Episode 157: skucast Live! How to Craft New Experiences with Merch in Today's Environment

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. Skucast is the official podcast of Common Skew.

On Tuesday, we hosted our very first Skewcast Live. It was a fantastic experience for our first live Skewcast, and if you didn't get a chance to attend, we're bringing the audio to you today. Our topic was how to craft new experiences with merch in today's environment, featuring Jason Lukash, co-founder of Aurig Audio, and now Senior Vice President of Marketing and Innovation at HPG. Many of you know Jason, but if you are new to the industry, Jason Lukasch is known as our industry's lovable rogue and highly respected for his merchandising prowess, not only in our industry, but outside of our industry and internationally as well. Jason was recognized as Entrepreneur Magazine's Entrepreneur of the Year. His Aurigaudio product was featured as Time Magazine's 50 Best Inventions of the Year. He was 4 times on the Inc. 500 list and notorious, of course, as winner of ABC's Shark Tank. Hi friends, I'm Bobby LeHew, the Chief Content Officer at Commscue. My co-host is Mark Graham, Commscue's President and Chief Brand Officer. And today we peek behind the curtain and discover how Jason and the HPG team developed the Batch and Bodega concept, a new food concept featuring cleverly curated branded merch with passionate small batch food makers across the country. Including brands like fourth-generation-owned Bird's Cookie Company in Savannah, Georgia, toffee cracker startup Legally Addictive in Brooklyn, Martin's Pennsylvania Dutch Pretzel Company in Moriah, New York, and many more with more to come. We talk with Jason about the inspiration behind the concept, ideas on how to go to market, overcoming price objections, and much more. Quick housekeeping note: a few weeks ago, we opened registration for Sessions at Home, the industry's only virtual experience dedicated solely to thriving in sales. Join Mike Michalowicz, Darrell Griffin, Danny Rosen, and Katherine Graham as we share how to refuel, refocus, and reenergize our sales teams to make sales growth a passion again. You can register and learn more at commonscue.com/sessionsatome. And now here's our conversation with our good friend, Jason Lukasch.

All right.

Jason, I want to start off with an easy one. Tell me about the inspiration for this line. Was it a particular moment? Was it a brand? Was it some lightning bolt that hit you as you were walking along the San Francisco waterfront? What was it that brought about Batch and Bodega in what is arguably a pretty busy, commoditized segment of the market?

Yeah, so it was ironically in New York. So it was about a year ago, it was August of last year. I was walking around the streets of New York, not just randomly, but for work. We do at Aurigaudio for years, we pre-COVID have done these high-end like shopping trips to kind of survey the market and see what's going on at retail. We always do one in New York. So it was last summer in New York. I was in Chelsea Market. If any of you guys have been to Chelsea Market before, I'm sure you have. Phenomenal food spot, definitely a foodie hub of New York. And I was in the store and there was a lot of really cool craft food manufacturers, Martin's Pretzels was one of them, that were on the shelves here. And I had that eureka, aha, lightning bolt moment, Mark, where I said, "Food in our industry," and I've received food gifts for years and this isn't throwing shade at any other suppliers, but they're all just generic. It's like, Food in plastic cellophane bags and I don't know where my pretzels are coming from or there's no story about it, they're in a white box or whatever. And I said, there's all these cool food brands out here, why aren't they in our industry? And I know, just like you guys know, navigating the waters of promo on the supplier side, it's tough. If you haven't been in this industry before trying to figure out how it works, I'm 11 years in it now at Oreg, I still don't know how it works, but we've survived. I learn things new every day, but it's hard to navigate the waters and jump into the sector. So I said, there might be something here if I can take all these cool food brands that are doing really well at retail and have cultish retail followings and bring them in the promo space. So that's kind of how the idea for Batch and Bodega was born, was on the streets of New York and Chelsea Market specifically.

Go ahead, Mark.

Sorry, Bobby. I'm so excited. I just have to ask a follow-on question here. All great products and brands, as we know, usually are born out of failure. I'm curious if there was any missteps or any things that hit the cutting room floor in the journey in creating Batchel Bodega, or was it all just roses and unicorns?

Ian Formigle: No, it wasn't all roses and unicorns. It never is. I mean, we're learning stuff every day.

Trey Lockerbie: I just made that up, by the way. I don't think it makes any sense.

Ian Formigle: It's usually puppies and unicorns, but it's close. The hardest part for getting this thing off the ground is we have 28 different food suppliers that are part of our launch partners or whatever. And we had like 3 of them go out of business and just disappear. One of which was hit by a tornado in Nashville and they never brought the food business back. 2 were COVID-related. So launching during the unforeseen environment that we are all living in now, that was extremely tough. But yeah, it wasn't all roses and unicorns. We learned a hell of a lot along the way to get this launch, which launched 2 weeks ago or whatever. It was a lot of blood, sweat, and tears, and a lot of food sample testing as well too.

