#45 - Kyle Krull & Anthony Corsaro - The Biggest Problems Facing ReGen Brands & What We’re Building To Help Solve Them

Episode Recap:

ReGen Brands Recap #45 - The Biggest Problems Facing ReGen Brands & What We’re Building To Help Solve Them - (RECAP LINK)

Episode Transcript:

Disclaimer: This transcript was generated with AI and is not 100% accurate.

Kyle Krull - 00:00:15
Welcome to The ReGen Brands Podcast. This is a place for consumers, operators and investors to learn about the consumer brands, supporting regenerative agriculture and how they're changing the world. This is your host, Kyle, joined by my co-host, AC, who's going to take us into the episode.

Anthony Corsaro - 00:00:33
On this episode, we have your two favorite podcast hosts. Yes, just Kyle and myself today, it has been 29 episodes since Kyle and I jammed out together without a guest and it was definitely uh just the perfect time to do it again. It was not planned, but it worked out pretty well. Similar to episode 16. We spend a great deal of time breaking down things we've learned from all 44 episodes, the 42 blogs and the more than 1000 conversations that we've had collectively with and about regenerative brands. Quite simply, we talk about the biggest problems facing regenerative brands and what we're trying to build to help fix them. We do an in depth into the what the why the how on the Regen brands, media platform, the Regenerative Coalition Trade Association and Outlaw Ventures' new early stage regenerative CPG, venture capital fund. A lot packed into this one, folks.

Anthony Corsaro - 00:01:13
We hope it's fun, informative and we would love your feedback. Let's go. What's up everybody? Welcome back to another episode of The ReGen Brands Podcast. We got a little special flavor for y'all today. Um It is just Kyle and myself.

Anthony Corsaro - 00:01:28
We were actually stood up by a, by a brand guest that will remain nameless. But we sat here and said, you know, do we just skip another week? Do we do a little solo episode that we're entirely unprepared for uh prepared for? And uh we said the good, the good awesome listeners of The ReGen Brands Podcast, they deserve some fresh content. So here we are,

Kyle Krull - 00:02:07
we're here and you know, I, I'm almost confused about what to do here because I am so turn key on this first question and I can't ask myself. So it's, it's gonna be weird, but we, we really through together a quick list of things to discuss. Um And we are just gonna kind of free flow and see what happens here. I should also mention for those listening only and not watching. We are both wearing glasses today for the first time because we're trying to be more articulate and uh no idea how this is gonna work out.

Anthony Corsaro - 00:02:35
Kyle Kyle is like Ricky Bobby in the, I don't know what to do with my hands interview. You know, he just doesn't know what to do with himself, but his first question.

Kyle Krull - 00:02:45
It feels like there's so much more pressure when it's just the two of us, you know, it's like people are relying on us for information rather than us getting information out of other people. Um And yeah, I guess that makes my hands do weird things but, you know, we got a few things we wanna try to discuss. Anthony and I are lucky that we've learned a ton from all these different brands that we have on. So we're gonna use this as an opportunity to kind of recap some of the learnings and see if we can hone in on some of the common themes that like we've done in a, in a previous episode. So I think, you know, one of the first ones we really want to dive into is the operational differences between, you know, operating a regenerative brand and a regular CPD brand and what, you know, sort of challenges that presents and why the strategy should be different and how strategic partnership with either certain retailers and or distributors could make life hopefully, in theory, a little bit easier for regenerative brands. Um You know, the first one, when I think about an operational difference between a regenerative brand and a conventional brand is supply chain and sourcing because as we've discussed over and over and over again, developing a regenerative supply chain is one of the biggest challenges for a regenerative brand. You know, it's not, you can't just walk to the commodity market and say, hey, I'm looking for corn.

Kyle Krull - 00:03:51
You know, you've got to find regenerative corn, which comes from a specific farm which isn't siloed in the same, you know, holding facilities as the non regenerative grain and it gets really hard and then not only is it hard to source upfront, it's hard to then scale because as you grow, you've got to maintain that supply with every new retailer, with every new skew and all of that. Um So it gets hard. So ac what are your thoughts on regenerative supply chain? And you know, do you see any opportunities to, how do we improve that? How do we make that better or how do we make that easier?

Anthony Corsaro - 00:04:28
Yeah. Um you know, to add some context to what you just said, which I thought was a great way to, to get us started is, you know, the average brand, in my opinion, from what I know they're basically just working with co commands and co backers, right? And the man or the Co packer has an ingredient list. They have a ability to make XYZ product and you're basically relying, you're outsourcing on that person to basically always have the raw materials um that is needed to make your product. And yes, for general brands still use Co Packers. Uh But many of them, if not the, you know, the majority of them have upstream visibility and complexity added by working directly with farmers or aggregators of farmers or some sort of additional step that most other brands don't have to deal with. And so depending on the region they're sourcing from, depending on what that crop is. That complexity could be, you know? Really interesting. Right.

Anthony Corsaro - 00:05:12
I think of Emily at little Bucks and the fact that she buys all her buck wheat one shot a year, one harvest from a frame farm farms. So what happens if that one harvest goes bad? Does she have backup farmers? You know, are there other Roc farmers she can source from, um, how does she space? You know, how do they operationally plan to produce with that? Just that one shot of buckwheat over an entire 12 months, right.

Anthony Corsaro - 00:05:31
How do you bake that into forecasting and inventory levels and production and when you're gonna get P OS? So, um, you know, we not to get too much in the weeds, but I think that the hardest things are supply of regenerative raw materials is constrained, right? It's not as much as we'd like it to be. And there's usually a time constraint around the fact that many of these dedicated sourcing programs are focused on a farmer or a certain group of farmers that are, you know, um limited in terms of the amount of harvest they have just because of the way that time and weather and, you know, the calendar works.

