How CPG Brands can Grow & Find Investors Now- Jeff Grogg – Ep 55

How to Strategically Plan for The Rest Of 2020 in Every Aspect With COVID-19 In Mind.

Hiring is sometimes where many leaders fail when they choose to delegate that process to recruiters when they should do it themselves. Leaders should also focus on the core and the people as a strategy to continue growing the business.

Jeff Grogg is the founder and managing director of JPG Resources and has founded businesses in spaces ranging from athletic training to alcoholic beverages, in contract food manufacturing, to a new food venture fund. He has 25 years of experience as a leader in the natural food and beverage space.

He shares his background and experience in the food industry and his strategy in acquiring and investing in small businesses. Listen in to hear advice on what to focus on for struggling small businesses during the Coronavirus pandemic.

Key Takeaways:

  • The power of a great team and input for business growth and leadership efficiency.
  • The importance of hiring better people than you as a leader.
  • How to make hard choices as a struggling business and focus on cash management and profitability.
  • The science of abnormal supply chain explained.
  • How to find high-quality deals in the right places for companies looking to acquire.
  • Learning to simplify, focus on the goal, and focus on the people during hard times.
  • A badly managed business vs a strategically managed business.

Episode Timeline:

  • [0:29] Intro
  • [1:57] He has a background in food science and has found himself in both food and business management.
  • [2:44] He credits teamwork and great input for his efficiency.
  • [3:37] How he has scaled to afford people who are better than he is so he could move on to where he can add more value.
  • [4:50] He describes different performance for different companies that he helps during the Coronavirus.
  • [6:21] How to find actionable and aggressive ways to save struggling businesses.
  • [7:38] He explains what JPG does in the food industry and helping other companies.
  • [9:20] How he grew JPG through referrals and marketing even before he started.
  • [10:37] He talks about the recent exciting project he’s worked on growing a small business to greater heights.
  • [12:25] Why the supply is functioning differently because they’re built for a different market place than what is existing right now.
  • [15:43] He describes qualities of the companies that they’re looking to fund and the deals they’re looking to acquire.
  • [17:42] How they leverage networks that help them acquire higher-quality deals.
  • [20:05] How he has learned to focus on the core goals and the wellbeing of the team during the COVID-19 pandemic.
  • [21:00] He explains how he lost a plant after failing to manage it in the right way.
  • [23:27] The process of hiring the right person for overall business success.
  • [25:16] How to focus on discipline and simplicity when striving for business growth.

Relevant Links:

Website: https://jpgresources.com/

LinkedIn: https://www.linkedin.com/in/jeff-grogg-2a73663

Speaker 1: Welcome to the Page 1 Podcast, a podcast featuring a variety of guests and thought leaders on topics ranging from digital marketing, sales channel strategies, influencer marketing, best in class product launches and all the details about how to accelerate sales. Now here’s your host, Luke Peters.

Luke Peters: Thanks for joining us on the Page 1 Podcast. I’m your host, Luke Peters, CEO of NewAir Appliances, and Retail Band Digital Strategy Agency. We’re now in a Coronavirus world, and this is on everyone’s mind. So I’m going to adapt all of these interviews and we’re going to get you, the listeners, the most important information, and we’ll get right into our questions. Before we do that, quickly, this episode is sponsored by Retail Band, where we can give your business owners a blueprint on exactly how to grow their digital sales, either direct to consumer or via channels like HD, Wayfair, or Walmart.com. To learn more, find me on LinkedIn or email me at Luke@retailband.com.

Luke Peters: In this episode, you’re going to learn from entrepreneur, Jeff Grogg, on how to strategically plan for the rest of 2020 in every aspect with COVID-19 in mind, and also how small and large CPG brands can find investors right now. Jeff is the founder and managing director of JPG Resources. He’s founded businesses in spaces ranging from athletic training to alcohol beverages, and contract food manufacturing to a new food venture fund as well. He brings 25 years of experience as a leader in the natural food and beverage space.

Luke Peters: Jeff, welcome to the Page 1 Podcast.

Jeff Grogg: Thank you for having me, Luke.

Luke Peters: Awesome. Did I miss anything there on the intro? Anything you want to add?

