Ep 16 Transcript
Garrett McBride [00:00:09]:
Hey there. Welcome to Get the Scoop with Smirk’s podcast, where bulk ingredient conversation happens. We’re sharing our knowledge and expertise as bulk ingredient importers, tapping into the latest trends we are seeing and commenting on what that means for natural food businesses as they approach ingredient purchasing, product development, and marketing. You’ll hear the latest market reports, ingredient specifications, and product applications from SMERC’s in house experts, as well as origin stories from our growers and processors around the world. Listen in for the scoop on what’s happening with bulk ingredients.
Garrett McBride [00:00:50]:
Hello, and welcome back to another episode of Get the Scoop with Smirk’s. I’m Elisa Louis, and today we’re diving into the fascinating world of co packers. Whether you’re a seasoned industry professional or a curious listener, this episode is packed, pun intended, with insights you don’t wanna miss. To give you some background here, The US food and beverage co packing industry was valued at 33 and a half billion in 2023 and is projected to reach 40,300,000,000.0 by 02/1930, according to horizon Grand View research. And while exact figures are really unclear, a large percentage of food startups depend on co packers. However, despite its significant size, the co packing industry remains surprisingly opaque, making it a crucial yet elusive part of the food supply chain. Smirk’s, an importer and supplier of bulk organic and non GMO conventional ingredients, collaborates with a wide range of co packers and co manufacturers. Whether you’re part of a consumer packaged goods startup or managing a mid size or large brand, you’re likely seeking insights on how to build and strengthen successful partnerships with your co packers.
Garrett McBride [00:02:03]:
Today, we’re thrilled to have one of our key co packer partners with us to share valuable perspectives. Joining me today is Jason Ludtke, the director of business development for ZoRoCoPackaging. ZoRoCoPackaging is a leading co packing and co manufacturing company in the food industry based in Caldwell, Idaho. And I also have my trusty cohost with us, Garrett McBride, our own SMERC’s VP of operations. And today, we’re leaning on Garrett to bring us his unique perspective as well as someone who’s worked on both sides, working for a CPG brand and in partnership with co packers like Zorroko. Welcome, Jason and Garrett.
Jason Luedtke [00:02:44]:
Hi, Elisa. I’m excited to be here. Thanks for inviting me.
Garrett McBride [00:02:48]:
Thanks, Elisa. I’m looking forward to this conversation. Jason and I go back far enough that I even know what he looks like without a beard, if you can imagine that.
Jason Luedtke [00:02:56]:
That is true.
Garrett McBride [00:02:57]:
I think that as a person that’s beard was to cover up all the, facial tattoos?
Jason Luedtke [00:03:04]:
And neck tattoos.
Garrett McBride [00:03:05]:
And the neck tats?
Jason Luedtke [00:03:07]:
Well, you know, the beard is a joke. It’s become my brand. It’s this kind of a silly thing. But, honestly, walking around super busy trade shows, I usually say look for the big goofy guy with the glasses and beard, and it works pretty well, to be honest with you.
Garrett McBride [00:03:22]:
So Yeah. It’s tough to miss.
Garrett McBride [00:03:24]:
Well, we’re here to support. You know? We just had to put our beards on.
Jason Luedtke [00:03:27]:
I like it. I like it. To To
Garrett McBride [00:03:29]:
have a little bit of fun.
Jason Luedtke [00:03:30]:
Yeah. Yeah.
Garrett McBride [00:03:31]:
For sure.
Jason Luedtke [00:03:32]:
That’s a good one. I’m just jealous. Good on that one.
Garrett McBride [00:03:35]:
It’d take me thirty years. I wouldn’t even come close to that impressive thing.
Elisa Louis [00:03:40]:
Yeah. We’re all about having fun here, and you’re definitely a fun business partner friend of ours, Jason. And we’d love for you though to seriously share a little bit about your professional background and, hey, tell us a fun fact about yourself.
Jason Luedtke [00:03:57]:
Well, so food industry reinvented into the food industry in in 2013 at ZoRoCo. I have, done my entire food industry tenure with ZoRoCo. Before that, I was a land surveyor. That’s what brought me to Idaho. I came up and, was the surveyor of record on one of the larger master plant communities in the Boise area and spent, my first four years in Idaho wandering around the woods, by myself all the every day. And it was fantastic, to be honest with you. And then, you know, some things changed with the housing industry, and it was time to find a different direction. And, here we are with ZoRoCo, and I couldn’t be happier.
Jason Luedtke [00:04:45]:
I’ve found a family here and some excellent mentors and leaders, and here we are, what is that, twelve years, thirteen years later, and I have a whole host of industry friends, including Garrett and all the guys at Smirk’s and many other brands and suppliers around, the food industry. So fun fact, I’m a farm kid from Montana. So that implies that everyone thinks I’m a cowboy or, at least a ranch kid or whatever, which I am, did all the different things. But I have never ridden a horse in my life, except for one exception. And that was when I was about eight years old through a crowded bar, which really surprised the heck out of my mom when she, saw me walking through, a crowded bar on a horse. So other than that, no horseback riding in my, 50 years of life.
Elisa Louis [00:05:40]:
Okay. Alright. Quite the intro. Awesome. Well, I’m I love hearing about your background, and I’d love to hear actually a little bit about ZoRoCo, and I think our listeners would too.
Jason Luedtke [00:05:54]:
Sure.
Elisa Louis [00:05:54]:
I was kinda digging around, poking around about ZoRoCo, and and I happen to notice that it says the company was founded in 02/2007, and I’m like, that sounds awfully familiar. Smirk’s was founded in 02/2007. Am I right on that?
Jason Luedtke [00:06:09]:
You are. You’re absolutely correct. So ZoRoCowas born as Zorroko, ZoRoCopackaging the brand in 02/2007. There was an existing company that the owners have purchased and began managing a couple years before that under a different name. It was the fledgling, call it seed of what our frozen division now is. And they quickly grew the company past the small space that they had originally taken over. When they left that original facility and they built our first standalone structure, they needed to leave the original name behind and rebrand as a new DBA company name. That was 02/2007, and that’s when ZoRoCo, as the brand, was born.
Jason Luedtke [00:07:02]:
It’s it’s really when we built our own Greenfield facility that is still operational and in the parking lot next to where I’m sitting today.
Elisa Louis [00:07:12]:
Alright. And could I ask I mean, ZoRoCo is certainly a unique name, and I think our listeners are gonna wanna hear the backstory about how the name came about and then the company’s interesting green dragon logo. What’s the backstory on that?
Jason Luedtke [00:07:29]:
Yeah. The it’s a fun story, and it’s always part of the tour. So if you’ve come to ZoRoCo and you’ve got a tour from me or any of my colleagues, usually, there’s a stop. There’s a little, plaque on the wall that has the logo. It’s really done its job as a brand icon. It is eye catching. It it’s a fun story to tell. And so it’s a green Kirin dragon, and the Kirin dragon, it’s a mystical dragon from the Japanese culture.
Jason Luedtke [00:08:01]:
The cofounder of the company was a Japanese gentleman by Heritage. His daughter, only daughter, our owner were husband and wife. And, you know, it’s tough to rebrand as a company, but they wanted to honor Mark Ichabassu was his name, his Japanese heritage. And so they picked the Kirin Dragon with a little homage to the Japanese culture. And then the name itself, Zorroko, if you notice or you know the logo, it’s got capitals and lowercase. And so the Zoho and the Rho and the Ko are really the first beginning names of the three grandchildren. So there’s three grandchildren. The Zoe is the Zoe.
Jason Luedtke [00:08:52]:
And if you know the dragon very well, it has a tiara on top because she’s the princess of the family.
Elisa Louis [00:09:00]:
Love it.
Jason Luedtke [00:09:01]:
If you know the logo well, the dragon is also holding a samurai sword. Well, the ro is Ronin. He is the middle son, happens to also be in the middle of the Zoroku name. And, Ronin is a masterless samurai, so that’s why the samurai sword is, being held by the dragon. And then the oldest brother, Cole, whose middle name also happens to be Kirin, which is the mystical Kirin dragon horse, is the last of the Zou, Roa, and co. So, really, what you have is the children and therefore grandchildren of the founders, Zoe, Ronan, and Cole. And that that’s where Zouroko comes from. That’s cool.
