Behinds The Scenes of Coconut Cult’s Operations

Jordan Buckner: [00:00:00] Today we're going behind the scenes into the journey of a beloved Coconut cult brand and doing so with Justin Oleesky, who's the COO of Coconut Cult. So they've been making a ton of waves in the probiotic space with their ultra potent coconut yogurt, and the company's been going through a lot of growth as we're going to hear.

Both in terms of retail expansion and production. In today's episode, we're going to explore the operational challenges that come with growing so fast, managing complex retailer requirements, staying resilient through economic uncertainty. We are dealing with tariffs right now, which I know is a huge issue.

And really just trying to understand how do you keep systems from buckling under the strain of that growth. Justin, welcome to the show today. 

Justin Oleesky: Appreciate you having me on. 

Jordan Buckner: So I know you are kind of in the wits every day with this stuff. 

What are the things that are top of mind for you right now? 

Justin Oleesky: Yeah.

Right now it's blessed. You know, , we're going through a massive growth phase. The past couple years we've been really, really booming which causes a lot of [00:01:00] stress on myself, team and such. But it's good stress. And so right now we're really focused on. Getting more product out there, more more flavors for everyone to enjoy.

Jordan Buckner: I love that. Are you having to deal with uncertainty or issues around the tariffs that are going on right now just in terms of like pricing? 'cause I'm guessing you, the coconut that you're getting is, is from other around the world. 

Justin Oleesky: Yeah. Yeah. I mean, it's difficult, you know the US isn't really made to make.

Coconuts. It's nothing that we can technically make you know, in-house. I wish I had a massive greenhouse, but I could grow some palm trees and make some nice coconuts. But we use a specific type of coconut. It comes from the Philippines. There's some other places that we can get it from. So it is , highly tariffed right now.

And it's definitely some challenges. Our supply chain is working overnight, figuring out solutions. Ways around it. We're having to you know, go more in depth in buying more things in bulk to hopefully negotiate some different pricing. So that we can supplement those tariff increases. The one thing that we don't want to do is increase anything for our consumers.

I know that we're gonna get it increased on [00:02:00] our end, so we're trying to figure out ways to handle it for ourselves. 

Jordan Buckner: Yeah, that makes a ton of sense. So take me back a little bit. How long ago did you join Coconut Cult and a little bit about , your experience going into this role. 

Justin Oleesky: So I joined Coconut Cole just about four years ago.

Prior to that, still do, I own a 3PL down in Los Angeles. So most of my background is operations and fulfillment, packing freight, eight, things like that. Also prior to that was a chief Operations officer for inventory management software. So anything to do again with internal workings of inventory management.

Finances, freight out. That's kind of my background. I ended up having a connection with our CEO of Coconut Cult Ari. He started Once on a farm and he, so he brought me on board when he came on board with Coconut C ult and ever since then it's been great. It's been fantastic.

Jordan Buckner: So four years is a, a very long time in this space. I know there's been a lot of change. What were some of the biggest changes from when you came on four years ago to where you are today? 

Justin Oleesky: Yeah I mean, gosh, if you looked at our facility four years ago to now, it's [00:03:00] completely different. One, we used to be located in California central California called San San Luis Obispo in a very small facility.

It was about 10,000 square feet. About half of that was our production space. One thing I should note is everything we do is ourselves. We self manufacture every piece. We don't use any comans, anything out external. Everything is on our back then, four years ago, everything was also done by hand. We had no automation, so we were hand filling these jars.

We were hand labeling, tamper, sealing, closing those lids in an extremely sterile and clean environment. But super laborious. Now if you come to our facility, it is mostly automate. We still have , tons of assistance and help with people. There's , so many people here in our facility great folks, but automation is key.

It's the only way for us to scale. 

Jordan Buckner: I mean, I see I already brought you on because one thing that I constantly heard is that in experience myself for running my business. The sales and retail arm of a business is almost completely different from the operational side, just in terms of the competencies and where you have to focus.

And so needing to have a strong team that can make sure [00:04:00] operationally everything is made and produced is a whole business into itself. 