Kyle Krull - 00:06:23
I think it's a really great point and it sort of it makes you want to shout out all of the regenerative founders that are out there right now because you just mentioned one aspect, we're talking about the first difference between regenerative CPG and regular, right, conventional, you know, commodity supply. And what you just spelled out really eloquently was like how much more complex it is to source product. And these are generally the same founders. It's not like they have a sourcing team who's handling all this and all these different relationships and all this complexity and all this nuance, it's all really down to the founders, especially in early stage. So just the level of pure like things to manage like bandwidth being, being spread out and underresourced. I mean, these, these founders are just under so much pressure to literally just find their ingredients in addition to everything else that they've got to deal with, from finance to sales, to funding to marketing, to strategy to, you know, 35 10 planning. I mean, it's just, it's overwhelming to think about. Um So yeah, I think, I think that's a great call and supply. You can really kind of segues nicely into innovation, you know, as these new brands, these regena brands are looking to build their portfolio.

Kyle Krull - 00:07:16
Uh They've got to ensure that the claims they're making, these regenerative claims are upheld with every new product that they bring to the market. So that really gives them a couple of different choices. You know, there's number one, you can continue to iterate off your existing supply chain with different flavors, potentially, right? So let's say, you know, we'll continue with the little bucks example you provided like how do we make more stuff out of Buckley? And for little bucks, it really is sort of their niche. So that might not be the best example. But for another brand, like let's say Artisan Tropic who has, you know, cassava chips and I think they've got a few like plantain chips, right? There's multiple ingredients there.

Kyle Krull - 00:07:53
Do they continue to innovate on those two different formats or do they try to include something new, a new ingredient? And if so like how do they ensure that that supply is regenerative? And it's and then from again, not only is it regenerative, is there enough capacity from the growers? And do they have their relationships to source enough ingredients to like bring these products to market? And especially like as a regenerative brain grows in scales, you open up all these different retail doors and when you launch a new product, you wanna launch in all the doors that you already have open. So every time you launch a product, assuming you've grown year over year, your initial supply requirements increase because you want to open up all those new doors. So it becomes harder and harder to grow and scale the further into that journey.

Kyle Krull - 00:08:41
You are um long, long story short, innovation's hard. What are your thoughts on innovation.

Anthony Corsaro - 00:09:01
Yeah, I think you brought up some great points and it seems like the brands that are having the most success are doing what I call commercializing the rotation, right? So you look at some of the agri forestry systems. We've talked about like what good Sam has or what artisan tropic has and then taking the rotational crops on top of their main hero ingredient and then commercializing those. But something else we've talked about that adds another layer of complexity. There is each channel in retail is a different business. And for those non hyper CPG focused people channel is like the the um the section of the store and the section of products you're in. So for a company like Good Sam, it's a totally different business to operate coffee and chocolate bars or bag nuts, right? And I think they're doing an amazing job and I think a lot of other regenerative brands are doing that, but that is very um anti best practices of, of conventional CPG, right?

Anthony Corsaro - 00:09:48
And so it's, it's really similar to the upstream sourcing complexity is like how do we make space for uh more diverse and elastic solutions rather than have to be so concentrated and so focused on these like specific things. Um And I think the brands that we're talking to are are doing that work and, and blazing those trails because I don't think they exist today really.

Kyle Krull - 00:10:23
I think you're right. I think there are very few brands who have done that. Well, uh, one of the few that comes to mind would be like prime location. I think they've done a good job kind of spanning multiple categories. Another good non regenerative brand who I think is probably, has, has done a better job of this than anybody right now is starting in chips, working their way into seasonings into sauces. Um, you know, and a and a canned beans, you know, they've really taken their, their primary value proposition which to me is really like clean, authentic, cultural, culturally relevant food. Um And the other big value proposition for them is, you know, no seed oils really and no non PUFA oils. And I think that that's um an interesting brand that some of these, these other brands like Good Sam can kind of like look to as like how do we emulate this path of success that C A is like really, really done a fantastic job of doing. Um One of the other things that came to mind is you were talking about the commercialization of the rotation is the benefit that that has both for the farmer and for the land, right? Because if regenerative brands continue to source more products that are diverse from the same plots of land, you're incentivizing rotation, which is increasing biodiversity, which is benefiting soil health, which is increasing carbon sequestration, water retention, all those other benefits that we talk about with regenerative agriculture.

Kyle Krull - 00:11:25
And it, to me, it just feels like the right thing to be doing right? And in addition, it gives the farmer more opportunity to sell products to the same trusted vendor. So it increases their quality of life, um increases their profitability, their resiliency, um their lack of dependence on a single crop. So I think to your point like the commercialization of the rotation is imperative for regenerative brand success and also just has so many different cascading benefits.

Anthony Corsaro - 00:12:13
Mhm Yeah. And the the amount of times that we have had a brand talk about how their innovation pipeline or strategy or whatever they're selling now is really farmer led I think is super admirable and it's why I think you and I are so passionate about trying to support these brands is like that is exactly the kind of win, win. Um you know, strategies that we need. And if you look at the large multinationals, you know, a lot of the big problems I think that we're facing are the farmers are just trapped in those commodity supply chains and they have no seat at the table in terms of hey, I don't want to grow corn and beans every year for the rest of my life ever again. You know, what else could we do here? Whereas the brands that we featured on the show are really boots on the grounds with farmers have the farms themselves or whatever it may be. And they're saying, hey, I'm already selling these one or two things for you.

Anthony Corsaro - 00:12:51
What about these other three or four things that you're growing alongside of those? How can we help, you know, how can we help make those a premium offtake for your operation? Right? Is that, that is ultimately what gives the profitability to enable the sustainability on all sides in my opinion?

Kyle Krull - 00:13:19
Totally. And it it it also kind of like flips the paradigm instead of saying like, hey, the market demands corn, everybody should grow corn regardless of climate, regardless of irrigation situation, regardless of soil type. Instead it kind of like the farmer says, hey, this is what I can grow. This is what thrives for me. This is what's complementary to these other crops that I'm growing and you know, back to the land like that's gonna improve everything for, you know, again, biodiversity, Carma, sequestration, water retention and like that. So I think flipping that paradigm, which is what regenerative brands are doing in general across the board. They're flipping all these different paradigms. Um That one is something that is particularly interesting to me and I think again, cascading benefits all the way down the the the chain, right?

Kyle Krull - 00:13:45
Um So what,

Anthony Corsaro - 00:14:01
what do you see, oh go ahead, like what do you see as like potential group wide solutions or like how can we help? How can we help the brands with that? And we're gonna put our, we're gonna put ourselves on the spot and just Riff on this live. Um But we, we talked about it a little bit but what do you see is how we can help the brands with that?

