#131. Health-Ade is one of the fastest-growing and earliest small-batch kombucha brands. We talk with co-founder Vanessa Dew about how she grew the brand from one farmers’ market to over 25,000 doors nationwide. The Loose Threads Podcast features in-depth discussions with leaders across the rapidly changing consumer economy.

Check out the full transcript below. 

Vanessa: [00:00:01] Because natural felt right to us, we knew that we had to really gain the credibility of that type of consumer. We just focused there. We just had our blinders on to what else was out there and we didn’t want to be everything to everyone.

Richie: [00:00:15] That’s Vanessa Dew, co-founder of Health-Ade Kombucha, one of the fastest growing and earliest small-batch brands in the space. Vanessa started the company with her co-founders Dinah and Justin after trying to use kombucha’s byproduct to cure hair loss. They soon realized that they stumbled upon a category and a product that had an immense amount of potential.

Richie: [00:00:33] I’m Richie Siegel, the founder of Loose Threads, which analyzes and advises next-generation consumer companies, and FaceLift by Loose Threads, a retail incubator and accelerator for leading brands and retailers. For our latest analysis and insights, check out our free weekly newsletter and LooseThreads.com.

Richie: [00:00:49] I started the Loose Threads Podcast to spark engaging discussions with leaders across the consumer economy. That’s why I was excited to talk with Vanessa about the step-by-step way she grew the brand, climbing up the grocery ladder from a single farmer’s market to over 25,000 doors nationwide. Here’s how it all began.

Vanessa: [00:01:12] One day, Justin came home, and he had been working in the hair-loss industry for a couple of years at that point. And he came home utterly distraught because his hairdresser said he would be bald by 30. And so, we thought, “Okay, why don’t we create an all-natural hair-loss product?” And Dinah had been brewing kombucha for years at that point, since she was a nutritionist at Tufts. And so, we knew that, anecdotally, kombucha was supposed to be good for hair loss. So we started brewing, not to drink, but actually to create this hair-loss concoction with the SCOBY, that symbiotic culture of bacteria and yeast.

Vanessa: [00:01:50] And so, when we were brewing to get this hair-loss product, we were just giving away the kombucha itself, because we didn’t need that. That was a byproduct of what we were actually trying to start as our business. And so, ultimately we decided we’re not gonna start a hair-loss company, but what we did have was amazing kombucha; our friends and family were coming back all the time for more. So we decided to start selling at the farmer’s market about seven and a half years ago in Brentwood, California. And that was March 25th, 2012, and we sold our first bottle.

Richie: [00:02:21] Do you know who it was to?

Vanessa: [00:02:23] Yes! It was this tall individual named Richard. He bought two bottles of original. I think we still have that ten dollar bill, somewhere in the world of Health-Ade. It was a really momentous day, ’cause we brought five cases, a whopping largest production ever, and brought five cases, 60 bottles, to the market and we sold out.

Richie: [00:02:42] Talk for a bit just about kombucha generally. Is it hard to make, is it misunderstood? Like, it sounds like Dinah had been doing for a long time and had the knowledge, but does it take a lot to get there?

Vanessa: [00:02:51] So, interestingly enough, kombucha is very simple to make at home, but it’s very mysterious, I think, in what people perceive about it. It’s been around for thousands of years in various cultures, and what it is, it’s, at the heart of it, it’s fermented tea, rich in probiotics and healthy acids. And I think because when you start talking about good bacteria, how you brew it, what is this SCOBY, all these questions come up, people perceive it to be this mysterious beverage, but at the heart of it, it makes you feel good, makes your gut feel good because it’s rich in probiotics. And if you wanted to make it at home, you can do that simply—actually, we make it very similar to how you would make it at home, we just have commercialized it. And so it’s two-and-a-half-gallon glass jars that we brew downstairs, we have hundreds and thousands of these glass jars. Simple ingredients: water, sugar, tea and that SCOBY. And you just need time and a little bit of lovin’.

Richie: [00:03:51] Talk to the first few months of the farmer’s market, in terms of, you had that first sale, had the first good day. What led you to come back on the second, the third and the fourth? And, I guess, what were some of the learnings in that kind of very early incubation period?

Vanessa: [00:04:04] Yeah. So I think it helps to understand the mindset that we’re in. We were so eager to make anything our business and we were just—

Richie: [00:04:12] Something that worked.

Vanessa: [00:04:13] Exactly. So we’re just so excited that (a) we got a sale, and (b) we sold out. So, the only thing we knew was to do it all over again. And the beauty about making kombucha the way that we do is, you know, once you start brewing, you start kind of amassing these batches of kombucha that keep on fermenting. And so, we’ve had now five cases, and now we have an additional five cases ready for the next weekend. So we had all this kombucha ready to sell. So we thought, “Okay, let’s just do it again. We’ll learn something from our consumers there. We’ll ask some questions and let’s see if we can sell out again.” And the beauty of being in that market is that we were able to sample, we were able to educate, we’re able to learn how to talk to people about this mysterious drink called kombucha.

Richie: [00:05:02] This is kind of like the best grocery store kind of demo you could have.