Hey, by the way, I want to remind everyone, please throw your questions in the chat or any comments in the chat. If you have ideas along the way of things that as we unlock for this conversation. If you have ideas on how to go to market, tips, please share that as well. Jason, did COVID accelerate or threaten the development? I'm sure it threatened it somewhat, but how did that impact things and what can we learn from that?

So both actually. So the plan, we went to PPE.AI and kind of like not soft launch, just had the concept out there. We used PPE.AI as like kind of a market research platform to learn. I know Mark, you stopped by and Bobby did at one point, what people thought of the food, what they thought of the concept, were we on par for pricing. The goal was to launch it fairly soon after PPAI. COVID happened, which also accelerated the process. Shipping shelf-stable food to people's houses on a one-piece minimum dropship model, if I had this pre-COVID, we'd be sitting in the pretzel gold empire, right? But we definitely accelerated the process to get this launched prior to Q4 to capitalize on, you know, food during Q4 does extremely well based on our data and just industry knowledge. So it was delayed, but it was also accelerated and it just landed to happen in summertime. We had some kits that we were planning on launching this year that we actually are now holding off to launch next year as well too. At a higher price point, definitely. So we want to put out more price-sensitive product now. And I mean, I mean, our stuff compared to just generic pretzels or whatever, it's more, we're, we're on the more expensive side, but we're doing all the legwork for you. But some of the really expensive stuff we're waiting to launch the next year, just to see how the industry kind of rebounds from COVID as well too. Yeah.

Are you expanding on these, these makers as you move forward? I mean, what's your sort of grand plan with all of this?

Okay.

What's the first, what's the name?

Go ahead. Go ahead. No, sorry.

Go ahead. No, what's kind of your vision for a bigger strategy around this? I'm sure this is the entry-level point, but what do you envision 12 months, 16 months from now when you've reached some of this form of maturation in your mind?

Yeah. So right now we have 27, 28 makers, fairly geographically diverse. You'll see a lot heavy East Coast and a lot heavy West Coast. I want to fill in more of the middle part of the country. My goal is to have Ideally a maker in every state, including Alaska and Hawaii. I want to find that syrup producer making guava nectar from Hawaii or the person selling gold nuggets from Alaska. I can't think, or maybe a reindeer jerky, a caribou jerky from Alaska. My goal would be to have a food partner from every state. And I really wanted to do regional kits. So say Google was having a tech conference in Atlanta, Georgia, they could buy like the Southeast kit. It's kind of like a room drop to welcome people to that city. That was the goal, to have these regional kits initially when we came up with the idea for Batch, was to have like regional kits from different parts of the country. But that all changed during COVID So I think next year my goal would be to have maybe double the amount of makers and the regional kits kind of in our wheelhouse. Right now we have 11 kits that we launched with and 28 makers. So maybe next year it's like 22 kits and 50 makers from all 50 states would be phenomenal.

Jason, can you summarize your marketing strategy with this line and how it differs from anything else you've ever done? And I ask this question because we've got distributors that are here and we're trying to really get into your brain in terms of how it is you think about marketing strategy and to see how distributors might be able to learn from your experience.

Ian Formigle: I'll give it as a two-part answer. It's consumables. I've never done consumables before. So there's the sampling process. You don't get your samples back. People eat them like Bobby ate the pretzels. Second part is for Oregadio, we built our brand and our brand story around Oregadio the brand. For Batch and Bodega, Batch and Bodega is a brand. It's more of a company. We're leading with the maker stories. So The maker stories for each of these 28, 27, I should actually know the number. I'm going to say 28 food manufacturers that we have on board are phenomenal. We're leading with their story, whether it's the third generation pretzel maker, it's, you know, the single mom that made popcorn on the side out of Asheville, North Carolina. It's just kind of a hobby and then did it now as her full-time business. So we're utilizing the maker stories because they're, I think, more important than the batch and bodega story to really go forward with from a marketing standpoint. So we've got brand story videos to showcase each of the makers and their story behind it. All the product is coming in the maker's packaging because there's phenomenal brand equity and value for each of their brands that they've built too. So we're utilizing their power to help push Batch and Bodega into the atmosphere as well too. So it's different. But then the consumable side is from a sampling process, like how do you get product in people's hands? For Org, for years it was easy because you'd send out a speaker or someone take it to the beach, play with it, show it to a friend. For food, you can't really do that. So it's a lot more, um, you know, uh, individual samples going out from a food tasting perspective, um, that you don't get back. So our consumer budget's a lot higher, um, because it has to be.

So yeah. Hey Bobby, this one, by the way, I'm real curious, Jason, you talk about how you're introducing this to the market, to distributors and leading with story, which I love leading with the maker stories.

