The Startup CPG Podcast

00:10
Jeff Church
I think it's important, if you can, to get a foundational experience set, whatever that is. But with a company that has some kind of systems, process, procedure, structure, potentially good skill sets that you can acquire, tools that I refer to with arrows in your quiver, you can shoot one day and you're learning on someone else's nickel versus your own nickel. I mean, learning on your own nickel is really expensive. And in this world of CPG that we operate in, it's a very distinct language.

00:40
Daniel Scharf
Welcome to the startup CPG podcast. Today's guest is Jeff Church, the legendary CEO of Suja Juice, as well as Rowdy Energy. Jeff joins us to share his lessons on beverage entrepreneurship, taking risks and growing brands. And also he has some news to share about the future of rowdy energy and what he'll be up to next. As somebody who started a beverage brand from scratch myself, I've really appreciated these learnings. Hope you all enjoy. All right, everybody, welcome to another episode of the startup CPG podcast. Today's guest is Jeff Church. Jeff is a 35 year entrepreneurial veteran, CPG consultant and advisor, and the founder of Teamchurch Co. Jeff is also known for his remarkable achievements as the CEO and co founder of Suja Juice, where he led the brand to a whopping 100 million in revenue.

01:31
Daniel Scharf
Within six years, he was recognized as Ernst Young's Entrepreneur of the year, Bevnet's person of the year. He's a Harvard Business School alumnus and former Ernst Young CPA, and he shares his insights through consulting, fundraising, and public speaking as well. And I'm just really excited to have him here on the podcast today to go through a lot of accomplishments along his career and some of the key learnings that he's had. So, Jeff, welcome. It is so good to have you here on the show.

01:59
Jeff Church
Thank you, Daniel. I'm super excited about being here. So appreciate it.

02:03
Daniel Scharf
All right, so, Jeff, with somebody who has such a storied career, with so many different stages and accomplishments as yourself, I would love if maybe we could just give everybody a quick overview of your career background. So where did it start? What were the key points for you getting to where you are today?

02:19
Jeff Church
Great. Yeah, no problem. Thank you. I grew up in the midwest, in Cleveland, Ohio, a very midwestern, middle class background. Went to college at Michigan State. So I went out of state from Ohio and studied counting, became a CPA, spent four years with Ernst Young in their Cleveland office, and last year I was able to spend a year in their m and a merger and acquisition group. And this is in the early 80s. So this dates me way back, but was able to really build some models, learn how to talk with investors, talk with companies about buying or selling parts of their businesses, and really fell in love with the m a side of it and then decided to go to business school. So went to Harvard Business School.

02:59
Jeff Church
Unfortunately, Harvard doesn't necessarily have great reputation these days in the world, but went there and really loved it and got a ton out of their MBA program and had an opportunity after business school to go work for like a mini general electric. So a business that had its kind of fingers in a lot of different things and a lot of different things geographically, and I was able to go into a troubled company of theirs, and I was 27 at the time and they promoted me to president of the division within about six months. And it was a very difficult business that ended not making it. But I learned a ton of great learning lessons in my late twenty s of running businesses and working with people and working with a militant labor union and a whole bunch of things.

03:37
Jeff Church
And then I worked for a bunch of other subsidiaries within this company, same company, for about twelve years, laddering up to running their full north and south american group of businesses, which was about 250,000,000 in revenue. And eleven businesses throughout north and South America still got a lot of really good international experience. And about the time I was about 38, I started just having this itch to really want to take that entrepreneurial plunge. And I remember my mom wanted me to do it because your mom is always pushing you to do it. She thinks you can do anything, right. My wife wanted to do it and she was like really risk tolerant. And I was kind of in the middle, risk averse and risk tolerant, and I just couldn't quite pull the trigger.

04:13
Jeff Church
And I remembered back to a situation that happened to me when I was in high school, which was like 20 years earlier, and I was a senior in high school. I'll tell a quick story, but I was a senior in high school and we had lost every game for my junior and senior year. We were in the second to last game of the year. I was a receiver. I was out in the end zone with a minute to go in the game. I already had a pretty good game. I caught a touchdown pass. The quarterback was rolling out. We were down by four points, so we needed a touchdown to win. And I was in the end zone and he was rolling out.

04:40
Jeff Church
And I had this split second like, do I raise my hand and have him throw me the ball and catch it and be the hero or drop it and be the goat. And I had to make this split decision on do I raise my hand so he sees me, or do I not raise my hand, and maybe he doesn't see me. It felt like an hour, but it was literally a second or two in my brain. But I didn't raise my hand, and he didn't see me. He got tackled. We lost the game. We went ahead and lost the next game. So went. Owen, 20, in my high school sports career, in football, and I just couldn't let it go. In my brain, I'm like, why couldn't I raise my hand? Why wasn't I ready to take that on?

05:12
Jeff Church
Yeah, at some level, agonized about it over the years, but kind of came full circle when I was getting ready to take this entrepreneurial plunge and take this jump. I'm still struggling with why I didn't raise my hand. So it started to occur to me that was channel surfing. Late one night. I was about 38, as I mentioned, it was about two in the morning, and I came across this interviewer who was interviewing a bunch of senior citizens who had successful careers. He was going around the room asking every one of them what they had wished they had done differently in their career, and every single one of them, to a person, said that they wish they had taken more risk in their professional careers.

05:44
Jeff Church
That clicked with me, and all of a sudden, I realized that not raising my hand in the end zone was an incredible learning experience for me developmentally, because now I realized I was ready to take that plunge, because now, at 38, I was more afraid of mediocrity than I was of failure. But way back when I was 17 and a senior in high school, I was way more afraid of failure and what that might look like and how that might hurt me than I was of mediocrity. So over the course of that 20 year period, my paradigms had just shifted to now I want to take the shot. If I fail. But being an entrepreneur, as you know, you have the opportunity to jump socioeconomic classes, if you will, because it's not just linear. You can actually do something really disruptive. It's very risky.

