The Startup CPG Podcast

Bob Pankey
One of the things going back to Hot Pockets, one of the things that we always would hear was consumers, more meat. You couldn't put enough meat into Hot Pockets. But then we would run a focus group study with them. We would show them a sample that had 20% more meat in it and then we'd show them a sample with 20% more cheese in it. And hands down, they wanted the cheese. So. So consumers will tell you something, but you have to kind of read between the lines because they think they want this, but what they really want is that savory eating experience. And that's another thing that I tell my clients. Your product has to taste good. Your product has to be something that people want to continue to eat.

00:47
Bob Pankey
You may have the best, highest amount of protein, you may have the highest amount of fiber. You may be gluten free, you may whatever your other guardrails are. If the product doesn't eat well, you don't have a product.

01:01
Adam Yee
Hey everyone, this is Adam Yee, Food Scientist and podcast host of Startup CPG R&D Radio where we interview food scientists and product developers and what they do and how they can help you build your CPG business. Today I'm interviewing Bob Pankey who owns Castlewood Food Innovations, which helps emerging and growing CPG food brands turn innovative product concepts into commercially viable products. They provide hands on expertise in product development and commercialization, helping startup CPG founders navigate the path from concept to successful retail launch. Bob gets a ton of clients from the Startup CPG's product developers database and I ask him why he believes why people choose him. I will say Bob is one of those rare people who's done a little bit of everything he's done.

01:43
Adam Yee
Canned chili, corn dogs, waffles, baby food, confections, compound butters and 14 years building hot pockets into the powerhouse that it became. He is a jack of all trades and that range is exactly what makes his perspective so valuable. I, as a novice formulator also learned a lot from his expertise in this conversation. We get into a lot why the simplest formula is all also always the one that survives. A jump from benchtop to manufacturing. How to coach a founder through the hard truth that they may not make money the first two years and why sometimes the smartest move is taking someone out of chasing retail. We dig into protein and fiber and we also dig into other trends such as clean label and ultra process.

02:23
Adam Yee
And we also talk about some problems that we observe as food scientists, such as kind of the waste supply crunch and the fascinating psychology of Ingredients. Bob is an example of where parents happily ate a hemp protein product themselves, but they were hesitant to serve it to their kids. And I'd love to have you guess why. If you've built the food product or just love the craft on how food is made, this one is packed with great advice. Enjoy this episode with Bob. I'm sure you'll learn a lot if you're looking to connect with buyers, investors and industry experts in real time. Join our community Join our free Slack community with over 40,000 members and get access to exclusive events and trade shows where you can meet those buyers and investors in real life. Tap into free resources and more. Text CPG to 833-605-7002.

03:12
Adam Yee
That's 833-605-7002. You can definitely find this on a transcript of this app and the team will get in touch with you. Welcome back to R D Radio. I'm here with Bob Tanke today and a very experienced product developer and I'm here to learn from the best actually. Bob, welcome to R and D Radio.

03:34
Bob Pankey
Thank you very much. Glad to be here.

03:36
Adam Yee
Great. For sure. And I got this message from Daniel, the founder and he said like, hey, you should interview this guy. He's gotten a lot of value from the product development directory that we have, which we work really hard on this type of like database for a lot of people to find and look for their product developer. There's a lot of product developers on there. So I'd love to hear just for this part, how people are finding you through that or why did you decide to like go on this platform and put your info in and then like, how are people finding you? In a sense?

04:07
Bob Pankey
Yeah. So I met Daniel probably about five, six years ago at Expo West. We spoke for a few minutes and I've kind of followed the Startup CPG website and Slack channel since then. And then earlier this year, I want to say probably beginning of this year, I saw an email from startup CPG saying that they were going to be putting together a product developer database, a listing and would I want to be involved with that. And immediately, I mean I jumped at that opportunity to get out there and to get my name and company out there to help people like this for various startup products. So I signed up immediately and literally within a couple of weeks I started getting emails and calls from individuals asking if I could help them.

04:48
Bob Pankey
And I've talked with several of them since but for sure, but I've asked them when you reached out to me, was I the Only person you reached out to. And they, for the most part they were saying no, probably anywhere between four and six people that they're on that database that they were listing, they were reaching out to. And so one of the things that I try to do is jump on this as quickly as possible. I try to respond, let them know that yes, I'm interested, yes, I can help them. Yes, let's schedule some time to talk sort of thing. And so they would reach out, we'd schedule some time to talk, sometimes half hour, sometimes an hour. And I'd understand what they're doing, where I can fit in to help them.