Justin Oleesky: Yeah, and you know, it's a big trust thing too. Our founder Noah created an amazing, wonderful product. I. That has a ton of health benefits. And so we wanted to make sure while scaling, we would never deviate from our core, which is clean ingredients, clean product, good for your gut.

So there was no way of, you know, taking a shortcut, going to a coman and doing it that way. we evaluated other options, but the best option was scale it internally. Keep our recipes, make sure our ingredients are high end, clean, and great for consumers.

Jordan Buckner: So what are some of the operational hurdles you ran into as you were starting to scale selling into larger retailers, and how did you manage that complexity?

I know you also mentioned going from a manual process to automation, but that doesn't happen overnight. And so how are you managing , those different growth levers? 

Justin Oleesky: It's a lot of juggling to be honest. But I would say everybody has to work together on these types of things. So like when we onboarded new retailers or getting nationwide distribution for one of our stores, it was all [00:05:00] about timing and a lot of communication amongst the stores, amongst our sales team, amongst operations.

And finding the right partners to work with ops. So finding the right solutions for equipment manufacturers, making sure people have enough time to get onboarded and trained with equipment. There's a lot of things behind the scenes that a lot of people don't know and it's fun to kind of be it know behind the lights.

Jordan Buckner: Yeah, there's definitely a lot of things that go into making that happen. I know you mentioned kinda these partnerships With retailers. So what were some of those systems or tools that you needed to have in place as you start to manage orders and logistics? Because I've been there, pitched to retailers, gotten the like, yes, ready to go launch into hundreds, thousands of stores, but then you need all the backend, logistics and substance to make sure that all works.

I know having, you know, an EDI set up. Is kind of required within there just to make sure you're actually getting orders incorrectly, gonna fulfill that. So what does that look like in terms of the systems you need to work with retailers? 

Justin Oleesky: Yeah, I think it's twofold. So there's two systems we definitely need, and I'll say like when I first joined, there [00:06:00] was no systems like coconut.

We just had spreadsheets to of Google Docs, tons of Excel docs managing for multiple people, very inefficient. First thing that we need is an inventory management software or some type of ERP for finance. We chose Cin7. It used to be called Dear. That's our backbone. Everything is run through that system.

The next thing that we needed is a way to communicate to our distributors, our grocery stores and such. And that is all via EDI. We went through multiple rounds of different EDI partners and it actually ended up taking about six months away from another vendor to get onboarding onto our current vendor, which we love.

And that vendor's So right now we utilize Crstl through all of our EDI communication. They handle all of the orders coming in the flow, creating it into our system, and then all of the order acceptance portion after. 

Jordan Buckner: So I know you mentioned working with other EDI providers before, what were some of the issues that came up when you were working with them?

Justin Oleesky: I think implementation. Our process was through our ERP Cin7, having to connect it, making sure that skews were being mapped [00:07:00] accordingly, make sure the accounts were being put into the right account lines. Pricing was correct. Any time of, you know, in food, any ois, any discounts, making sure those all flowed properly and we kept failing.

We weren't not getting through. So. We ended up finding Crstl during this, during this implementation, and honestly it was kind of mind blowing how fast the implementation took. I was already six months into another vendor and within I would say eight, nine days, we were done. 

Jordan Buckner: Wow, that's a huge difference.

Right? And like in this business, that time really does matter because six months out of, you know, a couple years, it's like 10% of the time you've been in business. Like these are large numbers of a hundred percent what you've been doing. 

Justin Oleesky: Yeah, 100%. And that's not just me too. There was multiple people involved.

Yeah. And so having Crstl was. Super fast. It was automatically in like integrated with our system. They already had a connection into it legit took a week, 10 days to have it completely done. I think of the second week is when we launched it. All pos ran smoothly. I got 'em into dear Cin7

yeah, it ran great. 

Jordan Buckner: So [00:08:00] this is something that I realized I was having a conversation yesterday, is that as a brand you communicate with. Buyers at the retailers you communicate with category managers of pitching in new products. But really a lot of your week to week relationship with a retailer and distributors are gonna be through just these EDI connections, right?