Elisa Louis [00:09:44]:
That’s really cool. You know, I love the fact that it that there’s so much meaning baked into that name and logo, and it’s, like, such a powerful symbol as well.
Jason Luedtke [00:09:56]:
Yeah. It’s really been a a fun brand to represent, and I couldn’t be prouder for sure. So
Elisa Louis [00:10:02]:
So, Jason, from your perspective, I mean, if we get into kinda talking about what is the role of a co packer, how do you define that?
Jason Luedtke [00:10:10]:
It’s such a wide question, and I wanna answer it succinctly. So first and foremost, I wanna say I wanna I mentioned earlier, I’ve only really worked at one co packer, one co man, and that’s ZoRoCo. And so I’m speaking from how we do it. I can’t promise that’s how everyone in the industry does it, but we are pretty proud of how we’ve built our system of co packing. And so I’m really speaking from that side of things. And so I in our opinion, co packers, co mans and there’s a little differentiation between those two terms, but we know where we are in the industry. You You know, ZoRoCoitself doesn’t own or sell any of its own brands, and so we’re not out competing for any market share with the brands we represent. We’re really here to create the opportunities for our brand partners.
Jason Luedtke [00:11:03]:
We’re here to add value to their business. We provide the superstructure, the equipment, the expertise, but at the end of the day, we’re a service provider. We’re a problem solver, and we’re a path to their scalability. We don’t grow unless our brands grow, And so we’re really here to serve and support the brands that are out there fighting in the food industry to build their names and build their own sales. I mean, it that’s as simple as it gets really as what a co packer should be focused on.
Elisa Louis [00:11:35]:
So just a follow-up to that. I mean, could you kind of define the difference a little bit for our listeners between a co packer and a co manufacturer just so that’s a little bit more clear?
Jason Luedtke [00:11:46]:
This is, again, my terminology. I’m sure people will debate it. Maybe we’ll get a hot viral debate going online about the two differences. But in my mind, co packing is really more of a bag conversion. It’s probably taking, maybe there’s a limited amount of mixing and then filling, but it’s really moving something from a large package into a smaller package. Co manufacturing is when you’re adding true value. Let’s say baking a cookie. Let’s say emulsifying a plant based butter.
Jason Luedtke [00:12:20]:
It’s doing a a manufacturing process versus just putting something from a bigger bag into a smaller bag ready for the retail shelf. So in a very simplified version, that’s how I kinda think of it as the differentiation. Copac is just it’s more of a change of size. Co manufacturer, you’re doing a a manufacturing process. Your value adding something from base ingredients to a finished product, if that makes sense.
Elisa Louis [00:12:48]:
Yeah. So I’d imagine that it’s crucial to understand those differences. And and of course, every business is gonna wanna think about what their own needs are and whether they’re they need that extra level of that co manufacturing capability, or if they’re just looking for somebody who can pack a product from a bulk package into an eight ounce bag. Right?
Jason Luedtke [00:13:14]:
Yep. Yep. You’re right on point. That that’s kinda how I define it in my mind. And, you know, it’s a blurry line. There’s no right or wrong answer, honestly, but I think you’re definitely right on point.
Elisa Louis [00:13:25]:
Great. Well, switching over to you, Garrett, what do you think of in terms of you know, you’ve worked with brands. You’ve you’ve been a co packer before. You have these different perspectives. I mean, what’s your take on this role?
Garrett McBride [00:13:41]:
Yeah. I have a unique perspective in that I’ve done kind of every piece of the puzzle along the way. And I agree with everything that Jason said. Additionally, you know, from a brand perspective, working with a great contract manufacturer allows you to focus on the other non manufacturing aspects of scaling your business, you know, allows you to free up capital that can be allocated to growth elsewhere like sales, which is ultimately what we’re all after. In many cases, CoMans also offer value beyond the manufacturing and beyond the packaging. There might be food science, there might be R and D help you know, for development and commercialization support for new programs and products. Outsourcing manufacturing operations can be a really effective strategy for brands to allow them to scale quickly while remaining flexible and agile, which is extremely important for brands from the smallest to the largest scale.
Elisa Louis [00:14:36]:
Awesome.
Jason Luedtke [00:14:38]:
Well, one little thought that I just had, and I didn’t think of it until Garrett mentioned that, but the auditing side is super crucial as well. I mean, you know, we carry, BRC, a plus, you know. And if you’re a brand growing into large scale retail, to get into all the major retailers, you have to have a fully compliant, fully high level auditing package. And that’s something that a brand, even a a midsize brand, trying to do on their own is you just don’t realize what a huge bite of the apple that really is. So the auditing and the food safety package is probably equally as important as the equipment and actual operational acumen that comes with, running the plant is is really having that the certification and the paperwork side to back it all up. So that’s a pretty important piece of it as well.
Garrett McBride [00:15:35]:
Yeah. That’s a great point. And, you know, along with that comes the quality department that any competent contract manufacturer should have, you know, as a brand or as a another party associated. We’re relying on the contract manufacturers quality team and processes to ensure our collective success. So super important piece of it along with certifications, the audits, you know, food safety and quality can be understated in terms of importance in this world.
Elisa Louis [00:16:04]:
Great stuff. Yeah. So with that, Jason, I’m just kinda curious As far as your thoughts on this, what do you think kind of the secret is to a successful and productive CPG brand and co packer relationship since this is so crucial?
Jason Luedtke [00:16:23]:
Yeah. The the secret sauce, I think it’s probably gonna sound a little bit too warm and fuzzy when we’re talking about technical operations and things like that. But at the end of the day, it comes down to trust, in my opinion. It’s pure and simple. When you trust one another and it it’s a two way street to be very clear. I mean, the the packer has to trust the relationship of the brand, and the brand has to trust that the co man is going to do the right thing, that they’re on top of things. And so it’s really a a trust relationship. But trust isn’t given, trust is earned.
Jason Luedtke [00:17:01]:
And so I think maybe the magic, honestly, is how do you get to that trust? You know, it it’s not something that either side necessarily has right away. The co pack industry has had a black eye in the past, and has got some, you know, there’s some horror stories out there. And so, you know, I think brands inherently come in with maybe a little bit of defensiveness sometimes. And so you have to earn that trust and get to that partnership foundation. And, and I think what we’ve learned in our philosophy of doing this over the years is you do that through complete transparency. There’s nothing that we do in our organization that isn’t able to be seen by the brands in a live twenty four seven scenario, we do it with high integrity. We’re usually calling you before you know that there’s a problem. That’s how you solve problems.
Jason Luedtke [00:17:57]:
And, you know, along with that integrity and that that’s a doing the right thing kinda core values type of statement, but it really is what leads to good communication and high performance as well. And so we talk constantly with our brands. They have access to their own information, and then you have to perform. I mean, that’s the other thing is at the end of the day, you have to execute against your POs. You have to hit fulfillment. We make fulfillment guarantees. And if you do that and you do those things right, what you end up with is trust. And then when the problems that ultimately arise come up, you tackle them together.
Jason Luedtke [00:18:36]:
And to me, that’s the ultimate most important part of a Copac brand relationship is really just boils down to that trust factor.
Elisa Louis [00:18:48]:
Great stuff. Garrett, I definitely wanna hear your thoughts on this one too. What do you think?
Garrett McBride [00:18:52]:
Yeah. Truss is absolutely right. I mean, Jason’s spot on with that. Without that, it’s it’s very challenging to have a a true meaningful partnership. You know, really effective communication and transparency are are key components of that brand and and co man relationship. The contract manufacturer you choose should be aligned with your organization’s strategies and and should take on a supporting role in your growth and not be a constraint and not be a roadblock. They shouldn’t be standing in the way of your growth and your progress. They should be an active partner.