Vanessa: [00:05:05] Exactly. It’s a hand-to-hand combat, if you will, and you get live direct feedback that, every week, we’re able to go back to the drawing board and iterate around what went well, what didn’t go well. And we’re such go-getters, we’re bright-eyed and bushy-tailed and just so eager to start this business, that we were going at it with full gusto. And so, we were all-cylinders-firing at the farmer’s market learning as much as we could. And soon, those first couple months, that one market turned into seven by the end of 2012. So you could find us around LA and Pacific Palisades, Malibu, Brentwood, Larchmont; all the places where we thought the kombucha drinkers would be. And it was a great learning ground and testing ground for us, honestly.

Richie: [00:05:51] Was there any like, seminal lesson that came out of it, or any like, one or two things that made a huge difference? Or was it a lot of just kind of the week-by-week iterations that did it?

Vanessa: [00:05:58] Well, I think there are two things. One is how to talk to people around kombucha. So once you start getting into the weeds around science, people’s eyes start to glaze over, and you’re like, “Okay, I know what not to do.” Keep it high-level and just keep it upbeat, and people are buying into you, too, on how you sell it. And then, second, weekend after a weekend of getting up at 3:00 am. to sell in seven farmer’s markets and also having your full time job while brewing kombucha on nights and weekends, it gets to you. So I think what we really came out of that time with is, “How do we do this better, and how do we scale this and not get up at 3:00 am. every morning?”

Vanessa: [00:06:37] That’s when we decided to pivot into wholesale around LA, and that was an interesting time. We were able to sell directly to restaurants to stores around LA, but this is, again, us being bright-eyed and bushy-tailed. The closest and easiest way to get the product from point A to point B was if we dropped it off, so 2013 became the year of self distribution into those 250 stores that we ultimately got into. So that was really, I think, a key pivot point for us.

Richie: [00:07:07] Talk a bit about the price point and kind of the structure from a cost perspective that would allow you to say, “We can actually afford to go do this at wholesale,” and so forth.

Vanessa: [00:07:15] So, initially, the farmer’s market we were five dollars, five dollars a bottle. Keep it simple. And, at the time, we pegged the number-one player, where his price point was, and we said, “Okay, we know we’re making a quality brew, we know we’re a premium product, and we want to signal that through pricing, but we don’t want to make it too outside of the grasp of the consumer.” So five dollars, honestly, it felt right. We didn’t do some crazy magician work around cost of goods at that time, but we thought it felt right from a consumer demand price-point level and what it meant relative to the competition. And we were able to sketch out some economics on what it meant to go wholesale. And for us, since we’re delivering, it was quite easy. And so we didn’t factor that into the economics, but it made sense from a time level, what it meant to sell one bottle at the market versus one case to a store, and that started to help conceive this idea of how do we scale distribution a little bit more.

Richie: [00:08:16] And did you change the manufacturing method at this point, or were you still making it the same way?

Vanessa: [00:08:20] Still making it the same way, those two-and-a-half-gallon glass jars that we started with back in the market.

Richie: [00:08:25] And was it still you all making them, or you had a facility at that point?

Vanessa: [00:08:28] No, we were still making it. We were still bottling everything into 2014, actually. And, you know, how we really worked that is we were able to borrow space at a bakery in Manhattan Beach and use their health certificate, since we were working out of that kitchen. And that really helped us gain entry into some of these stores, into the markets, and all the meanwhile we were working as clerks at this bakery, part-time as well, still while having our job. So you can call us kombucha brewers, bakery clerks, and 9-to-5ers during this time.

Richie: [00:09:03] What were some of the, I guess, the interesting learnings or inflection points when you’re in kind of delivery mode and starting to sell in to restaurants and other stores? And also, I guess, what was the distance like? ‘Cause now you’re not selling hand-to-hand anymore, you’re selling through somebody.

Vanessa: [00:09:15] Yes.

Richie: [00:09:16] And how did that kind of manifest?

Vanessa: [00:09:17] One of the things that stood out to me was, when you put product on a shelf, it just doesn’t sell itself, right? And the difference at the farmer’s market, you’re proactively talking to people, sampling them. So we thought, “We can’t just simply leave it to chance. We want to be able to help educate.” And at that time—well, still, currently, I believe there’s an un-awareness around what kombucha is. But, at that time, definitely, we wanted to educate. So we had to really put demos into place with ourselves doing them. We had to put a little point-of-sale items out. And, again, we weren’t formally classically trained in CPG, so we didn’t know these are the things that normal companies do. We just thought, “We can’t just leave it there to chance. We have to help increase our chances of success here to get the turns off the shelf, or even at a restaurant. How do we put signage up that allows someone to even know it’s here? How do we get on the menu? How do we do some type of pairing to partner with that outlet and show that we’re in it to win it with them?” And that was just by sheer wanting of making sure it’s successful in these outlets.

Richie: [00:10:27] Was it hard to get the restaurateurs or the kind of local stores to buy into this? Were they looking for more kombucha? I guess like, what was that process, like, of getting in?

