that by continually coming out with people, our audience wants new products and new flavors and new everything. So we try to have new flavors on almost a monthly basis at this point. We try to make our activations one offs. We have artists that are designing boxes and labels for us for limited edition runs on, you know, it might be the same flavor of G fuel, but it's a limited edition package. We did a product with code with Bandai, the video game company for a release of a video game they had called code vein. And we had a type O, which is a blood because it's a, you know, it goes in theme with the game, which was very gory. And then we had two different labels on it because there were two main characters, a male and a female. So we had a limited run of a typo G fuel with the two different labels and sold out of it immediately. And our audience continues to... When we see that kind of demand, we're just a little upset, usually, that we sell it out so fast. It's really hard to estimate the demand. But we know that our audience loves that stuff. And we know because we speak to them regularly. And we're also... We see in the community with other brands. But having new products and limited edition things is definitely a catalyst for the business.
[00:30:28] Ray Latif: Is it a way to also acquire new customers, new consumers to the business, or is it very much about focusing on your loyal customer base?
[00:30:37] Cliff Morgan: I think it's both. I think that, you know, if you do a new activation, like I mentioned the artists, we have one of those that we're unveiling in September that'll also have a pop-up attached to it in New York City. And I am sure that that artist and that group that we're working with has a lot of their own supporters and fans that will be interested in the product because they'll get exposure to it through that channel. And all of our existing customers are going to want it because it's a cool new box and a cool new flavor.
[00:31:01] Ray Latif: As you noted, a few weeks ago, you launched a ready-to-drink product in cans. It was something your customers were asking for. And previously, you were only in powders. Different business, coming from someone who's been in the beverage industry for some time, or at least been covering the beverage industry for some time. The canned energy drink category is extremely competitive, and there's a handful of players that actually can do anything to move the needle. So, that being said, it sounds like it's a pretty uphill battle you're facing.
[00:31:35] Cliff Morgan: I think our brand is so strong. and we have such a giant amount of followers and fans that have been asking for it that you know and we are not looking to do anything fiscally irresponsible you know we made some products we talked about the launch we thought we would have enough to last 30 days again because most people buy these kind of beverages in a convenience store, not mail order. So the end game for us is to be in all these convenience stores and other big retailers. But we wanted to launch the product, get some feedback from our consumers, make sure that they really liked it, and then expand from there. So we have a lot of confidence. I realize that it is definitely not a walk in the park. It is a highly competitive space. I will say that most big brands don't start their own brands. They usually acquire them. So I think that, you know, whether it's, you know, Sobe or Vitalwater or all these other companies that kind of started off and yes, over history, they have been acquired by the big beverage companies. But it seems like history says that these new companies get traction on their own. And we have stayed away from signing any deals that would hinge us to anyone as we want to continue to expand and get some distribution on our own strength of the brand and then go from there.
[00:32:56] Ray Latif: So it sounds like you're really relying on your consumer base, your current consumer base to be the customers of the ready to drink line. Do you feel strongly about their ability to influence current consumers of other brands and get them to switch? I mean, is that the strategy?
[00:33:13] Cliff Morgan: I think that recently Bang Energy has come into the market, as I'm sure you must cover them and their massive sales. So I don't know if I said this last time we spoke, but I would never say anything negative about companies doing billions of dollars a year in revenues. But what I will say about Monster and Red Bull is they have been dominating the market for a decade. And Bang came in and showed that people are looking for something new. And then Monster came back with a product rating that kind of matches Bang. So I would say that the market's looking for sugar-free, healthier, higher performance versions of the energy drink market. So I think there's lots of room for us to grow. And I think that some of those bigger guys are going to see their business get eroded. And it's not like we're coming after any one drink or any one company. I just think that there's many, many billions of dollars worth of business getting done. And I think we'll start out by maybe being, you know, a pimple on the ass of the industry, and maybe eventually we'll become a thorn in the side of somebody. But at the way we're growing and the belief we have in our business, eventually, they're going to take us very seriously, and we're building a big beverage brand.
[00:34:20] Ray Latif: Well, I mean, I wish you all success on that journey. Just for context, can you share revenue numbers? Or is that something that's internal?
[00:34:29] Cliff Morgan: We're Inc. 5000 and Inc. 500. So I think that, you know, they haven't announced this year's list, but I'm expecting that we make it, which will be four consecutive years. And I think they report our revenues, although it's not on a fiscal basis. But I'll tell you that we're, we're approaching a million a week consistently just in the online powder business.
[00:34:49] Ray Latif: Wow. Well, That's not bad at all, and if you can come anywhere near that for your RTD business, well, kudos for sure. Cliff, thank you so much for taking the time to speak. Your brand is pretty remarkable, and it sounds like what you've been able to accomplish to this point is something really special. I can't wait to follow GFuel and follow the progress of the company going forward.
[00:35:16] Cliff Morgan: Thank you so much. I really appreciate the time. And getting the word out about G-Fuel to your audience is awesome for us. So if anything else comes up, please give me a ring. I'd love to do it again.
[00:35:29] Ray Latif: Absolutely. Thanks so much, Cliff. That brings us to the end of Episode 173. Thank you so much for listening. And thanks to our guest, Cliff Morgan. You can catch both Taste Radio and Taste Radio Insider on the Apple Podcasts app, Stitcher, Google Play, SoundCloud, and Spotify. As always, for questions, comments, ideas for future podcasts, please send us an email to ask at Taste Radio. On behalf of the entire Taste Radio team, thank you so much for listening, and we'll talk to you next time.
[00:36:11] Fortnite World: 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.
[00:36:42] Red Bull: 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.
[00:36:53] Fortnite World: 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?
[00:37:09] Red Bull: 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. But Lay 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.
[00:37:52] Fortnite World: 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?
[00:38:12] Red Bull: Yeah, absolutely. I think some of the early red flags is just everything is chaos. So when they're looking in their financial software, maybe they don't really have an accounting background, 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.
[00:38:49] Fortnite World: 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?
[00:39:14] Red Bull: 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?
[00:39:47] Fortnite World: And do you recommend that founders are able to call up a margin by channel?
[00:39:52] Red Bull: 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.
[00:40:08] Fortnite World: 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 CVG 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 Belait? Understanding that so many brands are bootstrapped or they might be tight for cash. What is that friction point?
[00:40:38] Red Bull: 3 3 3 3 3 But as you're growing, as you're getting to 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?
[00:41:11] Fortnite World: 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 NetSuite or something like that?
[00:41:34] Red Bull: 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.
[00:42:20] Fortnite World: 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?
[00:42:37] Red Bull: 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.
[00:43:07] Fortnite World: 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?
[00:43:36] Red Bull: 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.
[00:44:02] Fortnite World: I feel like I felt founders and the folks who are running brands collectively sigh a breath of relief just hearing that. How can people learn more about Belay Solutions?
[00:44:13] Red Bull: So people can text TASTE to 55123 for their free inventory guide to get started.
[00:44:18] Fortnite World: Matt Lynn, 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.