Like getting, receiving the orders in, receiving the purchase orders, making sure that you have all the requirements down for the shipping requirements back to that distributor or retailer. So you're in compliance. Like, that's actually what most of the relationship is, where if things are going smoothly, right?

Justin Oleesky: 100%. There's tons of communication back and forth just in regards to the purchase orders through EDI and having it all in one location like Crstl saved us a bunch of time. Also, really easy to rectify or go back to and look at reporting functionality in there. Sometimes we get some, you know, random charges or random, you know, disagreements , on something we sent.

And it was able to see like, Hey, that's what you requested. Here's everything here. Here's all the documents. All stored [00:09:00] in. 

Jordan Buckner: When you're selling and shipping product to all these different retailers and distributors, is it pretty similar, like shipping to UNIFI or KeHE or going direct to retailers?

Like is the process similar or is like everyone have their own requirements and so you're almost billing out workflows for each? 

Justin Oleesky: It's pretty close. Almost all of them , are pretty similar. I would say. There's, you know, there's a few differences amongst. But like within that one week time period, we were able to map all the different distributors that we use.

I, we used four. So we had different distributors set up in that one week timeframe. Different process maps. They also have different internal codes for our SKUs and just mapping that accordingly. But again, it was super fast. 

Jordan Buckner: That's awesome. So what, there have been some of those biggest improvements since implementing like an EDI system.

Has it saved time, reduce errors or help you grow faster? 

Justin Oleesky: Yeah, I mean , it's definitely saved a quite a bit of time. We like to keep those type of stats. So we have one person that kind of manages most of it and it saved about four hours a week. Wow. And that adds up for me just on the EDI portion.

The next thing that [00:10:00] was able to build on that is we had another team member a founder of ours, James. Help build automatic BOL program because of our EDI with Crstl is able to flow in so smoothly and easily that we were able to create that process and now we have all our BOL generated automatically.

And that saves a lot more time too. We used to do those manual. 

Jordan Buckner: What do you kind of recommend for other emerging brands who are getting set up? Because I know there's a couple legacy providers in the EDI space. 

What do they need to know in terms of like choosing a partner and what should they prioritize?

Justin Oleesky: I mean, I have a background in EDI's and , I've definitely used some of those legacy providers. I just think it's a little bit old school now. And I think a lot of us are just kind of stuck in that old way and seeing something like it was really simple. So I would say if anybody is in our space in food and beverage.

And is communicating to, you know, unifies the KeHE of the world, check out Crstl. It was pretty smooth. And also like we're going to go into other grocery chains and Crstl doesn't have those integrations, but they're willing to integrate and make those API and EDI [00:11:00] connections through that software.

So, yeah, let's soft, they're to look at, even if they're, you don't currently have a provider with them. 

Jordan Buckner: So I think one area, just thinking broadly about the operations, I think a lot of the founders who I talked to aren't even quite sure how, like what their operation team looks like as their company grows.

Could you share a little bit about like as Coconut Cult has grown, like what your team looks like under you, the different roles and functions and responsibilities? 

Justin Oleesky: Yeah. The team has changed a lot over the years. When I first got here, there was. Maybe less than 10 individuals in operations. It's definitely smaller.

Jordan Buckner: Is that including production or not? 

Justin Oleesky: it didn't include production. Production. I think probably had like 14, 15 people at that time. Right now we have about 87 production workers currently, so we've definitely grown in operations and production. You have a little over like about a hundred staff.

And that's differences or that's different roles of head of supply chain, head of inventory management, head of fulfillment director of engineering, manufacturing. Everything we do is in house. So, you know, , we're working towards building [00:12:00] our next facility currently, and everything is being in, ran in, in our own operations.

But prior to that it was a very, very small team. 

Jordan Buckner: A lot of founders ask me, they're like, I don't even know what questions I need to ask around running the operations of my business, especially if I'm self manufacturing, right? Like when they're thinking about moving from a. Commercial kitchen maybe to like their own private production space as they're growing.