05:24
Bob Pankey
One of the things that I see for myself, given my experience in years in the industry.

05:29
Adam Yee
How many years you have, Bob?

05:30
Bob Pankey
I have 40 plus years now in the industry and I love it. I mean, I love what I do. I jokingly tell people I get paid to eat sort of thing and I love the variety of things that I get to work on and see. All throughout my career, I've never specialized in one specific angle or avenue within the food industry. I've kind of been a jack of all trades and I definitely have developed some philosophy, some thoughts on how to look at things, how to think of things. I try to keep things very simple. I think a lot of developers try to over complicate things a lot of times.

06:00
Adam Yee
I agree. Yeah.

06:01
Bob Pankey
And really, more often than not on the benchtop, that's fine. But transitioning from benchtop to manufacturing, the commercialization process, the more complex your formula is, the harder it's going to be to manufacture.

06:12
Adam Yee
That's true. Yep.

06:14
Bob Pankey
And the more difficult it's going to be to have consistency sort of thing in your product. So I try to look for a very simplistic approach that way and doing that way. So a company would reach out to me, a client would reach out to me, we'd schedule some time to talk, I'd understand what stage in the process they're looking at. Do they have product already in the market and they're looking to develop new ones? Where do they stand on this? And everything kind of associated with that process. More often than not, they don't have a single product in the market yet. They have a concept, they have an idea.

06:43
Bob Pankey
They want to take this product that they had in their family for years and they want to commercialize it and take it to market they think is great and there's nothing wrong with that's ideal. But I told them, are you sure the consumer wants what you're offering them? Are you sure you're offering them what they need, what the consumer is looking for. And a lot of times it's not necessarily a change in product, but it's almost a change in format, packaging, how you'd look at that. I know one of my clients recently was looking at a breakfast cereal. All right. And he was thinking putting it in a one pound bag and selling it at retail that way.

07:19
Bob Pankey
And after talking with them and after working through them a little bit, no, we ended up changing it when we're going to do individual cups of this breakfast cereal. And so the convenience factor is just as much a part of the product as the product was the actual food itself. And so trying to look at that and how they think about that.

07:36
Adam Yee
Yep, for sure.

07:37
Bob Pankey
I also ask them, financially, this is a big undertaking.

07:41
Adam Yee
Yes.

07:41
Bob Pankey
Get into this. I mean, big companies spend millions of dollars to launch a product and not that big client needs to have millions of dollars to start a product, but they need to going into this, that there's going to be costs associated with this and those costs can get significant and making sure that they're prepared and ready for that sort of thing.

08:00
Adam Yee
Yeah, I definitely agree with that. You know, you are running a business at the end of the day. Right. And a business requires a different mindset than making a product in your kitchen.

08:09
Bob Pankey
Exactly.

08:10
Adam Yee
Yeah. And it's hard to wrap around this. I kind of in the same boat as you. I'm also in the product development directory and I talk to people who just have an idea and sometimes we have. I assume you agree, coach them in how to look at the food industry in more of a bigger scale. Right. The stuff we're used to doing in our factories is quite different than the people who want to bring their idea to life.

08:31
Bob Pankey
Exactly, exactly. And then also what are their expectations? I mean, and I kind of tell them you're not going to make money the first year or two years that you have this product. And if you go into that with that need, that mindset, this may not be the exact thing that you should be doing at this point. Then I said, ideally, you want to look at this as a business and make sure you cover your costs and make sure you at least break even. You don't want to necessarily lose money, but don't expect to make a lot of money the first couple of years while you're out there.

09:01
Adam Yee
Do you think you convince people out of making a food business then?

09:04
Bob Pankey
I have. In the six years that I've been consulting now, I've probably talked at least three Individuals out of pursuing and moving forward or at minimum I've talked them out of thinking, nope, you're not going to get in to retail. Don't chase retail right now. And especially in this day and age with websites and you can market your product, business to consumer directly, do it that way. And there's a huge need for that. In fact, one of my most recent clients that I'm working with that found me through the directory was up in Vancouver, British Columbia and I said, start, put together a website, get it out there and let people start seeing this and thinking about this.

09:42
Bob Pankey
That literally the first week that she had her website live, she got 12 companies or 12 people approaching her wanting to buy her product and she hasn't even made the first sample yet.

09:53
Adam Yee
Love it.