Jeff Grogg: No, that was great. Thank you very much.

Luke Peters: Cool. So Jeff, before we get into a few questions, do you want to briefly describe to the audience what you do and that way they can just understand more about your experience and expertise?

Jeff Grogg: Absolutely. My background was in food science. I worked at Kellogg’s, and then I moved to Kashi, and experienced a high growth business after a big CPG. And then, as that was absorbed into Kellogg’s, I stepped down and started a consulting company, and now we have, as you mentioned, consulting, we have contract manufacturing, we have a fund, and we also operate a couple of brands. It’s really fun, because we get so many different lenses to the industry, around food, but also just business management in general.

Luke Peters: Yes, and then before we get into some questions, you have several businesses here managing a fund, and doing a couple of other things that you listed right there. How do you improve your efficiency, I guess, when you might be pulled in a few different ways? Any special tips? I’d be curious to learn that.

Jeff Grogg: Well the most important thing is to have great people, and when you’ve got the right people in those businesses, they operate themselves on good days. So I focus on where I need to have maximum input, but I sort of jokingly say I’m on a quest for irrelevance in all of the businesses and can go on to keep doing something else new, but it really is just recruiting and enabling a great team.

Luke Peters: All right. And then I’ll pry a little bit more because I’ve gotten to that point too. I luckily and fortunately have a great team, but it wasn’t always that way. So what was the change, because I’m sure there was a time in your life when you were full on, a hundred percent in these, in one company at least, or maybe a couple. And then now you’ve been able to kind of pull yourself out. Was it literally just making those hires, or what was the thing, that box that you checked, that allowed you to work more on the outside of the business?

Jeff Grogg: I think part of it was getting a little bit of scale to be able to afford those people who are better than me at all these different aspects of the business. So my goal is that I’m always hiring somebody who, when they step into whatever their role is, that they’re better at it than I was, and that always unlocks new potential. So going back over the last six to seven years, as we brought people into JPG, they were better at that aspect of it than I was. That unlocked new growth, new potential, and it also then allowed me to move on to where I could add the most value.

Luke Peters: Yeah. And by the way, I totally see it the same way, and I think it’s the most, it’s a real honest answer because sometimes that can be answered in ways that are not that tangible, but literally when companies have enough scale to be able to pay for folks that can really make that difference, then I think those positive changes happen, so I’m with you on that a hundred percent. Jeff, you advise companies, you guys obviously have a venture fund and you’re minority and, I think in some cases, majority investors, and so you’re touching a lot of different companies. And how has COVID impacted these companies that you help.

Jeff Grogg: It’s really different. I mean, maybe the best two examples are two companies where I’m on the board and one is King Arthur Flour, you’ve probably heard about them, and especially lately, the response has been phenomenal, but no matter what they do, they just can’t make enough flour right now, it’s just through the roof. But it’s also given them a chance to be more public about who they are and drawing their 230 years of experience as fantastic bakers. It’s just such a great time in that company right now, because of the growth, but also getting the spotlight shown on them.

Jeff Grogg: And then I’m on the board at a company called This Saves Lives, which is a fantastic company doing great things in the world, literally bringing children from the break of starvation back to health. But 30% of their sales is through Starbucks, which is basically shut down, so that business is really struggling right now just because of the COVID situation and where they have exposure points to the market. And that I think is indicative of the 100 companies, or so, that we consult with in a given year. We’re seeing that entire spread of down 50% to up 300%. It’s very individual.

Luke Peters: Got it. What advice are you giving to these businesses? Obviously, many of these things are external, but if a company gets hit like that, they can’t all necessarily just wait it out. So what type of advice and changes are these companies that are impacted doing?

Jeff Grogg: The businesses that are struggling you just have to be lean and you have to get lean quickly and aggressively. You have to really focus on what is working and find ways to amplify that. At This Saves Lives we’ve amped up online. I think we’ve 5x the online business in a very short period of time, which has been great, and it doesn’t cover the gap, but it certainly is a step in the right direction. We pushed out some innovation that we were able to get picked up by retailers, so we’ve been really aggressive selling while also getting lean on the overhead and doing the best we can. I think it’s a time for brands, especially if you’re on the struggle side of the equation, to get lean and make the hard choices that you may have been putting off and just get really focused on cash and cash management and profitability.