Obviously there's, you know, supply chain, like inventory ordering, there's someone dealing probably with freight. But what are some of those considerations that small teams need to start thinking about as they're planning, if they can continue the self manufacture, what are the different things I need to know?

Justin Oleesky: I think self manufacturing is definitely the way to go. One it makes a lot of control. You have control over the product. You have control over your processes. And you're not relying on an external source. The visibility is way more apparent in self manufacturing. I think hiring and finding the right people is important.

I've been lucky to find great staff where I'm located. I've actually relocated some staff from California over [00:13:00] here because we love them so much and they've been great assets to the company and myself. But I think not being scared to take that dive and finding the right facility to self manufacturer is really important.

I think some considerations to think about though is margins. Can you handle that? Can you take on additional ingredient inventory? If not, what are some other solutions defined ways to get that? I think that's really important. Contribution margin, things like that. 

Jordan Buckner: Does running your own operations require different kind of capital investment requirements?

I'm guessing if you have to invest in the facility and equipment. 

Justin Oleesky: Yeah, I think it does. I've been a proponent of lean my whole life, so we don't like to overspend. We go extremely lean here and how I built the facility here and our new facility is everything's modular, so we're building as we're growing.

I will say that we beat our numbers by a lot, so we, we've outgrown our current production facility and that's why we're on our next, but, you don't need to go spend $40 million, you know, you don't need to do that. You can do this in chunks. We spent a million for our first facility out here in Utah, and we've [00:14:00] spent more over the year, couple years, but to get it launched, to make product, to handle the current volume at that time, we spend about a million dollars in investment.

Jordan Buckner: Yeah, Justin, that's one thing that I've seen a lot because. When investing in equipment, there's different like skills, right? There's like the tabletop machine, there's like the small, just getting started. Speed. Yeah. And then it kind of like steps up. And I think a lot of founders are figuring out like, okay, like , when do I start making those investments to scale?

Do I forecast that my business is gonna grow so I get the bigger machine now, or do I get the smaller machine knowing that it won't be utilized in the same capacity until the bigger machine go? Like how do you think about those equipment challenges? I. 

Justin Oleesky: it's a lot about your gut, to be honest.

I mean, I met with a ton of consultants that were like, Hey, you need to buy this $6 million equipment line and you need this $4 million vision and optics portion of the line. And it's like, I don't have 40 million to spend on a pilot facility. And that's what a lot of, you know, the larger companies do when they're making new product lines.

This is more boot strap. Do it at this pace that you can handle. I will say that like, if you can [00:15:00] afford a little bit more, for sure, do it. , you're investing in yourself and your team. But if you can't, that shouldn't deter you start smaller. 

Jordan Buckner: Yeah, I mean, that makes a lot of sense because usually if your business gets to the point that you need the much bigger equipment, you can find ways to finance it at that time.

Justin Oleesky: 100%. , even if the rates aren't necessarily great at that time, it's still worth it. Your margins you can handle it. 

Jordan Buckner: How have you been thinking about, push , towards margins that you mentioned, like reducing costs or controlling costs within the team, because I know margins are always , getting tighter for brands, especially as other costs are increasing.

 How are you and the team thinking about controlling the manufacturing costs and what it takes to get the product out the door? 

Justin Oleesky: Yeah, again, we're a little blessed because our product is booming. Our company is booming, our product lines are what I think is way to cut corners in larger scale right now I'm in a 55,000 square foot facility.

I pay x amount per square foot. I went down the street, found another facility for 220,000 square feet, four times the size, but I was able to negotiate. Square footage [00:16:00] down because I'm one tenant instead of them having to lease out to multiple. So I saved a lot on my overhead costs. Now looking at our scaling of all the raw materials, not even just ingredients, but packaging Yeah.

Is if I can afford to handle three, four months worth of inventory, do it. 'cause I'm gonna save 10, 15% upfront. And I'm just doing all those , little pieces in the supply chain with our supply chain director, Claudia. she's been able to really help us on that front, because those. 

Jordan Buckner: Yeah, I think that's huge.

