[00:00:10] Ray Latif: Hey folks, I'm Ray Latif, and you're listening to the number one podcast, the food and beverage industry, Taste Radio. This episode features an interview Anna-Lena Kamenetzky, the founder and CEO of Touch Capital, a woman-led VC firm focused on growth stage investments and scalable consumer brands. Just a reminder to our listeners, if you like what you hear on Taste Radio, please share the podcast with friends and colleagues. And of course, we would love it if you could review us on the Apple Podcasts app or your listening platform of choice. When it comes to evaluating investment opportunities, Anna-Lena Kamenetzky doesn't pull any punches. Her straightforward style is shaped by over two decades of global experience as a brand operator and board director at multinational companies, including Keurig Dr Pepper and JAB Holding Company. She's helped incubate and build billion-dollar brands and understands what it takes to succeed in the highly competitive food and beverage industries. That perspective guides the vision and funding strategy Touch Capital, a recently launched venture capital firm led by Annalena that invests in consumer brands across food, beverage, pet and personal care. Touch Capital founded on the thesis that CPG conglomerates, quote, will continue to need to buy in innovation through strategic acquisitions. By leveraging their operational know-how, Annalena and her team support portfolio company founders, including those of fast-growing brands Super Coffee, Lesser Evil and Catalina Crunch, by bringing quote, buyer-side experience to the builders. In an interview featured as part of Taste Radio's live podcast and meetup event in Austin, which was held in September, I spoke with Annalena about the formation of Touch Capital, how global trends help advise the firm's investments, how she evaluates innovative brands and their scaling potential, and the impact of a talent shift towards entrepreneurship. She also explained why feedback and input only work if it's a pull and not a push scenario, how founders can mitigate risks for investors, and offered a candid perspective on trendy concepts, ingredients, and food and beverage categories. All right. I hope you all can hear me because the person who I'm sitting down next to is someone you definitely want to hear from. That's Anna-Lena Kamenetzky is the founder and CEO of Touch Capital. Annalena, how are you?
[00:02:51] Anna-Lena Kamenetzky: Great. Thank you for having me.
[00:02:53] Ray Latif: Thank you so much for being here. You know our previous guests intimately well as the investor in Super Coffee, but you're not based here in Austin. You are based in the great city of Miami. And it feels like over the past couple of years, everyone's either moved to Austin or Miami. Now, I know why people want to be here. Can you explain why entrepreneurs should consider Miami as a place to be?
[00:03:20] Anna-Lena Kamenetzky: Let's put it this way. The number of friends who want to visit me has gone up significantly since I moved from Washington, D.C. to Miami. And it peaks usually in December, January and February. I mean, Miami always had a great lifestyle. But I think what really has happened during the pandemic is that a lot of investors moved there. And that obviously makes it interesting for founders to be there as well.
[00:03:42] Ray Latif: Do you have to have a really expensive and like flashy car to be in Miami? I heard that's true, that's the case, no?
[00:03:47] Anna-Lena Kamenetzky: No.
[00:03:48] Ray Latif: No? Okay, cool.
[00:03:49] Anna-Lena Kamenetzky: It may help, I don't know. I don't have one.
[00:03:53] Ray Latif: You have a ton of experience in this industry. You have a lot of operational experience in beverage. You are a noted observer of global trends in the beverage industry. How do you incorporate both into your current role as an investor?
[00:04:09] Anna-Lena Kamenetzky: I mean, I have invested and worked as an operator in Asia, Europe, and in the US. And what I've seen is that many times great products in one geography actually make their way to other geographies over time. I mean, Red Bull was a drink in Thailand. Kind Bar was actually a bar that existed in Australia. And because we're here sitting at Super Coffee in Japan, 80% of coffee is ready to drink. So I think having kind of that global perspective and seeing trends in one geography is helpful from an investment perspective and certainly always guided me.
[00:04:52] Ray Latif: I think folks, you know, given your background and your work in Europe and your experience as a global operator, Some of them might say, hey, well, how come you're not investing in brands in Europe? What's so attractive about US-based brands?