Luke Peters: Yep. And that’s unfortunately what a lot of folks are having to do and some of them can pivot, but not everybody can pivot so quickly. Luckily things seem to be opening up. Why don’t we talk about JPG Resources really quickly before we get into more questions so the audience can understand. Are you able to give us kind of a scale of the business, maybe number of employees or types of companies or number of projects you work on? Just something that can give the audience an idea of the company.

Jeff Grogg: Sure, yeah. We’ve grown JPG Resources now to 40 people and mostly highly experienced CPG professionals who spend time in the bigs and then have that entrepreneurial spirit to be able to lean it out and run fast. We work with about a hundred companies in any given year from pre-revenue startups to the biggest food companies in the world, and kind of help the big ones run leaner and faster and help the smaller guys see what’s coming at them and understand the industry more. And then Snack Works, the manufacturing plant, we also have about 40 people. And then the other smaller businesses, another 10, 15, so totalling out, about a hundred people.

Luke Peters: Great. And JPG, is it a… You guys call yourself a consulting firm or is there another label you kind of put on the business?

Jeff Grogg: We’re more than people typically think of in consulting? We’re very hands on. We do the product development, we go out to the plants, we launch the products, we put together all the finances and the supply chain. We do advisory work too, that’s more consultative, but we’re more of a contracted partner in the businesses. So we’re a very hands on team.

Luke Peters: Yeah. That’s awesome. And how many years has it been around and how did you… When you started this, because there are obviously some consulting firms that listen and in fact, I’m interviewing a very prominent tax and audit firm later on because it just fits in great with COVID and the Cares Act, and all those things, but how did you grow it at the beginning? It can be tough. Before there, obviously you had a reputation from the companies you had been at, but the first couple years, how were you growing it, how were you getting clients, and how were you adding people at that time?

Jeff Grogg: Yeah, we still grow and add clients in almost the same way. It’s almost entirely repeat and referral. We were fortunate when I first started, I had come out of Kashi, I’d been there nine years. We went from 25 million to 750 million during that time, and built some really good relationships with our suppliers and manufacturers and others in the space. The natural food industry is very collaborative. And so when I started telling people I was going out on my own I just had a really nice referral stream started right away.

Jeff Grogg: And so literally, I left Kellogg, Kashi on a Friday, started work on Saturday morning on a project, and we got busy pretty quickly, and the payback from the network was just phenomenal. So it’s just, I don’t know that you could do it any other way to be honest, but, I was really grateful and continue to be grateful for all of our partners and former clients who then send business to us.

Luke Peters: Cool, and Jeff, you work with brands and you help create new products and, for the audience and for me too, because I’m always curious about these things, can you share an example of an exciting project or product that you’ve worked on recently?

Jeff Grogg: Yeah. Recently we’ve been involved with a company called Caulipower, which really pioneered the cauliflower crust pizza. We started working with Gail before she launched and now it’s a very successful business coast to coast and booming. It’s been great to see her build that and to walk that journey with her along the way, or I should say run that journey because it’s been so fast. To be involved in many of the aspects of that business as it’s gone from zero to a $100 million, or so, in three years has been phenomenal. So it’s great to see businesses that have that kind of success and to be a part of helping put something like that together.

Luke Peters: That’s a great story. And I don’t know if my daughter is eating the same brand, maybe she is. Is that one over at, oh gosh, what’s the place that she gets it at, Trader Joe’s by chance? Do they distribute there?

Jeff Grogg: Yeah, maybe in trader Joe’s. I know they sell a ton to Walmart. Walmart actually has become a great partner to a lot of emerging and young brands, and they’ve done phenomenal business at Walmart, but they’re widely distributed in most grocery stores. Most grocery retailers do carry Caulipower at this point, it’s a big enough brand. It’s a top eight, seven or eight pizza brand nationally now.

Luke Peters: Yeah, so I had one the other day, because I’m gluten free or try to be.

Jeff Grogg: Really?