Vanessa: [00:10:37] Nothing like old-fashioned kind of cold calling, right? So, again, going back to us as being go-getters. So, in March of 2013, I remember it was just us working and brewing kombucha, but in order to kind of gain this scale into wholesale in LA, we ended up hiring our friends, our family, people on Craigslist when we posted an ad around being 1099 reps for us. And so, they helped multiply our efforts to go into these restaurants, grocery stores, and we had to go alongside them to help talk about the product. And it was really just cold calling. I remember I thought, “I wanna be in the cool gyms in downtown LA.”

Vanessa: [00:11:17] So I created a Yelp list around what those were. There was a little route, and we walked in with samples, we walked in with what our flier was around what made us different, and we had to talk about what we were doing in the farmer’s market. Who we were, what we’re about, and give it a try. And they wouldn’t be disappointed. So we’re essentially selling a little bit on a dream and a little bit on the product, and a lot of what we could offer for their consumer. So, with that, I think we were able to convince a lot of these store owners to give us a chance. And we didn’t want to prove them wrong, so we definitely put our money where our mouth was.

Richie: [00:11:57] So you go from one stand, to seven, to, call it 250 stores. Bring us to kind of the next inflection point. And it’s a good amount of distribution in a short amount of time. Where do you go from there?

Vanessa: [00:12:08] The next stage was being our own delivery driver. So we each had a route two times a week, it was not sustainable. We were spending more time on delivering product than we were actually growing the business. So we actually thought, “Okay, let’s pivot now to, either distribution or—how do we get into, what I say, the pièce de résistance? Some of these natural national grocery stores, right?” And it just so happened that we had a meeting with Gelson’s in January of 2014 and they took us on.

Richie: [00:12:38] What did it take to go into, I mean, that’s kind of the first chain?

Vanessa: [00:12:42] Yes. Two things. One, it was essentially the school of hard knocks when it came to, “Okay, now we need to learn distribution and what it means to load in a grocery store.” Like I said, we had five cases in that first farmer’s market. The first order for that distributor to deliver to Gelson’s was four pallets and 60 cases a pallet. So we quickly went from 240 cases, in that order, where previously we’re doing 240 cases in a week, let’s say. So we had to really understand how to ramp up production quickly. Second is, we, again, didn’t want our product to just flail on the shelf. We knew and we were committed to Gelson’s to make sure that we were a success, and we were doing everything that we could to make that happen, by sending our team in there to make sure we’re always merchandised. Also demoing to make sure that the consumers were going in and looking at Health-Ade. We’re learning the right things, tasting in the right setting and, ultimately, we’re able to get to a sale. And I think those two reasons, plus really working deep with Gelson’s to understand what else we can do more, different, better—we had a deep partnership then like we do now. So it’s always that type of mentality that ultimately led to us doing well.

Richie: [00:13:58] Talk about the brand at this point, in terms of, was it named this at that time?

Vanessa: [00:14:02] Yes. Health-Ade was always the name, we always had the anchor. The brand itself—and we felt this early on, even in 2013—we felt that because we are in LA, in this microcosm of Hollywood, if you will, there is a buzz that can be created, and what’s starting to be created by nature of who is already buying us at the farmer’s market. Celebrities would come up and pick us up, we were getting internal inquiries around influencers wanting some product on Instagram. We are getting this natural grassroots following it was really cool to see take shape. And, I think for us, when we started this company we knew we wanted to create something for ourselves that would have a big impact, but we also wanted to create a brand that really touched our consumers’ lifestyle points, and we start to see that come to fruition when we are available in these restaurants, in these gyms, in these cool coffee shops. And, at this point, the brand was really starting to take shape in terms of what it could be, and I think that was one of the most exciting things.

Richie: [00:15:07] Yeah. It’s interesting, I guess, how it sounds like you kind of fell into the fact that putting the product in a range of different moments or kind of context would do that. It’s sounds that wasn’t the grand plan, so to speak.

Vanessa: [00:15:18] So we knew that we had a certain type of consumer that would do well with kombucha at first, and we wanted to make sure we were in those outlets where that consumer could find Health-Ade. And so we did a lot to make sure that happened, but, at the same time, we also didn’t design anything in terms of that brand specificity, if you will. And that lifestyle portion really started to take shape as we developed and [became] more penetrated in LA.

Richie: [00:15:47] It’s interesting, I guess, in beverage specifically how, especially today, there are a lot of—not a lot, but a few kind of newer models of distribution, whether it’s digital or be it delivery or so forth. But there is a constant through-line of just, you have to be everywhere, anyone could potentially want it, versus having friction in the way of, “Well, I gotta wait a day for this, or an hour, or whatever versus, like, it’s just right here. I can grab it.”