[00:05:08] Anna-Lena Kamenetzky: I mean, the US consumer market is the biggest in the world. And two, it's also a very competitive one because there's a lot of talent. But I think as a brand, if you have 330 million people to go after with one language, one currency, and a somewhat cohesive set of regulations, it's much easier than if you have to reach that number of people through 15 languages and 10 currencies and, you know, a completely different background. So usually I would say it's not easy, of course, it's always difficult to break through, but I think the US is an easier market to break through than Europe.
[00:05:49] Ray Latif: might be an easier market to break into, not necessarily the easiest market to scale in. And typically, you need a lot of money to scale a food or beverage brand. And I have a feeling that there's a lot of folks in the audience right now, they're saying, well, hey, you know, what would it take for Annalena to invest in my brand? So having asked myself that question, Let's talk about TouchCapital. What do you guys do? What's your investment thesis? And maybe some of these folks might be in your portfolio in the near future.
[00:06:19] Anna-Lena Kamenetzky: Yeah, Touch Capital27;s investment thesis is coming directly from my experience in being an operator and investor in incumbents and basically for verticals, beverages, better for you food, personal care and pet care. And I've been operating and investing in the number one, number two, number three player in most of these categories. In the past, I've been active on the boards of these players. And while these companies are fantastic, the thing that I found very frustrating all the time was that real innovation never came out of these companies. We always had to buy it expensively from the outside.
[00:06:59] Ray Latif: And these multinational companies, do you want to name them?
[00:07:02] Anna-Lena Kamenetzky: Yeah, okay. Keurig Dr. Pepper, for example, is a company I was on the board for a long time and helped form it because I was part of the team that merged it. And Cody is a big player in cosmetics and beauty and personal care. So, you know, that experience of just seeing innovation happening outside led to me to say, you know what, in the future, I'm going to invest in those companies that I usually scouted for, you know, to acquire at some point. And Touch Capital really invests in those companies earlier, usually around series A, and helps those companies scale and scale in a way that makes them really attractive to be a top acquisition target for some of these incumbents. And then obviously when it's time to exit, and we were talking about that elephant in the room a little bit earlier, you know, we obviously very well positioned to also help them, given that I know the C-suites of most of these companies well.
[00:07:57] Ray Latif: What size checks do you guys write?
[00:08:00] Anna-Lena Kamenetzky: We try to ride between two and seven million. We sometimes do smaller checks in earlier rounds just to kind of get to know companies, build up the relationship and then kind of lead later on with larger checks. But that's usually what we're trying to look for.
[00:08:18] Ray Latif: The last time we spoke, you made a really interesting observation and you just touched upon it, which was that Large strategics, multinational corporations are really proficient at identifying trends, if not executing upon them. Why is that?
[00:08:33] Anna-Lena Kamenetzky: You know, they have a lot of resources. So, you know, you get a ton of data. You can buy every data set that you want. You have people who would analyze them. So, you know, you have all the good touch points to identify trends. I think the core problem in executing on them is really twofold. A, I think the incentive structure and incentive systems within large corporations just don't lend themselves to put great talent to something completely new. If you have a $12 billion business to run, you put your best person on your biggest business, which has the biggest profit pool. You don't put your best person on something that may or may not turn into anything. And I think the second big struggle that corporations have is, and I think that's a more recent trend, is I think the best minds, especially in the US, don't necessarily want to go anymore and work for one of the large corporations. When I was in college, everybody wanted to work at Goldman or McKinsey. That's just not the case anymore. I think today the best minds want to do their own thing and start a company. And so I think, you know, that's just an interesting mix that in terms of talent flow and in terms of overall incentives that will also lead to that being a continuous struggle for corporations.
[00:09:55] Ray Latif: So college grads who want to be entrepreneurs, that's a good thing.
[00:09:58] Anna-Lena Kamenetzky: I think it's a great thing.
[00:10:00] Ray Latif: That being said, and I wanna ask our audience here, for entrepreneurs in the room, can you please raise your hand if you had prior experience in CPG before you launched your company? I see three hands for listeners. That's not a lot. Do you put any emphasis, do you put any value or at least additional value on prior experience in CPG when you're considering investment in a brand, in a founder?