Luke Peters: Well, I’m usually gluten-free. And so anyway, my daughter has that and she’s got a few other of those products. I think there are some other cauliflower products, but anyways, that is an interesting story and kind of a cool little market segment. So you’ve seen plant closures as well and empty shelves. There’s a lot going on with COVID, so on the other extreme with excess product that has been destroyed, on the short and long-term how is this changing the supply chain?

Jeff Grogg: Well, I think most categories have responded really well to the spiky supply. Meats obviously has been in the news lately. Meat processing has been problematic because there’s been illnesses in the plant that are causing shutdowns. And then when that ripples back to the agriculture side it’s really problematic. Outside of meat, which I would say is a big anomaly, I think the supply chain has responded phenomenally.

Jeff Grogg: There’s been a lot of news about issues in the supply chain, but recently the economists wrote an article about how really, the global supply chain has been shockingly good at recovering quickly from these crazy demand spikes. And in some cases, even the regulatory agencies like FDA, has been providing some flexibility so that the product that normally would be going to restaurants, that’s sort of stuck and is packaged in a way that’s not normally retail, can be shifted over to retail in trying to help the shortages and help the imbalances where there’s too much food service product out there and not enough retail. That’s been the biggest challenge. It’s not that there’s not food available. It’s not that the supply chain isn’t working. It’s just the supply chains are built for a different marketplace than suddenly exists. And so that transformation is underway.

Luke Peters: Yeah, I couldn’t understand that. I’m like, at first we couldn’t… there was a shortage of chicken in the grocery stores and I’m like, how is that possible when it’s got to be out there with all the restaurants that are closed, but obviously, like you said, that chicken was built for a different supply chain and I guess it wasn’t making it into Kroger at the time.

Jeff Grogg: Right, they might be buying a 20-pound case of chicken breasts or chicken wings or it’s just not packed and labeled for individual sale. I was going into food service channel. Everything is different in terms of how that package arrives at the restaurant than how it arrives at the grocery store shelf. There wasn’t really a shortage of most things. Even now [inaudible 00:14:31] flour, the issue isn’t that they can’t move enough flour, the issue is that they can’t bag enough in two-pound and five-pound consumer-friendly bags. If you want to buy a 50-pound flour bag it’s not a problem. If you want to buy a truckload of flour, you can do that. It’s just buying a two-pound bag at Kroger is the problem.

Luke Peters: Yeah. That’s such a good explanation. So, thanks that supply chain disruption I now have a freezer in my garage stocked with enough meat for three months cause we were getting ready for the apocalypse.

Jeff Grogg: Yeah. You and most Americans.

Luke Peters: But all’s fine right now. Now it just takes me… now I have to think the day ahead of time before I want to eat something because I’ve got to defrost it. It’s kind of funny. Cool.

Luke Peters: Listen, I want to learn more about that fund and I think the audience would be interested as well. Maybe just from an investment perspective, from both sides. Right now companies smartly are looking for acquisitions because maybe there’s some weakness in the market and they can grow their brand, and then also on the other end some brands may want to find and acquire. For your fund, what are key attributes or things that you look for if you guys were investing in or acquiring a company?

Jeff Grogg: Yeah. Our fund is pretty early stage, we’re normally some of the first professional money, so to speak, and we’re investing fairly small dollars between $250,000 and a million. So right now, especially, we’re looking for businesses to have a sustainable plan that are responsibly managed, that are showing traction in the stores they already sell, and aren’t out just buying new accounts. It’s expensive to open up new accounts in food in particular, so we want to see products that are working where they are, that are winning in place, and that we trust the founders to be responsible. We’re placing investments now, we just closed one recently. We got another one we expect to close in the next couple of weeks. So we are active through this, and I see a lot of investors, frankly, who are just parked right now, and there’s probably more than half of investors in food and beverage and related space that have just said, Hey, we’re taking a pause, we’re going to sit this out for a little bit until we have better clarity, but there are a lot of investors still active.

Jeff Grogg: I think the investors who are more on the acquiring side are more active now because they see it as a little bit, maybe a deal market. There’s definitely compression in margins right now… Not margins, multiples. There’s definitely some companies that are in a time of struggle that might sell for or transact a majority at a price this year that they wouldn’t have contemplated a year ago. So definitely on the acquisition side, I would say a little more bullish, whereas in the minority investment side, especially for young brands under five million or $10 million others, definitely some money sort of waiting this out.