Garrett McBride [00:19:23]:
And that’s super important. I think the most productive partnerships are the ones that allow all the parties to grow and get better together. It’s not just a one-sided thing. It never will be. It never should be. It’s a collaborative effort. You know, one person succeeds. We all succeed.
Garrett McBride [00:19:41]:
Doing business with your co man shouldn’t feel like you’re dragging an anchor behind the boat. You know, we’ve all been there at some point. If you’ve been in this business long enough and it’s not fun, Having that good true partner that you can trust and that you can have faith in to run a very important part of your business, you know, manufacturing is so important. Can’t tell you how many times I was in, in the facility in in Idaho with Jason. You know, how we’d roll up our sleeves, put on our hair nets, put on our gloves, we’d do the r and d, we’d do the line trials together. Being able to be hands on and and completely cohesive and transparent is is immensely helpful in in building the relationships and maintaining that that ongoing rapport.
Jason Luedtke [00:20:20]:
Yeah. We love it when our brands come in and take part in their own activities. The brands know what they want out on the shelves in the customer’s hands, and we can listen and we can read and we can learn and we can even control samples. But when a brand is right there with you out on the floor, seeing it happen real time, they’re able to look you in the eye and say, this is what I expected to see, and then you just start to build. Otherwise, you’re on the phone back and forth, and you’re guessing, hey. Is this the exact right color? Is this the exact right texture? It seems so, but then it becomes my judgment, not the brand’s judgment. So we love it when they come to the plant. We have an open door policy.
Jason Luedtke [00:21:05]:
Almost all of the early piloting there is accompanied by the brand representative, and, it’s really it’s the first one of those early steps in that relationship and trust component for sure.
Elisa Louis [00:21:19]:
That’s great. And from a brand’s perspective, let’s just say I’m working for a brand, Jason, and I’m trying to navigate choosing a co packer. What should I be looking for?
Jason Luedtke [00:21:33]:
That’s a big question.
Elisa Louis [00:21:34]:
I know it is. I know. But just, you know, tap
Jason Luedtke [00:21:38]:
tap tap
Elisa Louis [00:21:38]:
tap tap
Jason Luedtke [00:21:39]:
as you
Elisa Louis [00:21:39]:
can. Yeah.
Jason Luedtke [00:21:40]:
We have three hours. Okay. Well, so we’re gonna use most of that up for sure. But no. I mean, there has to be an operational fit. Right? There has to be the right product, the right equipment. You have to do the operational due diligence to make sure that the pairing is appropriate from, call it, the technical side or the tactical side. The bag has to fit my machine.
Jason Luedtke [00:22:10]:
The product has to go through my filler. And, frankly, it has to go through at a speed that makes it a healthy piece of business for both sides. So there’s this tactical element that can’t be ignored. Right? We have to do the right due diligence to make sure that the project succeeds. And and that’s honestly, at the onset of a new business development scenario, that’s really what I focus a lot of time on, and it does take time. It often takes months to do some of those things, and that’s not in all out of line with what it takes to do a a proper due diligence of a new project. But then at the end of the day and it’s usually through those communications that you’ve gotta feel good about the fact that you have a genuine partnership. We have to like one another.
Jason Luedtke [00:23:02]:
And we don’t have to be best friends. We don’t have to have sleepovers. But you that it’s that trust building factor. Right? I mean, after a few months or two months of exchanging communications and phone calls and validating all those operational pieces, you kinda get to know who you’re dealing with. And this is a hard industry. There’s a lot of stresses. There’s a lot of things that go wrong. It’s hard enough.
Jason Luedtke [00:23:25]:
We want to work with folks that we believe in, that we can get behind, and that we feel the same type of partnership back with them. And so it’s warm and fuzzy. It’s intangible. It’s hard to put a finger on, Alyssa, but you’ve got to find that genuine partnership in some of that early communication to know that it’s going to be a good fit. And, you know, maybe there’s not a exact litmus test beyond your gut, but it’s an important part of it because our intent with any new brand relationship is to work with them for years. We don’t do transactional work. We do partnership manufacturing. And so it solves those future problems so much easier when you’ve built that foundation of trust, a professional friendship, and you actually wanna see your brand succeed.
Jason Luedtke [00:24:16]:
You get behind them, and that makes you motivated to help them. And that’s all part of that trust building that that I would say is still the vital part of it.
Elisa Louis [00:24:26]:
So as a follow-up to that, as a new brand, let’s say I’m kind of I’m struggling a little bit to find the right partner that can start me out at the right minimum order quantity that I can bear, but works for the hophacker? I imagine that that question and that sort of challenge comes up quite a bit. I mean, what’s your take on that that question in terms of, well, you know, can you do a lower minimum order quantity
Jason Luedtke [00:24:56]:
for me? There’s always a few core questions on every first introduction call. You know, I mean, there’s some of the just the kind of the big questions that can’t be avoided. And the minimums question is absolutely one of the most important for both sides. Mhmm. It’s a tricky question. It’s one that takes a little tact to navigate. And the tricky part that I often try to talk to I mean, you kinda know who you’re talking to based around some of where they’re at in the market, where they’re at in their distribution. And so you have kind of a sense of where their volumes may or may not lie, you know, fairly early on, you know, maybe even before the first conversation.
Jason Luedtke [00:25:41]:
But our job as high volume co packers, co mans, is to allow you to say yes to your sales. It’s allowing you to scale up and go big, and that’s what the brands wanna do. Right? They wanna find their attraction, generate their sales, but I always think of it or and try to use the analogy of stepping stones. You have to make sure you’re not taking too big a step too soon. And this is a hard conversation that I’ve had many, many, many times, is maybe we’re not the best first step out of a commercial kitchen or whatever. Maybe we’re the third step, and sometimes I have to say that to brands. And it isn’t that I don’t support emerging brands. We love our emerging brands.
Jason Luedtke [00:26:33]:
I’m very proud of the emerging brands that have now become big brands. But there is just as much danger and risk to a young emerging brand to have too much inventory than not enough inventory. Too much inventory that isn’t pushing through the sales cycle fast enough is dead money for the brand. And it’s just as dangerous, if not more dangerous than not filling the orders that they have. And so there is a lot of delicacy in making good decisions on timing. When are you ready as a small brand versus a larger brand that already has nationwide distribution? It’s a diff slightly different conversation. For the emerging brands, you just need to know that we’re a big beast. And when you turn us on, you’re going to get a lot of product.
Jason Luedtke [00:27:26]:
And you’re gonna get it fast, and you’re gonna get it every month, and you’re gonna get exactly what you order from us. And you need to know that you’re gonna be able to keep it moving through your side, or I lose that value. I become a hindrance to your growth versus a benefit to your growth. And those are tricky conversations to navigate. And, you know, sometimes I say no because I just know from experience that it’s not the right time. And, and I don’t want to be that hindrance. I want to wait a year and let them get their traction and then have them come back and both sides be much more in a much more healthy position. You know,
Garrett McBride [00:28:04]:
it comes back to the transparency and communication also, though. You know, when we’re having these conversations as a customer interviewing a co man or a co man communicating about your capabilities, that minimum order quantity is so critical because it is based on a certain cost, a cost target. You know, the brands have to understand that if they want a reduced minimum order quantity, there is a cost associated with that. And then the conversation around building up to a tiered volume that will allow for lower cost over time really has to be outlined and understood by everybody because oftentimes there is a path, but it’s not as cost effective as as brands would like out of the gate. But you have to work forward and look at the big picture of your business and and have faith in in your scale plan.
Jason Luedtke [00:28:53]:
Yeah. I mean, I love you saying that, Garrett. I I mean, that that is part of the like I mentioned earlier, we all have to this is a a penny’s game in the food industry. We all have to be healthy to grow, and you’re exactly right. I mean, I call it runway. You know, sometimes small brands need a runway to get up there, and I come up with pretty creative solutions to get there. But you can’t necessarily have super high volume costing, but only run super low volume, you know, POs. And so it’s a balancing act for sure.