[00:10:30] Anna-Lena Kamenetzky: Let's put it this way, it doesn't necessarily need to be with the founder. I do look for experience in the team, but it doesn't have to be the founder. And that goes to the heart of what I think anyway is the case that great founders need to have the confidence to hire people who are at least as good as they are.
[00:10:50] Touch Capital: Guessing your margins? That's risky. Belay Financial gives CPG brands the clarity to scale smarter, faster, stronger. Get your free inventory ebook by texting TASTE to 55123 and start making data work for you. Vibrant Ingredients is the natural ingredient partner powering food and beverage innovation, delivering flavor, function, and protection through a science-backed portfolio. Vibrant delivers purpose-driven solutions that help brands create extraordinary experiences. Discover what's possible with Vibrant today. Visit vibrantingredients.com.
[00:11:37] Ray Latif: I want to come back to that point in a second, but I'm just looking across the room and I see so many amazing brands. And thank you all to folks who brought samples. And I see a lot of innovation on these tables. And innovation is an interesting concept. It's an interesting thing to talk about. Just because your product has something different, it doesn't necessarily mean that it's going to be successful. That's me talking. But how do you evaluate innovation?
[00:12:04] Anna-Lena Kamenetzky: It's very right what you say. And I think that's something that I would always tell founders make sure that before you kind of put everything in and give it your best that it's really a product that's enough differentiated to really make a difference that's sufficient for a consumer to pick your product versus somebody else's. And also sufficiently different for distribution channels to really say, OK, we are we're taking a bet on this one because it really is a completely new and beneficial approach to an existing category. And I think much of the innovation, especially in beverage, doesn't necessarily pass that smell test. So what I really look for is, A, is the addressable market big enough that this can actually become a really interesting scale brand? Because sometimes brands are just kind of in such a small category that I'm like, at least as an investor, even if it's a blowout success, it's not going to be a very big outcome. Secondly, I think in CBG in particular, relatively early on, you can see if you get with your product to a margin structure that's going to long-term support a profitable business. And Jim mentioned it earlier, that's maybe a viewpoint that for some investors comes new to the table, so to say, over the last year and a half. You know, I would say I've always been more old-fashioned in that sense and thought, you know, if you have to pay customers to buy your product, that's not something that's going to be long-term a viable business. And so I think in consumer where even with scale, you're only going to get so much more of scale benefits, because different from tech, you still have to actually produce your product and distribute it. I mean, these costs don't go away. They may get a little bit lower with scale, but they don't go away. So I think you can relatively early on see if this is a business that has legs or not.
[00:14:03] Ray Latif: Can you do that when you're walking through the aisles of Whole Foods?
[00:14:05] Anna-Lena Kamenetzky: I wish. No, no, I can't. I mean, I think what the walk through in a Whole Foods aisle can better achieve is to see the gaps. And we just invested in a company, an instant ramen business better for you. And, you know, when you walk through that aisle, you can see that the companies that have been in there, haven't done anything innovative for the last 40 years. And the contents, the nutritional value is awful. And so there, I think you can easily see the gap. And then you can look for who is filling that gap and invest in it. But I think going through the aisles and saying, this is a product that's going to definitely break through. Again, I wish I could do it, but that's a hard one.
[00:14:47] Ray Latif: when we chatted prior to our conversation right now, you told me something interesting about innovation and team, the dynamics between innovation and team. And I'm gonna have to read it here. You said that an A idea, that is like a great idea, doesn't work with a C team, as in an average team, but a B idea can work with an A team. Can you elaborate?
[00:15:10] Anna-Lena Kamenetzky: Yeah, I mean, I think a great team can really pull things off and make ideas work that aren't necessarily at first sight fantastic. But the best idea, if you don't have the right team, it's just not going to work. So for me, going back to also what Jordan and Jim and Jake said earlier, really investing in your culture and in your people is really core. And it also goes back to what I just said. I think great leadership for me is really also to have the confidence to hire fantastic people. And I think that's where many companies fall short that, you know, there's a lack of confidence in the leadership team and they hire people that, you know, don't get dangerous, so to say, because they're not as good. And I think you should always try to hire people that are better than you. If you met my partner, Grace, you know what I'm talking about.