Kyle Krull - 00:14:20
When you say help the brands that I make sure I understand the question. So is that like helping the brands flip that paradigm? And like how do they tell that story to retailers specifically to generate the markets? No,

Anthony Corsaro - 00:14:28
I I think more just the operational burden and complexity of regenerative sourcing, right? We're talking about Reger supply chains, reg of raw materials. Like how, how can we build programmatic solutions for that for our entire cohort of brands?

Kyle Krull - 00:14:42
Man? That is a really hard question and outside my domain of expertise, I mean to get caught out on this one, but I'm, I'm gonna try this one and, and just acknowledge the fact that this is not my, this is not my bread and butter. You know, I'm outside of my, my my skill set here. Um But it really feels like, you know, if, if the goal is, how do we get to a solution where it's easier for farmers to grow what they need to grow? Um Market generation feels like the number one thing and I guess you do that via the brain. So if, if a farmer says, you know, they're a cow farmer and they're like, hey, you know, I really love to grow plantains like we need to develop a market for plantains. Um How do we as an organization like uh the regenerative movement help to do that? Man.

Kyle Krull - 00:15:11
I really don't know. I'm just riffing and trying to like give my brain some time to think of something that'd be beneficial, but I don't know what the answer is. And what do you think we could do to help to create a process or a system to help, to solve some of these problems?

Anthony Corsaro - 00:15:37
Yeah, I mean, look, I think your answer of market demand can be a solution for every problem or every added complexity we're gonna talk about today. So it's always a good answer, right? Um I think some things that I'm seeing being done in the space at a small level that could be scaled or done with greater collaboration could be really effective. Like when we went to the ROC, the Regen of Organic Certified uh meeting at Expo West and Bridget who works for the Rode Institute is working on trying to create a little more collaborative like portal and visibility for both uh reserve organic certified farmers and brands in terms of, hey, I'm sourcing these three things, but I want to source these two things. Does anyone know someone that's growing that, that it's certified or that would plant it for us? Um I think we need to do that at a broader scale and we need to do that in a way that's like a centralized hub or portal where it's notated by region by availability of timing of the year by what certification it would fall underneath. Um, et cetera. Right. And that is a big, big task. Um that I don't know who, you know, who's the right person for. I think we've talked about it from a representative coalition in a region, coalition standpoint, it's probably not in our phase one.

Anthony Corsaro - 00:16:36
It's definitely something I'd, I'd like to see us work towards. But that to me of almost like a, almost like a, it's like a broker that the brands and the certifying bodies kind of put together collectively themselves um that can work on behalf of right now. All those conversations are very disparate, right? It's hey kettle and fire sources, bone broth. So they're talking about Bones, hey, this other company sources veggies. So they're talking about veggies and it's like, how do we get both of them to talk about soup? You know what I mean?

Anthony Corsaro - 00:17:06
Like that, that is the win. And I think that's, that's a lot of musical chairs and I don't know what the exact right form and function to get us there is. But that's what comes to mind for me on how do we drive supply, decrease prices, increase collaboration and make it easier to pull through that supply. From a demand perspective.

Kyle Krull - 00:17:40
I you can spot on man and I love the aggregation and collaborative model that you just laid out. So you know, we have this group of regenerative brands who are all trying to do the right things and support farmers and we have all these farmers who are trying to implement these regenerative practices. And, you know, I think it's, it's almost like a two way form of communication, right? And it could be, it could come from either side where there's like x number of farmers who want to continue to grow more legumes because they're nitrogen fixers and they're beneficial for the soil and the market might not be there. So that you're discussing it could be like, hey, we've got all these farmers who want to grow this specific type of Legum, you know, regenerative brands like, can you utilize this? Can you include this in your product offer today or is there any way you can innovate to create AAA market for these products? And then conversely, there could be a group of regenerative brands who are like, hey man, we'd really love to have more.

Kyle Krull - 00:18:16
We generally grown i corn wheat for example. And then we can, you know, take that demand back to the farmers and say, hey, who, who is in the right place where they can add this to the rotation? Um and we'll grow it on a regular basis and kind of determine like how much of this can we actually get and can it meet the demand that already exists? So I think you're spot on this sort of portal is a killer pipe dream. Um If there's anybody listening, who feels like they might have the skill set to figure out how to go. So, such a tool man, let us know because uh I don't think, I think we conceptually have a pretty good understanding that it could be successful.

Kyle Krull - 00:18:48
Um But I, I do think it's outside of, you know, years and eyes skill set today, no doubt.

Anthony Corsaro - 00:19:07
Yeah. And, and the last thing I'll maybe add there is like a shout out to some awesome collaborative brand uh initiatives that are happening like the almond project, right? We got Capello's Simple Mills and who am I forgetting? Um I'm forgetting one daily harvest, daily harvest. Yes. And they, their, their presentation at Climate Day was like super rad and what uh what they're doing, guided with some help from Jesse Smith and Lauren Tucker and some others, like I thought that was really, really cool and we have to kind of come together around these certain commodities and have that specific focus, I think to drive some change, then we have to have some, some broader hub on the back end. That's like doing the research and tracking of all that work. So there's visibility for the whole ecosystem into OK. Almond supply might be ac minus right now, but like papaya is A F and it's like we really need to get three people on papaya or like what, you know, fill in the blank with whatever you want

Kyle Krull - 00:20:04
I can spot on man. And II, I feel like your brain today is just operating one level ahead of mine because I was about to talk about a collaborative project similar to the one project. Um And I, I appreciate that you brought it up because you know the on fire, we're really in an interesting quote, commodity space, right? Where we essentially use a byproduct of existing industries like nobody's raising cattle for bones. So we are actually looking to partner with a few other brands and I don't want to name them just in case they're uncomfortable. But we are in active discussion with a handful where we utilize bones. Another brand might utilize premium cuts and another brand might utilize what's called drop, which is basically all of the leftover meat that isn't utilized for ground or you know, try to rib eye, whatever those cuts are. And that to me, that type of product, if we can take that demand and say, hey, these are three well established CBG brands who can buy X amount of poundage a year on whatever cadence can you start to implement these principles and practices where we can scale acreage because like the demand is there, we're ready to buy, you know, and I think that that model, like you mentioned the almond project, they did some fantastic work there.

