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Elan Halpern - Dealing Yogurt Via Citibikes and Backpacks

41m 34s

Elan Halpern - Dealing Yogurt Via Citibikes and Backpacks

Sour Milk NYC is a functional Greek yogurt brand founded to solve gut health issues, inspired by the founder's personal struggles with digestive problems. The brand differentiates itself by ensuring its yogurt contains live, probiotic cultures in effective quantities, addressing three common shortcomings in commercial yogurt: pasteurization after fermentation, use of non-probiotic yogurt cultures, and insufficient probiotic counts. The product development involved extensive iteration to combine effective probiotics with a pleasant taste and texture. Sourcing organic, grass-fed milk from small New York farms presents scaling challenges due to the fragmented organic dairy supply chain. Manufacturing required finding co-packers through traditional networking, as the dairy industry lacks online resources. The brand's mission is to improve gut health by offering a probiotic-rich yogurt that fits into existing consumer habits, avoiding the need for supplements. As they scale, managing perishability and maintaining quality while expanding distribution remain key considerations.

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Welcome to shelf help. Today we're speaking with a lawn helper and co-founder of Sour Milk NYC based functional and Greek yogurt brand that's been making a lot of waves as of late. Before jumping in the CBG world, the lawn was a Stanford CS Groud. That's been a lot of time at Facebook Instagram and Silicon Valley. Earned a co-founder, Kiki, I think they've sold close to 10,000 units of yogurt originally on bikes across New York City. Excited that into this stuff. But yeah, just for first off, just for kind of the listeners that aren't all that familiar with Sour Milk, love just kind of get quickly to land just in terms of kind of the origin story and the why behind the brand and what the kind of core product lineup looks like and then we'll go from there. Yeah, absolutely. And thanks for having me on Adam. I'm excited to chat. So my co-founder, Kiki and I met at undergrad. We went to Stanford together. We actually met during a nutrition class, top-by-professor in Christopher Gardner. And sort of bonded over our shared passion for food and health systems and how kind of those things interact. And went on to new totally separate careers. Like he said, I studied computer science. I ended up being a product manager at a fast growing Web3 tech company. And in 2020 it was there for four and a half years. And my co-founder, Kiki, was in private equity for the same duration. And I've threw out that post-grad experience. I would say intensive gut health issues that kind of affected me on a daily basis. And so these were things that are standard and common and normal pertaining to the gut. So things like chronic bloating and inflammation. And then other downstream things like brain fog and hormone disruption. And all of these things. And what I realized is that all roads led back to the microbiome. And a lot of how you feel every single day stems from your gut and what's going on in your microbiome. And so I was actually an athlete in college. I played, I was on the rowing team. So developed a habit of eating Greek yogurt every day after practice. Because our coach would line up Greek yogurt bowls after we got off the water. And I'd been eating Greek yogurt every single day because of that habit. And when I realized in the process of trying to heal my gut and fix all these issues, was that the Greek yogurt I was consuming every day was actually doing nothing to contribute to my microbiome health. And there's a couple reasons for that. Number one is many, many yogurts will pasteurize after they ferment. And so that kills off all the live and active cultures. But it extends the shelf life. So you get this really long-lasting yogurt. Number two is the specific cultures that are used in yogurt are, they're called the yogurt cultures. So the cook is thermophilus, lactose bulgurus, they're great at making yogurt. They're not probiotic cultures that are designed to be really good for your gut. So you're not actually getting those benefits that you get from other probiotics. And then number three is even yogurts that do have probiotics. And then they just like don't generally tend to have enough. You're gotten as 100 trillion bacteria in it to make a dent. You need billions and billions and billions on a daily basis. And so I wasn't getting sufficient amount from that Greek yogurt. And so I started making my own. And really the goal was I'm already eating this thing that has an incredible potential for being really probiotic, right? Yogurt in itself is a really good vehicle for getting probiotics. But the yogurt I could buy in the shelf wasn't actually designed to do that. So I just started making my own that had the right probiotics in the right quantities. But I could eat the thing I wanted to eat every single day and get the benefits my body needed. And that was really the inception of sour milk. It was sort of a like self problem that I myself was trying to solve. So it's kind of self fulfilling need here. And what Keke and I realized is that two thirds of Americans have digestive issues, not too dissimilar to what I was experiencing. And simultaneously yogurt has a 92% household penetration in America. And so if we can take this thing that people are already eating and familiar with and design one that's truly good for your gut, almost a probiotic supplement disguised as a yogurt, you can actually reach way more people than if we tried to sell a pill or a powder or a supplement. And that's kind of the mission behind sour milk is like, how do we actually help people achieve awesome gut health outcomes in a way that that doesn't force them to change their habits? Back at those early days of formulation and product development, imagine like most you went through a bunch of iterations to kind of get that final product. And I think I read you really, really kind of focusing on trying to get uniquely fluffy and light texture. Love to just get a sense of what that journey looked like in terms of the key variables that were top of mind for you as you were playing around with formulation, what it looked like from, you know, between that first version and the final version. And you said, okay, this is right. Do you feel good about selling this to customers? Yeah, I would say that the yogurt that, you know, is on