09:53
Bob Pankey
But in this day and age that's a very viable way to run a business and start a business.

09:58
Adam Yee
Yeah.

09:59
Bob Pankey
So I always tell people, get out there. And another thing that I tell them is be open to change. You think you're going to be going down the route with this product in this kind of packaging and like I said, you know what, you're going to learn stuff that you don't even know that you don't know at this point and be open to change. Sometimes companies or individuals can be so kind of rigid like, nope, I'm going to make this product, I'm going to sell it.

10:22
Adam Yee
Yeah, I'm going to add this ingredient has to be this claim, right?

10:25
Bob Pankey
Yep. Another example of that. Other recent clients that I'm working with, we started out developing this breakfast cereal. Going back to this product, they wanted it to be gluten free and okay, to be honest with you, in my mind their reason for being was more protein fortified and a high fiber cereal, but they also wanted it to be gluten free. And so I started on the path showing them prototypes that way and they're like, this is not quite what I'm looking for. And I said, I think if you get out of the gluten free parameters or take those guardrails off, you can be very successful doing that. And so he basically said, you're right, let's stop at this point.

11:03
Bob Pankey
We basically almost went back to the starting point and developed a new prototype for him being a gluten containing or a conventional type product and he's very happy with it. And now we're at a point where he's starting to look at comans how to commercialize this and looking at that,.

11:18
Adam Yee
I do want to just interject a little bit on that one. I think that's a really good point on terms of, like, these trade offs. Right. And you only get to see these trade offs when you're actually presenting them. Right. As a food scientist, you understand the functionalities of ingredients. Right? Gluten free. Gluten free. They have pretty different functions and sometimes it's good to see and have the client taste it. I don't want to say enforce your point, but more so like to understand the challenges of replacing something.

11:44
Bob Pankey
Exactly.

11:45
Adam Yee
So I do love this. I am curious because I would say the directory is very competitive and I'd love to hear or I don't know, if you ask your clients, like, why they chose you at the end of the day. So we can help maybe other consultants figure out the way to. Because I do think it's kind of black box in terms of like, how we as consultants, like, figure out exactly how we stack up, I guess to say you're right.

12:07
Bob Pankey
And it was interesting after I met with Daniel 2 weeks ago There at Nootopia here in Colorado, I went back and I've been given that some thought also is why do people choose me and then how do I go through the selection process so that they narrow it down to me?

12:22
Adam Yee
Yeah, yeah.

12:23
Bob Pankey
Like I kind of said earlier, I think speed and reaction time is important. I mean, it seems like I want to sound old school at this point, but it seems like everything is slowed down and people responding to an email. I'm like, I'm not saying you have to respond within minutes, but I mean, you should be responding within a day.

12:40
Adam Yee
Yeah, I agree. I agree with that.

12:42
Bob Pankey
And a lot of these companies, they're excited. They want to keep that. And that's another thing that I coach people on. Keep your momentum. All right, Momentum. Whether it's professional business momentum or it's even personal momentum in life, that momentum will carry you through a lot of things and help you with that. So I try to respond right away. It was interesting last or two weeks ago when I was talking with Daniel at the show. One of the things that came up and I started it just popped in my head is I kind of said, so my company is Castlewood Food Innovation. I wish I would start with an.

13:12
Adam Yee
A. Yeah, I know. I say that too. Yeah.

13:15
Bob Pankey
Old school telephone books. You want to be AAA Food Delta.

13:18
Adam Yee
The reason why Amazon was made. Amazon was made because of the A. Yep.

13:23
Bob Pankey
So at least starting with a C or higher up in the directory. But yeah, people are scanning through that. I also try to think and list what products I have experience with, and I've listed quite a few. One thing that I've also kind of prided myself throughout my career is I've got into opportunities where, you know, 20 years ago, I never had a single experience making waffles.

13:44
Adam Yee
All right.

13:45
Bob Pankey
But I had experience with corn dogs. So I was batter savvy. I understood batter formulation and how they react and some of the nuances of working and handling a batter. And that translated very well to waffles. And understanding that one of the companies that I was working with, they had this expectation or thought process that their waffle batter had an indefinite shelf life. And I'm like, no, no. It's a reactionary product. You have a leavening system in there being baking powder, and you need to give it time to start to react. So you don't necessarily want a time zero product, but then you also don't want it to go out for hours. I mean, in all honesty, you probably have half hour to 45 minutes to use that. And you. So you need to scale your batches in such a way that will.