Jason Luedtke [00:29:27]:
It’s a balancing act for the brands. It’s a balancing act for the packer. And quite frankly, from the smirks and supplier side, I mean, you guys are dealing with minimums and, orders. And a lot of times, the other side of my conversation to the brands about minimums is, well, it’s one thing about how us, Zorroko, as a packer structures are minimums. But do you have any insight? Have you talked to your supplier about what can you buy? I mean, you might have to buy a certain amount of packaging of a particular raw ingredient that’s not in alignment with what our numbers are. And so this is where a little bit of that supplier and packer relationship comes in. And my insight knowing how you guys operate as suppliers really helps me guide brands on, hey. That’s just not gonna work.
Jason Luedtke [00:30:21]:
You can’t just buy one fifty pound bag of something. You have to think in terms of pallet minimums. You have to be prepared for some of those types of things because that’s all gonna funnel back to what my minimums are. And and a lot of times, I’ll work to try to pair my minimums so we can consume all the wrong as close to possible on a run of raw ingredients. And then that’s just, again, a a little bit of the balancing act of the brand side minimum, but also the co packer supplier relationship. And why we lean on our relationship with Smirk’s is to know how you guys operate because that really has a direct effect of my life too. I don’t know if I’ve kinda gone astray on our on the question there, but it does all all three sides of the, you know, legs of the table have to work together for for sure on that minimums question.
Elisa Louis [00:31:14]:
No. I love that that piece of it. I think that’s really helpful insights. And, Garrett, you touched on just how important having that in-depth conversation about the minimum order quantity is when you’re going to select co packer. In your role in the past with going out and looking for co packers, what were some of the other items on your checklist as far as must haves?
Garrett McBride [00:31:40]:
Yeah. The checklist was long and, kind of a moving target of of priority, but, you know, certainly, as Jason mentioned, the core competency, you have to have the right manufacturer that can do the right things so that everybody can be set up to succeed. Cost of course is one of the most important components. Location, quality is huge. Have to have faith in in, you know, a lot of confidence in in the quality systems, you know, in place with the contract manufacturers, minimum order quantities, lead times, scope of function. You know, a lot of times it’s who’s purchasing ingredients, who’s purchasing packaging, is this a turnkey endeavor or is this just strictly tolling with the brand bringing all the materials in for the manufacturing effort? And let’s not forget character. It makes life so much easier when you know you have reliable, trustworthy partners that are functionally taking responsibility for the most important part of your business. So there’s never just one list.
Garrett McBride [00:32:36]:
It’s a it’s a big mishmash of requirements.
Elisa Louis [00:32:40]:
I can imagine too, like, if I’m a brand that is marketing the fact that I’m free from certain allergens, that’s a whole nother issue too. Right?
Garrett McBride [00:32:52]:
Exactly. But the specifics around what you’re trying to achieve from a a product value proposition standpoint has to be taken into account because there are manufacturers that won’t deal with certain allergens or will only deal with certain allergens or have various constraints. And, you know, it’s again, communication and transparency. We need to understand what the brand is looking for, what the contract manufacturer can deliver against, and make sure that everybody’s aligned in moving forward or not, you know, hit those targets.
Elisa Louis [00:33:20]:
Jason, to that point, how does Xeroqua navigate the whole allergen question and scenario?
Jason Luedtke [00:33:27]:
So we’re a fairly unique animal in the sense that we have three different brick and mortar facilities, so three independent standalone production plants, and each one has different allergen parameters around them. So we’re pretty darn unique in the sense that we do offer big nine allergen free. So that’s a dedicated facility that allows none of the big nine allergens. And it has unique, you know, that’s our baking facility. So we bake cookies and granola, grams, and a variety of other, products. We do tons of other things in that thing, but there is zero, never have, never been any of the big nine allergens. Second plant, and the thing is in our little, quiver of of plants, is gluten free. That’s a dedicated GFCO gluten free and peanut free.
Jason Luedtke [00:34:27]:
But I do allow what I’ll call allergen friendly. So I do allow the other, the soy, dairies, tree nuts, coconut, none of the shellfishes or the protein based ones, but the other non gluten, non peanut allergens are welcome at that facility. So that’s where I do a ton of oatmeals, a lot of baking mixes, those types of things there. And then we have a temperature controlled facility that its restriction is only peanuts. So I can allow gluten at that facility, but, there is no peanuts allowed at any of the three of our facilities. And so one of those early vetting conversations, you know, Garrett just touched on all the different important checklists of things, is beyond the size of unit and the shape of the unit, the texture of the product, and what filler is going to be done with it, and does it fit the cartoner. It’s also what is your allergen parameters. And that’s maybe the first question I often ask because before I even go down the line, if I have peanuts in it, I’m sorry, but it’s just not gonna work.
Jason Luedtke [00:35:35]:
And so the those are just part of that really introductory level vetting process of deciding which direction to take a project. Can the project go even at all? But allergens and the paperwork around allergens, those if a brand is making an allergenic claim, whether it’s just gluten free or if it’s big nine free, there has to be all the documentation to back it up. You can’t just say it. You have to live it. And so that’s a whole different level of quality beyond the call it standard workmanship type quality that comes into play when you’re running an allergen specific plan.
Garrett McBride [00:36:14]:
Yeah. In this day and age, that allergen control is is just so important. It’s such a a hot button topic. There are a lot of people that did that that impacts. Having a a contract manufacturer that can effectively manage that is a a gigantic plus in the in the positive column.
Elisa Louis [00:36:30]:
Such a range and variety of different capabilities within your three plants, Jason. So that’s it certainly gives customers a lot of options, and it helps to just,
Jason Luedtke [00:36:41]:
like Don’t tell anyone, but we’re not very good at saying no to things. This is I I think what that means, to be honest with you.
Elisa Louis [00:36:50]:
I can twist your arm.
Jason Luedtke [00:36:53]:
Yeah. Yeah.
Garrett McBride [00:36:54]:
There’s always a conversation.
Elisa Louis [00:36:55]:
Peanuts. Forget about it. Right?
Jason Luedtke [00:36:57]:
Yeah. There’s there’s peanuts. I mean, that’s one of the benefits, you know, and we’re a little off topic here, but we’re a privately held company. Our owner is very entrepreneurial. If we feel good about the people and the partnership and the product and we see growth, we’re very not afraid to say yes to things we’ve never done before. We believe we have the operational skill set to, you know, manufacturers manufacturing to a degree. And if you’re good at doing one thing, you can take those same principles and apply it to other product types, maybe other pieces of equipment, and still get utilize the same principles. And so we’re pretty diverse on purpose because we don’t want all of our eggs in one basket for one, from a a personal side of our business strategy.
Jason Luedtke [00:37:42]:
But, secondarily, if it makes sense, if it’s economically viable, if it pencils out for both parties, we’re willing to look at things that we’ve never done before, and we’re willing to push the limits and challenge ourselves to try new products. And, you know, we do lots of, quite a few different wild crazy things for sure. So but keeps it fun, keeps it stressful, but, you know, it it also allows us to keep a pretty wide view of what can and can’t be done for the food industry. It allows us to stay on trend a little bit. As the trends in food change, we can pivot with them, and we aren’t just locked into one mindset that we only do this and we only do that and we won’t do anything else. And I think that’s really served us well, why we have a wide range of really high profile brands across the industry. So we’re pretty proud of that, to be honest with
Elisa Louis [00:38:35]:
you. Awesome. Well, I definitely wanna ask you about trends in a little bit, but, you know, I wanna bring up the fact that I mean, it sounds like the business is really nimble, and I think that’s great because like you said, the natural and organic food industry is just growing so rapidly and it does go in different directions all the time. Every, every year we go to Expo West, we see something new. Right?
Jason Luedtke [00:39:00]:
Yeah. If Expo West is your bellwether of what the industry is like, and you’ve been to Expo West, you know exactly what the industry is like.
Elisa Louis [00:39:08]:
Yes. %. But let’s just shift gears a little bit. I mean, if I’m coming to you guys and saying, look. I’m a brand. I’ve been struggling with my current co packer. It’s just not working. What’s your advice for me, Garrett? Let’s start with you.