Luke Peters: Where does the deal flow come from? Again, I’m sure your reputation helps, but is that enough or how are you guys kind of keeping the deal flow… you have enough deals to look at and then potentially invest in?

Jeff Grogg: Yeah, I think most investors would say there’s always too many deals to look at, but the trick is finding the ones that you really want to look at. We do try, and I think every investor tries to develop some deal flow that’s a little bit proprietary, and whether that’s through our clients or just we’ve been around this space for a long time, so we have other investors who will call us and sometimes say, Hey, we’re going to invest in this, but we’re not selling out the whole round, would you like to come invest? And that’s a great way to get brought in to looking at a company because you already know somebody else you like and respect and trust has looked at it.

Jeff Grogg: So yeah, it’s hard work and it does help to have a network that helps show us some of the higher quality deals that we get a chance to look at. But we’re also out there involved in the industry, trying to find new deals that we just actually… I didn’t mention this before, we just partnered with two other companies to launch a deal flow platform called Brandjectory, which helps connect early stage food and beverage brands with investors, with early stage investors, because there’s such a concentration of those investors in certain markets, and this helps make it more accessible for everybody to go online, almost a dating platform type of thing, and try and make the connections.

Luke Peters: Oh, that’s so smart. There you go. That guarantees deal flow right there, once that gets going. But wow, really smart to create that platform. What was the name of it again?

That’s called Brandjectory.

Luke Peters: Cool.

Jeff Grogg: Brandjectory. And that is just brandjectory.com, literally just launched in the last two weeks. We pushed that hard, given all the food shows where investors and brands meet are not happening, so we’ve launched it a few months early and we’re ramping that side up now. It’s a great time to do that, and we just felt like it was needed anyway because there’s such a concentration. If you’re in Boulder or San Francisco, it’s easy to find investors in food, but if you’re in Topeka or Toledo, it’s a little bit… there’s not the same kind of community for brands or investors to find each other.

Luke Peters: Cool. Really interesting, and consolidating eyeballs, which is a great idea. What lessons have you learned about operating during this crisis?

Jeff Grogg: I think the biggest thing is just a focus, simplify, focus. I’m the kind of entrepreneurial guy who always is looking at what should we do next, what’s the next thing, and this has been a time to just call some of that and focus on the core, focus on the health of your team, focus on the wellbeing of everybody, focus on the work you’re already doing, and just immerse yourself in that, and set some of the longer term stuff to the side. And I think that applies whether it’s a brand or whatever the business is right now is a time to simplify, focus on the core, and make that work. And then of course, focus on the people.

Luke Peters: Yeah, for sure. And this can always be a challenging question, but I think it kind of can share a lot about yourself or your background, but what’s the biggest mistake that you’ve made, and from that mistake, what did you end up learning?

Jeff Grogg: Well, I made so many mistakes we could do hours on that. Probably the biggest mistake that resonates with me is when I launched another plant called Bridgetown Natural Food that still operates out in Oregon. We built that, it just took off like a rocket. We were super busy the whole time, three years, we zoomed that business to grow. And we were always under-talented. We were always behind the curve on hiring the talent we needed. That made it so much harder and it just made it so much more of a heavy lift and it was financially damaging and it was just insane hours. I had a bed in the plant. If you have a bedroom in your manufacturing plant, you’re probably not doing it right, in retrospect. So I think that, and then that led to some other bad decisions because we were too much in the weeds and not managing the board and the finances, and delegating maybe the most important things because we didn’t have the team to do the daily grind.

Jeff Grogg: You know that. It’s one of those things where it’s not like I didn’t know better, but sometimes you have to live the mistake to really learn it, I guess, unfortunately.

Luke Peters: Wow, I love that quote, “If you have a bed in your manufacturing plant, you’re probably not doing it right.” Well, probably for all of us except Elon Musk. He’s the only guy that can get away with that, I guess.

Jeff Grogg: Yeah. Yeah. It was great in some ways, I mean, the growth and again, our network really was helpful. We went from zero to 100,000 square feet at 140 employees in two-and-a-half, three years, so that was great, but we really needed to get a little bit better funded and just make the commitment to great people. And now in my current business and my current life, I’m living the benefit of doing it the right way versus the struggle of nine years ago.