How are you seeing other distributors who are already sort of grabbing hold of this and being progressive with this line? How are you seeing them introduce this to the market? I mean, we got— it's obviously a room full of smart marketers on this podcast episode, and I'm asking this to the audience too. What— how do you guys plan on introducing this to market? If you can share that in the chat, we'd love to all sort of gain from the knowledge of everyone being here.

But what have you seen in the market so far, uh, how distributors are introducing it, and what do you recommend?

So it's done incredibly well in the 2 weeks. I have 2 weeks worth of data to go off of, but the distributors that are— we've already got 4 repeat orders from one end user client, one of our distributors in the Midwest, which is surprising. Within a 2-week period, they received their first— they did a pre-order on the first— it was our speakeasy kit, and they've ordered 3 times on top of that. It was done as a mailer to, because it's Speakeasy, so have your own home happy hour. No booze comes in it, so you can add your libation of choice to it. So they sent it out to their customers or to their clients' customers as do a virtual happy hour with us. It did incredibly well. They re-bought again and again and again. And that was one, I think, the best applications I've seen. From our, um, our PB&J kit. I can't remember what it's called, bad, but it's the one that comes in the lunch bag with peanut butter and jelly. And I know Ben, our marketing director, is like printing behind me. I don't know the name of it, but I forgot. Um, that one, uh, did really well as like a virtual lunch option too. So it's like make your adult PB&J. It comes with like, uh, uh, nut butter, um, a chia smash jam, like a super high-end Rice Krispie treat, honey straws. Everything except bread, so you can make your lunch while you're doing like a lunch and learn. So that's done well so far. So I've seen the distributors kind of like positioning it during COVID times and kind of like taking the spin on, hey, we would come in and do a lunch meeting in your office, but now we'll send lunch to your house for you. And the home happy hour have done really well so far. Oh, sweet. Ben chimed in. He's on the chat. It's Sweet and Smooth.

Sorry, Ben, I forgot the name.

This is like a dream.

Ben is like, "You're fired, Jason." Hey, this is really like a dream for us as distributors. Like we want things that are going to be emotionally engaging with our own customers. So what a great way to, I mean, I'm picturing like quarterly reviews or 6-month reviews with clients that sit around with this food experience because we know food is comfort and we know all the emotional attachments that come with food. We all kind of know that, that's baseline. But distributors, there's so many opportunities. We're going to get into holiday gifting in a minute. And I saw some questions. We're not ignoring your questions. We're actually combining these and we're going to ask them at the end. But we used to do food gifts every Thanksgiving because the reason we ignored Christmas, not to rain on any Christmas plans here, was because everybody did food gifts at Christmas. We did them at Thanksgiving with a handwritten note so that we could generate food sales at Christmas time.

So that was our trigger and we did it for years.

But part of my thing with this is because of COVID every opportunity is a food gifting opportunity because of comfort. Because of emotional engagement. And I encourage everyone after today's episode, if you want to learn more, when Vicki Ostrom delivered her presentation at SKUCon this year, and then we had her on a SKUcast, maybe I'll share this in the chat here, a couple of links. She talked about this, about engaging emotionally and what the market is now needing and requiring, and this is the perfect line for that. So, I mean, there's so many opportunities here that it's just crazy.

Mark, go ahead. Sorry, that's super smart, Bobby, by the way. From a marketing guy's standpoint, like genius. So why don't people do like Labor Day food gifts, right? Let's— on Monday. I'm telling you, to capitalize on— yeah, capitalize on the Q4 because people that give food around Christmas time, it gets lumped in with all the other food you get and food sales drop off in January and February.

So yeah, smart, Bobby. Um, yeah. And one more thing, I'm— you're talking about guys really excited about food sales. So, uh, in mid— I think it's mid-September is when the big food chain catalogs typically launch. So you have like, what are they, Harry David, and have all those mid-September, and then mid-October hits. And then, I'm sorry, the B2B, the business market's a little slower. And so what'll happen is, it's funny, depending on what part of the country, and the minute the first snow or cold hits, people start thinking of holidays. And then the other thing is we love to actually surprise and delight with food year-round because that's when people aren't expecting. So there's just so many great opportunities, not just around food. And don't forget, in corporate America, and this is going to probably really increase this year, I forget the percentage, but it was something like 60%, 70% of the gifts that are given by businesses during the holiday season are food.

Interesting. One thing, you were going back to the earlier question about a kit and a good marketing message. For how distributors pitched it. Our Rise and Shine, our breakfast one, is really cool. So it comes with like pancake mix, an oven mitt, a spatula, maple syrup, and honey and granola, depending on which level of the kit you buy. But one of our distributors did that as kind of like family breakfast on Sunday type of thing and gifted them out to, you know, their customers or whatever for their families to engage in a family activity, like making pancakes together on Sunday morning. I thought that was pretty clever as well too. Because a lot of gifts, if you think about the promo industry, when gifts are given, it's usually a singular use, right? So I gave a pen to Bobby, like Bobby's going to keep that pen. Rarely do you give gifts where like a whole family can engage. And I think a couple of our kids can kind of hit that perfectly.