Garrett McBride [00:39:28]:
Yeah. I think for for brands that are struggling with their contract manufacturer relationship, we keep touching on these recurring themes here with communication, critical transparency. If there are miscommunications, if there are delays, you know, addressing the issues early and directly is is a key piece. It’s also important to understand your co man’s constraints or what their pain points are and to be able to work with them and be open to having that dialogue to collaboratively identify and execute the solutions that ultimately will allow you to fix the problems or move through the challenges. Managing the collective expectations in the form of, you know, a contract
Jason Luedtke [00:40:08]:
or a written agreement
Garrett McBride [00:40:09]:
upfront helps everybody involved. So, agreement upfront helps everybody involved so that all parties can clearly understand how the relationship is intended to function and what the consequences will be if the balls get dropped by either side. The agreements are something that get overlooked by a lot of people, but in the event that you have challenges, you can always go back to the agreement as the guiding document that says we agreed to x, y, and z. If x, y, and z aren’t met, we understand that there’s a consequence here, whether financial or timing or what have you, but it’s outlined and agreed to upfront and and no surprises later on down the road if challenges arise. The, you know, the other critical thing, and and nobody ever wants to hear this, but you gotta know when to throw in the towel. If you as a brand owner continue to beat your head against the wall and keep getting nowhere, you gotta cut your losses and move on sometimes. There are so many great partner minded contract manufacturers out there. It’s worth taking the time to understand what that competitive landscape looks like and to take that time to make sure that your co man is truly a good fit and a proper partner.
Elisa Louis [00:41:19]:
You know, to follow-up on just some of those thoughts to something that popped into my head as you were speaking is also geographic location, right? We can have whether it’s a lovely partnership with a co packer, but maybe they’re way across the country from where we need our products to be or to be distributed through. So, I mean, what do you suggest on that on that front? If I’ve got a great co packer partner, but they’re only covering part of my market or they’re not covering my needs very well geographically because my freight costs just keep going up.
Garrett McBride [00:41:59]:
Yeah. I mean, it’s important to line up your distribution network with your contract manufacturing network in in a way that makes sense. I guess we’re fortunate, you know, the world we live in right now is such a small place. Transit times are are shorter than they’ve ever been. Costs are up and down. But it is certainly important to make sure that you’ve taken into account the physical locations of your distribution network relative to those of your your manufacturers and and make sure that it makes financial and logistical sense.
Elisa Louis [00:42:29]:
Jason, I know you’ve had the scenario a million times. Yeah. Give us your thoughts.
Jason Luedtke [00:42:34]:
Yeah. About a million times. I mean, in those early vetting questions, I mean, I’ve for sure learned that that’s one of my vetting questions. And sometimes I know when to throw in the towel before we even get going. If you’re heavily distributed in in New England, I’m probably not your best choice. And let’s not go down a path that we’re gonna create a disaster six months from now or a year from now or whatever. And so I’ve gotten pretty savvy in learning, hey, where does your product come in from and where does it gonna go back out to? Because I even if you don’t know to ans ask that question, I I know to ask that question. And so that’s an important factor.
Jason Luedtke [00:43:17]:
I mean, the products have to move around the country. The the way our American food industry is set up is there’s transportation involved pretty much at every step of the way. And so that’s a a factor that just can’t be ignored. No doubt about that. I mean, good, bad, or otherwise, it’s just an important consideration. And and, frankly, it’s better to talk about it. Like Garrett mentioned earlier, all these things are better to talk about upfront and be open and and completely transparent about some of my best projects have been lost in the final hour because nobody did a freight study until we were about ready to sign on a dotted line, and the whole thing blew up. And that was months of work down the drain, and and I’d rather talk about freight up front and not have that rug pulled out from under me down the line.
Jason Luedtke [00:44:08]:
Now can I always solve it? Definitely can’t move my plants around every single day of the year just to fit a a distribution model, but it’s an important factor that needs to be discussed. No doubt.
Garrett McBride [00:44:22]:
We might as well throw in a shameless plug for for Smirks here. You know, on the supply side, when you’re talking about geographic location, we have warehouses on both the East Coast, the West Coast, and in Colorado. So when it comes to supplying ingredients to a co man, really, in any location around the country, we have an option somewhere nearby, reasonably speaking.
Jason Luedtke [00:44:45]:
Yeah. I’m glad you brought that up because the reason we call Smirk’s is our usual first supplier option on any product is because we know where your warehouses are, and we know that we can access them. And and that’s something that we think about from our side of things all the time. I mean and so that’s part of the the bond that we have with Smirk’s from a co pack standpoint is that element of proximity and access to both coasts and all those kind of things. So that’s for sure important from a co packer to supplier side as well.
Garrett McBride [00:45:22]:
It just keeps things flexible and agile. Keeps business moving forward.
Elisa Louis [00:45:27]:
Absolutely. So besides the whole geographic issue or challenge, what are the other reasons that people come to you having already worked with one co packer and they’re struggling and looking to you to potentially be their new co packer?
Jason Luedtke [00:45:43]:
Yeah. Garrett, he’s super savvy. He always has been. That’s why we’ve become friends over the years. But he hit the nail on the head. I mean, he used the term pain points, and, honestly, that’s a term that we use internally in almost every discussion we have. It is stressful. It is time consuming, even costly to move co packers.
Jason Luedtke [00:46:06]:
Nobody does it just for fun. I mean, that’s the bottom line. So if you’re are a brand that’s out there, you do have sales, you do have traction, and you’re needing to grow and scale, you’re not going to leave something that’s working. It wouldn’t make any sense. So there has to be a particular pain. It’s a pain of fulfillment. Your orders are either being pushed out or incomplete. You’re having quality issues.
Jason Luedtke [00:46:35]:
Those are the things that really are the main drivers of making the very difficult decision to move manufacturing. It’s not taken lightly. And those are the the very first questions I also ask at that vetting stage. What do you need to solve here? And if we don’t all know what the problem is, then, a, I don’t know how to solve it. I don’t know how to think about what is important to you as the brand. And so we’ve gotta just kinda pull the Band Aid and ask the hard questions and really figure out what those pain points are, make sure that Jirocco’s appropriately set up to solve them. And maybe I am, and usually I am, frankly, but maybe I’m not. And I’d rather know that right out of the gate.
Jason Luedtke [00:47:28]:
And that just kinda comes back to the common theme that we’ve touched on multiple times is trust, transparency, integrity, and just I don’t wanna set myself up to fail. Being super selfish, why would I wanna go because it’s a lot of work for us as well. I don’t wanna set either side up for disappointment if I can’t solve the pain point that we know is already occurring. And it would just be silly for both sides if if I did that. So
Garrett McBride [00:47:57]:
Gotta be mutually beneficial, or it’s not gonna work long term.
Jason Luedtke [00:48:01]:
Yeah. I mean, it’s gotta be a win win. This whole industry has to live off win wins.
Garrett McBride [00:48:07]:
The nature of partnership.
Elisa Louis [00:48:09]:
Makes a lot of sense for sure. We’ve talked about it sprinkling it throughout this conversation. But from your perspective, Jason, as far as the partnership that ZoRoCo and Smirk’s shares, what do you think really makes that collaboration successful between the supplier of the ingredients and the co packer?
Jason Luedtke [00:48:32]:
Yeah. I mean, it’s really kind of the same thing just applied in a different direction. I mean, the reason we work and really pick up the phone and we call Smirk’s first is the same reason. You know, you’re a customer to us and we’re a customer to you. We’re doing business together back and forth all the time. And so the brand is our ultimate customer, but we have to have that trust factor together. I need to know that my supplier is gonna deliver at the time that they say they’re gonna deliver, that their inventory’s tight, that they’re not gonna send me old product, that they’re gonna have all their paperwork in order. And that’s an important part of what I need so I can serve the brand on the other end.