the shelf now, the sour milk that is on the shelf now, tastes a lot better than the one that I was making for myself and eating. That's kind of a huge variant. Obviously, the recipe developed from the yogurt was making myself, but this one is like actually tastes really yummy. And so that's actually where a lot of the iteration came to be. So the way we were thinking about recipe, it wasn't necessarily like, how do we make a really yummy tasting yogurt? It was like, how do we create a probiotic? And then how do we make that taste good? So how we approached it was like, okay, there are a, you know, 40,000 different bacteria strains of those like 100 to 300 less than 1% are like probiotic strains of that subset of probiotic strains. Very few of them will survive in a yogurt form, right? Because yogurt is a city. It has a lot of water content. So there are awesome strains out there that actually really only work in a pill form, not in a food form. And so those have to get eliminated. And then of those that we're left with, which ones actually yield a taste that we think taste good. And so it really like windals down to what we're able to use. So within those constraints, we were doing a ton of iterations on sort of the ratios, the amounts, the combinations and kind of what textures and flavors that product yields. So like I've heard you say, sampling along the lines of most yogurt, it's kind of fallen to one of three, one of three traps. Can you, assuming I got that right, like what are those three traps and how did you kind of go about intentionally avoiding those three? Yeah. So this is, this is a bit of what I was mentioning earlier. It's a couple of things. It's the pasteurization after fermentation, right? And that helps extend shelf life of yogurt. And that's really like you see that in the traditional goger. It's those types of American eyes yogurt. You'll see that they just don't have any live and active cultures. Then it's the culture choice. So the yogurt cultures are awesome at making yogurt. They're not necessarily the best for your gut. And then the third thing is quantity. Creating a really high probiotic requires longer time, longer fermentation durations. It requires more expensive cultures than the typical yogurt ones. And so it's not the yogurt companies today are optimizing for how do we create as much yogurt as quickly as possible? You want to optimize for like super high quality. And that just yields to slightly less efficient production lines and higher cost of goods and all of these things that help us make an awesome product that makes you feel good and it has all these benefits. But maybe is less like optimize on the cost effective side that some of the larger yogurt brands care about. In terms of manufacturing, finding co-packers or whatnot, was it hard to find ones that kind of align this aligned with your vision? Totally. I mean, the hardest part about finding a co-packer in our industry is that it's so old in fashion. So nothing's on my mind. I come from tech where if there is a problem you're trying to solve, you open up Google, I mean, not now, chat you see, but you open up Google, you punch in that problem and there's like 10 software solutions for finding that problem, very well SEOed, very clearly broken data. Like it's so easy to find solutions to problems. If you're like you can try looking up like dairy co-packer, like you are not going to find hit. These things are not on the internet. And so a lot of the process finding a co-packer was like calling random numbers, not, not eat like calling them and being like do you know anyone can you do this? And they're like no, but try so and so and they're like no, but try so and so and it just kind of was a domino effect until we found someone that could do what we wanted to do. In terms of like the actual process, like you for us, a lot of the yogurt product, like if you're making a plain yogurt, you know, a clean plain yogurt, there should be two ingredients it's whatever milk you're using in our cases organic grass, red milk. And then the cultures that you're using the culture combination, the process of making the yogurt and this is really cool about this is kind of part of the reason why we're so excited about this product is that the process is actually something that you can literally do in your home and you can do with 2000 gallons of milk and a factory. And like the process itself is generally same. That's not the same as like a potato chip or a protein bar or like a stat like those types of things cannot be made in your home kitchen. I think there's something really cool and going back to roots of like, you know, packaging a product to making it really easy and accessible, but it's also something that if you wanted to make it home, you could that's how I started making it. The process is very similar. And so really like the the changes that we're making in the process are that culture combination that we're using the temperature that we're fermenting at the duration that we're fermenting at, but the equipment required to actually do that will be the same as like another yogurt on the shelf. And so that made it easy to fit into existing co-packers. Oftentimes when I talk to other brands, they'll find that co-pack or they're ready to really scale up. Oftentimes they have to make maybe sacrifices a bit of a strong word, but formulation changes to be able to transition from the kind of a small batch production to, you know, co-packer level production. Did you guys have to make any kind of hard decisions around that or was it pretty much, you know, you're kind of year what you had in vision, they're able to do exactly what you had in mind. Yeah, it's funny. So we, everyone we talked to, we talked to a ton of CPG people about this process as we were starting and we were learning, we got to learn so much and from listening to podcasts and all these things. And everyone was like, your first five come in production runs are going to be trash. Like don't even, like they're going to be like something's going to go wrong. It's not going to be good. Like just don't expect it to be like a good product for the first three to five runs. And so going into it, I was really nervous. I had this product that felt very precious, you know, like I was excited about where it was and I was like, how is it going to scale? I wasn't sure how that's going to scale up on different equipment and larger quantities. And that first production run we got back was like amazing. Like we were like, we're like, this is so good. It's like