Vanessa: [00:16:07] Yeah. Yeah. That’s an interesting point. So I actually think the friction piece adds to either the premium nature, the niche, the fact that there is that friction there to find it, or there’s this growing demand and kind of creates a little bit of a cachet, right? And so, for us, in the beginning, the strategy started to take shape where we knew we wanted to expand out into this specialty natural grocery store because that’s where the kombucha consumer was at that time. So, who do we need to be in? Namely, Whole Foods, Sprouts. How do we start to position ourselves to get into these stores? And, [I’m] proud to say that, by the end of 2014, we did start in Whole Foods SoCal, by that time. And I remember they gave us a chance too, early on. It was, “We’ll start you in these three stores and we’ll see how you do.” And we were able to prove ourselves on-shelf in those three stores where they were able to cut us in off-cycle, but we had to do the grunt-work to sell into each individual store. And we took that challenge, and head-first dove in and we’re able to accomplish just that, and slowly built out the natural world from there.

Richie: [00:17:17] Do you treat the natural channel as a channel? How do you think about, I guess, the different intricacies of the different players in the stores and the customers that kind of frequent them and, etc.? Especially at that kind of early time?

Vanessa: [00:17:27] So, in that time, we didn’t necessarily know there was any difference with them, right? But we knew that we wanted to focus our attention, to not spread our wings such that we were everything to everyone. And, because of that, we really had to focus where we showed up, how we showed up and, ultimately, making sure we focused on velocities in those locations. And so, because natural felt right to us, we knew that we had to really gain the credibility of that type of consumer. We just focused there. We just had our blinders on to what else was out there and we didn’t want to be everything to everyone.

Richie: [00:18:05] A lot of businesses talk about the concept of product/market fit, of when the market kind of accepts a product. Did you feel like you had that at the farmer’s market? Did you feel like you had that at this time in the natural channel? Do you feel like you were still searching for that, kind of up to 2014? What was that thought process?

Vanessa: [00:18:20] Yeah, I think we’re still searching for this, to be quite honest. In 2014, where we were located was essentially LA, SF for the most part, and then bits of the Rocky Mountain area, and it was primarily only in the natural channel in some of these independent natural grocery stores. And we thought, “Okay, the brand needs to start to develop and really start to have strong legs under it. How best to make that happen?” And what naturally came to mind was New York City, by nature of how many people are there, penetration into that type of market. Fairly early on, and this was at the end of 2014, we started in New York City, in distribution. So it’s a little bit of a departure from where we had been that year. And so as we understood how we needed to grow there, it really became a different type of mechanism than how we initially grew with Gelson’s or Whole Foods.

Vanessa: [00:19:20] So, there’s a distributor partner that we use, The Rainforest, and we needed to work with them deeply, have our team work with them on the route rights to not just educate the store, but also educate and gain share-of-mind with that particular distributor and distributor team. So that’s one thing. And then second, just understanding how bodega’s work, how turns work in that type of world, how negotiation works. It really started to necessitate, not a different type of skill set, but someone who’s been there, done that. And that’s when I knew I needed someone who, (a) [was] really strong in distribution management, and then (b) [understood] the New York market to a tee, who’s essentially built it out before, so that we can follow that same blueprint in the city in the US with the most amount of people, right? So, we knew if we can survive in New York we could be a brand to be reckoned with.

Richie: [00:20:15] So you started in there kind of early 2015. I guess, talk about the next year and, I guess, especially around kind of that markets, and the lessons you learned, the ups and downs, similarities, differences to LA, etc.

Vanessa: [00:20:26] So, I think one lesson learned, [is that] the cost of doing business in New York, especially when you’re a west coast brand, [is] large. To ready yourself to do business there you just have to understand the economics through and through. Second, especially being a refrigerated product—and this is more of a huge scenario that stuck out for me—we wanted to make sure our first shipment over to New York was successful. And we’re refrigerated product. And I remember, I specified that to the carrier, and you just want to make sure that your product gets there refrigerated, not frozen when you’re meant to be refrigerated. So that was a huge learning, when it did show up frozen in our retailer partner that operational and logistical know-how is just so important to ultimately carry the wholesale cycle through. And that was funny and traumatic and hilarious all around, now that I look back, but hindsight’s always 20/20.

Vanessa: [00:21:24] And then, third, you need a team to be able to really be ear-to-the-ground of the New York market. In LA, I think you can be still ear-to-the-ground, but it’s in a different way. You need this stereotypical New York person who knows the streets, knows the people, knows the boroughs in and out and being able to navigate it, and that’s what big lesson for me was.

Richie: [00:21:50] Throughout 2015, you’re now in New York, you’re dealing with, you know, you went to Whole Foods by the end of the year, and then also the probably hundreds of independent bodegas and so forth. Which, again, is interesting from like, a high/low perspective, is they’re not the most beautiful places in the world but they often carry higher-end beverages. Was it hard or different to juggle that variance in where these are, how fast product turns, and so forth? Just from a, I guess, breadth of distribution point.

Vanessa: [00:22:18] So, I would say first is team focus and deep domain expertise. So I mentioned that I needed someone who knew distribution very well, and knew the New York market, and I hired just that at the end of 2015.

Richie: [00:22:32] So it took like a whole year, kind of, to get to the point of like, “We need this.”