Jason Luedtke [00:49:15]:
We can both serve the brand. You want them to believe in you. We want them to believe in us. And so if you, the supplier, and the co man isn’t working well together, if we don’t trust each other’s quality, we both risk looking bad. You know? And so it’s gotta be that same kind of partnership orientation. Now the benefit that we have as supplier co packer is between your subject matter expertise, my subject matter expertise, Garrett and I can get on the phone. We can talk about a project. He can talk about it from the ingredients side because of our history, because of that trust.
Jason Luedtke [00:49:56]:
He knows what equipment I have. He knows how that it works. He knows what granulation of sugar is better for a particular type of application than a different type. I know from my side, your organic certificates are gonna be perfectly dialed in, that we’re not gonna have a paperwork issue. That if you say you’ve got product in a warehouse, you’ve you’ve got product in a warehouse, and it’s gonna get to me on time. And so through that trust and that mutual effort together, we both can shine in the eyes of the brands. We both can grow our businesses. And and it just, the trust factor with our suppliers is equal to the trust back and forth with brands.
Elisa Louis [00:50:40]:
Anything to add to that, Garrett, or from our perspective as the the ingredient supplier?
Garrett McBride [00:50:45]:
Yeah. Again, Jason nailed it. The the dynamic between Smurfs and ZoRoCo was very similar to that of the brand come in partnership dynamic. Again, it comes back to trust, communication, transparency. It’s just as important on the supply side
Jason Luedtke [00:51:01]:
as
Garrett McBride [00:51:01]:
it is on the manufacturing and sales side. With everybody, you know, the supplier, the contract manufacturer, the brand, working together seamlessly, the results speak for themselves and everybody succeeds. And that’s the goal in this. I mean, everybody Right. The collective success, you know, rising tide floats all boats sort of thing. It’s also extremely helpful that Smirk’s in particular has direct relationships with a lot of the brands that work with ZoRoCo and work with a lot of the contract manufacturers that we supply. And we’re able to execute more effectively because we understand the needs of those brands outside of just the manufacturing relationship. You know? So to have the the more complete picture, the bigger picture of their business in mind as we’re having conversations with Jason and Zorroko, as they’re having conversations with their brands, we’re all aligned.
Garrett McBride [00:51:48]:
We’re all ready to go into battle together and and just generally kick ass.
Jason Luedtke [00:51:52]:
Yeah. I trust the whole team at Smurk’s, and I know all of you guys, but Garrett and I have been working together for a super long time. I’ll ask him how to help me solve a problem. You know, if I’m struggling with something, something’s just not processing right, I know I can pick up the phone and say, hey. This is what’s happening. What do you think about this? Like, why is this not working out? And these kind of conversations happen a lot of times without the brand ever knowing it. And maybe what we can do is recommend a different granulation or a different source supply or something that does make it, you know, and I’m just making up examples, but a product flow a little bit easier or be a little less sticky or and so relying on the subject matter expertise of our supplier is important too. You know? I mean, I know that Garrett’s traveled the world and goes and personally vets a lot of the growing sides of the business and things like that.
Jason Luedtke [00:52:52]:
And so I know it’s solid start to finish. Our quality department knows it’s solid start to finish because I know the guy that went to Southeast Asia and actually looked at where the coconuts were grown and things like that. Right. And so that it prevents a lot of sleepless nights when you know who your partner is on the supply side too.
Elisa Louis [00:53:13]:
Yeah. And one of the interesting things I’ve Yeah. Yeah. Exactly. You got enough.
Garrett McBride [00:53:18]:
Across the board.
Elisa Louis [00:53:19]:
One thing I’ve noticed is that the more customers that we share, Jason, in terms of smirks and and ZoRoCo, the the more efficiencies we have too, because we end up building full trucks going to your facilities, which saves our customers time and money. So Sure. We can just pass on that savings to them and you get the ingredients that much quicker.
Jason Luedtke [00:53:47]:
Sure.
Elisa Louis [00:53:48]:
So from my perspective, that’s been one of the nice bonuses of having kind of these multiple shared clients.
Jason Luedtke [00:53:57]:
Yeah. Oh, absolutely. It’s good to keep it in family. I mean, let you know, honestly, there’s efficiency all the way around. I mean, if you’re detecting themes through what Garrett and I are saying, I think you could find a few common threads that are pretty paramount in every different direction within our industry. And I think that that’s, you start to see that efficiency and it it becomes real dollars and cents if you look at the bigger picture of how you can shave time and energy and and cost on different things by having that kind of collective mindset for sure.
Elisa Louis [00:54:36]:
So speaking of these partnerships, Garrett, I know you and Jason go back a long ways, well before the beard, collaborating together. And so from your thoughts, could you share insights into your working relationship you’ve had with Jason and ZoRoCoand what it was like?
Garrett McBride [00:54:55]:
Yeah. You know, I, you’re right. We go way back. And and when it all started, when it was all the dating period, trying to feel each other out and and see if this was a path we wanted to go down, you know, as a a brand manufacturer partnership, I was very skeptical. We had some very specific and complicated requirements as a brand, you know, with regard to the products and the value propositions. And, you know, Jason was so honest and straightforward about their business and about the way that they conducted themselves that I really almost didn’t believe it. I made him work pretty hard. I mean, I can’t count how many times I was out there prior to actually getting into the partnership, but he had to jump through some hoops.
Garrett McBride [00:55:37]:
And, you know, at the end of the day, it was all about Jason and Zirocco saying what they were going to do and then doing what they said, and that’s exactly what they did. And it was, and and still is with the the previous brand that I used to represent, a very fruitful partnership, and and it’s been a great relationship since day one.
Jason Luedtke [00:55:59]:
Yeah. Well, thank you for saying that. I appreciate that. Garrett’s a pro. Garrett, he was a ball buster. There’s no doubt about it. I mean but the thing about working with strong professionals is they make us better too. I know speaking on behalf of our brand, but the owner personally, he expects us to be high integrity people.
Jason Luedtke [00:56:23]:
That’s the culture he’s built. That’s what we all try to live. And the words that Garrett just said, I think, would make him very, very happy and very proud to know that we actually live the culture we preach. And, you know, that’s what we’re gonna continue to do. But, when you’re challenged by a strong professional like Garrett, the first day he showed up and you know a pro when he brings his own flashlights, ultraviolet flashlights, and he knows to where to look and the things to look for. And you’re like, alright. We’re gonna be in for this one, you know? But at the end of the day, we live in that ready state, and we made it work. And those hoops that he makes us and other customers as well, we work with some big mega national companies on our frozen division, and they’ve challenged us.
Jason Luedtke [00:57:10]:
They’ve made us stronger. And we are who we are today because we have strong partnerships, and we have been challenged. And we’ve just learned and continue to build the blocks of high quality, and it’s because we get pushed. And that there’s nothing wrong with that. We welcome that a little bit. So
Garrett McBride [00:57:27]:
Yeah. That’s what makes this life and business fun is the relationships and, you know, not just the business, the personal pieces. You know, if you don’t enjoy what you’re doing, it’s not worth waking up every day and and and moving forward with it. But, having the relationships with, you know, especially a smaller family run manufacturer like ZoRoCo is is just it’s rewarding and fun. Thrilled to death that I continue I get to continue participating in that partnership from the supply side. So this has kind of been a a cool full circle thing for me personally.
Jason Luedtke [00:57:59]:
Yeah. For sure. I mean, Garrett and I kinda started together in the early days, and we’re still working together. And that’s, like I said earlier, I rely on him all the time. Sometimes it’s a ZoRoCosmirks thing. Sometimes it’s just I don’t quite understand. That’s something I read. Hey.
Jason Luedtke [00:58:15]:
What do you know about this? You know? What do you know about this new statement about, whatever, an allergen? What what have you heard? And so, you know, we’re sharing insight back and forth and really appreciate and rely on that from a friendship standpoint, but the professional side as well. So
Garrett McBride [00:58:32]:
yeah, it’s a lot of fun, man. It’s been great.