exactly what we want it to be. And we had future kind of command hiccups down the line and it's very common to like have something go wrong in your production. But we were very lucky that the first one that we did went like very, very smoothly. And it was a product that we were super excited about. Our process is still like relatively manual with our command. And so because of that, like our very astute customers will notice, like, hey, this batch is like a little bit thicker than the last one. It's like a little different and they'll notice that which is just kind of fine. We're still small scale. So that type of musters have our phone numbers. Like many of them are able to like just shoot us a note in text, which is great. But as we sort of get more repeatable consistency, they'll be way less variance in that. From a supply chain standpoint, from what I know, based on these coasts, so it makes sense. You've been sourcing an organic grass-fed milk from some upstate New York dairy farms. Canacures, what that spot chain looks like, I guess, in more detail. Like as you continue to scale up on you're getting to like, you know, national scale level distribution. And you're in, you know, 10, 20, 30,000 plus doors at some point. What do you guys envision what that supply chain is going to look like once you get to that level of scale? Yeah, it's a great question. So the organic industry is really interesting. For non-organic farms, they're able to have like 30,000 cowherds, right? Because you're basically can just like cram as many as many cows as possible into a small surface area. And so if they get sick, you give them antibiotics, all those things. These hormones and you can kind of feed them whatever. A lot of these like conventional dairy cows are fed like excess waste product from like other factories and candy and whatnot. So that side of things basically is there's like a bottomless tap of milk you can access if you're going the conventional route. That's it. There are some not like non-organic conventional farms that do an incredible job. The by-all standards is like amazing milk. It's just there's no, you know, there's no guarantee consistency unless you know your farm and know your farmer. So I think there's ways to source really high quality conventional dairy, but a lot of it is coming from these sort of like k-fo farms. The organic side of things, the kind of rules and requirements around organic make it much more conducive to having a large amount of tiny farms rather than a small amount of large farms like it is with convention. And there's a couple of reasons for that. One, like the food is more expensive. You can't use any pesticides in the food as we are organic that they're getting fed. You can't use any antibiotics or medicine. So you have to use all preventative medicine to make sure that the cows don't get sick. And you know, if you do end up having to use antibiotics, like the cow can no longer be a part of that organic herd. It has to be sold off. And the number three is they are required to spend like every single day outside at some point. It's like some some super super large percentage of their time has to be spent outside and 30% of their diet minimum has to come from pasture. And so you have all these like cow to land ratios that you have to meet, which means you know, if you have 200 acres of land, that actually puts a cap on the number of organic dairy cows you can have. So you can't just like endlessly grow because each of those cows have a certain acreage associated with it. And so it basically creates this supply chain that's like, you know, a couple really, really huge conventional dairy farms that can kind of scale infinitely. And then like a bunch of really, really small organic farms. And what happens when you want to buy organic milk is they're usually contracted. And so a larger co-op like organic value or horizon or some of some of the other ones will basically contract a small dairy farm and say, Hey, I will pick up your milk on this schedule alongside all of these other routes. And that enables this like teeny tiny farm that's maybe not producing that much milk to get pulled in with a bunch of others and then sold like a larger cop. So that's like, you know, that was probably like more than you asked for on that. That's great. Now I've got love the detail. Yeah, the organic versus conventional sort of like dairy space. But it does pose a couple challenges for us as a new to market brand, right? Because in some sense, we're too big to just say, Hey, can we get a couple gallons of milk to make our to make our small batch yogurt? And we're too small to say, Hey, let's we'll take over all of these contracts and like create our own supply chain and pick up route and do all of these things. And so there's like sort of a growth stage here, which is part of the challenge with organic right now is that we have to kind of stitch together and find these really high quality sort of organic dairy farms that can sort of divert milk to us or maybe they're not they're not contracted and we can buy milk from them. As we grow in scale, the hope is that we can start to develop those direct contracts and relationships and partnerships with some of these organic dairies where we're getting we're kind of producing enough volume or we can kind of guarantee that for them. Yeah. Cool. That makes total sense. For, let's just say you had another friend approach who you'd say, Hey, I'm thinking about starting a CBG company as well in the broader dairy space, maybe say ice cream or something. What recommendations might you have for like them in terms of and they're about to start the co-packer search? Like what might recommendations might you have for them based on what your experience was like and I guess, you know, eliminating some of the pain points that you had along the way. Yeah, I would say get comfortable with answering unknown phone numbers. I was like before this, I'd never if I got a unknown phone number, I would never answer it with some sort of numbers. But now every zoo and I get answer because it could be some some dairy farm. No, but Nazar says I think it's just like, you know, expect to be on the phone a lot, expect like every person that you meet even if they can't help you with directly what you need, ask them if they know anyone that might be able to and that's really like how you end up following down these threads and rabbit holes. I think it's been really fascinating to learn about the industry and listen to the challenges that that are being faced and the