14:30
Bob Pankey
You can use that batch in that time frame and then create another fresh batch to follow behind it.

14:36
Adam Yee
What they were leaving, like waffle batter for like days or something?

14:39
Bob Pankey
I mean, like beginning of the ship, they would make this giant batch and then taking the entire shift to use it.

14:45
Adam Yee
Yeah, I see.

14:46
Bob Pankey
By the end of the shift, the waffles had a different word.

14:49
Adam Yee
Tough.

14:50
Bob Pankey
Exactly. They were very tough and leathery. Whereas before that they had a lot of spring to them and air structure in the crumb itself and ate very well. So it's just kind of understanding kind of that process and how that works and what that looks like.

15:04
Adam Yee
Yeah. Food size is really interesting. Right. In terms of that, I think one of the things I was specialized early in my career was plant based meat.

15:10
Bob Pankey
Okay.

15:11
Adam Yee
What I learned a lot about plant based meat is were actually comparing a lot with different proteins. So when I pivoted to my practice, I focused a lot on protein functionality and understanding how proteins interact in a food system. And that has become really valuable, especially as, like, meat and dairy are getting more and more valuable in the market. So I think that's something to really keep in mind is like, even though I know some people seek, like the experts on a certain product, you'd be surprised, kind of the innovation that you can get from someone who might be a little bit outside of that scope or adjacent to the scope of what you're looking for.

15:43
Bob Pankey
Yeah, exactly. I mean, I think of things from A different angle. And I've always kind of enjoyed personally and professionally trying to do something different and brand new. Most recently, I'm doing a lot of work with popcorn.

15:55
Adam Yee
All right.

15:55
Bob Pankey
And everybody wants protein popcorn right now.

15:59
Adam Yee
They do. Yeah. Kardashians want it too. Or they already have it. They already launched it.

16:03
Bob Pankey
Exactly. And what does that look like? How do you do that? Like you said, a lot of different proteins that you can use. Right now, it seems like everybody is using whey protein.

16:13
Adam Yee
Yep.

16:13
Bob Pankey
And that market, I won't say drying up, but there's only so much whey protein right now currently in the market. In fact, one of the big players here in Denver is Laprino. They're known as a cheese company, mozzarella cheese company, but they have a nutrition division that produces a lot of dried whey. And talking with their experts in house and everything, there's basically saying, bob, we're sold out until late 2027. Wow. Okay.

16:37
Adam Yee
Yeah, it's crazy. I mean, I get a lot of these dairy projects and I think we're seeing a lot of innovation. The casing front. Yeah, like calcium case cellular casing, but still the same price as like, whey protein.

16:48
Bob Pankey
Yeah.

16:49
Adam Yee
And yeah, I always tell people, like, trying to experiment with these types of proteins, even though it might be functionally different, sometimes it can't work out even better. But yeah, you're right about, like, kind of this uptick in dairy protein. The supply chain is really tight. We recently did an R and D newsletter article which I write, that involves kind of seeing the price change between not only whey and whey protein, isolated whey protein concentrate, but also, funny enough, whey has exceeded cheese sales as well.

17:17
Bob Pankey
Yeah. I mean, right now, almost every call I get from a new client, they want to do a product that's protein fortified, fiber fortified, and that's all they're interested in. And in all honesty, that's what the market is.

17:29
Adam Yee
It is. Yeah.

17:30
Bob Pankey
Consumers cannot eat enough protein right now. And there's a whole range of the consumer level in there. Some people just kind of have heard it on tv, oh, I want to increase my protein. And then there's other kind of what I call the hardcore group that want to eat 2 grams of protein or more per pound of body weight, and they can't eat enough food in a day's time to do that sort of thing. So that's interesting. And I think consumers look at protein and think about it. Right now, a lot of it is focused on what I'll call FDA type products. The Popcorns. Whereas I think there's going to be a shift also to looking for protein fortified meats. What does that look like?

18:09
Adam Yee
Yeah.

18:10
Bob Pankey
And drive that.

18:12
Adam Yee
That's how I was going to do it.

18:13
Bob Pankey
Yeah, exactly. And so we're playing around with that and thinking about that. And then again, what's the right protein to add in there? Another thing that I think as developers we have to be careful about or think about it.

18:23
Adam Yee
Exactly.

18:24
Bob Pankey
Is the protein that we're using, is it really beneficial to the consumer and do they want it? Right now there's a lot of focus on collagen. Yeah. And using that, but it's not a complete protein. But then on the other side, do consumers understand what a complete protein is versus a non incomplete protein and also, do they care?