[00:15:59] Ray Latif: That's a very nice thing to say. You know, I think when people are looking for investment, they're also looking for value added investment. They're looking for people who have the kind of operational expertise that you have. That being said, they don't necessarily, from what I've heard from entrepreneurs, they don't necessarily want investors to be, I'm going to use the word meddling, so to speak, in the day-to-day operations. But when you have that experience, when you have that insight that you want to share with the portfolio companies, how do you incorporate that experience when you are offering advice, when you are evaluating their progress?
[00:16:36] Anna-Lena Kamenetzky: Yeah, I mean, first of all, to say having been on the receiving end of this as an operator as well, I think I have never met an investor who didn't think that their value added. So, you know, that's kind of as a starter. I think personally that that value added always has to be a pull. If you have to push your opinion and advice on somebody, that to me means this is not going to work. Because either you invest in somebody who really actually values input, or you don't. Or you don't have anything valuable to say, and then there's also no point in saying it. And I think within our portfolio companies, there are companies that I'm involved with a lot, And then there are others where I'm not involved with a lot. And they, you know, only come when something is like totally on fire and a big crisis. And then, of course, I sometimes say, well, you know, maybe you should have come a little bit earlier because we could have avoided that pretty easily. And now it's more difficult to solve it than earlier. But I'm not a believer in kind of calling up people constantly and offering advice that's not wanted.
[00:17:41] Ray Latif: Every investor thinks they add value, or they have a value-added aspect to what they're doing. Every entrepreneur, I hope, thinks that they can pull off their vision, thinks that they can do what they're setting out to do. But how do you know that they can pull it off?
[00:17:55] Anna-Lena Kamenetzky: You know, you obviously never know exactly, but I think there are pretty good data points around if people can pull something off or not. I mean, one is, you know, how committed are they actually to their business? I mean, you heard the three of the Super Coffee team here earlier that in April, they went out to Publix and stocked the shelves. I mean, that's a commitment, I don't know, like, but you need that sort of commitment to your brand to really just do what it takes. So I think that's something you can see relatively quickly if people are really into it and really want to build something or if they just think, oh, this is an easy way to make money, which it clearly isn't. But I think there's this misperception sometimes. I think what you can also see relatively quickly is how thoughtful people actually go about building their business and building their teams and building their systems and really thinking about how they do this. And there are huge ranges. huge. I mean, I saw businesses that are literally in the exact same product that raised $17 million to come to $700,000 of sales. And the same business with the same product raised less than a million to come to $2 million of sales. And that just kind of shows you how capital efficient people are, how they really kind of think about what's the right expense and the right investment and what stage of the business. And I think these are things that you can see relatively early. For us, we invest in Series A and up. So I think a lot of kind of the, you know, a lot of the things have already been weeded out until then. But again, I think there are definitely some points that you can identify pretty early.
[00:19:35] Ray Latif: Even at the Series A level, though, there is risk.
[00:19:37] Anna-Lena Kamenetzky: Of course.
[00:19:38] Ray Latif: Yeah. How do you evaluate the most impactful factors or what are the most impactful factors when you are thinking about investment risk? And, you know, for the entrepreneurs listening, the entrepreneurs in our audience, how can they help you? How can they help mitigate that risk?
[00:19:54] Anna-Lena Kamenetzky: again I think it goes back to the same points like do you have a market that's big enough, do you have a differentiated enough product, do you have the right talent to execute on your vision and do you have the right setup from a margin structure from day one. I think these are the most important points and also I think what changed over the last year and a half is how resilient is your business in terms of multi-channel, not only in one channel, in terms of doubling up on supply chain. So these points have certainly become more important. But I've always looked for multi-channel businesses and I think the last two years have shown us that only DTC businesses obviously went through a tough time with the iOS change. I think only food service businesses went through a tough time with the pandemic. Only retail businesses went through a tougher time during the pandemic. So I really think when you think of your product, you need to kind of see how can you play in different areas and in different channels. Obviously, we're not going to, or hopefully we're not going to have a pandemic every couple of years, but I think generally your business is just a stronger one if you can play in different areas.