problems that are that the industry is trying to solve. I think that dairy is a there's no better time to be in dairy. Obviously like American consumers especially tend to swing a lot, but now there's a lot of like updated regulation and recommendations around dairy and positive for dairy. So I think it's a it's a really interesting time to be in that space. Yoga compared to a lot of other shelf stable CPG categories is obviously more of a perishable product. I think shelf life is probably like out of six to eight weeks. Ish is my guess even cranking from wrong. Definitely seemed like that presents some some more delicate challenges, especially having a board dial in and strategy from like, you know, demand planning. What does that look like in terms of yeah, what you guys have found so far and just like I've challenges so far around that time and demand around expiration dates and that stuff and how are you thinking about that if you really start to scale up as well. Yeah, it's definitely something that was top of mind for the moment we started this thing. In the early days, we just started a protein bar company that could live in the brand for a year, but the way we thought about it, especially in the beginning as a new to market brand was that the moment we stepped into the factory and make, you know, a palette of yogurt like in 1200 to 2000 yogurt, we had to know where that product was going. We couldn't just like conduct our first production run and then like market and try and sell it. We had to know and so how we went about it is we built a wait list of 2000 people before we ever even stepped foot in the factory. And that way when we made that palette of yogurt, we already had this like virtual lineup, the door of people who were excited to buy it and sell it. And so after that first production run, we went out, we set the palette of yogurt down and we sold all of it by hand on city bikes in seven days. And that really kind of helped us, you know, build confidence, then increase the size and increase the size and kind of could need a cell. Now that weren't stores, I think we're learning a lot. We've been selling out on shelves and some things that we've learned is that groceries don't actually tell you when you're sold out. It's like usually we find a customer sends a photo and says, Hey, I tried to get this and it's funny because as a customer, you're like, Oh, why are you not on the shelf? And I'm also like, we didn't even know like we love to be always on the shelf. So we're learning all of this in the CBD space and navigating the kind of process there. We want to keep a tight lock on like supply and demand. We never we never want to be sold out. That's like never a goal for us is to be sold out. But we also don't want to kind of overstep our demand where we're jumping to these huge, huge production runs and not actually having the right distribution channels to do that. So part of our growth strategy here in New York City is like being very intentionally focused on New York City on our backyard. And then expanding regionally once we feel like we've sort of dominated this market and are ubiquitous here. Yeah, you kind of touch on it in terms of like I mean clearly there's obviously a lot of learning lessons Billing in any company whether you know they miss you or not, but What if you felt like coming from the kind of the tech space Before coming into CBG anything that Now that you've been in the space of it anything that's actually proven to be pretty Useful that you kind of brought over from your learnings and yeah the tech world into into CBG Yeah, it's I mean, so I'll give you a couple of couple examples one like very tactical like I said you can be your science and Code in our website, right like when we were when we were doing our pickup model raising Shopify for our website and Shopify doesn't natively have this like concept of like a pickup, right? You order it and then they like you know partner with FedEx or UPS and they create the shipping label and send it out and So I basically had to build this feature into Shopify that Gated someone to check out on them choosing a pickup location and so we would kind of like hard code in these Locations like pick up a union square pick up in the West Village pick up on the upper east side and Before you could actually go and pay for yogurt yet to make that selection and so like you know If I didn't have a software engineering background like we probably wouldn't have been able to have that user experience of like Conducting that model and you know, we sold like over 8,000 yogurts that way so that was like a good tangible tactile use for it I think the other thing is just like product product thinking so I was a product manager for four and a half years and I think the way that Keke and I both sort of approach Building a brand building a product the packaging The sort of criteria that we have of how users interact with it and how they feel about it all those things I think are very like Start up and tech forward and maybe less like traditional consumer and a lot of that Sort of non-consumer thinking I think put it this way like if we had had consumer experience I don't think we would have done any of the things that we did like some of the things that we're doing are like so wildly Unscalable and pretty untraditional and I think had we had a background in consumer before and knew the way to do things We probably wouldn't have done it the way we're doing it And so I think that we've gotten a lot of value out of thinking out of the box. I think You originally launched as I'm not sure you pronounce it Benny B and I why and then You guys got some cease and desist or something from some energy during company assuming I got that right and then you had to like obviously Before she to rebrand yet walk me through that that process a little bit because I think you're not the only one that's that's Experiences and like how you kind of turn it into an opportunity Yeah, that was a a tough moment for us. It had been In our previous previous name was Benny and we had had that name You know for like five months or so so in the grand scheme of a company that's so little but for us It was like the only five months we had of course as that we and and we had built up some brand equity online Thousands of followers and subscribers and people kind of you know we'd merge and all those things and So when we got that cease and desist we were like, you know, we're we're felt the floor is falling from underneath us and We basically had to decide a couple