JPG Resources, Howie Sher 3 Legged Stool

Jordan: [00:00:00] Today we're talking and tackling one of the most critical and often misunderstood aspects of own the or beverage brand. It's the relationship between brands, distributors, and retailers. So you wanna think of this as an ecosystem, a three-legged stool where each leg a viable role if is isn't isn't strong, the whole thing. So to help us break this down, I invited on Howie Sher, who a seasoned expert the in the CPG industry, both on the could across all sides of the business, and he's also now a leader JPG resources, which the the health helps brands navigate growth from those early startup days to scaling their companies. Howie has seen firsthand what makes these these relationships work and what causes them to fall for quite so to on to really talk through this. Howie, I would love for you just to give a quick overview of your brand that ran, business, and your unique perspective in the industry.

Howie: I appreciate you having me on Jordan and to me I take for granted the amount of time served [00:01:00] in the different areas that I've touched. I assume that others that are getting into the business have had similar experiences, and I soon find out that my journey's been quite unique.

So having started a young age at 12 years old, family business, fourth generation what I love most is the people part of the business and. So much has changed since the mid eighties to this point. But one thing will never change is that common link between food, beverage and people. So thanks for having me on.

The journey started at the retail wholesale side. I won't go into all the stories and details, but what led me to this point and to be with you? My family had a graceful exit in 2008. We sold our businesses to a regional chain here in the St. Louis metro area. The people that worked with our family, we considered our business family.

And being able to be in a position to take the next step in my career, knowing that the folks on our team were in a better position to compete in the marketplace was the biggest reason why we [00:02:00] knew as a family it was the best decision for all concerned. So when I did reinvent myself, I had this idea that what I had learned from one side of the table one side of the desk, if you will, from my exposure and experience and understanding consumer habits, trends, commodity classes I identified the nut category as something that was being developed.

Very creatively recognizing great source of protein was kind of a boring commodity class at the time. There were a couple nut clusters that were being presented by a large company in one hand, in a startup in another. It was doing well and I thought it would be wise to lead with my chin with brand voice first.

And I created, what are you nuts? 

Jordan: I love that

Howie: In a world that wasn't as nuts as today's world is, but it does apply all the time. It just depends on where you sit and how it applies. But the food itself, once you grab the customer's attention was reverse granola more nuts than oats.

That what brought it all together was I know batter, it was baked out and created a lot like. Identical, the granola, but the o component was what was bringing [00:03:00] it all together. That was on the market for close to nine years. Sorry to say that it didn't continue. I had still two kids that had to start college and time is money and money is time, if you will, and I didn't want to keep chasing the dream and putting my family second.

So I've. Moved on from that experience, which was incredible. The people that I met and what I learned, knowing from one side of the desk what I thought I needed to know, everything, I was far from there and learned so much through those experiences. And now that I could get to work with founders that are bringing their product and their passions to life it's my honor and enjoy working with many brands at any given time, and it's been awesome.

Jordan: Howie. That's why I love your perspective because you came at this you came at this first from having experience with the retail wholesale side of the business. As you mentioned, you thought you knew

everything of how the. Industry worked. Then when you started a brand, you realize there's so many other considerations where it definitely helped you, but there were new things that you learned along the way.

And it's also the same when you think about [00:04:00] distributors, and how their business model works, right? So if you're getting your product to customers through grocery, retail, there those three main pillars that I taste to get to the consumer, the brand, the distributor, and the retailer. And so can you break down the role of each of those players and then what their core priorities are?

Howie: Absolutely. I'm gonna start in the middle and that's the distributor because it's the easiest they distribute. We'll, we'll, we'll talk about some of the programming, some of the mainline distributors have. So many of the retail partners that I had with the time served with Woody and nuts. Have their own self-distributing network.

But even those businesses have secondary suppliers and distributors, and that's what they do. So the relationship is truly paramount between the brand and the retail partners that you secure. And at the beginning, the learnings, the data, the feedback from the buyer's desk, how it [00:05:00] applies should be.