18:42
Adam Yee
Yeah, exactly. Yeah. I've had some problems like that too. I'd love to hear your thoughts then, because you were mentioning supply and I think this has been kind of an interesting kind of discussion I've had and many of my other friends in the product development space have had. In terms of like, how do you confront or work with like a client on an ingredient that's unavailable, for lack of a better term?

19:03
Bob Pankey
Well, I wouldn't understand why they want that ingredient. Why are they so tied to that ingredient? Is that part of their quote unquote reason for being? Is that part of their brand identity, that ingredient? Or is it more just the nutrient macronutrient is part of their brand? And how do you get to that? A couple of years back and I was working with a company trying to use hemp protein in their product and which was very interesting. I really had never worked with it before. I'll be honest, I wasn't even sure it easy existed prior to working with them and then talking with them. And like anything out there are some clean hemp proteins, flavor wise, and there's some others that are out there that are like, ooh, death. This is not a clean product.

19:44
Adam Yee
Not quite there yet. Right?

19:46
Bob Pankey
Exactly. Now and then on top of that, I remember we put together prototypes and we actually showed it at a hemp show here in Colorado. We made some prototypes up. We were able to sample it to the people attending this expo and it was interesting how they perceived it. And one of the things that I, thankfully I was at the booth and be able to see the people's reaction to this was, wow, they didn't realize that there was hemp in this. All right. And their experience with other hemp products is it tends to have an off flavor kind of a what I call an alfalfa or very green grass. Note to it, okay, yeah, products that would work, but other products, it's not. And one thing that struck me and it really jumped out at me.

20:27
Bob Pankey
And I wasn't even thinking this going into this expo, but after talking with some people, they were like, wow, this is really good. Yes, I would eat this. And then my question back to them, all of a sudden I had this, like leg hold go off. And I said, would you serve this to your children? And they paused and they're like, I don't know, it's hemp. And I said, it's perfectly safe. There's no cbd, there's no THC residue in this product. But again, the name hemp, the ingredient name hemp, made them stop and pause. They thought it was fine for them, but they weren't sure if it was the right ingredient for a product that a child would eat. Which I thought was real interesting.

21:01
Adam Yee
Yeah.

21:02
Bob Pankey
So ingredients are interesting and how they're tied to that and what they do. What was interesting, after we did all this work looking at using hemp protein, we ended up going with a completely different protein source.

21:14
Adam Yee
And why was that? Was it cost? Was it just complexity?

21:17
Bob Pankey
I think it was complexity because we had shown some prototypes to some retailers and they were interested in it, but they said, we're not ready for hemp yet.

21:24
Adam Yee
Interesting. See, yeah, that's a really interesting.

21:27
Bob Pankey
And somebody has to kind of crack the code and break into that market. But especially some of these retailers, they weren't quite ready. Now, in a different retail setting, you know, a smaller, almost like a health food store, they might be able to do it. That might fly. In fact, that might even beneficial. But to the major retailers in the U.S. they tapped the brakes. They weren't ready to go forward with that.

21:50
Adam Yee
You brought up an awesome point there. Ingredients do carry a lot of weight, especially if you, like, focus on your value proposition, which I like to call it, were talking about here. Your ingredients do tell a story. And the fewer ingredients you have, the more those ingredients have to tell that story. And there's just a lot of kind of side stories. Specifically, hemp is one of the big ones, but, you know, other ones too. Like collagen is good for the skin, for instance. Right. Even though it's not a complete protein. Do they care? Does your consumer care that's good for the skin or does. Do they not? Or do they care about building muscle? Then probably you shouldn't use collagen. You brought up A really good point. And you also brought up a good point about, like, essentially market acceptance. Right.

22:25
Adam Yee
Like there's certain stages in retail or certain stages in. And just in general food business, where market acceptance is almost all that matters in terms of to know that your product is going to work. And some people can get there kind of too late, don't you think?

22:38
Bob Pankey
Yeah, for sure. But that's something you have to consider upfront going into this.

22:42
Adam Yee
Yeah.