things fun was Do we just like take this to legal and like spend you know thousands of dollars just like fighting this in a legal battle or Do we basically like cut our losses and just like go through the name change now and you know avoid when we got this this letter We were like days away from ordering a hundred thousand units of packaging right with our names and please say it was like Yeah, it was a lot so we basically had to decide like do we just say do we ignore it and just say whatever We think that we'll win on this discussion and and just Keep going or basically put a pause on everything and figure out a good solution here And I think we obviously chose to just decided to do a name pivot and that was probably one of the best decisions we've made I'm so we went through this like two-week sprint of like you know internally brainstorming and then also externally Like everything is content for us So the moment we got this we like posted and we're like hey, we got here's a change our name like anyone have ideas and just kind of cool And pool got over 500 submissions from our customers at about different naming ideas which is really helpful Um, and we ended up choosing sour milk and There were a couple of reasons for this. I think it it came down to some criteria that we had around naming At first we were just trying to find another version of our old name But then what we realized is that a name change is actually a huge opportunity like the name of a of a CpG Or any consumer company is like a huge huge aspect of their memorability of their recognition and all these things and so we decided to take the name in a different direction And the things that the criteria that we wanted were number one the name should be easy to pronounce I think there's so many yogurts on the shelf where people just don't know how to pronounce the name of their yogurt It's like food Your fire and chobani and sig or say like just all of them are just like so hard to pronounce We're like we need to need to be easy to pronounce number two is it had to be memorable And that I think is super super important so many brand names are very forgettable And so to take up space and actually have a name that sticks is very very high value And the number three is we wanted it to tell you something about what the product was We really admired and liked you know the liquid IV The you know vitamin waters like these these types of brands that you read it and you're like okay I kind of get what it is. It's not just like out of left field and It's our milk really checked all of those boxes super memorable easy to pronounce and helps you understand what the product is Yeah, totally. That's a great name. I think Blessing in disguise happen to change it to that 100% 100% from a visual identity and kind of packaging design standpoint You kind of mentioned those names like get flakim peeding them in a category with some pretty big giants Chobani and sigis and whatnot more of the key variables over top of mind for you in terms of building out the brand identity packaging So you really focusing on really being able to stand out on the shelf against some of these legacy players Yeah, I mean we knew that the yogurt aisle was a sea of white which actually made our jobs pretty You're our sort of criteria pretty easy Yeah, we did not want to have a white packaging That was sort of like the baseline thing was that if we're gonna stand out on the shelf It's a sea of white We need to have some sort of bright color that really like sticks out and so we ended up going with this like like royal blue sort of our art like signature bright blue Part of the other reason for this is that we knew that when we were launching we were gonna launch with one skew And you probably Adam know this but We got a ton of advice being like you need to launch that least four skews because you're not gonna take up And it's and no one's gonna see the product and so we have sort of like a double header challenge of like you're giving you to stand out in a seat of a sea of white and We're only launching with one skew so it like really needs to stand out because it'll easily get lost most of the yogurt We just see in the shelf have like four to even like ten different skews So they're taking up a top of the off space Yeah, and so we went with this like bright blue packaging and I think that Plus our name being sour milk really helps us like kept people's attention and grab their eye The other the other reason why we didn't necessarily want to launch with skews is because we shot like We knew who our sort of target demographic was and we knew that that demographic buys a plain yogurt Like most of the people who are maybe a little bit more house conscious and are looking for sort of a clean label yogurt They're buying plain and then they're adding their own fruit and they're adding their own honey and they're adding their own granola on it at home and sort of building their own yogurt bowls Or maybe they're using it for savory yogurt and so that meant like if we as a new brand wanted to stay focused and speak to our target consumer The only thing that matters was launching the product that they're looking for which is a plain yogurt Totally think that launching flavors which we will do actually in R&D for flavors right now helps us expand our market and kind of attract different people that That are looking for a flavored yogurt Yeah, it seems like from when I've read you've kind of position sour milk kind of like you know your favorite Greek yogurt disguise as a probiotic supplement So may I got that right like how do you how do you guys think about kind of straddling the The food versus supplement category if that is kind of the goal Yeah, when we were first thinking about the brand and brand identity We have these sort of like two diverging paths that we could go on one was this like very serious very scientific kind of almost almost sterile health background I think there's there's companies that do as well like the zbiotic seed AG1 like these are very like this is clinically studied here your health and in outcomes And then the other was just like the opposite it was just like super playful super fun just like be a fun consumer brand And ultimately we realized even though we sort of straddle both was that we'll be able to reach more people If we're just like a really fun awesome consumer brand then if we're like a very health focused product And so we took a strategic decision to you know go for this more playful energy and and really make it a yogurt that you want