I want to take a half step back and go back to what you were talking about with makers, Jason, and tie it to two distributor examples that I think are kind of cool about this. Transparency in the storytelling around where the products are coming from. That was something you mentioned at the beginning that in the case of a lot of suppliers, promotional products, we don't really know where it's coming from. A lot of people don't care, they don't ask. But Bobby, you did a great episode with one of the co-founders of The Merchery out of Belgium. And what they're doing in this new company is really interesting about how transparent they're being about where they're sourcing their products. And they're sharing factory information and telling stories about the people who are making their products. That's super bold. You don't often see that, particularly opening up where products are made in China. So that was one thing. Then of course, our good friends at Bright Sleeve, they've been running a cool campaign called Make Goods. If Ali's in on here, maybe she can post the link to the Mercury episode as well as the Make Goods blog post, where Right Sleeve is featuring these individual kind of maker-style suppliers that they've partnered with that are giving back to underprivileged segments of society. And it's so interesting as to how I think progressive distributors are really leaning into this storytelling and transparency where we didn't have that before. So I love the fact you're doing on the supplier side, but there's great lessons for distributors too to do this as well.

Yeah, I'm a huge fan of the brand Everlane out here in San Francisco, which gives full supply chain transparency, even down to what their costs are and their freight costs and tariffs. And that's the best way to, I think, to do business. That's how I operate. I'm 100% transparent. I tell it how it is. And for Batch, we didn't want to hide like the pretzel maker story, right? Or the conery out of Brooklyn. Like we took cameras and showed like their trade secrets, how their batter's being made, how they're We've got maker partners that are allowing us to showcase that because like I was saying, like their story, their stories are unbelievable. All we've done is make all those stories come together under one vehicle and batch. But their individual maker stories are phenomenal.

Some of these stories.

Yeah.

Great. One more thing on this marketing before we get into end client. I want to talk about end client. I want to talk about the ideal use cases, the ideal types of customers, what you're already seeing in the 2-week window. But before we do that, Jason, Are these each handwritten notes?

Correct.

They're handwritten by little elves. When I posted— that's funny. When I posted this on Slack to our team, Allie said she has to be best friends with whoever wrote it because the handwriting is gorgeous.

I definitely didn't write it. It's definitely an AI handwriting robot. It's not a person. So it actually uses a pen, Bobby, which is— That makes me feel better because it's so perfect. Yeah, there's no way if they hired me to handwrite the card.

But Jason, here's my question though.

These can be individualized, right? Yeah. So it's like variable data. I think one thing we definitely missed was like the selling points. Let me give like the 10-second selling spiel on Batch. No minimum, right? No setup, full digital, 3-day production in Minnesota, free personalization, and every single one comes with a custom handwritten handwritten card included, variable data, free dropships, everything. So—

[Speaker:BRAD_STONE] This is genius because if you're going to send the same gift to everybody in these days, you had better personalize it. And one more thing on the marketing strategy, clever copy, comforting words. It's not just enough to give food. Words are tools, words are magic. And when you map those to this experience, you're opening up a whole new marketing engine. Holiday gifts Shipping is easy, but I mean, this personalization is huge.

It's a huge start. Yeah. All right. Yeah. And honestly, like, I'll pump Ben up. Ben Posse, our marketing director, and Campbell Davis, our marketing manager for Batch, and Marissa Zodaway, who did the product development all behind the scenes. The Batch and Bodega website is a phenomenal tool. It's batchandbodega.com. And we can get into the name in a second if you want. Uh, we've got like rave reviews from distributors, best website in the industry. I don't know about that. I think it does a phenomenal job telling the Maker story. There's an interactive map too, where you can hover over different states and see the Makers in your region as well too. And, um, the photography that Adele and Jeff did and Casey, everyone behind the scenes to get this thing to come to life. This was the first ever like HPG brand launch or HPG common project across all HPG subsidiaries, um, where we work together as a team to get it live. And like, it was amazing to see how the team came together to really get this thing, um, ready for launch.

So I, I noticed you had different products from each line.

Yeah.

And some of it's right.

And correct.

Uh, I want to do a factory tour of the Rice Krispie Treat place.