06:27
Jeff Church
Once I saw that, it just made so much sense to me. I literally quit my job, worked out a nine month transition plan because I was the president of a pretty big group and began looking for companies. So I took the entrepreneurial plunge, but it was really just being more afraid of being of mediocrity in my life than I was of failure at that point in time.

06:44
Daniel Scharf
Okay, so you said basically when you were in high school, it was more because the fear of failure for you than the legendary success that you could have by catching the winning touchdown. So that's what drove you to do it. But then later in life, you flipped the script and just decided to go for it. But if you're somewhere in between risk averse and a risk taker, did you feel like there was a certain point where you had to get to in terms of a safety net wealth before you could really let yourself do that? Or did you still feel like it was just really terrifying to go for it?

07:14
Jeff Church
I think about that a lot. And I talk with young people about that a lot too. And I have four kids that are in their late 20s, early 30s. So they're in a similar situation. I think a lot of times we have this thing that everything's got to be right before I take this plunge, this entrepreneurial plunge, I got to have my spouse, I've got to be ready to do that. I've, I've got to have enough nest egg in the bank. I like to think like, I quit my job when my fourth child was being born that month knowing that I didn't have the income, I was going to lose my income. So I don't think you should wait necessarily to go on with your life to do this entrepreneurial plunge. There's a timing for it.

07:46
Jeff Church
Maybe that timing is earlier, maybe that timing is late, but it's got to be right for you. But I tell people, like, don't put your life on hold. Certain things have to get done before you take it. Because I believe that people in their twenty s, thirty s and forty s, we kind of get like one good opportunity that comes across in each of those decades of our lives. And we don't have to take them those opportunities to really take that entrepreneurial plunge or to do something disruptive. But once you get into your fifty s and sixty s, things change a little bit and your time, perspectives and paradigms change. Your risk tolerance seems to drop a little bit. But when you're in your twenty s, thirty s and forty s, risk tolerance is something that is important to be able to digest.

08:24
Jeff Church
And I was always a very middle of the road person. My wife is from Morocco, came from nothing, had nothing. And so she's very risk tolerant. Roll the dice all the time for me. Had to be much more calculated. And I had this vision, Daniel, that entrepreneurs were these kind of swashbuckling Ted turners from CNN and those kind of larger than life people, and they had to be born. But actually, entrepreneurs are really made. There's tools that you can learn to be an effective entrepreneur. There's the whole risk tolerance, risk aversion. So I think about risk tolerance and risk aversion a lot, to answer your question.

08:57
Daniel Scharf
So you started being an entrepreneur at 38, so you had a lot of experience to fall back on and probably some savings. So if it didn't work out, there was a probably decent career path still waiting for you. A lot of the entrepreneurs that I see in our community, I think typically people think of them as maybe mid 20s or early 30s, kind of just going for it, and they're betting their whole career on it, which is great if it works out. But also, there is a lot of risk inherent in that, where you're not building up necessarily the same career path and skills that you might need if you try to jump back, if it doesn't work out and you jump back into the kind of formal career path.

09:32
Daniel Scharf
So how do you think about that for people who are all the entrepreneurs that just jump right in, maybe right out of college?

09:38
Jeff Church
That's a good question. I have two kids that went to college and became life coaches at 24 and 25. And the life of me, I'm like, okay, well, how are you a life coach with a lack of experience? But I do understand that today's generation approaches it a little differently than maybe my generation approached it. But I think it's important, if you can, to get a foundational experience set, whatever that is. But with a company that has some kind of systems, process, procedure, structure, potentially good skill sets that you can acquire, tools that I refer to as arrows in your quiver, you can shoot one day, and you're learning on someone else's nickel versus your own nickel. I mean, learning on your own nickel is really expensive. And in this world of CPG that we operated in, it's a very distinct language.

10:23
Jeff Church
And the language, it's not that the language is that hard. It's just a language that takes a little bit of time to figure out, and it takes a cycle or two of going through things to understand. Okay, this is what that really meant. This is what I should have done. But those cycles, if you're paying for those on your own, become very expensive cycles. So that's not to say that you can't or shouldn't start it right in your 20s, but if you have the opportunity to go get three, four, five years of good foundational experience, that doesn't mean you have to put your dream or your entrepreneurial idea on hold, you can percolate it on the side just like it's a hobby for you.

10:54
Jeff Church
And then when those two things merge at some point in time, either when you have liquidity, you have a little bit of investment capital, or you have the right opportunity, you meet the right people, then you can kind of pull those together. But I like to have, if people can have a foundational understanding of stuff, it doesn't even have to be in the same segment or industry, but just a learning of how to work in groups of people, goal planning and process with a lot of basic stuff. You get that said, if you've got the winning idea and you're comfortable with the outcomes, take the shot. If it all lines up. From my perspective, I knew that I could go back and get a job making a quality earning as a CEO or a president of a business.

11:29
Jeff Church
So I wasn't afraid of that failure.

11:31
Daniel Scharf
I mean, that really speaks to me. I think because me personally, I am actually pretty risk averse. And I kind of backed into the entrepreneurial journey of that way of going to big companies, I would say progressively smaller ones, but trying to build up my skill set and perspective before doing something a little bit riskier. Also knowing I could always go back to that, even though I love the startup world a lot.

11:51
Jeff Church
Yeah. The other thing, Daniel, that's important with the risk thing is if you have a significant other, I see a lot of potential relationships where one spouse is really risk tolerant. So go. And the other one is really risk averse, kind of foot on the brake and one's on foot on the accelerator. And sometimes that works out for a really good marriage because you're balanced. But if you're thinking about taking on big risk and your spouse isn't necessarily aligned with it, your significant other isn't necessarily aligned with it, then that's a problem. I know people that have launched into business without even really telling their spouses what they're doing and doesn't create the best family dynamic, especially if your spouse is of a different ilk when it comes to risk. Yeah.