to eat every single day And it just so happens to also surface your probiotic as opposed to something you're feeling like obligated to eat every day because it's your probiot I don't want to say this the wrong way, but I feel like you've called it the drug dealer model where in terms of what you talked about Leonardo delivering yogurt on and city bikes and like brown bags before you guys entered retail. Would you recommend this model thinking back now? What do you feel like have been the big pros and cons? Yeah, 100%. I think if it's possible for you to do an execute, it was incredibly beneficial for us. And we did call it the drug deal model. Just to run people through what that actually looked like. So customers would come to our website and they would choose a location to actually pick up their yogurt. So it's a one of five yogurts. I'm going to pick up in the West Village on Tuesday, five to six PM. And so when they go and they place that order, we then fire over a calendar invite to their email that has that location and hold and date and time and their order details. Then, you know, when it comes to five PM on a Tuesday, you'll see either me or Kiki or both of us sitting with our blue sour milk backpacks and you'll come over and we'll hand you a brown paper bag of your yogurt that has your five yogurts in it. And that was the exchange. And you're really like coming to a street corner to buy your like brown bag of yogurt, which is kind of insane. But it became known as a drug deal model because that's just kind of how people would buy drugs. And so we, there was a couple reasons why we did this and we gained a lot from it. So first and foremost, speed. When you launch a specially a perishable dairy product, the traditional way is to, you know, go produce a product, sign on to a distributor that has a refurbotry and then, you know, from there, go to a bunch of retailers and sell it there. And when you, that was going to take time, that was going to take a lot of price, a lot of build out. And ultimately, we were like, our product is in a really good place. We have all this customer demand. And actually the fastest way to get it to those customers into their hands is by doing it ourselves. And so we wanted to get our product from production into customer hands quickly. And this was a really good way to do that. Number two is it enabled us to get feedback really quickly. So we were building these direct relationships with customers. We were giving everything one of them our phone number and we could get like a media. That's when we learned people really love the texture of our yogurt because they would say, like the texture is amazing. I haven't had any other, like this or I love the flavor or I'm, I'm now more regular by eating the cereal every day. I'm having better bowel movements like all of that we got from having that direct relationship. And if we had sold through stores, we wouldn't actually have that direct relationship with them. Totally. And the third thing, which is really kind of related to that is there, there's a world of a difference between going to a grocery store and seeing a product for the, on the shelf for the first time and being curious about that product. Oh, what's that? What's a new product I've never seen it before versus going to the grocery store and seeing a product on the shelves for the first time and saying, I met the founders of that company and I've been eating that yogurt all summer. And we've now had this direct face to face relationship with every single one of our customers who bought our yogurt this summer so that the moment we're in grocery stores, they are just as excited as excited as we are because they felt like they're a part of this journey. They know us. They'd been in the yogurt. They developed this habit of consuming it. And that was just like, you know, we had a hypothesis that was going to benefit us in the stores. And we saw that play out from like day one when we launched into retailers. It's our customers are loyalists and we're our biggest advocates and they were buying the yogurt. I imagine sitting on a, you know, whatever street corner or whatever with a bright, you know, blue bag and your end people, the others and bags. I imagine you had at least a good number of people that just saw that actual transaction happening and like learn about it that way and then maybe came up and you said, what is or, you know, eventually then saw the bag and then like Google it themselves or something. 100%. Yeah, we had a ton of people. You know, sometimes we sit outside at coffee shops. We had people being like, what do you do? And then that's like, I'm so new here and you would buy it on the spot. It was definitely like a bit. We had people like me at these dropped because you know, we'd have like, sometimes up to like 20 people coming to pick up yogurt from us in a given drop. And so there'd be all these overlaps. I remember there's one time where we chat with everyone, right? Like you're coming to meet us. So so we we stay we stay there and chat with everyone. We were talking to someone who just started a company and was looking for an engineer and and all these things. And then you know, our next customer comes and he was like, oh, I'm an engineer and I just lucked my company like we should chat and like they met and and chatted and I don't actually know if they're working together, but that would be awesome. So just kind of became this like kind of community community space and everyone had this shared interest in what we were building. And so people got to meet each other. I asked for in a little bit. Started getting into retail. Did it did it as it proven in those first retail conversations having those, you know, 1000 plus really loyal customers. You could some level that data showing repeat orders that kind of stuff. Did that really help you get on the shelf that, you know, first retailer to? Definitely. It helped a ton. And I think beyond that, we had all of our customers like zip coded. So, you know, we we just recently launched with Butterfield Market on the Upper East Side. And we didn't really have a store on the Upper East Side to kind of capture that market. And we told them, look, we have hundreds of customers in this zip code who have been asking to trust the stock here. We'd love to work with you guys on it. And that's really, really helpful in these retail conversations. And then you have proof points, right? Of course, like in our first two stores that we launched with, we like flew off the shelves. And so we can point