Thought of is the gold and the brand's responsibility early on especially, is to do their homework, to understand the possibilities of where it might land on shelf or if there's a need for secondary displays to begin. If you can gain traction in that way with the retail partner. So again, the brand, the brand voice.

Having a great marketing plan to support, not just, Hey, this is a great product and I have great pricing. To begin, you need to have an ongoing plan for pricing. So the brand founder and their, their leadership team really needs to understand where do they fit. In relation to the retailer they're presenting to walk the store, understand who their competitors are.

There's no wide open white space. There's no buyer at the retailer side saying, I have this gap in my stores, the rarest of times, and dare I go down that path? But in the rarest of times are the retailers going to seek and find [00:06:00] gap fillers? Because they can't fill a commodity class space. 

Jordan: And Now, let me ask about retailers from their perspective, how do they see their roles in the industry?

Howie: Well, there's the commodity class trends that are in place. Profitability. Like I said, there's typically not a gap on the shelf, so if they're gonna bring your product in, something's gotta go. they're wanting to make great decisions that are gonna deliver greater turns off the shelf, greater profitability being part of a growth pattern in a commodity class.

That's what they're really looking for. And , they're looking at the founder are they prepared? If in fact things take off, will they be able to, to fulfill? The orders placed on a timely basis. What is their social media voice looking like? What is their marketing plan on the TPR strategy look like?

Jordan: You know, coming at this from the brand's perspective, I'm curious to hear yours coming from the other side. Originally was that I call this a brand. My role was to create a product, then sell it to a distributor. That [00:07:00] distributors sells it to the retailer and the retailer sells it to the consumer, right? And that like the brand was involved, but all the other players had a significant stake in the success. What i. later kind of on, again, from the brand perspective is that distributors are often thought of as warehouses and trucks. Even though you're selling your product to them, they're really just keeping your product and

giving it and selling it to the retailers, filling the shelf, and then a lot of retailers, especially nowadays, act almost as selling shelf space to allow consumers to come in, customers to buy your product. But as a brand, you're still the primary one in charge of if your product is well. and Sells off the shelf to the consumer. And If your product doesn't sell, it's usually not the retailer's fault, is not the distributor's fault. It really comes back to you as the brand owner. Would you say that's fair or not?

Howie: from my perspective, having been a retailer and a distributor, it's vitally important to understand, understand your perspective.

I'm [00:08:00] gonna professionally move to the other. View, and that is that you have to create the relationship with the retailer because depending upon what the commodity class is, if you're a snack food product, if you're a beverage alcoholic or non-alcoholic, or you're gonna go to a straight line wholesaler distributor, it's the retailer that has an idea of where your products fit best they know for you in a new and emerging space.

Who the distributors are that are gonna be the easiest to work with. There might not be choices, there might be only one. And you might need to start your relationship with a direct to retailer business if you can, if they allow you to. I. Ultimately, I think cutting out is a third party distributor in a relationship, is the best case scenario of all.

But it's not always the option. And the one that drives the decision is the retailer not the distributor. Very, very rare for you to see from an outside view of who is the distributor selling [00:09:00] to. So when you make that sales call. And whether it's you representing yourself or a broker representing you or somebody from your team, that discovery meeting, that first meeting, it's about what's your plan?

Obviously the cutting of the product that they like that taste, texture, price model, and they have space for it. But then what you really need to be listening to is how do we best get it to you? Who's your preferred distributor? 

Jordan: I think that's so important. I'm curious from what you've seen, what are some of the biggest misunderstandings that founders have when. It comes to working with distributors.

Howie: You can't be asleep at the wheel. You can't make assumptions. You gotta read the fine print at the very beginning and understand deductions timely with orders being delivered when you have an appointment, if your truck's gonna be delayed. What's the primary point of contact? Who are the secondaries?

And the more I get into those details of what the brand needs to be aware of, it's about relationships and [00:10:00] though at the early stages to be your own best seller representing yourself. You need to start thinking early on of who are the best brokers in these regions, because you're tapping into the relationships that exist, not only with the retailer, but also the distributors.