12:27
Daniel Scharf
And just one more question before we jump into some of the brands that you started. So you went to business school in the think you said, and then had a pretty big job coming right out of it. I went to business school, finished in 2009, and I don't think people were getting hired to just run big divisions of companies at that point. I think a lot of us just went in to be consultants, kind of rank and file at that level. But what do you say to people who ask you if business school is worth it? People who are interested in careers in CPG?

12:54
Jeff Church
I feel like there's enough courses and groups and things like startup CPG or other type stuff online that you can really get a lot of the skill acquisition and skill set. And obviously you can get a lot of the community as well, too. I think you can get the majority of the skill acquisition without doing your MBA. I think the one thing that the MBA helps with is networking and connections and people. I mean, to this date I have 20 guys that we travel to a ski trip or a long weekend trip once a year. We've been doing it for the last 35 years. And those relationships are pretty invaluable. I mean, not all connect with CPG or anything like that, but they're pretty unique relationships to be able to tap into. So I think that was the differentiator.

13:38
Jeff Church
But the skill acquisition, I wouldn't have been prepared to launch a startup CPG business out of business school. They don't really prepare you for mean, I think the tools and resources that portals like yourself have are frankly much more valuable than the stuff that they teach in MBA school. Got it.

13:54
Daniel Scharf
Thank you. I'll add, I just really am a fan of the side hustle, taking some of these great experiences you can get, whether it is going to business school or working in a job that has some really good structure and process, and then doing your thing on the side, which can supercharge your learning and then help you warm up an idea before you figure out if it's big enough to really take a swing at. So I really like what you said. Okay, now just jumping more into actually starting a brand. So tell me about starting your first brand.

14:19
Jeff Church
Well, starting my first brand was I have a combination of eight companies that I've either started or acquired since I went off on my own and took that entrepreneurial plunge. And I like to look at those, see, okay, how did I do? What did I do wrong? What did I do right? Of those eight, there's been four that I would consider to be, in a baseball analogy, home runs been one was a double, and there have been three that have been strikeouts. And unfortunately, the strikeouts, really painful. But fortunately for the strikeouts, you tend to learn the most from the things that you fail at.

14:50
Jeff Church
And about six or seven years ago, I did a deep dive into the, at the time, it was two brands that had not made it, two businesses that hadn't made it, and I wanted to look at what was different between the two that hadn't made it. And the five that were successful, and it came down to overwhelmingly, the concept of the ones that were successful had something disruptive that the ones that were not successful did not have. The ones that were not successful were more commodity type businesses that I bought at a good valuation, whereas the ones that were successful were either acquired or started up, but they were something disruptive. It couldn't be a route to market.

15:22
Jeff Church
It can be something functional in a product, it can be in a unique team, it can be in a unique offering, it can be an IP, it can be in a variety of things. It doesn't have to be any one thing, but something that's going to protect that gross margin over the longer period of time so it's not eroded. So I began to then try to change my filter. But my first startup that I really did was Nico Water, which was a did with my kids when they were in middle school and high school. And it was about us creating a bottled water company in the United States and selling the water here and almost in like a Newman's own know where. All the profits were donated back to charity.

15:57
Jeff Church
All of our profits were donated back to bring clean water to people around the world that didn't have access to it. So we sold bottled water here in the United States, used the profits from that to bring clean water to people around the world. And with my kids and others, went and opened up water systems, education systems, microfinance systems in a whole bunch of countries throughout the world. And through over a four or five year period, we brought clean water, education and microfinance to about 31,000 people. So a lot of social entrepreneurship, a lot of really good stuff came out of that and really taught my kids entrepreneurship, my nieces and nephews, and it was a really great thing from that perspective. Unfortunately, I probably picked the wrong category in bottled water.

16:38
Jeff Church
I probably should have picked something like sunglasses or something that have naturally a much higher profit margin. So it became a difficult business for us, really, to sustain. But over the course of that four or five year period, we did donate several million dollars and brought clean water to a lot of people. So I kind of got the bug at that point in time about doing a startup. And around about a few years before that, I was in a business called Links Professional Grills, which was an outdoor gas grill company similar to a Viking. And it was at the time, in 2007, where there was a lot of focus on outdoor kitchens and bringing, like, restaurant grade quality into your homes. And this was a really great product. But didn't have a lot of love on it. The product itself was good.

17:16
Jeff Church
It just had a little bit of mismanagement. So I went in and bought it. I don't mind doing turnarounds as long as they're what I call feather dusters, that they're not structurally broken, but I can kind of optically clean things up, make them look better, and hopefully remove the block that's hurting them, and move on. And it was the first time I really got touch and interface with the consumer, because the businesses I'd been in before that were more industrial, b to b. But working with the consumer, I just fell in love with. I fell in love with. I called it cul de sac innovation, where I will take, if it's suja and the juice, bring the juices to my kids. If it's rowdy, I'll bring the energy drinks to my kids. And my wife's a big griller, so I'll get her input.

17:52
Jeff Church
I love the connection of the consumer, and that was really my first touch to that. So since then, I've really only done consumer and consumer businesses. But Nika was the first startup that I did that's amazing.

18:02
Daniel Scharf
Basically a nonprofit model and grow it to millions of dollars in sales. Did you find consumers were just really open? Did they know what the mission of the company was? Did that make it way more likely that they would be picking it up.

18:14
Jeff Church
Right off the bat? First of all, creating awareness is very difficult, as you know, and a product isn't out there, particularly in a sea of products that are known. So it's very difficult to create that awareness. I had hoped that the vocalness of the market on social entrepreneurship and businesses are giving back and doing it in working on profit, but also working on social impact and all that kind of stuff. I felt like that would really move the needle. Unfortunately, what I realized is that there are vocal extremes on either end of the spectrum, if you will, whatever bell curve you're looking at. But they tend to be the vocal minority, so they may be really loud in what they're talking about on social entrepreneurship and only helping brands that are better for you and helping brands have a social purpose.