Kyle Krull - 00:20:46
And that's another, you know, before we talked about and these, these models that have been proven to work. And I think that all CPG brands should look to the almond project as this, you know, trailblazing collaborative effort between CPG to help to improve the way we do agriculture in new places. So um I really appreciate that call out.

Anthony Corsaro - 00:21:28
Yeah, dude. And I love, I love the share on the kettle and fire piece. And I think what's so powerful about that example is to me, one thing we've kind of done wrong in the space is we've allowed, you know, the brands have totally outsourced raw material supply and that production piece to other people. And there's been no visibility, no linkage between farmer and brand and those projects allow us to work with those aggregators or those middle supply chain entities. But in a way where the farmer and the brain hopefully has more visibility and more skin in the game so that it's not just a constant, like drive the price down through the supply chain, but like truly a collaborative effort. And you know, that's probably a good, a good challenge for us is to seek out some of those middle supply chain processors, ingredient, suppliers, aggregators that are, that are sitting between some of these entities and learn more about their work and learn more how, you know, it can be more uh true partnership there versus just like I'm putting in a po and I'm buying this ingredient or you know, needing 10 cents off per pound of the price or whatever that may be

Kyle Krull - 00:22:33
i your spot on and you, you nailed one of the bottlenecks of why this work is so hard. You know, and I think processing in particular for the meat industry is like that the huge bottleneck there just aren't that many processing facilities who do identity preserved, right? They, they typically have their commodity now and people buy commodity level, whatever and it could be organic or it could be conventional. But for regenerative like because the supply is so low, it's really hard for them to do specific quote runs if you will or maybe slaughters is the right term, which is, that might not sound inhumane, but that's the reality of the situation. Um And to, to maintain identity, preservation of like these are the regenerative cattle and for them not to get mixed, creates a lot of operational challenges for those processors. And without that demand, it becomes really hard for them to justify that additional workload, right? So that's another one of the unique challenges. Um You also mentioned storytelling, I just wanna touch on like a random, you know, things that happened recently. Um I had the opportunity to to moderate a regenerative panel at Sprouts Conn just, just on Tuesday today is Thursday.

Kyle Krull - 00:23:20
So it's we're two days out of that,

Anthony Corsaro - 00:23:36
tell people what sprout is just so just so people know,

Kyle Krull - 00:23:41
yeah, Sprouts Con is essentially like an expo West and a miniaturized version for Sprouts employees only. So Sprout's corporate office, they all get together and they fly in uh a bunch of grocery managers, vitamin managers and store managers to go to these events and learn about, you know, what's happening in the industry, what's happening in Sprouts. And they also get the opportunity to interface with a bunch of brands who go and pay to booth up and they get to talk to all these people on one on basis, which is really, really cool. And as a part of sprouts, they also have these panels and discussions with a few different showcase, topics or brands or whatever. And sprouts wanted to put on a regenerative discussion to teach their employees a little bit more about Regen, why it's difficult, what's hard about it, the different certifications, et cetera and one of the pieces I really want to hone in on there and kind of empower this team and they seem super responsive to this was, you know, the brand is a storytelling entity and to your point, Anthony with regenerative brands, they really want to showcase and tell that story for these direct former relationships that they have and the impact that they're having on the ground and things like that. And if the brand is the story, the retailer is sort of the microphone or the megaphone or the quote library. If the story is a book or the movie theater, if the story is a movie and the more we can partner with the individuals who are working at retail day in and day out and to make sure that they understand the impact of regenerative agriculture from both a human health and a planetary health perspective.

Kyle Krull - 00:24:55
And can tell that story to shoppers like the better off this movement's gonna be. And I couldn't be more thrilled with the way the spouse team responded to sort of that call to action. They were very like, this is awesome. We want to do this. They were very engaged and just a huge shout out to the Sprouts headquarters team for having the, the dedication to kind of put something like this on. It was, it was super, super fun, super powerful.

Kyle Krull - 00:25:24
Um and a great experience

Anthony Corsaro - 00:25:35
dude, love that they're doing that and love that you got a chance to participate. I think that's so cool and I think it's a really good segue into another one of our operational takeaways, which is just regen brands have to operate at the distributor and the retail level differently, right? Which we can kind of have a very high level conversation around. Do we need to blow the whole thing up or you know, it's like that revolution versus reformation and you know, who knows? Maybe the system will still be, hey, go through Unify, go through K he get to retail in 50 years. Maybe it'll be something totally different. Um I think we're clearly seeing there's a lot of flaws in the current system, not just for regena brands, but especially for any emerging brand, any sub 10, sub 25 sub $50 million brand. Um So dude, this is your domain of expertise.

Anthony Corsaro - 00:26:08
I'm gonna let you kick this topic off and just share kind of what you're thinking there.

Kyle Krull - 00:26:27
Yeah, man. Um you know, I think in order to really address this properly, we kind of have to take a step back and think about what's happened over the last 10 years. You know, I've been in this industry, I think what, 11 years now and the quote, you

Anthony Corsaro - 00:26:40
yourself, bro,

Kyle Krull - 00:26:41
I am dating myself. Um, but the asks as, as I'm sitting here like adjusting my glasses because I'm so old. Um but uh the asks and the requirements to participate in a lot of these retailers have changed and increased significantly over the past 10, 11 years, you know, where, you know, I killed on fire the way we originally and this, this, this is only five years ago, not even 10 years ago. What we consider to be a good ad spend originally was if it cost 50 dollars per store to get off shelf placement, right? So essentially what that means is that if there's a 10 store chain and it costs you $500 or less to get offs shelf placement, then you're in good shape, that's a good spend, right? And what's happening now? And this, this is primarily because of all these massive exits that get so much attention. You know, Rx Bar is selling for $600 million to Kellogg and these huge evaluations in this venture capital funding that comes in, um, the retailers have sort of like we want a chunk of that.