Vanessa: [00:22:36] Exactly. And also to find the right person. People are really important to Health-Ade, in terms of brand manifestation, culture, and also the expertise they bring. And so, it’s really hard to find that particular person. Found them, still with us, and like my right hand today in a lot of different ways. But that was really important to get the right team set up there. Second was inventory. Yeah, so you’re right, in the city in the US with the most amount of people, turns are much different than LA, so it was understanding how forecasting inventory and all the turns really worked within distribution and making sure that we never were out of stock. That was a lot of detailed and fragile working, I would say, as well. You know, the way we make kombucha, we can’t just flip on the switch and have it ready in one hour. We have to forecast, and there is a lot of operational workings that make sure that we have the right amount ready at the right time to ship out. And it takes about a week to get to the east coast, so you can’t just flip on a switch to have it ready if they’re out. So, I think that was a big learning, is understanding inventory turns.

Richie: [00:23:48] Did you ever think you would need to manufacture it locally, or that wasn’t an option, I guess?

Vanessa: [00:23:54] At the time, no, but definitely it became a proposition as we looked to all the shipping costs, as we started to grow out, not just New York but the east coast market.

Richie: [00:24:06] Is that something you have today or…?

Vanessa: [00:24:07] Not something we have today. We’re all thinking about the future.

Richie: [00:24:10] Yeah. So I guess into 2016 now, you’re going bi-coastal. Are you starting to expand up and down the east coast at that point, are you still focused on New York? I guess, what’s working, what isn’t, in that year?

Vanessa: [00:24:18] Yeah. We’re still growing our doors within the natural world. Primarily our footprint geographically was New York and then west coast into the Rocky Mountains. So, still just coastal, but also really only focused on the Northeast. 2016 was an interesting time because that was when we started to hit our stride in natural, in terms of the doors that we penetrated, but also the consumer that we’re talking to, where velocities just rocket-shipped. Actually, 2016 is when we found ourselves out of stock for a lot of the year, because demand greatly outpaced supply.

Richie: [00:24:58] What do you attribute that to? I’m sure it’s not one thing, but…

Vanessa: [00:25:01] One is, you know, again, wanting to achieve and do well is this, “Let’s go!” And kind of growing at this huge pace. And us mainly pushing for penetration into this channel a little bit more. Also, I believe that our efforts in market to help educate the consumer was working. We were talking to them about not just what kombucha is, but how we’re different, and it really started to see this turn on the shelf, that said to us, we’re on the right track in terms of where we’re going as a brand. And then, as I look back operationally, that growth tied into the timing of our operations. We probably could have planned better but, again, we’re just, we’re going.

Richie: [00:25:46] So at this point you’re at hundreds if not a thousand doors, maybe? Maybe high hundreds?

Vanessa: [00:25:52] Yeah. Let’s say low thousands.

Richie: [00:25:55] Low thousands?

Vanessa: [00:25:56] Yeah.

Richie: [00:25:56] What does education, I guess, look like at that point? Like, how does one scale that? ‘Cause at a certain point, you can’t be everywhere anymore, even the reps you have locally can’t be everywhere anymore. I guess, what were some of the kind of lessons or insights around, “How do we do this?” Whether it’s with digital channels or so forth but without replicating ourselves?

Vanessa: [00:26:13] Yeah, that’s a great point. I remember being at the airport asking the same exact question to one industry that, at the time, saying, “We just got authorization to a northeast account.” And it wasn’t just local in New York City, it was actually found up and down the eastern seaboard with thousands of stores. And I remember saying, “Now that we’re in this larger geography where we can’t be everywhere to do a demo, we can’t just be up there to put up POS, how do we start to educate?” And so, I think at that point we had to think about how we disrupt the consumer from a packaging level. So, is our package doing right by our brands on the shelf? Is it popping? Two, do we have the right level of price promotion to introduce trial into the brand? Three, are we doing enough around that store? Like, whether it be cultural events, field marketing to help generate this buzz that we need to, to help direct them to the store. Then it’s also, digitally. How are we showing up in terms of SEO, how are we pushing and disrupting that type of consumer?

Vanessa: [00:27:18] So then we have to start to build out this 360 disruption platform, because we couldn’t be everywhere at all times, and that was a huge learning. And, in fact, I think we’re still in that phase.

Richie: [00:27:31] Was that codifying the mechanisms internally that you could push out across the fleet? Like, talk more about that, if you can.

Vanessa: [00:27:36] At that time, the year was 2016. We covered ourselves with feet on the street around five markets, which included New York, LA, SF, Portland at the time, and Denver, I want to say. ‘Cause we knew that we can go deeper into those markets, we can go into these stores, we can have field marketing local events. And that’s where we really kind of put our flag in the sand and said, “This is where we’re building out.” And, in all of our other markets, where we couldn’t, it really had to depend on partnering with the retailer at that time, where we’re able to hop on to their ads. How do we start to build out partnerships where they’re talking about us to their types of consumers?

Richie: [00:28:19] Right. And those aren’t free, normally.

Vanessa: [00:28:20] And those aren’t free. And so it became more of a joint business planning, if you will, on how we start to increase our touch into their consumers, and not take the heavy lift all on our own in every single city across the US.

Richie: [00:28:37] In terms of the packaging, which you mentioned, was it the same, or was that part of a kind of re-brand or repackaging process of carrying that education forward, kind of at a bottle-level?