And it's really important because you have to plan to have, not knowing what's gonna go wrong, but something will eventually pop up, and to have a relationship in place that's representing your brand where you're new. Your brand is new to the buyer's desk and the distributor, tapping into those relationships through a broker network makes a lot of sense. Yeah, I 

Jordan: I think that's cute and I think what I've seen as well is this false sense of inevitability or so from brand where brands think if I create a product I. Deserve to have it on the shelf. I deserve to have it through a distributor. Why would they not work with me versus thinking out, how can I help support the retailer's business and their goals? How can I help support the [00:11:00] distributor? Business and their goals so that we can all be successful instead of seeing them as like a company or a tool, but really seeing the people and the relationships behind the company name, which you alluded to, right, is like, how do you feel those strong relationships? So they're looking up for you and you're looking up for them.

Howie: Well, first, I admire the passion and all the time and effort and expense that's been put into bringing a product to life. But I believe Jordan, truly, I didn't, and I don't believe most founders really recognized the fact that on average there's 60,000 individual selling units. In the average supermarket. There's a range, 15,000 to 60 if you somebody looks it up. So depending upon the type of operator they are, the traditional supermarkets are on the higher end. Why am I saying this? There's a lot of people that have the same thought about their products, not necessarily in the same commodity class, but there's nothing that's being invented that's so rare of [00:12:00] rare that's gonna just land on a buyer's desk that's curing some terrible disease that's tasting better than any other food's ever tasted.

That feels a certain way when it hits the palate that doesn't exist. The more that the founder can have a layer of humility when they walk into that first meeting, believing in what they've created, but realizing this is now a partnership. And the best that they can do is put that right foot forward, present the brand voice with the product itself with a great pricing strategy, promotional strategy, and consistency.

In that line of communication than anything else, like put , their belief that this is the greatest thing since sliced bread to the side. As much as it's difficult to do early, be proud, but you can't be arrogant because it just doesn't pay. 

Jordan: Oh, it's funny because I remember talking to retail buyers and one of the things they discourage and I would say, but hey, like really makes 'em roll their eyes. when brands come in. They were like, [00:13:00] we are the first company to ever do this. And they're like, you really? Like, I literally get pitched every day by just companies. I guarantee you I've seen something simpler where there's at least about 30% overlap, if not, you know, a 90% overlap of what you're doing. And so, like, yes, there may be some things that are a little unique or a little different, but it's not so out there that I've never seen anything like it. And it almost leaves a, bad taste in their mouth. So that kind of leads to my next question of, you know, I wanna get into what's in it for each party. And So you've mentioned this a little bit with retailers, you know, what are they really looking for from a brand? Then you mentioned, there's thousands of products on the shelf. They have to take off a product for a brand or new product to get on. What are they looking for to make them say yes? 

Howie: It's gonna be simple.

It's gotta sell. It's not the first order. It's a third order that they can be excited to walk over to their colleague in a different commodity class and say, you're not gonna believe the turns on this product. In a commodity PLA [00:14:00] class, it's been around for a long time. This is the greatest flash that I've seen in a long time.

It's gotta sell. There is not 2, 3, 4 on the list. It's gotta sell. There's nothing more that I can stress that it doesn't matter how beautiful the package is. It doesn't matter how competitive the price point is, it's what are the turns. Call me when you get the third order with excitement. The first one. I understand it.

I do. I understand why it's exciting to secure that next retail partnership, but get really excited from that third shipment 

Jordan: I love that, and I think there's lots of ways that brands can use, right, to get those terms. Maybe they're adding a new level of premiumization where they're getting higher margin, they're bringing more dollars in that way, or maybe have. A unique packaging that has a higher frequency of purchase, right? There's lots of different letters that you can pull as a brand, but I think you're right, like it all goes down to how are you bringing either more margin or more velocity into their

Howie: [00:15:00] Well, he, here's something I don't think a lot of brands think about is even before the founder or the representation of the brand walks into the buyer's office to have a meaning. This retailers existed in most cases for many, many years. They have programs in place during an annual cycle. They have. E coupons.

They have holiday events, they have display contests. They have participation in certain commodity classes during certain times of the year that they're looking for the next brand to be a participant in their program, how they're running and operating their business. So lean into what is it that we can do to support your programs with this product that we might not be aware of before we walk in here.