22:43
Bob Pankey
And think about those ramifications now. More often than not, most ingredients are kind of benign. People have accepted them. I know recently there's a big push on clean label, and there's a big push on minimally processed. And that's the one thing I always say is great about food, is there's not one perfect food out there that everybody accepts. And there's so many different varieties that people. And they have different preferences. Barbecue sauce within the United States, there are, I mean, multitude of varieties of barbecue sauce. In the Carolinas, you have your mustard, strong mustard barbecue sauce. In the Southwest, you know, you have mesquite, you have hickory in the south there. And I saw this a couple years back, they said barbecue sauce is to America what wine is to Europe. Each region.

23:31
Adam Yee
I love that. Yeah. Think about that.

23:33
Bob Pankey
And it is interesting. And some people are very loyal. And to them, anything else that's not what they like is not barbecue. It's something different.

23:42
Adam Yee
I just moved to North Carolina, actually. So you mentioned the mustardy or sauces, and you're right, they are a little bit more acidic than I'm used to.

23:49
Bob Pankey
Yeah.

23:50
Adam Yee
I'd love to talk more about this, probably the third half of it. And I'd like to talk about potential kind of food trends that you think are underrated based off, like, kind of your 40 years or experience that you've kind of noticed or through either your projects or what you see in the market.

24:03
Bob Pankey
I really think consumers are going to look for very simple, basic, clean foods. All right. I think there's such a push for that now. The huge push. Getting rid of artificial ingredients, artificial dyes, artificial coloring. That's huge. I go back and forth, I'll be honest with you. I mean, I tend to be very open, and I necessarily. Personally, I don't necessarily see artificial flavor as being bad.

24:27
Adam Yee
All right.

24:28
Bob Pankey
Other than the fact that it has the word artificial on it sort of thing now. And I can understand why consumers would want that other stuff, but I'm not sure that it's really based on hard scientific fact.

24:40
Adam Yee
Yeah. I think what's interesting about the flavor part is that you just have barbells. Barbells is a protein bar and it actually proudly states it as artificial flavors in the label. It's one of the top selling bars when you think about it. So I think what's important about this topic is that I think people are differentiating about what is important to them and they can choose what's important to them. Right. And we do see a subset of them wanting essentially less process, but we also see another subset that is fine with process. And I think that's really important to really hammer out when you develop your food product.

25:12
Bob Pankey
Yeah. And what does process mean? You know, on a pure, simple set, everything is processed. Okay. The fact that we grow food, that's a process. The fact that we grow corn, we grow vegetables, crops, that's a process. We harvest again, a process. I mean, now probably most people say, no, it doesn't take effect until you start to prepare them. And what is the process that it goes through to prepare them? And what does that look like? And different products are going to have different things. I had some experience with canned foods early in my career and did a lot of work with canned stew, canned chili, and those types of products. That retort process is pretty severe.

25:51
Adam Yee
Yeah.

25:51
Bob Pankey
Pretty extensive.

25:52
Adam Yee
Well, it heated up and you pressure it in a long period of time, right? Exactly. Until it's like cooked really well.

25:57
Bob Pankey
Yep. And not just cooked, it's quote unquote, commercially sterile sort of thing. And that's why it can sit on your shelf without refrigeration. And that's also why it can last for years in that can per se, and be safe to eat sort of thing. Like looking at that. So I always think that was interesting. One of the questions that I get a lot from people, once they understand or figure or I tell them, a food scientist, they're like, well, why can this sit on my shelf? But all of a sudden this has to be in the refrigerator. And I said, well, there's a variety of reasons come into play, you know, and. And then also, why can I leave butter out? And some people leave butter out, they don't even refrigerate it at all. I mean, we're that way. We leave it that way.

26:38
Bob Pankey
Now when we buy butter, we put it in the fridge, but once we start to be able to use it just in our butter dish on a countertop.

26:44
Adam Yee
But you cover it, right?

26:45
Bob Pankey
Yeah. Yeah. But why is that safe? And why is that acceptable? But not otherwise? Also in the holiday season, butter will be shelf to stacked in the aisleways for sale. I remember as a kid, I grew up working at a grocery store, and to this day, I love grocery stores. I love walking through.

27:01
Adam Yee
Yeah, that's one of my favorite things to do. What's out there?

27:04
Bob Pankey
I always kind of say, all food has already been created. You're never going to come up with something completely innovation, completely brand new. What you're doing then is you're taking a type of food and you're morphing it into a different format, all right, which is interesting. Or you're doing different combinations, or you're doing different packaging and presenting it to the consumer so that they can take it in different ways.