Kyle Krull - 00:27:29
Like these brands wouldn't be selling if it wasn't for the support and the velocity and the sales that they're getting at our stores. And I completely understand that logic, right? But unfortunately, what's happened is like three different things at the same time, like number one, the retailers kind of jumped on that philosophy as it was sort of coming to an end. So their ass are increasing as the funding pools and the exits are sort of on the decreasing side of that. Number one, number two, it's becoming more expensive to operate as a brand for a variety of different reasons. There's the war in Ukraine, there's COVID, there's supply chain issues, all sorts of other things that inflation so hitting inflation, right? Yeah. So that's part two, it's more expensive to be a brand. Retailers are asking for more and it's also harder to raise money, right?

Kyle Krull - 00:28:10
So those three things are creating this compounding issue of retailers asking for more while brands have less and it's becoming more and more challenging for especially these regenerative brands who have a harder time. It harder than most regular brands raising money don't have the same 589, 10 year turn and burn mentality where they're looking to, you know, hit a certain, you know, revenue threshold and sell immediately. A lot of these brands are, it's a different model. They're actually trying to do good and maintain in business for a long time

Anthony Corsaro - 00:28:56
and they're building the supply chain, right. They're not just building another ice cream with the same ingredients and a different label on it with a, with one tweak with a better brand, right? So it's a much it it's gonna be a slower growth period regardless, especially if that supply chain is not fully at the top, not always, but you know, a lot of super,

Kyle Krull - 00:29:11
super great point to, I mean, to your point like we talked about before, um how hard it is to grow with that supply chain, right? This isn't a liquid death and nothing against liquid death. I think what they're doing in the category is fantastic. It's disruptive, it's fun, it's unique, but it's not hard to put water in a can, you know, whereas if you're talking about a regenerative ice cream who is, you know, sourcing from a very specific dairy. If Walmart comes to them and says, hey, we want to put you with 4 $4500 tomorrow, they literally don't have the supply and the supply to do that quite possibly. And I'd be willing to bet a lot that supply simply doesn't exist. They, they quite physically like they can't get there. Um At least not without years of work of developing and building that supply chain. So that's part of why it's so hard and really like to support regenerative brains. It almost feels like the expectations need to change.

Kyle Krull - 00:29:45
Like it's, it's impossible to some of these brands. And I don't wanna put uh by name, this, this specific retailer on the spot, but there is a very high profile retail chain natural channel in Los Angeles that has slotting requirements that are like $2500 per skew on top of a free fill. And essentially what a free fill is, is like one free case per store to get on shelf, which is not out of the ordinary, but it just becomes so expensive to try to to get on shelf,

Anthony Corsaro - 00:30:31
take, take a pause and for the absolute layperson, talk about all the charges from manufacturing to shelf, right? So talk about all the different dings you get as a brand by the time the bone broth goes from the factory to the distributor to actually being on on the store shelf, like just just categorize those and give, give a frame of reference

Kyle Krull - 00:30:53
for people. Yeah, I I mean, I'm not even the pro to be able to handle all of them honestly. Um but I can touch on what I know off the top of my head and you know, obviously you've got your raw ingredients supply like you've got to pay for those. In numerous cases, you also have to pay to house those because you're not ordering products directly to be manufactured on the same day. That's just too hard, right? So you have to house those ingredients somewhere. So there's like number one, you got to pay for the ingredients. Number two, you have to pay to house the ingredients somewhere.

Kyle Krull - 00:31:18
Number three, you generally have to pay for your run or quote your line, some of your actual manufacturing in addition to paying for like the labor to manufacture and the machinery time and things like that, you also have to pay tolling. Um which uh I, I should know more about exactly what tolling is, but I think it's like a, it's like a per unit charge for every unit that comes off the line. Um You also have to pay for the actual, you know, physical case, the the package that the unit is sold in and all and every single one of these is increasing over the last two or three years. Right. Um From there you have to again pay to. Right.

Kyle Krull - 00:31:40
Right. So you, you

Anthony Corsaro - 00:32:00
went even further. Yeah, you went even further upstream than I wanted you to go. But that's just, that's just to make the product, right? And so then you got it right.

Kyle Krull - 00:32:11
Well, yeah, because you manufacture not where you house. So then you have to pay to ship from your manufacturing facilities to your fulfillment. Center. And for, for many brands, you might have two different types of fulfillment centers that could be like your GTC fulfillment partner and then your retail fulfillment partner. So then you're shipping product to at least two locations most, most likely three or four, because you might have different fulfillment centers across the country. Then you have to pay for housing in the fulfillment center. Then you have to pay to ship the product again to the distributors and the distributors are squeezing the brands for money. They want these mandatory invoice.

Anthony Corsaro - 00:32:43
Hold on, hold on, hold on. I wanna, I wanna draw a line because this is what I wanted you to talk about. Not even the manufacturing piece, but it's great that you talked about the manufacturing piece because it shows no, it just shows the burden and the complexity and the amount of cost there. I'm simply just talking about finish good hits the distributor, all the things you can get dinged on by the time you get to the retail shelf and sell to the retail shelf. So give, give us that list because I think it's crazy.

Kyle Krull - 00:33:07
Got you. So I mean, apologies for the, the massive ramble prior to but you gonna show you the complexity and all the different pieces that, that the consumer is paying for, right? Um So once the product arrives at the distributor, you know, I guess even before we get there, every distributor has a K, he calls it a marketing allowance unifies it's a boy about an invoice charge, which could be anywhere from 1 to 2 or more percent. So for every single dollar that goes out the door, they're automatically taking one or 2%. Um So that's like thing, number one, number two, most of the retailers out there try to get their brands to sign up for a quarterly off invoice program, which essentially means they want to see a 15% discount every single quarter. So that could be January April, July October or something like that. Some sort of cadence like that, these distributors will try to force brands into that system and at the same time, do what's called bridge buying. And this, this is primarily for long shelf life products and buys a two year shelf life, which is pretty standard in the industry for anything that's self stable. So they will buy typically between 60 70% of their volume during that 15%.

Kyle Krull - 00:34:00
Oy, despite the fact that they're not selling it at that 15%. Oy. So they are patting their pockets and squeezing the brands again because you're, you're not really getting any benefit for the bulk of those sales at the discounted period. Um In addition to that, they want to see all sorts of other levers and promotions and things like that at the distributor level, we don't have to get that granular. Then the, the distributor is gonna sell the product to the retailer. I don't know how deep you want to get into. What that, because, I mean, there's all sorts of chargebacks and crazy math that happens in, in that area.