[00:21:07] Keurig Dr: Do you want more repeat buyers on Amazon? Well, this free resource in collaboration with Straight Up Growth will help your brand turn first-time buyers into long-term subscribers. Download Winning the Repeat Purchase Game on Amazon now at Taste Radio slash SUG. That's Taste Radio slash S-U-G to start building retention-driven growth for your brand on Amazon. Scaling a beverage brand into major retail comes down to operational readiness. From packaging lead times to co-manufacturing strategy, the details can make or break a launch. In a new ebook in collaboration with Octopi and Asahi Beer USA, industry leaders share what they've learned in helping brands scale. Download it now at Taste Radio slash octopi.
[00:21:57] Ray Latif: I've talked to a bunch of entrepreneurs who are self-manufacturers. They're making their own products, and it feels like they have been buoyed by having their own production, especially the last two years, with all the supply chain issues, with the lack of capacity for certain co-packers. How do you feel about self-manufacturing when you're looking at potential investment deals?
[00:22:17] Anna-Lena Kamenetzky: I mean, obviously, it depends a little bit on the category and on the scale. But I think if you can do it in a financially attractive way, yes, it has a lot of legs and has advantages. But again, you know, the US is obviously not a cheap market to manufacture. On the other hand, you may be able to save on freight. and you're not as subject to geopolitical risks as we experience right now. So, you know, if you have 100% of your production currently in mainline China, I would be concerned.
[00:22:48] Ray Latif: You mentioned something that I'm sure every entrepreneur has heard. They've heard it a hundred thousand times, margin, margin, margin, margin, margin. Do they have to have great gross margin from the outset? Or is that something where they can get to a point where you're comfortable with their sort of evolution toward a 40-50% gross margin?
[00:23:11] Anna-Lena Kamenetzky: Obviously better if you have it from the outset, but I think for me it's also fine if you have a clear path of getting there. If you're not there and there's also no visible path of getting there, that's obviously kind of where it becomes difficult.
[00:23:24] Ray Latif: Well, how do you know what are the indicators for having a visible path to that kind of gross margin?
[00:23:29] Anna-Lena Kamenetzky: Well, I mean, if you can see, OK, there are there are a couple of points where that I can gain if I get to scale X or, you know, we currently have to do it. We currently, for example, because of lack of scale, have to produce in a super high cost country. But as soon as we have a little bit more, we can do it somewhere else and get it chipped in for cheaper. So, I mean, I think there are ways to identify paths or, you know, you say currently we have to be in glass, but we will be able to be in aluminum, which is X cheaper or so. I mean, these are things that you can clearly see and point to.
[00:24:06] Ray Latif: Jimmy mentioned it a few minutes ago. You know, investors want to make their money back. Investors want to make more than their money back. And one way to do that is to sell your company. It's becoming a bit trickier, I would say, to sell your company. But, you know, maybe my opinion is not the opinion of the investment community. But, you know, what's your take on the M&A environment for entrepreneurial brands?
[00:24:30] Anna-Lena Kamenetzky: I mean, what's certainly true is what Jimmy said earlier, that I think the hurdle rate where large incumbents look to buy is higher than it used to be. But I think that's actually better for everybody because the reality is, and again, I've been on the other side of this many times, if you put a tiny brand, a $20 million brand into a huge sales apparatus, they just don't know what to do with it. And it gets overlooked and you don't grow the brand as you should. So I think that obviously makes it more difficult because you need to get to that higher mark. But I think in the end, it's for the good of both sides, so to say. Overall, from a macro perspective, I don't think that it's a worse time now than it used to. And the simple reason I think that's the case is because From an overall macro perspective, many of the large companies are going to see or are already seeing their own organic growth stalling or even declining. And as a consequence, they will have to look for inorganic growth. And that's, again, kind of where the young startups come in.
[00:25:36] Ray Latif: So if I'm hearing that correctly, if I'm trying to read between the lines here, are you more inclined to invest in food brands and beverage brands because of that hurdle that Jimmy was talking about at this point?