18:56
Jeff Church
But when people get to their pockets, they get a lot stingier when it comes to buying stuff. And I found that people that want to give, kind of want to choose how they want to give on their own versus give through a product. So gave me a little bit of a different perspective on that than I had expected. Yeah, great.

19:11
Daniel Scharf
Okay, so it sounds like that gave you a lot of beverage industry learnings also. So can you take me through what it was like with Suja? Life, the beginnings, and just some of.

19:21
Jeff Church
The key learnings, wild and fun and crazy and everything in between. But I met a young guy named Eric Ethans who was making these incredible, these dark green juices. And one of his friends was guy named James Brennan, who Eric and James were my partners in Suja. And James kept coming to me. We were in another business together, and he'd bring these God awful dark green juices. Remember, I'm a midwestern meat and potatoes guy. So for me, green juices is a bit of a foreign concept. And he kept telling me, you got to try this. You got to try was in a glass bottle, no label. And eventually I tried it, and it literally stopped me in my tracks. And I felt like, if I can drink a dark green juice, anybody on the planet can drink a dark green juice.

20:01
Jeff Church
And we kind of, over time, proved a lot of that out, which was really fun to kind of look back on it. But we began to look at, we had a really good product, but it only had a three day shelf life because there was no kill step on the back end to protect it from pathogens and stuff like that. So it wasn't even a legal product to be selling that he was selling, but it was really good. So I started looking at, okay, what could we do with this? I didn't want to pasteurize it because it's already been done by naked and odoala and other brands like that. So we began to look at what are alternative kill steps that are less invasive and provide you with better quality of the functional ingredients.

20:35
Jeff Church
And we learned about HPP or high pressure processing, which basically evolution fresh and blueprint cleanse were just starting to do. They were the two in the front, the main two brand in the category, and uses pressure instead of heat to kill pathogens if they happen to be in there. So it's really much better from an efficacy standpoint, from a consumption. So thought, okay, that makes sense. It's not going to be as competitive as, like, pasteurization, tunnel pasteurization or stuff like that. That goes really fast. So it's going to be a little more batchy. But we felt like that was going to better for the product and kind of the offering and the guardrails and stuff like that. So we got the idea in, like, say, April of 2012.

21:12
Jeff Church
We literally were on the shelf in Whole Foods Southern California in September of that same year. Really interesting. Daniel? I went to Whole Foods with my water company. Nika and I flew across the country. At the time, I was living on the east coast, and I literally got three minutes with a buyer. But because it was a crowded category, they didn't really want to see me. But when I got in front of the buyer with Suja, the buyer was like, yeah, come on in. The category was right for them, so the category was right for Whole Foods, and they felt like it was going to be a really big category, and they wanted to find another brand that they could put in alongside evolution and blueprint, and that Suja could be that brand.

21:48
Jeff Church
And were, like, humbled that they were interested in us, but I think they looked at us as a distant third. And blueprint was on the east coast, were on the west coast. So it was a good fit. It turned out that they were right. By bringing us in and then others in, we grew their overall category of cold pressed juice by more than 50%. What they didn't expect is that were the ones that ended up being the winner of the category, and we didn't necessarily expect that, and we didn't have an opinion of that in the beginning. We were just happy to be a part of it. But literally, within three months of starting Suja, both blueprint cleanse and evolution fresh were acquired by larger companies. And it oftentimes happens with larger companies that you lose the founder focus.

22:26
Jeff Church
And so those businesses just kind of went off to the side of the road, and were left sitting on this highway with no cars on it in the middle of the road. Our thing was, we just got to keep the stick in the middle of the road here and succeed. We should be a winner here. So were able to just focus on execution. As you know, execution is one of those things that is more controllable than things like the demand, how you're going to get enough demand, are you going to get enough velocity? But kind of blocking and tackling, fundamental execution, we can be good at that. So we began on that process, and it took off. And again, when we launched it, Suja only had a 23 day shelf life because were using the HPP, but we didn't have the right sanitation procedures.

23:06
Jeff Church
We didn't have a plant. We had a makeshift plant, so it wasn't as clean as we wanted to be. Today, it's probably 100 days on shelf life on most of the products, and that's through improved process and sanitation. But in the beginning, I'm in San Diego, I would drive the truck, a 30 foot box truck from San Diego to Long beach every day, drop the product off and wait for yesterday's batch to be picked up and bring it back down to San Diego. So it was a full on, do everything as a founder type experience? Yeah.

23:33
Daniel Scharf
Well, that's amazing. And I'm just curious, how do buyers actually decide when they think a trend is ripe or when it's time for more brands within a particular space? I see when Whole Foods, for example, puts out their trends for the year because they just saw the competitive brands, they saw evolution, fresh or whoever, just starting to increase in sales. And that's when they decide this is going to be important for the category. And I want more space. Or is it gut feel from the buyer just about trends for consumers?

24:01
Jeff Church
Yeah, it's a little bit of both. It depends on the retailer, and some retailers are very formulaic in what they do and you have to do to stay on the shelf. And some are much more subjective. I'd say Whole Foods was one of the more subjective ones. Probably has changed a bit since with the Amazon involvement with Whole Foods transitioning as it has transitioned. But Errol and Dwight were two of the legends at Whole Foods for a long time, and they love to incubate new thoughts. And I think with Whole Foods, and you see this with Costco, that are more regionally driven in a lot of their decisions and regionally focused in their operations is things will start in a region and then they'll get traction and then the other divisions, other regions will see that and they'll want to pull that product in.

24:41
Jeff Church
So when we launched it in southern California, within a month or two, Rocky Mountains and the Texas regions of Whole Foods had seen our performance because they can see the numbers and they wanted to bring us in. And then a couple of months later, another couple of regions wanted to bring us in. Within a year, we had full distribution within Whole Foods. And it was, a lot of it was, I would say, timing and luck, but a lot of it was also were very, very flexible. So we started with a 999 16 ounce product because my partner Eric was selling these at people's doorsteps at $13.16 ounce bottle. And we felt like we had to be under a $10 price cliff, if you will, as a minimum. But still, $10 for a bottle of juice is expensive.