Anthony Corsaro - 00:34:46
Yeah, just do like 345 high level examples. You don't even put specific numbers but like you got to pay to be on an end cap, you gotta pay to be on sale. Like just give people a flavor for that.

Kyle Krull - 00:34:57
You, you really got more than you bargained for this question. I'm getting very granular. Uh, but I

Anthony Corsaro - 00:35:02
think it's great. I'm letting, I'm letting you get in the weeds and go micro and then I'm gonna back us out and go macro. So you're doing great.

Kyle Krull - 00:35:08
Ok, so then you probably get to retail and every distributor has a different markup to that retailer and you know what? That, that's not, that's not critically important for this conversation. Basically, your product gets to the retailer and they got their margin. And then in addition, the retailers are looking for some sort of promotional support as they should. You know, it, it's gotta be a two way street if they're gonna put you on shelter brand and to support that, um, some retailers are more affordable than others. And so they're looking for generally speaking, quarterly promotions at a 15 to 20% minimum discount. And if you want to get off shelf placement or an ad or something special, you've got to pay flat fees for that, you know, at Whole Foods, you're looking at $40,000 for a national end cap. Um, and that's a two week promotion, you know, on a top of the 20% minimum requirement to, to spend. And I'm not necessarily trying to call Whole Foods out as being like the worst partner. If you break it down to a cost per store, it's actually reasonable.

Kyle Krull - 00:35:49
Um, but it's just incredibly expensive then as a brand, what we have to try to manage here and this is the hardest part is what we manage, what's called trade spend, right? And there's a specific target percentage we're trying to hit or maintain to make sure that we maintain profitability. So we want to hit, you know, between I'd say industry standards are between maybe 12 and 20% um trade spin grill. And that's, that's what we aim to do. And basically what that means is, you know, for every $100 that we sell of products, we only wanna be discounting or promoting at, at 15% and that's like annualized across the year. So that's a blend of your quarterly promotional activity and your non promoted times.

Kyle Krull - 00:36:24
Those have to balance out to hopefully hit that trade spend rate. Mhm I guess in addition to that this free fill, so to get private film on the shelf, you have to give them a free case and sometimes slotting. So like Alberson say if it wants $10,000 per store per skew, sorry, not per store per skew across the board. It's just, there's a lot, there's a lot, we, we can spend a whole hour talking about these type of fees.

Anthony Corsaro - 00:37:02
Yeah. And I, I set you up with a tough one there because it's very nuanced and it depends on the retailer and the brand. I think you handled it very well. So, thank you for just giving all that information because I think there's a lot of people listening that have no idea about any of it and you gave a, a great overview. Um Some people typically are more familiar with the e-commerce financial metrics of like CC and LTV, customer acquisition costs and lifetime value. And so it's the same thing if you're a brand at retail, it's basically like I'm gonna go make a dollar. How much do you have to spend to make that dollar? And that basically is your profitability. And so that's why I think we're just to, to bring it back to the macro of this is why this conversation is so important for regenerative brands is we have to make that more feasible, especially if they're doing more work upstream.

Anthony Corsaro - 00:37:35
Like how do we, how do we reward all the extra effort, all the extra complexity to make a better product, to source better, to treat farmers better, to treat the earth better in the way that it goes to market in the way that it is commercialized. And right now, I think we're seeing retailers make high level commitments. They're showing preference to some certain certifications that they think are great, which is awesome. But I think my challenge or what I see as the programmatic solution is how do we reduce that burden from manufacturing to shelf? How do we reduce that financial burden for brands? Right. So if you're really about regenerative as a retailer, can you just not charge slotting fees?

Anthony Corsaro - 00:38:07
Can you just not make them do a free fill? Can you just not like, can you take one of those 20 things off the board just to, to give them some sort of financial incentive or reward for this work that's being done because right now they're basically choosing to do the right thing and, and we're passing it all on to the customer, which goes into our whole conversation around pricing, accessibility, regenerative food is mainly for rich people right now, which is a huge problem, you know, and we can't, we can't look at the brand and just say here's all of our dirty laundry, here's all of our problems, go solve it, buddy. You know, like it has to be a shared risk and a shared reward throughout the um you know, throughout the supply chain. And it's really no person's one person's fault because the whole thing is built to operate the way that it is, it's operating perfectly the way it was built, uh, it just wasn't built

Kyle Krull - 00:39:14
correctly. I think you're spot on and I'll go a step further to ask for it because what, what you just laid out there would be like preferential treatment for these brands who are sort of doing the right thing, which don't get me wrong. I'm absolutely in favor of because they're doing the right thing. But if we can even like start with equal treatment, right? Because brands that are non GMO, brands that are gluten free brands that are organic brands that are Kilo Keto brands that are Paleo, they're all having their unique attributes marketed and messaged, messaged and supported by the retailer and today. Regenerative like that's not the case and I don't necessarily want to throw the retailers under the bus for that. That's primarily because of the nuance and the complexity between the regenerative landscapes or the certification landscape today and how nuanced and hard that is. So I want to acknowledge that, but I think that's what we should be striving for first. It's just that equal treatment.

Kyle Krull - 00:39:57
Like if this really is the future of food and this really it does have all the potential of human and planetary benefits that we all know that it does. Let's start there, right? Let's make sure that the retailers are really shouting out from the tops like these are the regenerative brands and this is why and how we're going to support them the same way we support these other attributes that, to me, just like, I mean, Keto is just a, it's a trend that's, that's not, it doesn't have a staying power, right? And there will always be some people in Keto for a period of time, but like Keto is not gonna save the planet and I really do feel that regenerative agriculture has the power to, I mean, I, I don't wanna be grandiose but it really feels like it has the power to save the planet.

Anthony Corsaro - 00:40:40
Yeah. And perfect segue into the certification conversation, which I know we wanna have and it's a good space for us to kind of tie together a bunch of snippets that we probably have almost every episode, right? And what our theory of change on that, which we can talk about later once we kind of discuss the problem a little bit is to emulate those other attribute programs that you just mentioned because what do they have? They have a third party that governs the validation and they have a third party that defines what the attribute means. And right now, we have 10 people doing that for regenerative and they don't agree with each other. So we have to find some or create some, some unbiased third party that can serve for that in this movement that can get that group to focus on the 80% that they all agree on versus the 20% that they don't and help them grow. The 1% of sales that they have versus fighting over that 1%. Right.