Vanessa: [00:28:46] When we went into distribution in 2014 is when we kind of had our first real iteration of the label. And it hasn’t changed too drastically from that time period, actually. We did come out in 2015, early 2016, with our superfood line, and that has gone through a couple of iterations. Most recently, we just launched our bubbly rose flavor, which has been the latest label iteration in terms of our kind of forward-moving plans on kind of brand dynamic and how we show up on the retailer shelves.

Richie: [00:29:20] Talk a bit about the superfood piece, and what started to be these extensions.

Vanessa: [00:29:25] As I mentioned we use kind of cold-pressed juice from locally-sourced farmers where we could, and you can only do so many things. And we started to experiment with superfood powders, like wheatgrass, spirulina—things that didn’t show up as just pure juice in copious amounts. And so we thought we could really create this line that met a consumer need that was looking for, not just kombucha to make them feel good, but essentially power them with other things they’re looking for, too.

Richie: [00:29:59] So, I guess we’re in 2017, kind of now, at this point [there’s] istribution up both coasts. Where do you start to, I guess, shift your time and your priorities of, you know, where to next?

Vanessa: [00:30:08] So, 2017 was also kind of a new chapter for us, if you will. So we had just moved into our brewery [in] January of 2017. As I mentioned, 2016 we’re out of stock for a good amount of time, because our brewery was just, we’re itching for it to open, and that did in 2017.

Richie: [00:30:28] Talk I guess briefly about why, you know, kind of the process of creating one of these things, ’cause some companies outsource it to other facilities. It sounds like this is yours. How did you know you needed this, you wanted to do it, and you could do it?

Vanessa: [00:30:39] So, early in the beginning of Health-Ade, we were searching high and low for a commercial kitchen, where we could brew kombucha the way that we did it, the way that we knew we could scale it. And, honestly, just not a lot was available back then, in terms of space, in terms of what we could afford. And so, ultimately, we had to take it upon ourselves to make it in-house. And we’ve come to learn that we have a tighter control and quality because of that, and we really wanted to make sure that we brewed quality every year therein. So it just made sense and, really, the right choice to keep it in-house at that point, and also make the decision to go bigger into what we’re in right now, which is about 50,000 square feet. And we needed to to meet that demand, because in 2016 is when we start to understand, “Okay, let’s now move into another channel where the market’s feeling like it’s ready, we’re getting this natural pull into the conventional retailers.”

Vanessa: [00:31:34] And so, 2017 for us marked this shift where we didn’t just show up in the natural retailers, we weren’t just in New York City and the west coast, we were starting to become more available across the US, across conventional and mass retailers. So that’s when we really started our charge to go into some of these more mainstream channels, and that is where we saw a lot of scale as well, 2017/2018.

Richie: [00:32:02] How do, I guess, you know you’re ready for that? Or maybe you never do. And then, what gave you the confidence to say, “Okay, we can break out of this thing that seems to be working very well, and kind of go bigger?”

Vanessa: [00:32:12] So, I think one thing is an indication and just inbound interest from a lot of these retailers, whether it be in the midwest or in the southeast. People were asking for us. And I remember kind of holding the line for a good year and a half, because (a), I need production, capacity necessarily wasn’t ready, and then (b), maybe that consumer wasn’t ready and we didn’t really prove ourselves just yet in natural at that point. As we started to, again, prove our story with our consumers our velocity was dramatically increasing within this natural channel. It felt like the right time because we’ve already penetrated natural and Whole Foods, we were starting to gain so much traction in terms of velocity there where we have a lot of inbound interest coming. So, why don’t we start to see what it would look like? Plus, we start to open up this brewery so we had a lot of additional capacity to start to meet those needs. So it was really kind of threading that needle just right.

Richie: [00:33:12] Talk about the kind of sales learning and kind of educational differences of going from the natural to the conventional. Were you surprised how much was similar, or how much was different, or kind of, how did you tailor the approach to be successful there but also not lose the natural channel at the same time?

Vanessa: [00:33:27] Yeah. I think one of the things is how to reach that type of consumer. We knew that from just by sheer number of doors and the geography that these conventional retailers spanned. We couldn’t, again, be everywhere, so we really had to understand the different mechanisms or ways to reach their consumer. And that came through their digital ads, through their advertising programs, through unique promotions that maybe this more price-sensitive consumer was wanting to see. So it was all those types of iterations that we went through in the beginning. And then, also, I think another learning was what flavors those types of consumers were really akin to. In Whole Foods and the natural world we saw ginger lemon just do really well, but as we started to get more time under our belt in the midwest in some of these conventional retailers, some of the more fruit-forward flavors were taking the lead, and that was a different learning as well. So we started to learn the consumer a little bit more, and that was really cool to see as a foundation.

Richie: [00:34:32] Where is, I guess, like, digital at this point? In terms of, do you have a website, can someone buy something on it, is it more educational-based? Social media as well. It sounds like so much of the power from this comes from investing in the channels and the tools that the channels give you but, obviously, the internet still exists. And so, how were those pieces kind of playing together in that offering growing as well?