So that's Bird's, uh, yeah, Savannah, Georgia. Uh, if you've been down, I definitely want to go for— yeah, it's, uh, it's a great story. Um, Bird's has been around for since like, I think the early 1900s producing cookies and They recently started doing Rice Krispie Treats and those Rice Krispie Treats are awesome. It was so hard to find a good Rice Krispie Treat manufacturer. You'd be surprised if anyone is looking for some side hustle here, start a Rice Krispie manufacturing business because there's only a couple in the US and shelf-stable and having a good quality shelf-stable Rice Krispie Treat that's not made by the Keebler elves or whoever makes Rice Krispie Treats is hard to find.

[Speaker:Ian Formigle] Yeah. I'll pass the message on to the Graham kids because all three of them love the Rice Krispies. Yeah.

You could be good at it.

Yeah.

Marcus, I'm going to hand it to you. So Jason, I'm curious about product and pricing and positioning, continuing down this marketing path. There's a number of distributors in our industry that are price sensitive, that have been buying food gifts for some time, that can buy food gifts that are less expensive than the batch offering. Can you talk to me about maybe some of the objections you've received and maybe how you've overcome some of those pricing objections from people that say, "Hey, I can buy this, but it's a different product, but it's still something that's less expensive." I think overcoming those price objections is something that distributors should listen to because of course they have to overcome those objections as well.

[Speaker:IAN_CASSEL] Sure. That's a great question and I'll Rarely do I quote Mike Simczak, but I'll quote Mike Simczak. That'll get his ego way, way too big. Let me first address the pricing part. So we're like Whole Foods of food in our industry. I think that's a good comparison. I'm a big fan of Whole Foods, but it's not for everyone, right? Uh, you're— people who shop at Whole Foods are willing to pay a premium for a quality product offering. And I feel like we're kind of Whole Foods or maybe like William Sonoma, right? Um, We're not like Costco, we're not big bulk supplies, but there's some Costco elements because Costco does some high-end stuff too that's discounted. So we are selling, we adapted our model in the last 2 weeks where we're selling food bulk now too. We didn't anticipate doing this because a lot of distributors wanted to do their own kits. So we had to build a model where we're selling pretzels by the case and sacrifice margin in doing so, right? So we are Costco in a sense, but we're like Williams-Sonoma Costco. So we had to kind of change the mindset for distributors who have been buying food for years, right? You get what you pay for, and that's what I think our product is doing, right? It's a quality product and you're going to pay a premium for it. But also let me counterbalance this with what Mike Simczak has been saying in sales meetings, and I think it's actually true. So our office in Danville, that was a distributor's office before, and the room that I sit in was literally a whole kitting operation to do food kits. So if you think about it, if you're a distributor and you were— there's a lot of distributors do their own kitting and food gifts. You got to send your intern out to Whole Foods to go buy the food, right? You got to find enough of them to do the kit. You got to source all the different information. Maybe the food's out of stock at Whole Foods, so you got to go to Trader Joe's and get like pumpkin spice butter. I know Bill Petry will roll over when he hears us talking about pumpkin spice anything. You got to go to Trader Joe's to find the pumpkin spice butter. You got to find hard goods. You got to call like Hub or whoever, shameless plug for Hub, to order pens. You got to find a box manufacturer, so you got to call Custom Box or BoxUp or someone to get the custom box. Oh, but you need crinkle paper, so you got to call Uline to get crinkle paper. You also need to print all your labels. You have to have someone with good handwriting like Bobby to handwrite all the cards. Oh, and then you have to put it all together and sweep everything off your conference room table, then process labels, then ship it out. Oh, but by the way, you also get shut down by the FDA because you don't have the FDA registration to ship food cross-border. Or to different states. So let us do all the legwork for you.

Yeah, I think it's a good example because it's true. Let me add to this too though.

When your client tells you that they don't only have a budget for X and they're going buying those cheap-ass popcorn tins that were at Sam's or whatever, um, don't believe them. Here's why I say that.

Um, we had a client one time that was like very price conscious, so we thought, at holiday, and they're gifting their number one clients.

They're gifting all of their clients.. And they came to us for a Yeti-like tumbler because this was when Yeti was sort of quasi first, really, really hard to get when they first came on the scene. And they found a way around us to get Yeti. So what happened was instead we came in thinking the client was right and they had a $10 budget, but when the client got inspired by a brand experience that was more creative, guess what happened to their budget?

The budget moved.

So clients are liars sometimes.

I love them, but sometimes they can be liars, but they don't know it. Subconsciously this happened. Right? It's like they just not inspired yet.

And I think that's what's cool about this line. I can never be a distributor. There's no way. I— all I like to do is make the cool stuff and allow people to sell it for us. Like, I don't know how you were a distributor for years, Bobby.

Like, it would frustrate the hell out of me.

Yeah, but hey, but I'm serious.

I—

the reason also I'm very excited about this line is because when you get—

when you get the product experience in your hand that's where the magic comes.

You have to, as a distributor, engage with this and self-promote. It might be cool enough because of the makers that it could appeal to somebody, but they've got to experience it physically.