27:25
Adam Yee
Yeah, I think that's a good point. One of the things I always say to people is like, the consumer can only handle so much change. And you'd be surprised just how little you have to really innovate because you need to capture that kind of familiar market share, too. Retailers know this specifically, right. They are specifically focused on a category, and they're not comfortable because it's essentially too innovative. They will say, like, well, as you mentioned, with hemp, we're not ready yet. Right? Yeah. So I think it's something to be very cognizant about how far your product can go in terms of being something new. It does have to be familiar for people. At least what we've seen, the research for people to buy it should be familiar to them in some semblance of the form.

28:03
Bob Pankey
Right. And I think some products struggle with that. It may be an excellent product, but people are like, I don't understand this, or how does this work? Or, why would I want that? Why would I buy that instead of just buying it this way? And so you're right. That's a challenge and something to understand and how you communicate that to the consumer in this day and age with the websites, and you're able to do so much that way and kind of show them behind the scenes and kind of share with them. Hey, this is how you need to think about this. A couple years ago, I was doing a lot of work developing some products for a compound butter company out here in the West. And we had some amazing products that were.

28:41
Bob Pankey
I mean, basically were just taking butter and then adding flavors or ingredients, seasoning.

28:46
Adam Yee
How simple, right?

28:47
Bob Pankey
Very simple, very straightforward, and they were excellent of all the products that they had. So we had 25 different varieties within that were offered in the marketplace. Their number one product was garlic butter. Super simple. But again, consumers understand that they can get their head Wrapped around that, they can see that and that was understandable to them. And that made up, I think it was like 87% of their total sales. Was just one SKU.

29:13
Adam Yee
Yeah. I think this is really important because I had a co founder who had a nutrition company and he said his top flavors for nutritional shakes was is vanilla and chocolate. Yeah, right. Yeah. Like it's that easy. Yeah. Actually this is a fun product development thing. A strategy I recommend is a three prong approach which is like one has to be mainstream, one has to be secondary to mainstream. One could be your wild card. And I always find that a really fun experience whenever I work with brands.

29:37
Bob Pankey
Yep. No, no, you're exactly right. So part of my career, I spent 14 years with Hot Pockets and I always tell people it was the best job I ever had. It was amazing.

29:47
Adam Yee
That's a crazy innovation by the way. It's quite impressive what you guys have done with that business. Yeah.

29:51
Bob Pankey
I mean when I started with them in the early 90s, I was a small company, but they were a mid sized company at best. And then they just had phenomenal growth. And I tell people, because it was the right product at the right time at the right price. Okay. And it was interesting. Like also you have that 8020 rule. 20% Of your consumers consume 80% of your product. And it was very amazing. The product was marketed to moms to buy for their children, but it was consumed by the children. And it also fit in there because it was at a point in time in the growth where both heads of household worked and the kids were coming home from school and they wouldn't trust them to use a stove. But you trust your 10 year old to use the microwave?

30:34
Adam Yee
Microwave, yes.

30:35
Bob Pankey
And it was very straightforward and easy in doing it that way. And going back to that what you were talking about, a Hot Pocket pepperoni pizza and Hot Pocket ham and cheese. We ran that every single day basically.

30:45
Adam Yee
Yeah.

30:46
Bob Pankey
All these other flavors were there because it allowed the people that, okay, I can't eat another Hot Pocket pepperoni pizza. So I'm going to try a beef and cheddar. I'm going to try a meatball mozzarella. And they'll wander away from pepperoni pizza for a week or two, but then they come back to come back.

31:02
Adam Yee
Yeah, yeah. I don't know if you can tell this like, but I love to just have one technical question about Hot Pockets. Is it a construtor product or is it a different method?

31:09
Bob Pankey
Nope. I mean originally it started basically looking at making them on Rions, which is a co extruded. You have two hoppers. I always kind of say it's a hundred thousand dollar play DOH machine. You have a hopper of dough, you have a hopper of filling.

31:22
Adam Yee
Yeah. That way.

31:24
Bob Pankey
And cut into shapes. The way were able to manufacture it, we changed that up. And it's a very confidential process.

31:31
Adam Yee
Yeah, yeah. I don't want you to share anything about like, but it was basically.

31:35
Bob Pankey
It was basically a revue.

31:36
Adam Yee
Okay, okay, I get it. Okay.

31:38
Bob Pankey
That's how it worked. The key to Hot Pockets was the speed at which we could make them. It was amazing the throughput we had. I would always jokingly say it would create a river of Hot Pockets coming out of the production line. All right. And that's what allowed us to stay top in the market in terms of price. Nobody could compete with this price point because we could manufacture thousands a minute versus talking and looking at other processes and other companies that they were looking at 100 to 200aminute. So were five to 10 times the amount that they could make. It was an amazing process and amazing speed at which they were made.