Vanessa: [00:34:53] So we did have a very active website, and we did invest into the aesthetics of that website pretty early on. From an e-commerce perspective, we weren’t available for the most part at this time period. Keep in mind, we’re refrigerated, there is an expense to ship, you know, cross-country at that point. And so, e-commerce was not built out for us really at all. We were very heavily Instagram-present, though. I think that’s where a lot of our engagement was, still is. So we really started to build out a strong Instagram platform. We dabbled on Facebook and Twitter, but nothing was very deep in that way. We kind of, digitally, we’re focused on the Instagram profile.

Richie: [00:35:36] So, I guess, bring us into 2018, and then we can talk kind of through this year, in terms of where your focus priorities were. It sounds like, I’m guessing a lot was around the conventional kind of channel and building that out.

Vanessa: [00:35:46] So, once we started in 2017, kind of planting our flag there and building that out, we started to see scale in terms of the number of doors that we went into by retailer. By the end of 2018, we actually had amazing metrics behind us, in terms of doors, items found in these doors. Right now you can find us in about 25,000 doors to date.

Richie: [00:36:11] Is that number crazy to you?

Vanessa: [00:36:13] When I think back, I’m just like, “Man, we started in seven farmers markets, and now we’re in 25,000 doors.” And that’s only measured channels, so there’s probably a whole host of others that we’re in, through like, restaurants and whatnot, not officially measured. Even thinking about what it means to pull all that together. I mean, it really does take a village, and that’s why I think the team piece is so important, is making sure they feel like they can win it and in it every day. Making sure they have the right tools to even get there. And, you know, operationally, making sure it all happens.

Richie: [00:36:46] Anything else, I guess, into 2018 and then into 2019, in terms of, I guess, the business’ kind of focus and priorities, or is conventional enough that it demands everything?

Vanessa: [00:36:54] Well, interesting you say that, because I’m excited—and, you know, going into 2019 and then the future—about what Health-Ade can ultimately fulfill in terms of that initial thought. How do we as Health-Ade—not just Health-Ade kombucha—become the lifestyle brand that we know we could be? And so, it’s not just about showing up in just the traditional grocery stores, whether it be natural to conventional. We have spread our wings across channels. So, we’re now found in drug, c-store, club like Costco, and so it’s understanding how we can grow those channels. But what’s exciting to me is how we grow this on-premise food service channel that touches consumers, whether it be through airports and travel, through recreation and fitness, through hospitality, restaurants, hotels. So I think that is a huge piece that Health-Ade has really only scratched the surface of. And I’m excited about what we’ll do in the future, too, to further our disposition as better-for-you beverage leader, and that doesn’t have to come just in the form of kombucha, and that’s what the team is really focused on now, and what we’re gonna be doing into the coming years.

Richie: [00:38:09] The hospitality channels, I guess, are interesting. Does it feel like it’s closest to one of the other channels you have, or is it in itself its own beast that takes kind of a whole new set of learning?

Vanessa: [00:38:18] Oh, whole new beast. And I think, for me, I am a learner at heart, so this is the cool part of kind of building that. It’s not just the new relationships, but it’s the new economic structure, it’s the new how you tap in and talk to that consumer. It’s now, kind of the new “how-you-show-up.” And that is very different than a traditional grocery store, and I think this is where we’ll really see our brand start to take shape in a whole new meaning to our consumers.

Richie: [00:38:49] Does it get easier as you have these tailwinds behind you, of 25,000 doors, etc., or do you feel like you’re still fighting in all those conversations to get into these places? Like, has that changed at all?

Vanessa: [00:39:02] I’d like to think it has, on some level. I can definitively say our team is second to none out there, so they definitely make our world go round in terms of execution and implementation. In terms of the day-to-day, there are still many a conversation that I remember having five years ago. It’s just, that same fire that needs to put out, it’s just maybe on a bigger scale.

Richie: [00:39:26] What’s been the cheapest and most expensive lesson you’ve learned, building the business?

Vanessa: [00:39:30] Cheapest lesson is knowing myself and the strength within myself. It costs nothing to invest in your self-confidence, but it ultimately means so much. And as [an] entrepreneur starting out in this industry where you seemingly are going up against the Goliaths of the world, you start to question yourself and have this impostor syndrome in your own head. And I know that me and my co-founders, we lean on each other, but also at some point we had to build our own self-confidence about what we are building, what we’re bringing to the table. And, ultimately, that had to do with a lot of personal self-awareness and work on ourselves to learn that we had it in ourselves, we have it within ourselves, and we can take it to the next milestone. I think that’s the cheapest one.

Vanessa: [00:40:21] The most expensive lesson…let’s just say the opportunity cost, and not capitalizing on all of the growth that we could have in 2016, because of being out of stock for a little bit, because our operations didn’t necessarily align to our growth plan. That was a very expensive lesson, in terms of financial operational planning, and also just on an emotional taxing level for myself and with the team, to constantly be on the front lines with the customers, to explain and be very transparent about what’s going on.

Richie: [00:41:01] Was there something you could have done at that point? Or was, like, it was impossible to overcome that?