[00:25:47] Anna-Lena Kamenetzky: No, I think that's the same in food actually. The reason why I have more food brands or pet care brands in my portfolio than beverage brands is just because beverage is just much more capital intensive than the two other categories. You need a bigger success in order to really make it worth the risk.
[00:26:10] Ray Latif: You know, trends are often fleeting. Well, I guess you could say fads are often fleeting and trends are sometimes hard to discern. How do you factor trends into your investment thesis, into your investment strategy?
[00:26:24] Anna-Lena Kamenetzky: I think long-term trends towards better for you, more sustainable, more authentic, more digitalized offerings. I think these are long-term trends. They've been here for many years and they will continue to be there. And those I definitely factor in. I mean, we don't invest in anything that's not kind of on those trends. you know, kind of more micro trends like, I don't know, Boba Tea or something like that is less of interest, at least to me.
[00:26:57] Ray Latif: I didn't ask you if we could do this, but I'll ask anyway. Can we play some word association? Because I think there's some categories, some trends, some potential fads that I just want to get your opinion on. Sure, this is a truth-telling part of the conversation.
[00:27:11] Anna-Lena Kamenetzky: Truth-telling part of the conversation. Do I have to answer that? Maybe not.
[00:27:16] Ray Latif: Well, let's start with something that's been a hot trend, a hot food trend that we've seen in many, many different beverage food brands. Keto.
[00:27:25] Anna-Lena Kamenetzky: Yeah, I mean, keto, I think keto maybe in particular, maybe less long term than many of the things that it actually means to be keto. So I think, you know, you don't want to have too narrow a positioning, but also being keto friendly, I think is certainly something that's going to have legs for a very long time.
[00:27:47] Ray Latif: Plant-based meat.
[00:27:49] Anna-Lena Kamenetzky: I think plant-based meat is an interim solution. I think the ultimate solution is going to be grown meat and fish, fermentation-based or whatever other technology may come up, that's real meat or real fish, but just without the animal.
[00:28:10] Ray Latif: Gut health?
[00:28:12] Anna-Lena Kamenetzky: Gut health, I think, is a fad, but... Why? You know... Again, I think that's something that obviously doesn't hurt, but that wouldn't be my only positioning.
[00:28:25] Ray Latif: Canned cocktails. Or ready-to-drink cocktails, excuse me.
[00:28:29] Anna-Lena Kamenetzky: You know, you're asking me as a former participant in Drinkworks, which was kind of a cocktail machine. So I think canned cocktails probably make more sense than a machine that makes cocktails. But generally, I'm not sure if the use case of cocktails is that wide. I think the spritzed tequila and spritz this and spritz that, that's clearly a much, much larger category and one that's there to stay. I think that's the bigger thing.
[00:29:01] Ray Latif: I'll ask you just one more. Is that okay?
[00:29:02] Anna-Lena Kamenetzky: Okay, sure.
[00:29:03] Ray Latif: Cannabis.
[00:29:05] Anna-Lena Kamenetzky: I've read quite a lot on the topic and looked at insurance data. and think that there is going to be a backslash at some point. So I wouldn't invest in it. What I think is the more interesting part of it is the medical cannabis. Also just from an investment perspective because I don't think that it's easy to make a differentiated product just with cannabis. I mean if you have a brand that has also cannabis in it, then that's something else. But I think just the cannabis companies, you know, I mean, you can buy unbranded cannabis everywhere for much cheaper. I don't know why people would go for branded cannabis.
[00:29:49] Ray Latif: Well, Jimmy specifically was like, Ray, ask Annalena the tough questions. And I think the last two minutes I asked you some tough-ish questions.
[00:29:57] Anna-Lena Kamenetzky: Let's see on how many I'm wrong in a couple of years.
[00:30:01] Ray Latif: Well, this has been a right, a really right conversation, and I'm so happy that we had a chance to meet. I'm so happy that we had a chance to sit down and talk on stage and have you on Taste Radio. This has been amazing. Anna-Lena Kamenetzky, fantastic stuff. Thank you so much. That brings us to the end of this episode of Taste Radio. Thank you so much for listening, and thanks to our Anna-Lena Kamenetzky. 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 for listening, and we'll talk to you next time.