Luke Peters: Yeah. And let’s talk again about that transition. You identified, and I completely agree, it’s getting to scale and being able to hire those right people. Can you share how it’s been successful for you? Have you done that internally? Have you made the hires yourself? Have you had your own HR do it? Have you always relied on an outside recruiter? How have you successfully found the right talent?

Jeff Grogg: Well, for the most part, I hired people directly, especially senior people. I did use a recruiter for the general manager I recently hired at the Snack Works plant. He’s been phenomenal and is a great fit. Although, even the recruiter was a high referral from somebody close in my network, so that also helped. It was like bang, bang. When you go through a recruiter, you expect a process, and she had the right referral for me within days. So I think that it’s always best if you can depend on the network. It takes so much risk out of it.

Jeff Grogg: I also tend to, I’ve just always got in the back of my head, there’s a reel of, “I want to hire this person. I want to hire this person.” I’ve got a list of, who’s next that I want to bring in the business that I’ve met over the years. I just think it’s… we talk a lot about people being the most important aspect of the business, but a lot of times when we hire, it’s just like, well, I don’t know what to do, I’m going to call a recruiter. And I just feel like that’s, while there are a lot of great recruiters out there and I have some great friends in that business, I feel like, especially for smaller companies, we should be working our networks harder than that, and we should be keeping that bank of our dream team to build over time.

Luke Peters: I like that one as well, “You got to keep that bank of your dream team and network.” And I got to admit that’s part of the thing I love about this podcast is getting to network with people like yourself and others that have been on here. It’s just unbelievable the people you meet and what you learn from them, so a hundred percent aligned with you on that.

Luke Peters: Why don’t we… we can wrap this up with, I guess, something that’s important to all of us and especially the business owners that are listening, what is the best bit of advice that you could give a CPG company that’s going to increase their profits above anything else?

Jeff Grogg: I think it comes back to what I mentioned earlier. It’s just simplify and focus. Too many brands have too many SKUs. Too many companies are just too broad and they’re spread out and they’re not effective in delivering everything. Do what you do best, do it really, really well, do it profitably. Too often, we sell ourselves into losses. We sell ourselves into bad situations so this is again, a great time to just be focused on discipline, on simplicity, on focus. That’s what we like to see. That’s what I believe drives profitability in most companies is really just pounding the core.

Jeff Grogg: There are a lot of companies that come to us and ask us to develop new brands for them and we refuse. We say we’ll help you learn how to sell more of what you’re already doing, but we’re not going to help you develop new products right now because it’s bad for your business, and we want you to win as a business, we don’t want to just take your money. And I think that right now it’s a wake up call on everybody to really just focus on what you do better than anybody and make that happen, and set aside the stuff that’s not critical.

Luke Peters: Great advice. Focus, build your core, do that before you expand or do line extensions. That’s great advice. Thanks for that Jeff. How can listeners find more about you or learn more about your business?

Jeff Grogg: Sure. I’m available on LinkedIn, but our website is jpgresources.com. I would love to hear from anybody who’d like to connect, certainly accept all valid invitations on LinkedIn, and love to build the network. Just like you say, I’m always learning and always looking for people who can just make us better, smarter, faster, more connected. That’s what it’s all about.

Luke Peters: Cool. Well, thanks again, Jeff, for joining us on this episode of the Page 1 Podcast sponsored by Retail Band. Also want to thank all the listeners. Hope you guys enjoyed this interview and truly appreciate your reviews on iTunes. I hope you join us for the next interview. See you then.

Speaker 1: Thanks for listening to the Page 1 Podcast with Luke Peters. If you enjoyed this episode, please help us out by leaving us a rating on iTunes. Want to double your online sales? Check out www.retailband.com. And don’t forget to join us next week with our next amazing guest.

Get a FREE evaluation of your online sales strategy

Episode References:

Contact Jeff Grogg: LinkedIn

Contact Luke: luke@retailband.comLinkedIn 

Listen, Subscribe, ReviewApple Podcasts + Spotify Podcasts