32:16
Adam Yee
Dang. Yeah. I love Hot Pockets. I don't buy them every day, but like I admire that innovation, honestly a lot. So that's really cool. You worked on it. I feel like they kept on innovating because they dealt the microwavable like pouch or something like that crisp it up. I thought I was like, wow, that's really cool. Yeah.

32:32
Bob Pankey
You know, I was challenging marketing on is do people really use this deceptor sleep?

32:38
Adam Yee
Oh, I do. And I'm one.

32:41
Bob Pankey
I know you're right. But I know when I was there, I had two sons that were in a perfect demographic for that. One son always used the scepter sleep. The other son didn't. Wanted more convenience, more ease. Literally just take the whole box right out of the freezer, throw it in the microwave for three and a half minutes. He had figured out three and a half minutes was the sweet spot. And then it'd go off. He'd grab it out of the microwave, run back to the TV set playing his video games and sit there and just kind of open the box in front of him and start eating it that way.

33:10
Adam Yee
That's crazy.

33:11
Bob Pankey
So, yeah, you have to understand how you're consumer going to use your product.

33:15
Adam Yee
I've never heard of that. You're right though. You're right. That's so. God. I think we go on and on about how we could. Like, how do you find out that people are using like that. Right. But we are running out of time here, Bob. I think I could probably talk to y' all and then I'll get you on another podcast that I do. But I think one last thing is, like, where can we find you and just kind of absorb all your knowledge and maybe even your help?

33:34
Bob Pankey
Okay. Well, again, going back, the startup CPG product developer database is definitely one place in there. I mean, they're under Castlewood Food Innovation and listed there. And I've listed all the types of products that I've worked with, and really, I definitely have a wide range of products that I work with. And if you have a new product that specifically isn't listed that you can't.

33:55
Adam Yee
Find it, give me a shot.

33:57
Bob Pankey
I love new challenges. I love trying to figure out something new and why it works and trying to apply what I've learned with other things. Okay. What's the mindset that I need to have looking at this new format?

34:08
Adam Yee
Yeah. Is there anything you want touch or is there anything for your game?

34:10
Bob Pankey
I think I'd try almost anything. I'll be honest with you. I really don't have a lot of extreme beverage experience.

34:17
Adam Yee
Same with me. Yeah. Okay.

34:18
Bob Pankey
But I'm fascinated with that. I've always jokingly said throughout my career, I'd love to work on Gatorade for a while. It seemed like a very neat and innovative product with all the different sub brands that they have. I've worked on baby food. I've worked on confections. I've worked on a lot of savory.

34:34
Adam Yee
Yeah.

34:35
Bob Pankey
One of the things going back to hot pockets, one of the things that we always would hear was consumers, more meat. You couldn't put enough meat into a hot pocket. But then we would run a focus group study with them. We would show them a sample that had 20% more meat in it, and then we'd show them a sample with 20% more cheese in it. And hands down, they wanted the cheese.

34:53
Adam Yee
Oh, that's funny.

34:55
Bob Pankey
So consumers will tell you something, but you have to kind of read between the lines because they think they want this, but what they really want is that savory eating experience. And that's another thing that I tell my clients. Your product has to taste good. Your product has to be something that people want to continue to eat. Okay. You may have the best, highest amount of protein. You may have the highest amount of fiber. You may be gluten free. You may whatever your other guardrails are. If the product doesn't eat well, you don't have a product.

35:26
Adam Yee
Yeah, for sure. Definitely. Bob, it was so good to talk to you. You can tell you have a lot of knowledge, so I think anyone should reach out and just pick your brand for 30 minutes. So thanks so much for being on the show. Thank you very much.

35:36
Bob Pankey
This was fun. Thank you.

35:39
Adam Yee
Thank you for listening to Startup CPG R&D. I hope you guys enjoyed this conversation. We've now arrived together at the end of another episode of the Startup CPG podcast. I'm proud to be part of the team that's part of the top globally ranked podcast in cpg. As you may know, we're not just a podcast. We're a community of brands and experts and you should join. You can sign up @startupcpg.com and you'll then get invited to our online Slack community and be informed on great guests and amazing networking opportunities to get you in front of buyers, investors, brands and more. Thank you for listening and have a great day.