So that's how you sell it. [Speaker] And like you said, you know, you sent me, you texted me and sent me the message. It delivers so much better in person than it does in a photograph. And I think our photography is phenomenal, but like tasting and like feeling, it's such a touchy-feely tasting, experience, you have to do that.

Oh my God, has really 30 minutes already gone by? We're not even halfway through our questions.

Mark, I'm hogging the show.

Why don't you ask a few questions?

Eat your Rice Krispie treat, Bobby.

Yeah, eat the Rice Krispie treat there, Bobby.

Hang on, I'll be back. Let the real interview start here.

Yeah, go ahead.

No, no, no, this is awesome. We always say the hallmark of a great conversation is when you look at the time and it's going by quickly. So maybe one or two more questions, Jason, and then we want to open it up. We've got a lot of great questions we want to make sure that we can ask on behalf of people. So talk to me about supply chain issues. I know from my experience when I was a distributor at Right Sleeve that we would seek out cool niche, niche depending on where you are, suppliers that could do really interesting things. I loved retail brands and these weird little suppliers that didn't have anything to do with the promotional products industry. So on one hand, it was great from a differentiation standpoint. On the other hand, these folks were not necessarily used to the demands of promotional products distributors. We needed, at this point— and oh, by the way, the product is taking off, we needed 1,000 more next Tuesday. And then almost like artists, they would really struggle to be able to deal with these difficult business demands. And my guess is that with some of these makers, you're probably dealing with some of the same kinds of personalities. How do you prevent this from not becoming a total cluster?

Let me just give a shout-out to you guys, because I like getting the hard questions, and I feel like a lot of times when I do interviews, it's just like, "How'd you come up with this?" or, "What's the story?" Well, those are Bobby's questions. I ask the tough ones. Yeah. You ask the hard-hitting questions that a lot of people blaze over, right? So it's extremely difficult, right? It's going to manufacturers and saying like, hey, we want to sell your product. We're in an industry we can't really forecast demand ever. So just like hold inventory for us. Oh, it's shelf-stable. It has, there's a shelf life to it. Oh shit. Shit's going to happen. So it's been extremely difficult. Luckily we have found partners and this was the vetting process to get the partners on board was extremely tough. Right. All the compliance standards that are normally out there, plus like HPG's compliance, which is a little tougher. They had to pass, they had to have inventory lot controls, they had to provide all the regional and specific state testing in addition to the national testing that we needed as well too. We had all these makers we have exclusivity on in the space as well too, in one form or another. So it wasn't just like, you know, Mark and Bobby making Rice Krispies Treats in their garage, no offense.

I'm sure you guys would do a great job, but we are actually just wondering how we can become a supplier.

We'll talk about afterwards. All these guys have some form of retail distribution, right? Um, none of them are in mass market retail. We actually dropped a beef jerky company because we found the product was in TJ Maxx HomeGoods, which like, I liked HomeGoods, but like, it's not really what we want to associate our brand with when you're building a brand. Yeah. So going to these guys and saying like, we're going to cut blanket purchase orders to allow for inventory allotment. Without, with the ability to cancel the PO at any time too, during your busiest time of year. So the getting these makers on board, it was extremely difficult process, especially now. Remember, this is just icing on the cake business for them, right? They weren't doing this business before. From a maker standpoint, they love it because it's more eyes on their brand that they wouldn't necessarily touch. So if you're Martin's Pretzels, you just have regional distribution in the Northeast. No one on the West Coast has seen these pretzels because you can't find them anywhere west of the Mississippi River. For them, they love it because it's putting more eyes on their brand, which is free marketing for them, but they also have to be able to support our business. They have to allow us to have inventory holds within their systems. They have to be able to ramp up. If we get a purchase order for 5,000 Beaky'sy kits and we need 5,000 cookies in 2 weeks to deliver, our industries that need it tomorrow deliver on time industry, otherwise the goods are obsolete. So they have to understand that. Um, so it's been extremely difficult and we had to drop makers because they couldn't meet our requirements for that. So I feel like the people we've got on board now will be with us hopefully through the holiday season. Um, because if they're not able to produce for us, we'll drop them, right? We need to be able to support distributor demand and get product in people's hands as quickly as possible.

And I want to suggest too that, um, don't Wait for your clients to call you for this product because there's going to be a crunch. I mean, and I don't want to like suggest that they're not going to be able to handle it, but this is the kind of line that we don't want to wait until the holiday season where everything is just jammed through. Plus folks on this call in particular want to be first in market with this experience. So that's why you got to hop on this now. Don't wait for your own Thanksgiving holiday gift. Do something now so you can avoid that crunch. We're all scared of inventory concerns no matter what the product is.