to that and say, we launched with these stores. And this is how many cases we sold. And we think that you also have a really good market to meet our customers and expand them. Yeah, totally. And I think happy year, your grocery was like the first retail partner. Yeah, happy year was our first retail partner. Why did you feel like they were the right fit of the first one you wanted to approach? Yeah, we were, we were very, we looked at, you know, a lot of different stores, figuring out which one we wanted to actually launch with. We felt like happier was a really good product discovery and landing pad. And some people generally tend to go to happier and they're more browsing. They're more interested. They stop and stare at things as opposed to like if you're shopping at a trainer goes or Whole Foods or some other stores, like your headphones aren't in and you're like, don't talk to me. And so it felt more conducive to product discovery. We also just like loved their permission, their vibe, their very founder friendly. And just felt like it was a really good splashy landing pad for us to start with. Yeah, for other brands that are in, you know, a bit behind you, say like six months behind you, they're gearing up. Maybe they've got that commitment from that first retailer. Now they're kind of gearing up for that first launch. You want to make sure it's successful. What's, uh, two, three things that come like top of mine that you might tell them. I think doing localized activations in that area can be really helpful. So if you're launching, you know, your first grocery store is, is on the upper west side. Find that local soul cycle, that local solid core or whatever, or jam and contact that and see if you can, if you can actually do a pop up there or do damp demos there. Obviously, in store demos are also great and you should be doing that in stores, but like thinking creatively beyond that, making it feel like the environment around that store is like you're everywhere within that environment. I think that can be really helpful because they're always going to ask where can I get a new to actually we're in this store like down the ball. Imagine popping up and that like a soul cycle, they're probably more friendly and don't don't charge you the way that retailers do probably do. No, yeah, exactly, exactly. We've had, we've had a ton of success partnering with gyms and other sort of 10 genchal partners that our core customer base also kind of goes to. Yeah. What's the retail expansion strategy look like from here? We're focused on New York City at the moment, so we want to kind of capture there's with a thousand grocery stores in New York City. So we want to capture this sort of local independence here and help sort of meet the existing demand from there. We'll probably grow regionally. So within the northeast and sort of expand and fold out. We'd love to be, you know, as far as California by the end of the year, especially because we have a lot of demand out there that we haven't been able to meet yet, but in the short term future just again, kind of continuing to rule out in New York City. Yeah. That's great. That's awesome. We have last last question for you. I know you've been in this space now for a bit. You're probably like tracking what's happening. Any just like the civic brands or trends in general in the CBG space that have just just kind of teacher interest with things you've been just kind of tracking closely just for fun because they feel exciting or interesting. That's a great question. Or maybe just brands that you admire think are cool too. If nothing jumps out, that's fine. You can delete this too. Yeah, no, no, no. So something that I'll kind of make it more more specific. Something that I think I think about is how does the brand image and brand identity evolve at scale? Because there's something like very interesting and cool about like a small brand. Like right now, we're a small brand. It's very found or led or like very scrappy. But once we're like in stores nationally, what does that brand identity look and feel like? And how do we maintain authenticity? I think the biggest thing that people lose is to scale is authenticity. You start to create more distance between you and your customer. Yeah. And I think there's a couple brands that we're looking at that we think are doing a really good job at that. I'll call out one. I think this is maybe one you get a lot, but I think Grazza actually does a really good job at that. They're pretty much ubiquitous now, but their brand identity and online presence still feels very intimate and small and genuine and authentic. And so I think that we will consistently keep keep touch or try not to lose touch with our customers and our brand identity as we scale. I think there's a couple good blueprints that we're looking at. yet to make sure that we stay on that path. Yeah. I feel like fish wife is kind of a good example. That too, so it's not an extent to you. Exactly. Yeah. So, you know, you look at our Instagram, it's like total spectrum. There's no like, you look at Instagram, some of these big food corporations, it's like very sterile. It's not very engaging. It doesn't feel very human. And I think we like seeing that brands can be really big and ubiquitous and still maintain authenticity. Yeah, I love that. That's a great point. Yeah, along this has been awesome. What's the best place for people to fall along with you and all this stuff is going on? I know you guys are kind of building in public and then best place to fall along with the brand as well these days. Yeah. So if you're in New York City, go to sourmock.com/stores and find a store that's closest to you. We also partner with Farm to People on Deliveries and get it delivered to your door. In terms of kind of following and staying up to date, we have a newsletter called Gut Check where we go really, really deep on basically all the topics that you and I just talked about. We share everything that we learn. So anything from gut health to building a business to the name change, like all of those things are shared there. Perfect. I post a lot on LinkedIn. She'll be reconnected with me, just my name. And then my co-founder, Kiki, posts a lot of really awesome video content online. So TikTok and Instagram at couchwoman. And there's a lot of behind the scenes, really fun stuff on her account. And then the sourmock gets our milk. So yeah, that's all. That was nice for sure. That's great. Awesome. Great. Awesome, Alondas McGrath really appreciate the time. I think that's the pub.