25:23
Jeff Church
And were getting it in Whole Foods, but we knew that we're not going to get it in middle America in a Kroger banner, let's say, which is really important to us to build a billion dollar significant brand. So we began to think we've got to come up with a second product that is priced at 399 or some price point that's lower, that we can reduce the ounces. We're not going to make the same profit margin, but at least we can have a product that can go where the mass can go. And hopefully it's about, I don't know, six months into, not even six months into it, three months into us launching, Suja came to us and said they want to create their own proprietary line. They want a brand to do it, so they don't want it under their brand name.

26:02
Jeff Church
But they were asking for us evolution and blueprint to all pitch on a line. And we all did at Expo s that was coming up in 2013, like three or four months later, we scrambled. I mean, not many brands that I know would come up with an entirely separate product line within three months of just launching their business. So I'm very much of the attitude, Daniel, that when opportunity knocked, you don't say, hang on, I got to finish. My mean, you kind of grab it by the throat and you wrestle to the ground, you make things happen. Otherwise you don't know when that opportunity is necessarily going to come back. So I'm sure it costs me more money to do it. Most significant natural foods retailer in the world approaches you and wants to do this. I mean, you jump.

26:39
Jeff Church
I mean, I jumped and we jumped. And we showed up at that expo west at their Whole Foods meeting where they had all their regions, and we had 45 minutes to present our products and we nailed it. Brian Rivley, our culinary, I mean, he killed it. He's a color institute of America trained chef. And just the formulas that he made were amazing. They picked all of our flavors and we launched that at Whole Foods the following year. So we had two product lines in Whole Foods.

27:04
Jeff Church
And we knew that the long term strategy was to reduce the 16 ounce and just have the twelve ounce, but we really needed to kind of harvest the margin umbrella, if you will, from the higher priced ones to help pay for us, because were so early in our development that we didn't have our cogs down to the levels that we needed them to be at.

27:21
Daniel Scharf
And the product that you were doing for Whole foods, were they very different from your line or mainly different flavors?

27:28
Jeff Church
Yeah, that's the challenge, is they were very much the same because we use just natural ingredients. We don't use any additives or anything. It's just fruits and vegetables. So we did get a 25% savings by dropping it from a 16 ounce to a twelve ounce. But the product itself is the same. That put us in a bit of an awkward position because we've got these two product lines out there that are kind of the same. So we had to deal with that for a couple of years until we phased out the 16 ounce product line. But it was a transition that I know a lot of people that will launch products that are, frankly, too high priced. And if you're too high priced, you just have to judge the elasticity of demand to understand are people willing to go over that cliff?

28:05
Jeff Church
And I think in a lot of cases, there are certain cliffs that are, at least in the beverage space, that are super important. Like $3 is a very important cliff in the beverage space. And if you're over $3, that's a mass product. That's a difficult price point to be successful at. I think were successful at it. People were able to realize that most products, whether energy drinks or a lot of sodas, that kind of stuff, you literally have a water content that's probably 75% of the total formula, whereas in Suja, it was 100% fruit and vegetable. So it was just a more expensive product. Got it.

28:35
Daniel Scharf
And people always ask about when's the right time to consider private label opportunities. A lot of people would say, if you have a real innovation that nobody else has, don't jump into that. Too early to compete with yourself. But maybe in this instance, because there were a couple other brands in the category already growing and Whole Foods was asking for the pitches, it was going to be you or somebody else, it maybe was more of a no brainer for you to just jump in for it.

28:58
Jeff Church
Yeah, I think on the private labeling, I think it comes down to, are you a manufacturer or are you co packing? Because if you're co packing, which is what most of us do in this space, it's difficult to do a private label because then got another margin layer that you're adding. On top of that, were manufacturing. So when you're a manufacturer, the challenge you have is you don't have enough stuff running through your plant in order to amortize your cost to get to the lowest level. So private label, if you're a manufacturer, notwithstanding the strategic implications, but from a cog standpoint, from a profit standpoint, is a really smart thing to do.

29:31
Jeff Church
Now, the strategic impact of it is I'm not as hung up as a lot of people are on private label, because retailers are going to do it if that's their strategy to do it. They're going to do it, and you might as well be absorbing that overhead with it if you're a manufacturer than someone else. And keep your friends close and your enemies closer, almost, if you will. You got to align that a bit with your retailers is keep them really close to you. But then the other thing with us is speed to market. The nice thing about doing your own manufacturing is you can get into the market very quickly.

29:59
Daniel Scharf
Yeah, makes sense.

30:00
Jeff Church
Okay, cool.

30:01
Daniel Scharf
So, not to jump forward too fast, but because there is a lot for us to cover. You were at Suja for eight years, I think, and then jumped right into rowdy energy. Can you tell me a little bit more about what was it like at the end of your time with Suja, and how did you decide to then start a new venture? How did you come up with the idea and decide to go for it?

30:20
Jeff Church
Yeah, great. So the end of Suja, we had gone through a transition where Coke had bought half the coke, and Goldman Sachs had bought half of Suja in 2015 at roughly a 300 million dollar valuation. And the plan was for Coke to buy the balance of the company in 2018. And were part of the VEB group within Coke venture emerging brands. And it was something I was sensitive to when I did the initial deal with them. Would they close on a two step deal and talk to me over and over about, they've never not closed on a two step deal. And this is when Mutar Kent was the CEO of Coke. Well, I did my deal with Mutar, and then fast forward three years later, they had a regime change.