Vanessa: [00:41:08] Should’ve, would’ve, could’ve. Hindsight’s always 20/20, so I’m sure there are things that we could have planned better, got resources for but, at the time, every decision we made then and today is always what’s the next best decision for Health-Ade. You’re growing so fast and trying to put it all together at the same time. I don’t think at that time there was anything we could have done differently. To be honest, our construction of this current brewery took record time, in less than six months, and so we did everything we could to advance it. And I wouldn’t change anything. I think our story is just as it should have been. But, nonetheless, hindsight’s always 20/20.

Richie: [00:41:44] What are you excited about that’s kind of on the horizon, next six to twelve months?

Vanessa: [00:41:48] I’m really excited about building out our brand as Health-Ade and what our innovation is set to bring. We started in this world of CPG as Health-Ade Kombucha, and as we started to build out this platform of a better-for-you beverage company there’s a lot of stuff we’re looking at that we could share in a couple of months. But we’re looking at different product platforms where we know we can take the stage and take the leader position as leaders in digestive health. Kombucha is just the start of that, and we’re excited to learn more about what it means to meet consumers at their lifestyle points, and this innovation’s part of that.

Richie: [00:42:24] In terms of, I guess, the messaging, the communication, and I’m sure this can draw on your experience from the farmer’s market to now, and I’m sure there isn’t necessarily one answer, but: do you find people are buying it just ’cause it tastes good and they feel good, because it actually does something? Warby Parker, for example, has gone very all over the place in how much they talk about their charitable mission behind it. There are different ways to kind of use the messaging to do different things. Is there one or two of those that drives it, or do people kind of bring different reasons? And did any of those surprise you about what worked from a messaging perspective and what didn’t?

Vanessa: [00:42:57] First and foremost, taste is really important. Second is function, the probiotic nature of what’s in Health-Ade Kombucha. So, those two reasons from a functional level and just a pure sensory level, not only brings people in but keeps them with us. But I think on another level that’s a little less tangible, more qualitative, is this understanding on the why we do it and the resonating of our founder’s story. And I think that was maybe a little bit the most surprising, is that when people start to understand the brand and understand the brand story, people really started to not be impressed about how we grew and what we’re doing, but more about the why behind how we got into it. And I think that type of entrepreneurial curiosity does speak to a lot of people. I think the fact that we’re a self-made brand, founder operator is still running the business, speaks to a lot of people. And I think, ultimately, we had to follow our gut, too. Our business resonates with people. So I think that was the coolest thing to see in terms of what consumers were resonating with. And so much more to even go with that, but that’s been I think the third piece of this puzzle, is the why.

Richie: [00:44:11] Where’s the name from? And then via what you said, kind of a question ago, is there a plan to drop the “kombucha” from the name?

Vanessa: [00:44:18] I think people definitely, when you see our bottle, it is an iconic bottle that people know it’s this healthy kombucha brand. And Health-Ade, in the beginning when we started, we wanted something to aid health, a-d-e, kind of an ode to like, the Gatorades. And then, a beverage, it means “beverage,” so, “beverage for health.” It kind of just made sense. So that’s where it ultimately came from.

Vanessa: [00:44:42] And where it can go? I’m excited to see what Health-Ade is at a platform for better-for-you beverage as we start on this innovation cycle. Who knows? Maybe you’ll see kombucha off of the label but, right now, I know that people, when they see our bottle, see our label, see our anchor, they know healthy kombucha. And we’re just trying to meet our customer where their lifestyle is.

Richie: [00:45:04] Is the anchor from the health icon as well?

Vanessa: [00:45:06] Actually the anchor came from a little bit of a different means. So, when we started the company, we wanted to have a logo that was clean. We were taking notes from like, the Nike and Apples of the world. What was gonna be that, what people remembered? And we wanted our company logo to stand for the words, “classic, strong, grounding, timeless,” and we didn’t have just the anchor as a brainstorming session. It was the anchor, we had a lion’s head, a lion’s mane. We had a Rosie the Riveter arm. And we kind of just let it sit for a bit. We were gonna sleep on it and come back to it. And then, when you start a kombucha company, you do a little bit of research on kombucha, the history of it and whatnot. So we read this book called, it was the history of kombucha, and the first couple sentences said, “Thousands of years ago, Japanese sailors would ferment kombucha to give them sustenance on their long journeys.” So after reading that, meditating on what the anchor could mean, and does that fit into the words that we wanted our logo to fit? Grounding, strong, timeless—seemed perfect. Homage to the sea fit nicely with those words and characteristics. And we weren’t ones to dwell, so we just moved forward and we picked an anchor.

Richie: [00:46:23] Very cool. Thanks so much for talking.

Vanessa: [00:46:25] Yeah, no problem.

Richie: [00:46:31] Thanks for listening to the Loose Threads Podcast. You can read full transcripts of the podcast and join the newsletter at LooseThreads.com. Feel free to leave review on iTunes, we always appreciate it, and thanks to George Drake, Jr. for editing this episode. We have a great roster of upcoming guests and we hope you tune in next week.