And I think right, like having the product that's dialed in early so that you can start to make those decisions to buy in advance really helps. I know with I ran my own energy bar company called TeaSquares, and I remember like we did a first initial, like stick on label packaging or like, all right, we need our next pack.

And I think we went from ordering out, at the time it was like 5,000 bags to doing 60,000. Yeah. And so we went with a manufacturer that was overseas and we were like, oh, we're just gonna get a bunch of packaging ordered it all got it in house. And then realized they're like. Mistakes on the packaging.

They're like, oh, we actually wanna [00:17:00] change , our positioning a little bit, but like, what do we do with all , this packaging and stuff. And so I think a lot of people, I'm curious if you've seen that just in other environments as well as like trying to over plan for sure. For supply when you don't have , the product or packaging dialed in yet.

Justin Oleesky: For sure. I think everybody feels the growing pains. And we've all made those mistakes. I've made those mistakes so many times with labels and so , it's 

Jordan Buckner: so you think it was like five, 10 people checking them? It was like, ah, someone missed this. The obvious thing, 

Justin Oleesky: I think processes and having all the procedures you want will work , and does.

And we have so many like , label steps, you know, making sure everything is written down on the label properly , and people redundancy of it, but still something happens. Yeah. I think it's inevitable. I think good partnerships with those vendors. Most of my vendors are stateside. I've been really.

Big proponent about finding local people to handle some of this stuff. So like I'm in Utah, I'm in Ogden, Utah. We're about 30 minutes north of Salt Lake. Most of our vendors are in Salt Lake now. So Nice. Getting our case packs, you know, to send to the [00:18:00] distributors. They're all manufactured , in Salt Lake.

Our labels are five minutes down the road, but they're getting made. It was about strategically finding the place where we wanted to manufacture, but also finding the vendors in the area. To utilize it. 'cause those are complete partnerships. I just had one of the vendors come in and stop by, say, I wanna just check on inventory and make sure everything's okay.

They're like 10 minutes down the road. It's those partnerships. When something bad does happen, you can rely on them. 

Jordan Buckner: Justin, I'm happy you mentioned that because I think as much as the larger startup environments moving towards software and automation, it's really relationships at the heart of all those components of the business.

And if you neglect that, then you'll lose a lot of opportunities. I even remember I was sourcing. almonds for our energy bars, we were based in Chicago. Our initial supplier was based in Washington State, and they gave us a good price per deal on the price per pound, but or per case. But then we had to add shipping across.

Right, and shipping across, basically, you know, half the country was really [00:19:00] expensive and we were like, all right, there has to be a better supplier. We're able to find someone local in Chicago that had a better price and free drop off. Right at that. And it hugely saved us money. We knew the vendor we could go by and stop by and talk with them.

They could let us know if any specials and plan ahead. And I think like that centralizing and localizing your supply chain as much as is possible and have partners that can work with you goes a long way 

Justin Oleesky: For sure. And since we do so much. We do everything soft manufactured. We pivot a lot. So, you know, we, one, we have a new flavor launch every month on our website, but like random things pivoting all the time.

So having these close relationships with vendors local it helps so much. 

Jordan Buckner: I love that. So any final advice that you would give to other founders or COOs who are preparing for rapid growth , into retail? Things that they need to kind of think about now, so they're prepared for. 

Justin Oleesky: I think one of it is trust your instincts. I think really, really go for it. Don't be deterred by large costs or tariffs right now. Like there's always other solutions around some of [00:20:00] these things. I think the tariffs are a hard portion and we're dealing with it, but there's always ways around it. I also think finding the right people and the right staff, believing in those teams, empowering them.

And then as a COO I'm very in the wits. I'm in this office. Anybody knows I'm here at least 12 hours a day. I love this place. It's my baby now. So be invested in your company that you work for or are part of, and it also makes the team be invested. 

Jordan Buckner: That's huge. Justin, thanks so much for being on today and sharing some behind the scenes of the Coconut Cult journey and building up operations.

Justin Oleesky: No problem. You're, the man Jordan