Podcast Summary

Key Points:

  1. Sour Milk NYC was founded to address gut health issues by creating a Greek yogurt that is a true probiotic, unlike many commercial yogurts that lose benefits through pasteurization or use non-probiotic cultures.
  2. The brand focuses on using specific probiotic strains in high quantities, avoiding common industry pitfalls like post-fermentation pasteurization, non-probiotic yogurt cultures, and insufficient probiotic counts.
  3. Sourcing organic, grass-fed milk from small farms presents supply chain challenges due to the fragmented nature of organic dairy, requiring careful scaling and relationship-building.
  4. Manufacturing involved iterative recipe development to balance probiotic efficacy with taste and texture, and finding co-packers required extensive offline networking due to the traditional nature of the dairy industry.
  5. The founders aim to make gut health accessible by leveraging yogurt's popularity, offering a convenient, habit-friendly alternative to pills or powders.

Summary:

Sour Milk NYC is a functional Greek yogurt brand founded to solve gut health issues, inspired by the founder's personal struggles with digestive problems. The brand differentiates itself by ensuring its yogurt contains live, probiotic cultures in effective quantities, addressing three common shortcomings in commercial yogurt: pasteurization after fermentation, use of non-probiotic yogurt cultures, and insufficient probiotic counts. The product development involved extensive iteration to combine effective probiotics with a pleasant taste and texture.

Sourcing organic, grass-fed milk from small New York farms presents scaling challenges due to the fragmented organic dairy supply chain. Manufacturing required finding co-packers through traditional networking, as the dairy industry lacks online resources. The brand's mission is to improve gut health by offering a probiotic-rich yogurt that fits into existing consumer habits, avoiding the need for supplements.

As they scale, managing perishability and maintaining quality while expanding distribution remain key considerations.

FAQs

Sour Milk NYC is a functional Greek yogurt brand focused on gut health. Its mission is to help people achieve better gut health outcomes by providing a probiotic-rich yogurt that fits into existing eating habits, rather than requiring supplements or major lifestyle changes.

The founder experienced chronic gut health issues and realized the Greek yogurt she ate daily lacked sufficient live probiotics to benefit her microbiome. She started making her own yogurt with the right probiotic strains and quantities, which led to creating the brand to solve a widespread problem.

First, many yogurts are pasteurized after fermentation, killing live cultures. Second, they often use yogurt-making cultures instead of probiotic strains beneficial for the gut. Third, even probiotic yogurts typically don't contain enough live cultures (billions are needed) to make a meaningful impact.

Sour Milk uses organic, grass-fed milk from small farms in upstate New York. The organic dairy supply chain consists of many small farms due to strict regulations on feed, antibiotics, and pasture time, which differs from large-scale conventional dairy operations.

Finding a co-packer was difficult because the dairy industry is not well-documented online. The process involved extensive phone calls and networking, following referrals from one contact to another until they found a suitable partner who could accommodate their production needs.

They select specific probiotic strains that survive in yogurt, use them in high quantities (billions per serving), and avoid post-fermentation pasteurization. This involves longer fermentation times and more expensive cultures compared to conventional yogurt production.

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