Anthony Corsaro - 00:41:29
And I think I'm getting ahead of myself and, and getting into the solution a little bit, but I want to back out into, you know, the certification problem and really preference and disclaimer the whole conversation with. There are so many amazing people doing amazing work in the space that we support. Um, you know, uh we, we're not anti certification, we're not anti any one certification. We just believe that there needs to be some sort of aggregation and unification of the bodies and of the efforts to achieve a better outcome. And we really feel like we have a ground swell and a tipping point level of brand support that agrees with that of all different regen definitions and certifications. Um So I don't know that was a big Rambo.

Anthony Corsaro - 00:42:02
Maybe I'll just pass it over to you brother and see what's, what's bubbling up on the certification front that you want to speak on.

Kyle Krull - 00:42:22
Yeah, I think I love everything you just said. I think you're spot on in terms of like the regenerative coalition group. Like it is well represented by brands of different sizes, different shapes, different products, different certifications and the coolest thing about it is that they all want to work together and they recognize the efforts that they're putting in. And I think the certifications generally today are sort of competing against each other, which is natural in business, right? I don't think we think we should demonize that, but I think that it's worth acknowledging. There are, you know, the arable land in the world, 1.6% of that land is certified organic. And if our goal is to transition the other 98.4% of arable land towards regenerative, we need to focus on how we, we make that happen versus how we make that 1.6% of organic land better. So yeah, that's like critical piece.

Kyle Krull - 00:42:56
Number one, the

Anthony Corsaro - 00:43:13
the the organic thing is such a triggering conversation for everyone. And so I think even maybe a better way to frame it is we want to have a market validation mechanism for net positive regeneration for net positive gain, right? Like as much as I don't think Pepsico just cover cropping, acreage is gonna change the world like it still is net positive, regenerate, regenerative gain. Is it fully regenerative? What certification is it? I, I don't know it's not getting the weeds there. Let's just start with, we understand we have to have market validation and incentives for farmers and supply chain operators and brands to make net positive improvement. That's it.

Anthony Corsaro - 00:43:40
And if you can't agree on that, you know, I don't know what we can get you to agree on

Kyle Krull - 00:43:55
totally. And, and just to just to kind of distill what incentive looks like for me, incentive really is the ability to communicate that value proposition to the consumer in a way that in an existing mechanism that they already understand, which again brings you back to in store signage, you know, so like, we don't want to have to make it that much harder for consumers to understand what regenerative is, we want to utilize the platforms that already existed and give regenerative its um opportunity to shine in that same format, right? And you know, to your point about like Pepsico cover crop and like that's a great step in the right direction. Does it qualify for the minimum for like a regenerative shout out at retail. Probably not, but you know, maybe they'll get there one day for now. I think there's so much opportunity for the small medium and sometimes large regenerative brands who are doing the right things and maybe implementing four out of five principles in every ingredient sold, but because they're not certified organic, they're not getting any shout out, right? And I don't mean to like really hone in on that one specific organic piece right now.

Kyle Krull - 00:44:52
But essentially what, what we anything I really wanna try to do is figure out how do we build this umbrella that allows the comp leading certifications today like rock like SC I like demeter, biodynamic Regen five eov. How do we let them all coexist together in a way that allows retailers to say like, OK, I can't message for these seven different certifications today, but if they all can say this is what regenerative is or there's some other entity to say this is what regenerative is. And all these different competing certifications take that box, they can focus on just that one message instead of those seven, which makes it from the consumer perspective, they can focus on just that one term instead of understanding the seven different certifications to what they mean. And that can make it a lot easier to raise awareness to support in store, et cetera, right? So that's what we really want to try to do in the certification, retail relationship space today. And that's where I I think there's the greatest opportunity and it could have the highest potential impact to increase adoption and understanding of a gender of agriculture.

Anthony Corsaro - 00:45:55
There's, there's basically three entities that Kay and I work through Regen brands is a media entity that is A B to B source of in, in, you know, information, inspiration and collaboration to basically create a seat at the table for Regena brands in the food, you know, in the B to B food world, the Regenerative Coalition Kyle is gonna tell you what it is here in a second Outlaw Ventures is a family office that is launching a venture capital firm to invest in Regina brands. So we have an investment company, a media company and we have what is now going to try to become a 501 C six trade association, which is the Regenerative Coalition which I'll let Kyle give the history on and then maybe I can kind of take us into present day what we're, what we're doing.

Kyle Krull - 00:46:33
Ok. Yeah, for sure. So, starting back to, I think this is April of 2021 maybe, you know, K and Fire is about to launch our first two regenerative bomb broths. So we got a regenerative beef and a regenerative chicken bone broth. As we're bringing those products to market, I was thinking to myself, you know, it's gonna be really difficult for K and fire uh a brand with 30 different skews in a portfolio to figure out how do we measure these two products differently on our own in an aisle where nobody really knows what regenerative is. So I thought if we could partner with other brands who are incorporating regenerative, raised or grown ingredients into their product offerings and partner at retail specifically to, to amplify the message of regenerative agriculture together, we would have more success. And at the same time back in 2021 I mean, re retail still isn't really supporting regenerative all that much, at least uh consumer facing. I think there's a lot going on behind the scenes. I want to acknowledge those efforts. Um but there was like very little messaging and marketing towards regenerative about the retail space.

Kyle Krull - 00:47:26
So we could help the retailers by solving that problem for them and providing them with assets, copy signage, et cetera to say this is how you can market and support regenerative agriculture with these brands, with these solutions. We'll promote together, we'll buy end cap space, we'll support you, you support us. It's a good reciprocity, you know, reciprocal relationship. And so we did that and we had some great partnerships early on. Shout out to shout out to Jimbo, shoutout to Earth Fare thrive market. We did a cool giveaway partnership with Kiss The Ground and that was fantastic as we started approaching some of the bigger retailers in the space. You know, the sprouts, the whole foods, the natural groceries, NCG info, et cetera.