Elisa Louis [00:58:35]:
So, you know, Garrett, you don’t get off the hook without actually giving me an, a real example, a real life example of something you and Jason collaborated on, some kind of project. So do tell. I will let you reminisce a little bit.
Jason Luedtke [00:58:54]:
You pick, buddy. I don’t care. Yeah.
Garrett McBride [00:58:56]:
Oh, man. We’ve had so many different projects and so many wild experiences. You know, the one that sticks out in my head the most, and then this is I wish I’d get into the details and the specifics, can’t do that, but at at a high level, I’ll never forget this, and and I’m sure Jason won’t either, and that team there because it was a stressful and wild commercialization. But we had a, a cup project a number of years back that we just knocked out of the park on about a five month zero fail timeline, meaning that we had distributor deadlines that we had to meet. We had retailer deadlines. This was this was a zero fail mission, and we had no time in which to do this. You know, ZoRoCowas the keystone in a project that involved work performed by three unrelated commands. One of them had to be set up from start to finish in the middle of this timeline.
Garrett McBride [00:59:48]:
ZoRoCo was responsible for helping us source, approve, procure dozens of new ingredients, packaging components.
Jason Luedtke [00:59:57]:
We had
Garrett McBride [00:59:57]:
to work through the formulation, the line trials, the actual production, and the distribution, again, in about a five month time period. And we executed flawlessly in just a couple of months. This would have taken, even the most heavily resourced company two years. I mean, if you’ve been in this world, the development timelines are long. Two years or more to complete, and we just nailed it on this, on the shortest of timelines with really everything stacked against us, being walking arms moving forward. And the reality of the situation is that most other co mans probably would have told me to pound salt because of the timeline and the complexity and just the overall probability of failure being so high. You know, ZoRoCohad enough faith in us to green light the effort, and we won. That’s it’s always great to get through a stressful, crazy, low probability of success event and win.
Garrett McBride [01:00:54]:
You learn a lot about people’s character when the stakes are high and when the pressure’s on. And, you know, I was beyond impressed with Jason and his team and and what they brought to the table. And and, you you know, they made me look good. Our brand looked good. You know, we were able to deliver as expected with our distributors and our retailers. And and again, that agility and that flexibility was key to this whole effort, and we nailed it. But that was one of a a dozen different wild projects that we brought to the table with no time and and very little resource that that it just came together and and executed perfectly.
Jason Luedtke [01:01:33]:
Yeah. I I’m pretty confident I know exactly what you’re talking about. And, you know, we do have to protect, you know, details, but it involved color. It involved a lot of test blending to get to the right colorations, and Garrett and I literally himself he and I blended for multiple hours straight, testing different ratios of colorations. And we both came out of that blend and ended up probably with cocktails later, and the face is the color of his shirt right now. And so I think we were both fairly Smurfed out for at least a couple of days after the fact, if, memory serves me so.
Garrett McBride [01:02:19]:
Absolutely right. That was an experience.
Elisa Louis [01:02:21]:
That’s awesome.
Garrett McBride [01:02:22]:
You know, it spoke to the character and the competency of of your team and the ability for all of us to pull together, line expectations, have faith in one another, and just execute. That’s what makes it all worth it. Because at the end of it, you’re feeling unbelievable. It’s amazing. It’s a great feeling.
Elisa Louis [01:02:41]:
Great story. You know, it’s like the two of you were in a war together.
Jason Luedtke [01:02:44]:
What it
Garrett McBride [01:02:45]:
feels like sometimes. I mean, anybody who’s been in development and CPG knows that there’s never enough time. There’s never enough resources. But when you win, boys would feel good.
Jason Luedtke [01:02:54]:
Yeah. There’s, definitely a little celebratory clinking of the glasses after a tough day of that, and you you’d know you’d got across the finish line. And and, you know, that’s that, band of brothers, sisters mentality that is why we’re still in contact, we’re still friends today, is because we did kind of go to battle in that metaphorical sense a few times. And, you know, it certainly is applicable to Garrett. It’s applicable to quite a few other people in the industry for me personally, and that is why those long relationships are forged. And it’s because you’ve you’ve had the good times, you’ve had a few bad times, you’ve overcome them. And then, you know, you have that that level of, I guess you’d call it, friendship, professional friendship. But you can also go relax together and have fun and have a laugh and and have that level of comfort after a tough day to do stuff as human beings and to to just relax and and be friends and and kinda laugh off all the things you just got done fighting through, and you’re just stronger because of it.
Jason Luedtke [01:03:59]:
I mean, that that it’s just that time behind the wheel with interpersonal relationships that just get stronger and stronger the more you do together. So
Elisa Louis [01:04:08]:
That’s great. I mean, that that’s definitely one of those great success stories. I I know we’ve all had our share of challenging situations too. I mean, you touched on it, Jason. I mean, the the tough times. And with all the supply chain issues that are out there in the world, we have our fair share. And and I think that we share that desire to communicate to our customer and our co packing partner or who you know, immediately when something’s not going well. Like, when there’s a delay in a container getting to the port, you’ve gotta be the first one to know as well as the brand.
Elisa Louis [01:04:50]:
They have to know so that you can adjust your schedules. Cause I know those schedules are critical to everybody meeting their goals down the line and ultimately getting that product on that grocery store shelf. So we’ve been through those times too. Right, Jason?
Jason Luedtke [01:05:07]:
Yeah. Absolutely. I mean, that that’s I mean, it’s, you know well, again, full circle over and over and over again. But if there’s that integrity there, if you’re not trying to hide the fact that there’s a problem, if you’re picking up the phone right away and communicating, usually you can solve a problem. If I know there’s a delay, I can start talking to my scheduler, and we can start moving things around, and we can start swapping, you know, maybe we run a different SKU. But if you don’t know how to solve the problem if you don’t know the problem exists. And so and that goes every direction in the three way conversation between supplier brand and Coman is, if you’re talking, you’re solving. If you’re not talking, you don’t know what is gonna fail, and then it’s already too late.
Jason Luedtke [01:05:52]:
And so it’s really just that repetitive component of trust and communication.
Garrett McBride [01:05:59]:
That’s so important.
Elisa Louis [01:06:00]:
Awesome. Well, switching gears a little bit, you touched on it earlier, Jason.
Jason Luedtke [01:06:06]:
Yep.
Elisa Louis [01:06:07]:
And I would really love to dive into a little bit more the trends that you’re seeing because ZoRoCobeing kind of very much an integral role in the the whole supply chain. I know you’re monitoring the trends, and I know you’ve done some research. So I’m really interested to hear what you think are some of the hot trends right now in the natural food industry.
Jason Luedtke [01:06:33]:
Yeah. I mean, lately, I would say the big one is protein, protein, protein. Everyone is seeking creative new proteins, non typical proteins to offer an enhancement of that protein level without either sacrificing taste or even maybe enhancing taste. So from a general theme, I would definitely say protein is, really a hot button topic. I think we’ll see a lot of it at expo coming up. And I think the other things is a trend not as much product driven as there’s without a doubt a continuation of traceability within the supply chain. The brands, all the way down to the consumer, they like knowing where their products are coming from. They like to know that it’s clean.
Jason Luedtke [01:07:24]:
They like to know that the folks behind the brand, meaning the suppliers, meaning the commands, they know where the farm source is. And so that’s where I think a lot of the buzzword of regenerative is coming from is it’s that traceability back to the growers. The personal story behind the growers, I think, is, continuing to be a pretty important trend to the industry. And yet you see that a lot in the brand marketing and those conversations about really understanding kind of field of refrigerator type of traceability in the industry. And so besides protein, I would say that that’s a a continuing theme that I see out there for sure. Yeah. I think in addition to the plant based protein, especially, it
Garrett McBride [01:08:13]:
really doesn’t seem like it’s going anywhere. Every trade show, every new product launch seems to solidify the plant based proteins position on the grocery shelves. Clean labels, of course, everybody wants their labels cleaner, simpler. Origin specificity, you know, there are a lot of people now that are requesting product x must come from either a very specific group of countries or origins or can’t come from a very specific origin. It’s becoming more and more common. And I think just generally having the right certifications from a food safety standpoint, all the organic, the kosher, now the regenerative to Jason’s point are really focused upon more than they ever have been in, you know, my twenty some years in, in CPG.