30:58
Jeff Church
There was new leadership in, you know, anytime there's a regime change, what I've learned is that new leader, they don't really want any baggage they didn't create attached to them. And I think, you see, unless things were going absolutely perfectly, Coke didn't really move forward with any of their two step acquisitions. And in fact, Coke made a strategic decision to get out of more of the non shelf stable products so that more stuff could ride on their truck. Like they've gotten out of honest tea, they've gotten out of Ziko, gotten out of Otwala, didn't close on Suja. They didn't tell us that at the time, which would have been really nice of them to tell us because we thought it was us.

31:35
Jeff Church
And we literally got to the date three years later, and Coke had come into our plant earlier the month in June, and they were supposed to let us know at the end of June. And they had done a presentation of what it's like to be part of the coke organization, and literally they no bid us. On the last day, my entire 300 person factory get a presentation of what it's like to be in the coke organization. And then two weeks later, they didn't execute on their, told us that they weren't going to go forward. So it was a real kick in the gut. I liken it to being, I've never been left at the altar, but I've written a book that I'm probably about three quarters of the way done that. It starts with my first chapters being left at the altar.

32:10
Jeff Church
So it'll be interesting reading, but deal with them. And then were left in a situation where they passed. We had a lot of debt. We were losing eight to $10 million a year, and were, like, in a world of hurt, and this is in 2018. I was able to restructure the debt, push it out a little bit, bring in some short term capital, even though it was dilutive, cut the crap out of the entire business. And we had this shot business that had been growing, and my wife and one of our team members had a shot idea years earlier, and were concerned about shots not being the little two ounce shots, like the five hour, but really better for you. And were concerned about where are they going to go in the store. They're going to get footballed around, so we'll lose the opportunity.

32:51
Jeff Church
So we kind of wanted to wait for somebody to come out, but we really had a line develop. So then all of a sudden, a couple of brands came out and got some traction, and we felt like it was time to go. And the beauty of shots from SuJ's perspective is you're talking about a 60% gross margin, much higher gross margin than the cold breast juices, for example, just because the volume is so much less. They literally helped us transform the company. And I think the shots, they are a very big part of the company's business. So we had that product ready. Who knows what it would have happened if we launched it earlier. But we also got the benefit of it then. And then eventually, we found a private equity firm that was interested in buying the business, and we sold the business.

33:27
Jeff Church
But I was ready at the time. Burned out. We had done something like nine or ten fundraising rounds in the eight years that I was there, and I really drove those rounds. And those are for entrepreneurs that have done fundraising rounds. If they're kind of unexpected or more than investors expect, you're kind of giving away a body part with each late fundraising round. So it were very challenging to do. We were in a period of time when retailers, as they often do, when they see something good, they bring too many brands in, so they over proliferate the segment. And that's what retailers did. They brought in six or seven, eight cold pressed juices, and the market's not that big to be able to handle that. And Kombucha was coming at the time.

34:04
Jeff Church
And so we saw a big transition with retailers reducing the amount of cold pressed juices, but they reduced all the ones that weren't Suja. So we really benefited from that reduction by improving our market share. And now they've got two or three brands, which is probably what they should have.

34:18
Daniel Scharf
So anything that you could have gone back and done differently, a decision, it could have gone the other way to cut the burn that you had, the eight or 9 million a year that you guys were losing. Is there some big strategic decision you could have taken along the way to improve your profitability?

34:33
Jeff Church
Yes, there's a couple for sure. One is getting my gross profit margin to 40%. So were manufacturing, so there was no copacking network for what we did. There was no HVP network for what we did, so we had to do our own manufacturing, which I've done my whole career, so I'm not opposed to that. It just costs more money. So, in Suja, for this excludes any liquidity activity, but over the ten year period, we raised about $110,000,000 in total, of which about 60 of it went into our various manufacturing plants we built along the way. And then the other 50 or so went into brand building, covering losses until the revenue got to a high enough level.

35:08
Jeff Church
And what I deep dive on what would have happened if I had been able to get the gross profit margin to 40% after the second year, starting in year three. And believe it or not, it would have lowered the total raise from 110,000,000 to about 50 million. So just getting the gross profit up, it averaged about 28, 29% for the first five years or so. And then it started ticking up as we got size and as we got the shots and all that happened today, it's a very healthy gross margin. What would you have done?

35:34
Daniel Scharf
You would have increased price or you would have focused on.

35:37
Jeff Church
I would have focused on it more. I mean, were growing fast. So at some level, you were just trying to hold on. Like, our first year sales were 600,000, our second year sales were 18 million, our third year were 44, our fourth were 67. And then it kind of went off from there. So they were really kind of disruptive, dynamic growth some level, just trying to hold on and hold on with a safe product. But I would have allocated more time, more professional management to getting that cogs down, which is really one of the reasons went with the Coke deal was we felt like they could get us into the food service space, which didn't really happen, but that would have been a really big opportunity for the brand that would have really helped us with our cogs.

36:13
Jeff Church
But just getting that gross margin up to 40% and being diligent and I can pretty easily today look at someone's cogs and say, okay, I think we can probably take 20% out of your cogs in a fairly short period of time by doing these handful of things. So I feel like it's out there to do. It's just a question of are you focusing on it? But just that one thing would have made that significant of a difference.

36:35
Daniel Scharf
Yeah, really interesting to hear. And I'm sure that resonates with a lot of brands these days trying to figure out growth versus profitability. Okay, so then fast forwarding, tell me about starting rowdy energy and what the progression has been like.

36:47
Jeff Church
So right at the time I was about to transition out of Suja, I got a call from a NASCAR driver named Kyle Bush. He's one of the top NASCAR drivers and he had been an energy drink ambassador for Monster for a number of years. Really liked the space and wanted to get into it. He had found me as a beverage entrepreneur and he approached me about potentially partnering and doing an energy drink together. And I looked at the space with him and I said, definitely interested, as long as we can find kind of consumer white space and retailer incrementality. Because if you don't, then they're not going to put you on the shelf on a crowded space.