Oh, and I had— I put together the initial forecast for this and it was just like, yeah, we'll sell like 2,000 things. We've increased the forecast 3x what I put together just in the 2-week period. We had some like early intel. We did some market research with a couple key distributors across the country to kind of get, you know, gauge their interest level. Um, but it was thrown out the window in the first 2 weeks, right? Because we want to make sure we can say yes to every single order coming in during the pipeline of Q4.

Yeah, we got a few questions here. Mark, do you want to ask them or do you want me to?

Or do you— did you have— well, I mean, I, I can ask, uh, well, I want to say one thing and then we can get to a lot of the excellent questions have been asked. Um, a bit of housekeeping. So an exciting part of this SKU Cast Live is that, uh, we in collaboration with you, Jason, uh, and BatchMedega are offering 100 free kits that Bobby had received. Really, really cool cross-promotion here. And just to let everyone know that we are going to be going from all the people who registered and selecting them at random tomorrow. So you'll be receiving an email if you have been selected at random, and then you'll be filling out your address in a, in a Common Skew shop, and that's going to be sent out tomorrow. So stay tuned. I know there's been a lot of people that have been excited about, did I win one of the packages, and so on and so forth. It will be selected at random tomorrow. So thanks everyone for your patience there. But let's get, let's get to some of the questions. I'll start off with the first one here. Um, Stephen Ward, our friend out of the UK, has got a question here. Um, how do you control shelf life of the food products, and do you order in, uh, or do you order in per order or keep stock on the site?

So yeah, we keep inventory, we have lot controls, so we track every single lot coming in. I mean, I'm not a supply chain expert, but I've done supply chain for— it's a FIFO model, right? So first in, first out. So that way we're making sure the freshest product is going out the door to customers. And we're, you know, for Origadio, when you order a hard good, it's got infinite shelf life. For this, we're cutting almost weekly purchase orders to our manufacturers to make sure that we're having constant inflow of food items as well too. So we have inventory on site for some of these large buys. If someone says, hey, 5,000 Be Easy kits, we're sometimes dropshipping from the manufacturer directly to the customer. It just depends on what's coming in, but it's more frequent smaller purchase orders than large 9-month inventory hold.

One question we have here, Jason, from Kate Plummer, of course, is a smart question.

And Kate, no, I'm not the pretzel eater.

If these snacks were sent to Mark, he would've actually devoured them during the postcast.

He's our snack eater at the office. That's exactly why Jason didn't send it to me, because he knew that I would just—

I guess one point to bring up, it's US only right now. Sorry, everyone north of the border or in the UK, but we're US only right now. We will launch out of our Dev Coast subsidiary in 2021. We'll be shipping to Canada, but for right now it's US only. It's a starting market.

It's why the press went to Bobby.

I want to stick with questions that can't be found on the website.

What level of exclusivity have you negotiated with your brands?

Are we going to find people like finding this, you know, obviously this is direct-to-consumer product. Yep. So full transparency, there's 3 levels of exclusivity that we have with our manufacturers. Tier 1 would be no other suppliers in the space. So at minimum, no other suppliers in our industry can sell this product. Tier 2 is no suppliers or distributors can sell the product. And Tier 3 is we have all their corporate business. So for a couple of our makers, all their end users that were coming to them, like, you know, Facebook's ordering popcorn, Google's ordering popcorn, that's coming back to us and we're fielding out to distributors to handle those orders. So if you're nice to us, you'll get some business sent your way for Tier 3 exclusivity. So it's one of those 3 different tiers, Bobby.

If they couldn't give us Tier 1 exclusivity, we didn't want to be in bed with them. Okay. Um, and you're— are you exploring other states?

Is this going to be better? Okay. Yeah. And I'm looking for recommendations. There's only so much research you can do online. Like, we've had a lot of distributors send us recommendations, two of which we just approved for 2021. So please, if you have a good maker, um, you can email me at jason.lukacs@hbgbrands.com. Um, and, uh, we are open to— there's great regional stories that we don't know about. So please, if you have a maker that kind of fits the vibe has to be shelf-stable, good-tasting food, good brand story behind it, retail-quality packaging, please let me know because we're looking for ideas too.

Trey Lockerbie: Hey, I've got one last question, and then Mark, you can ask your final question if you want. I actually am curious. We have supplier friends that are on this too. It's not just about distributors. I have never known this kind of question. What do you gauge as success in terms of gross sales, or is this just like let's do this and see, is there a capital investment that you guys have to run? Is there, there's a nut you got to crack?