That's what a partnership is. It's not what you want out of it from a brand perspective, but what can we do together to get more rings through the registers, period. 

Jordan: I love that as that's so key. Switching gears a little bit and thinking about distributors, they they operate in their own unique way. How do [00:16:00] distributors make money and what do they need from brands to succeed?

Howie: Volume. It's is volume. And over the last few years they've gotten squeezed. Their profit margins have gotten squeezed because of transportation costs and consolidation. There's not as many post-sale distributors to choose from today as there were in 2008 when I exited as a retailer. We were buying from super value at the end, now acquired by UNFI.

I have to tell you, their margins are closer and closer to what the retailer margins are than ever before. And they can't affect the expense line at all. So it's filling up the trucks, having the turns, the right product mix. So I think from a founder perspective the analysis and review.

Understanding how to tap in and really understand the data that you're given access to from the distributor's perspective and the retailer's systems perspective, is you need to have a weekly or the very least a monthly [00:17:00] understanding of what do my terms look like? What are their expectations from the commodity class that you sit in. Have an agreement at the very beginning, what are you looking for? For turns to be good in this commodity class? Not thank you for saying yes, but now that you've said yes, what sort of report card should I be looking at before we talk next so I can stay attuned through your systems?

Jordan: I love that. And that leads into the next one thing I want to talk about, which is how can brands then proactively manage that relationship with distributors instead of just handing off their product and hoping for the best? So I love the idea of thinking about like, what's the scorecard? How are you gonna measure my success or not? What else can you do as a brand to build that relationship?

Howie: You know, having just alluded to it here, it's gonna be foreign from the get go.

It's gonna be clunky. It's a system that you've never worked with before. Does this distributor, are they sophisticated enough to have a team in place to work with brand owners and [00:18:00] leadership teams to show them the very basic level of how do I get into the system, see what my average weekly turns are, where the product is shipping, where is it falling short?

Because I think a strategy that identifies certain areas of the country or within the region to be able to proactively address it for your next meeting to say, Hey, I've reviewed my products and the data provided through x, y, Z systems, and I like to address how to stimulate sales in these stores with this added layer.

Additional promotion or extending the pro promotion from two to three or four weeks potentially. If they can afford the opportunity , to buy an ad. you can't hold back those marketing dollars and waiting for the fourth or fifth order. You need to come outta the gate strong and cut your margins as a brand founder.

Be aggressive early because trial, they're not the customer. The retailers, the conduit. The [00:19:00] customer is not going to just see something on a shelf at regular price and say, Hmm, that looks interesting. There needs to be sampling events. There needs to be price reductions off shelf quick, right outta the gate. 

Jordan: I think that's huge. I think that like launch plan and the new retailer is so key in most brands, including myself. When I launched into retail, I thought the same thing. I'm like let me just get it on the shelf and see what happens. It was horrible. Like sales were low. We ended up in like four different locations within the store. Merchandise really poorly and the result were kicked off the shelf in like six months or so. So I don't recommend brands, just see how it goes. Have a very proactive plan, as you mentioned, sell sell here's this has been super great. 

Howie: Here's another, one too. Yep. For the early brands that are getting attention from media, this is your partner. Make them aware there's gonna be a spike in their business because the brand is getting attention. They're selling the product. You're not selling out of the back of your car anymore. Let them know so they can prepare and order more, and also [00:20:00] communicate the same to the distributor.

When you have a TPR, temporary price reduction set up with a retail partner, make the distributor know if they're not self distributed, because if you have a price reduction. Not making the distributor aware to bring in more inventory. There's gonna be outta stocks and before you know it, the promotion's over and you've gained nothing.

Jordan: I love that. Thanks for talking about this three-legged school stool, and I love breaking it out. Instead of just the different partners retailer distributor, and brand. Really thinking about the people who are at the heart of each of those relationships. Build strong relationships and achieve success together and help them achieve their goals instead of just focusing on your own. And with that, you'll find success. thanks for being on today.

Howie: Thanks for having me, Jordan.