37:19
Jeff Church
And if they do put you on the shelf, you're not going to get off the shelf because consumers aren't going to pull the product because it's not white space to them. So we did a deep dive into it and looked at a lot of mentel data, and I figured out that men and women both consume about the same amount of caffeine on a daily basis. But energy drinks are probably 65% male, 35% female. And when you look at it's because women generally feel like the energy drinks are full of crap and they are 99% even celsius. A good quality, high quality brand uses artificial sweeteners. So it's like we decided we're going to create an all natural better for you energy drink called Rowdy. Maybe one of the mistakes was calling it rowdy.

37:53
Jeff Church
Rowdy is Kyle's nickname in the NASCAR world, and he really wanted to have that name. Probably for a better for you energy drink. That may not have been the best name with hindsight, as I've kind of diagnosed, and we might have been able to do differently with it, but we launched the better for you product, I think because of maybe my background in CPG and Kyle's background in the energy drink or in driving. And as a celebrity, were able to get really broad distribution, and we grew into probably 25,000 doors within 18 months. The product wasn't turning fast enough. And what we realized is that one of the mistakes I made was that I had set up a rule at Suja that a learning that you don't have to be first in a market, you just don't want to be 51st.

38:31
Jeff Church
We were third in the cold pressed juice market. In the energy drink market, I kind of violated my lesson learned, and were probably 101st. So very crowded space. So if you get in there, you're in a big set. It's growing. It's kind of an illusion because it's growing fast. It's the fastest growing large segment that we have. It's an $18 billion segment growing at eight, seven, 8% a year. So it's really attractive with two brands that make up 80% of the total and breakout brands that are coming, like Celsius and others. And so it's very attractive to look at, but it's very hard to break in. And when you do break in, you have large slotting fees because retailers will let you in, but they're going to charge you.

39:07
Jeff Church
There are some retailers that will charge a 4k slotting fee per flavor per door to go into. So when you get stuff like that, unless you're going to be in there for several years, you're not going to be able to pay that back. So we had high slotting and our velocities weren't there. We differentiated. We had created our first product line. We called our core line very electrolyte focused. I guess it wasn't differentiated enough. We created a second one that has metabolism burning stuff in it. It was much more developed, and then we did a much better job on the branding. But it was a little bit too late for the product line.

39:40
Jeff Church
And unfortunately, we didn't get the velocity that we needed to get, I think a little bit because went too fast with distribution I talked to a lot of people about the need to. The traditional launch of a product would be a natural foods limited geographic launch, and then expanding that and then adding strategic grocery accounts, let's say, in there, and then building that out over time. It was energy drinks. So I felt like we could go broader, quicker, and I felt like with Kyle's background, that would help us. And I think what also happened is marketing has changed.

40:09
Jeff Church
It's been changing in the last five or six years, and it's gone away from it was it used to be you have to hit a consumer seven times before they're going to know the brand well enough to be able to go in and make a destination trip and see it on their shelf and pick it up. It's gone away from that, and that the model was like field marketing and a lot of touch points to get in front of the product. And it's gone much more to influencer, ambassador, celebrity, kind of trusted confidant by the consumer who they can rely on. And it's really shifted that I don't think we did a good job, rowdy, in shifting that focus. And although Kyle is premier within the NASCAR channel, he's not really well known outside of the NASCAR channel.

40:49
Jeff Church
And then what we also realized in the NASCAR channel is that people really like their driver, and there's 40 drivers, so if he's not their driver, then they tend not to like that driver a lot of times. So there's a bunch of mistakes that we made along the way. Unfortunately, with Rowdy, we have had to make the decision to close it down, and that's been a very painful decision, one that we didn't take lightly. I didn't take lightly myself. I put an incremental million and a half dollars into the brand over the course of 2023 to try to make it work. We felt like we had another celebrity to bring in, another equity firm, but the deal kind of fell apart. It's very disappointing. Wonderful people in the organization, people that kind of gave their all, and unfortunately, it didn't work.

41:33
Jeff Church
And I talk a lot with founders about don't throw the talent, because you never know. Success might be right around the corner. And I know that feeling of just let me give him a little more time. And in our case, the market told us that they weren't willing to invest more into it. And I was tapped out personally, and Kyle had put a lot of money into it himself. He was tapped out, and unfortunately, weren't able to continue to effectively fundraise for it. So we had to close it down, but after a lot of very difficult discussions and us trying as hard as we could, but very challenging situation with unfortunately more lessons learned now, which I wasn't really hoping to have more lessons learned at 62 years old.

42:12
Daniel Scharf
Yeah, thank you for sharing that. I really appreciate the vulnerability and sharing all the lessons learned along the way. And I think a lot of people know I also was running an energy to break drink brand over the last couple of years and I felt those market dynamics squarely. It's a super hot category, which means it's incredibly competitive as well, especially all of the new consumers know. I think Celsius in particular has brought into the category and then with the deal with Pepsi and all of the space that demands from retailers, they just make decisions a lot quicker. And I mean, I just saw a lot of category managers saying they were making very harsh decisions on space because of those things. So I certainly appreciate all the obstacles you were up against. And I also.

42:52
Daniel Scharf
Yeah, I mean, every book that I read about famous entrepreneurs, I feel like there are points in there where the business is on the point of failing and it's either do or die. And I think they probably know though, in their hearts whether it's something they need to fight through and just risk it all going for or versus making, I think, an informed decision about, okay, maybe this isn't the one and the next one might be.

43:14
Jeff Church
Yeah, I think you need to see some proof point, right? You need to see some proof point that you can hang your hat on that, okay, we can see that this is working. And therefore, if we push more on this, we're going to be able to make it work. And while we saw nice improvements with the second product line that we launched, we never got the branding right. That was going to happen in 2024 and that was killer branding. But we ran out of time. And I do talk a lot with also people about the rule of twos. I refer to it as is that everything takes twice as long as you think at the beginning and costs twice as much money.