Elisa Louis [01:09:05]:
Yep. I fully expect we’re gonna see a lot more at expo west products and companies featuring all these attributes. I wouldn’t be surprised if we see a lot more emphasis on protein. I have somewhat of a curiosity of how that might be tied to the new craze in the Ozempic. That’s going to be interesting. I’m no expert on it, but I’ve heard that the folks that are on or taking Ozempic tend to want to crave more protein, which is just a, an interesting side note.
Jason Luedtke [01:09:39]:
That is an interesting side note.
Elisa Louis [01:09:41]:
Yeah. Yeah. I mean, but you know, of course we’ve seen protein protein over and over again at expo and I just expect to see more and then everybody desiring more understanding about where their ingredients come from, for sure. So, and
Garrett McBride [01:09:58]:
I think we’re
Elisa Louis [01:09:59]:
gonna see stuff.
Garrett McBride [01:10:00]:
Yeah. I think we’re gonna see people really focusing on the colors as well. Now that the, the US FDA has, has taken a stance, especially on, on the red, We’re gonna see more and more focus on finding, I think proactively, preemptively finding alternatives to the, you know, the artificial and the late colors that some people still use in their formulations.
Elisa Louis [01:10:23]:
Alright. Well, good stuff. It it’s fun to kinda chat about what we’re seeing out there. I know we could we could really do this all day long. It it’s just fun talking amongst friends. And from Smirk’s perspective, I mean, this is the sort of thing we really value. The partnerships that we have with our co packers and co manufacturers like ZoRoCo are very, very important to us. We see ourselves integral in helping that whole chain so that in the end, the brand can get that product on the shelf when it needs to be there with good quality ingredients inside.
Elisa Louis [01:11:05]:
So Jason and Garrett, thank you so much for joining me today and sharing your insights. For our listeners who are interested in learning more about Zorroco, of course, you can go visit zorocopackaging.com. You’ll find lots of resources there and including a way to connect with our friend, Jason.
Jason Luedtke [01:11:23]:
That’s right.
Elisa Louis [01:11:26]:
And as always, I thank you, you know, our audience for tuning in to the get the scoop with Smirk’s podcast. And if you wanna connect with Smirk’s, you can reach out to us at what’s new at smirks dot com or through our website, smirks.com, of course. But keep on listening here because Garrett is going to, in the next segment, give us an update on the latest market report on a variety of ingredients. So you’re not gonna wanna miss that. And if you’ve enjoyed this episode, don’t forget to subscribe. Leave us a review. We would love that. Share it with your network.
Elisa Louis [01:12:00]:
And until next time, keep scooping success.
Garrett McBride [01:12:06]:
Hello and welcome to the Get the Scoop with Smirk’s Podcast Market Report for January and February 2025. Let’s jump right in. Let’s Let’s talk about macadamias. The market has rebounded to higher pricing compared to a few months ago and considerably higher than it was a year ago. Kenya has an export ban in place for in shell macadamia nuts to help to stabilize the market and to allow the nuts to develop fully on the trees. If they remove the export ban and China comes back in to purchase the in shell, it will add volatility to the market. If the export ban remains in place, it will help to stabilize the market. The market needs to learn how the consumption was in China from the Chinese New Year which just concluded.
Garrett McBride [01:12:49]:
If they consumed a lot, they may reenter the market and add pressure to the price. If consumption was not large, then we may see the market soften. Time will tell on this. It’s still early. Smirks does have positions on style one, style four, style five, and style six s if you are in need of inventory. Walnuts. The current walnut crop ended up very short of the anticipated yield this year, and pricing has spiked as a result. Yeah.
Garrett McBride [01:13:16]:
In some cases, 45 to 50¢ higher per pound. We still have some organic light medium pieces available. Call us to discuss your needs. Almonds. California’s Central Valley saw ideal conditions for almond growing last year. There was speculation of a 3,100,000,000 pound crop. But in reality, the yield ended up somewhere between two point seven and two point eight billion pounds Even with those perfect conditions, what was estimated was unable to come to fruition due to farmer economics. Farmers cut back on fertilizer inputs due to high costs so they weren’t able to reach that 3,100,000,000 pound crop that was initially projected.
Garrett McBride [01:14:00]:
This shortcoming shocks the almond market and we saw spikes in prices early. Markets are expected to remain flat, however, with some potential downside as we look toward the next crop. Conventional almonds are available and markets are currently flat. Over the last three years, markets have been steadily increasing but in fact getting more toward normal levels. Almond pricing was not sustainable for packers and farmers in past years and they’re now getting to the point where they will be sustainable. Cashews. Conventional cashews. There was strong production in the beginning of the harvest but the crop in West Africa was short in 2024.
Garrett McBride [01:14:40]:
We need a few more weeks to have a more clear picture of what the new crop will look like and to gauge how demand will be. Some growing regions are coming online to offset shortages but it’s not quite enough to make up the difference quickly. Falling ocean freight prices should help but overall, prices are likely to remain firm. Pecans or pecans depending on where you’re from. Pecan crop is down due to damage caused by Hurricane Helene. The conventional crop is estimated to have been reduced by 30,000,000 pounds to 36,000,000 pounds as a result of that storm. We expect prices to stay firm. We’re encouraging people to book now and early and get as much coverage as possible.
Garrett McBride [01:15:23]:
Organic pecans are also very tight. Very little on the market right now so plan accordingly. Coconut sugar. The coconut sugar shortage in Indonesia is exacerbated by long waits to get organic transaction certificates issued. This process is very slow as reported by multiple suppliers and has been the primary cause of delays getting shipments on the water out of Indonesia. Loads that were supposed to ship in November through January have still not hit the water and we’re waiting for that to happen. It is worth highlighting that Smerxs is off the market for spot sales until April with the exception of business already contracted, of course. We expect some product to begin shipping February but again that volume is allocated to current contracts and not spot demand.
Garrett McBride [01:16:12]:
Sunflower. We continue to see the markets get tighter on inventory in The EU. In particular, we are seeing suppliers sold out of organic kernels already. We expect organic to remain very tight from The EU. We have found some relief with supply from The US on organic and the pricing is not far off for that of the EU. You may consider looking for coverage from The USA as a good option until this market rights itself. King law. The supply of raw material is getting very bad in Peru and Bolivia with organic white running extremely low.
Garrett McBride [01:16:46]:
Prices continue to increase and new crop is expected to hit the market a little bit later than normal. There will be no carryover so we anticipate a run on the market at harvest time, April or May, which will keep pricing firm going into new crop. From what we’re hearing, we think new crop may not start shipping until June this year so please plan accordingly. If product ships in June, we will not see it arrive to The States until July or early August. Coconuts. Desiccated coconut markets remain firm as growing regions slowly recover from the lingering impacts of El Nino and La Nina weather patterns. Global demand remains high and raw material supplies remain low with a slow recovery horizon. This leads us to speculate that costs will likely remain high for all coconut products through the first half of twenty twenty five.
Garrett McBride [01:17:38]:
There are even rumors that many manufacturers in Indonesia and Vietnam are either completely closed or running at a very small fraction of their optimal capacities. Not good for the folks in those regions. Coconut oil and coconut flour are slightly less impacted as the raw material supply chains are a bit more flexible. Contact us to discuss your 2025 demand, and let’s put together a strategy to get your needs covered. Thanks for listening. We’ll talk to you next month. So that’s it for this episode of Get the Scoop with Smirk’s podcast, where we bring you the latest market reports, insights into bulk ingredients and their origins, as well as in-depth product information. So if you have any questions, feedback, or just want a sample to taste for yourself, visit the smirks.com website or email us at what’s new at smirks dot com.
Garrett McBride [01:18:31]:
Never miss a future episode. Be sure to hit the subscribe button wherever you listen to your podcast. Thanks so much for tuning in.