What is the, what's success look like to you? So many pretzels. Um, no. So, you know, honestly, like if I look at this and this is an HPG plug, if I, if Mike and I were to do this before, I don't think we would have, we maybe would have launched it, but probably not to the caliber that we were able to now. Right. Um, because the FDA requirements, that's extremely difficult to get. Having a supply chain in place to cut frequent weekly POs like Jason Lukacs, Mike Simczak before, probably not doing that, right? So the power of HPG actually like allowed us to get this off the ground way quicker than Mike and I would have been able to before, which is amazing. But success I think is determined by how well this product sells in, especially during the busy part of the year, Q4, right? So there's a number that we have behind the scenes because there was a capital investment to do this. I mean, Worst comes to worst, if this doesn't sell, we've got a lot of free snacks for all of our employees around Christmas time. Um, which I'm going to bet the house on. That's not, that's not going to happen, but yeah, there's definitely a sales number we need to hit to determine success. And I feel like we've got the right team in place and product offering to hit that number. I just won't say what the number is. We're on pace for sure. We're on pace for sure. So, all right.

Two weeks worth of data. We're on pace. Yeah. So Jason, I've got a personal question here from you. This came in the chat from Ellie Bath. How have you found managing this new venture and your dad role during COVID Feels like a triple whammy.

Yeah. And the new cast just took a sharp turn. Go ahead. So the bags under my eyes and the lack of a haircut. Love it. I love it. This was, to be 100% honest, this was what I needed. And I was, you know, 10 years, 11 years at Org, like I wasn't burnt out. Like I love Org, I love creating product for Org, but for Org, I've taken a way behind the scenes seat, right? Mike is running, you know, the sales side. I've got our shared service team across HPG running pretty much the day-to-day. So I'm not really involved as much in Org. So I wasn't twiddling my thumbs. I just wanted to create something else to kind of inspire me and reinvigorate me. And I wanted to try a sector that I knew nothing about, food, right? So this has been awesome and it's been a great project to launch and work on during COVID It's been tough juggling a second baby, which you might hear crying in the background during the launch of this thing too. But like without the kick-ass team behind the scenes, like I'm only as good as my team and I've got a solid team. So it was difficult to get this off the ground and running, but it's the perfect option and the perfect thing to launch during COVID I think. I wanted before—

Bobby, I'll throw it to you for one. You can wrap it up with a final question because I know you've always got great questions. But I wanted to— there's an interesting thing that you just said there, Jason, in your answer that I wanted to really highlight because I think it applies to suppliers that are listening to this SKU Cast and certainly distributors.— this whole notion of how you got into a product category you didn't know anything about. And on one hand, that's super reckless and there's lots of people who had failed by doing so, but oftentimes that's where innovation happened. I certainly think back to my distributor experience and really anytime we really hit a home run, it was because we came to a customer segment or product segment that we didn't really have any preexisting knowledge about. So we didn't have baggage. And sure, it may have been a little bit ugly and messy along the way, but if I look back at it really objectively, it was because we were outsiders and in a category and kind of had this unique opinion on things. And I think it's the same thing that you're talking about. You've obviously got experience in the promo industry, you understand distributors, you understand pricing, blah, blah, blah. So that's helpful, that's your safety net, but then you have no idea what you're doing in food.

And I think That's what's resulted in something that's interesting. [Speaker:IAN_CASSEL] Oh yeah. For Aurig, I had no experience in electronics at all. I knew about the promo industry a little bit, but I think that's why we will be successful because we've got our blinders on and we're running full steam ahead and there's a lot of distraction and noise on both sides of us, but we're just doing food the way we think it should be done and the way it probably should have been done within the industry. I would like to think hopefully we will change the way food is done in in our industry, and I encourage more suppliers to elevate their food game because it's only going to help tell the Batch story and Batch to be more successful. One other thing I want to bring up really quickly, and I know we're out of time, I also love this now because the makers, like the small business aspect behind their story, it's more pressing now than ever, right? Like supporting small businesses during tough times, like that's what America needs. That's what the world needs. That's what we all need as people. So like go on and support like the guy twisting pretzels in upstate New York with like 8 other guys. Go out and support like, you know, the woman-owned popcorn maker out of Asheville, North Carolina that's supporting— that's a single mom supporting her 3 kids.

Like, that's why we want to tell their story because now it's more important than ever. So. There is no better way to end than on that.

I want to say thank you to our special guests in the house, our clients and community and the tribe. And of course, our special guest, Jason. Thanks so much, man, for joining us and for sharing your wisdom as always. I also encourage you to go back and check out SKU Camp from last fall where Jason shared some merchandising tips and packaging. We didn't even talk about one of your key areas around packaging, but I encourage you to go check that out before you start developing these kits or things for your clients. Just check out what he's done in terms of teaching on packaging design, all that stuff.

Jason, thank you so much. Thank you. There's no one else I would have rather done this with.

Love you guys.

Thank you.

Thanks so much for tuning in to this episode of SKU Cast. Be sure to keep up with our latest content by subscribing to SKU Cast on iTunes or to our blog at community.commsku.com. Until next time, friends, thanks so much for listening.