43:45
Jeff Church
And that's a little bit of an exaggeration, but as an entrepreneur, you don't want to go into something if it's as like tight as tight can be. And you got to hit on every single metric in order for yourself to be successful. Because shit happens. These are emerging. I call them emerging shit show brands. I mean, it's like ready, fire, aim. You're dealing with a whole bunch of different things coming at you at all different times and they're challenging and that's why startups have a low probability of success unless they use organizations like yourself, startup CPG, use the resources, use the tools that you have, use people that have had the learning experiences, and just make sure that you've got.

44:26
Jeff Church
If you're a founder that you've got, and you're a sales and marketing oriented founder that you've got, a finance and accounting and admin type person doesn't have to be a co founder. It can be an employee, it can be a family member, it can be a peer, it can be a partner. But you got to be able to balance yourself so that together you've got real competency across all the functional areas. Because if you don't, it becomes very apparent when you're going through the fundraising process that okay, you can have the best sales and marketing person in the world, but if you don't know how to manage your cogs, make money on those products, it doesn't really work. And you can have the best, tightest process and all that kind of stuff in the world.

45:01
Jeff Church
But if you don't have the creativity and the ability to ask for the order and the uniqueness to grow that retailer's category, you're not going to get on the shelf. So it's really important to kind of have to think through that stuff.

45:13
Daniel Scharf
Makes sense. Yeah. So what's next for you, Jeff? What will you be up to in the coming months and years? What's your plan now?

45:20
Jeff Church
Yeah, I mean, good question. I'm really interested in creating Teamchurch Co. And Nico was a great business because were able know give back to people that didn't have what we have in the United States, frankly, and make a difference in their lives. And my wife and I for a long time have had a dream of creating a business called dream makers where we could help people achieve their dreams by providing capital or experiences or knowledge and just give people that, not a handout, but a hand up and help them do their thing and be all that they can be. And team church is really about working with entrepreneurs at any stage that they're at. And if I can add value to what they're doing, adding value in some way, if I can learn from them, learning from them as well.

46:08
Jeff Church
But I really want to create a website that's got some services for people that don't have the funds to pay for services, but also has some service for people that do, but has a range offerings that range from kind of one one, monthly consulting by me to specific project type stuff to been thinking about potentially doing a master class. My kids want me to do that. I'm not really sure how to do that, but I feel like working with ten or so founders that are within a year of launching or a year just after launching would be a really great thing to do in a peer group to kind of benefit from people at different stages.

46:43
Jeff Church
So I've been flushing an idea out with that, but I really want to rather than do it as all those eight companies that I've had over the years, I've been the CEO and the person kind of at the mass doing it. And I'd really like to transition where I can work with other people that are in that position now. And I really find a lot of joy in working with people. And there's so much to what I'm finding is even if I'm consulting for someone, I ought to be able to save someone five times what they're paying me or what they're paying someone. Anyone that's paying an outside group that is an entrepreneur, you should be able to generate value of five x what they're paying for you, or you should find someone that can.

47:22
Jeff Church
I find there's a lot of charlatans out here trying to pitch services that are going to potentially pitch you down the wrong area. So it's really important, again, if you align with people like yourself, Daniel, you see it all day long, I'm sure, but you can help keep sticking the middle of the road for people, but people just get bad advice. So if I can just help people get better advice, at least advice for me, that worked, I think that would be a positive thing to do and I really enjoy doing it. Amazing.

47:46
Daniel Scharf
All right, well, I'm really excited to see what kind of services you'll start offering through team church. And if you get that masterclass going, that'll be really exciting. So I just want to wrap up today's episode. So thank you so much, Jeff, for sharing all of these insights about entrepreneurship and fundraising leadership. And just really excited to hear more about your consulting for emerging CPG brands. And just before we go, is there a good way for people to stay in touch with you and hear more about what you'll be doing?

48:15
Jeff Church
Yeah, great question. And I would encourage people, just reach out to me through LinkedIn. We're building out the Teamchurch co website and would love to hit me out on LinkedIn and love to start a conversation with if you're as an entrepreneur, if you're anxious, you can't sleep, you're feeling the way to the know, you're probably doing things about right if you're feeling that, because that's kind of the status that you're in. And Daniel, you mentioned a couple of times, sometimes we kind of feel like we're going to lose it. I probably felt at least three times I was looking over to the abyss into is this business going to make it or not? And I had my family's money into it, my own money into it, my friends money into it, institutional capital into, you know, those are heavy weights to have.

48:59
Jeff Church
But keep true to your true north. Keep your lighthouse and keep course correcting. And work with organizations like Startup CPG. Check me on LinkedIn. Just ask for advice. You don't get what you don't ask, you know, ask for it and you'll get more than you think. So I just encourage you to not be disillusioned in the process. You can change your stars. You can use it to jump socioeconomic levels. You can do all of that if you work hard at it. You get a little bit of lucky. You surround yourself with the right people and you have a great product.

49:29
Daniel Scharf
I love it. Thank you for ending us on a very inspirational note. So thank you everybody for listening. And thanks again to our guest, Jeff Church, and definitely follow up with him on LinkedIn or via the website Teamchurch Co. Jeff, thank you again.

49:43
Jeff Church
Thank you, Danielle. I appreciate it. Thanks everybody.

49:45
Daniel Scharf
Take care. All right, everybody, thank you so much for listening. If you enjoyed the podcast today, it would really help us out if you can leave a five star review on Apple Podcasts or Spotify. I am Daniel Sharf. I'm the host and founder of Startup CPG. Please feel free to reach out or add me on LinkedIn. If you're a potential sponsor that would like to appear on the podcast, please email partnerships@startupcpg.com. And reminder to all of you out there, we would love to have you join the community. You can sign up at our website, startupcpg.com to learn about our webinars, events and Slack channel. If you enjoyed today's music, you can check out my band at the super fantastics on Spotify music. On behalf of the entire startup CPG team, thank you so much for listening and your support. See you next time.