Kyle Krull - 00:47:53
The biggest pushback was like, hey, we haven't yet determined what regenerative means to us and we're not sure that your minimum criteria is gonna be the same as ours. So ahead of partnering with you, like we need to figure out what that is internally because it's really confusing right now. So that immediately made me realize like there's a new bottleneck, right? What we have an opportunity to solve for is helping these retailers understand what these different certifications are, what they mean. And in my opinion, why they're all important, why they're all doing fantastic work and how we can showcase that work as a unified group and coalesce around a unified message to help consumers better understand what this is and and provide retailers with that solution. So, you know, like I discussed a little bit previously that that's what the Regen Coalition is focus on now is becoming that sort of umbrella entity where we are not a certification, we are not a a certified or verification body.

Kyle Krull - 00:48:48
We simply allow the different certifications to exist and we unify that message on their behalf to help retailers tell that story.

Anthony Corsaro - 00:49:07
So I think what Kyle has shared is like, we just need to do that on a higher, higher scale and in a more professionalized manner and the trail blazing work that he's led and the brands that have been involved with have have done is like been super awesome and super grassroots, but we have to, we have to take it up a notch, right. So we have been for the last, I don't know, Kyle has been 3456 months kind of noodling on how do we do that? Um You know, we feel like we have the brand support and the communication from those folks have been really awesome and we had an awesome connect at Expo West. And so we've really just been talking to a bunch of, I would say elders in the space and other people that are doing similar collaborative work. And um we went with where we're going with a very time tested mechanism which is a trade association and so formalizing a true trade association underneath the return of coalition banner with membership brands and with working towards basically the vision and the mission of increasing consumer awareness and demand for reg generally produced products. That's it. Like that is where we feel like no one is doing that and that is a huge gap that needs to be filled and we feel like that's really the, the, the space for us to be of service.

Anthony Corsaro - 00:50:12
Um And, and I put us this huge expansive strategy together that, you know, had had five big buck, five big buckets, which we've kind of talked about almost all of them already on the call, which were supply markets, media, education and financing. I mean, these are all the ways that we feel like we can help the brands. But then we had to kind of peel that back and say, OK, but where do we start? Like what is the focus? And we came right back to the impetus for why Kyle started this work overall, which was we need to help the brands execute programmatically at retail. So what do we actually have to do to do that? We have to establish this framework, right?

Anthony Corsaro - 00:50:46
That can encompass the various certifications and definitions of regenerative. We have to create a messaging strategy and shared marketing, collateral, and instore signage and execution materials that the brands and the retailers can use and share and execute uh well together. Um and then we gotta get, you know, enough brands and enough retailers to adopt it. And we really feel like if we can do that, this thing will be off to the races and this thing will be able to be marketed and commercialized in a much more compelling cohesive uh and programmatic fashion. Um but still embracing the diversity of approaches uh and perspectives and opinions in the

Kyle Krull - 00:51:40
space 100%. And ac you know, we spend a lot of time talking about the quote market piece of the Regen Coalition and how the dynamic between certifications and retailers and consumers kind kind of plays out right now and what we want to try to achieve. I wanna hone in a little bit more on the media piece and the markets piece, you know, there's something that you, you say on a regular basis and I think it's spot on and it's that these certifying agencies like you mentioned are really focusing on the, on the ground principles and maybe more B to B rather than B to C. So tell us a little bit why or talk a little bit more about why it's so important from a messaging and a marketing perspective that we can coalesce around a single message instead of multiple and some of the work that you're hoping to achieve there.

Anthony Corsaro - 00:52:21
Yeah, I mean, I think the two guiding like problem statements or belief statements that we have are like certifies aren't marketers and one certify is not gonna win out. So if you look at that, you have to come with a solution that I think can deal in both of those constraints or in both of those beliefs. Um And right now, uh I think the brands are all doing really, really good, amazing siloed singular work in telling the story of what representative is. They're working with some of the certifications to do that. But there is this mass amount of things that everyone acts, she agrees on. No one's just done the work to basically put that together and gain um buy in that, that can be an execution, you know, way forward. And so that's really all we're trying to do.

Anthony Corsaro - 00:52:50
We're trying to engage with a marketing agency, probably do some research, you know, we'll do it the right way to basically get to. What is that? 80%? And then how do we translate it into what actually drives purchase at retail? Because that's the most important thing is the planet story doesn't drive purchase at retail. The farmer Livelihood story doesn't drive purchase at retail. We really think it's the health and wellness story.

Anthony Corsaro - 00:53:17
We think it's taste, we think it's flavor, we think it's, you know, awesome packaging, branding, et cetera, narrative storytelling. So that's those beliefs are backed up by some solid data. But we're gonna get some experts in here to really, I think help us home that help us validate that go into it with a, with an open mind. We're gonna get the brands involved and do a bunch of stakeholder engagement to figure that out. But we need to leave with something that, I'll just repeat what I said earlier, which is cohesive, compelling and concise. You know, that, that is what we need to basically make one plus one, equal four instead of one plus one continuing to equal two.

Kyle Krull - 00:54:03
I think you spot on and I think to, to give the listeners a, um, an example of sort of what we're looking to achieve. You know, we've talked about this a couple of different times now with the one project like, that's a great example. How do we, how do we scale that with different categories? We talked about CS A and how they penetrated multiple categories successfully. How do we, how do we replicate that elsewhere? And I think that you and I both do a pretty good job of trying to figure out what has succeeded before and how can we utilize the existing playbook to help support regenerative brands and regenerative agriculture? And to me and, and I know you feel the same way, we actually both like reached the same conclusion individually and then share the fact that we're, we're all on the same page is we need to develop the Got Milk campaign for Regenerative agriculture. And to me, what's so brilliant about Got Milk is that it doesn't specify any specific brand, it's not organic versus conventional, it's just milk, right?

Kyle Krull - 00:54:47
But the whole dairy industry was willing to coalesce around that campaign, those marketing attributes and regardless of how you do or don't feel about milk, you know what the Got Milk campaign is and it was extremely successful. And if we can replicate that model for regenerative agriculture to say, hey, for all the brands who are are doing successful things in regen. And like this is the message, this is the marketing. Let's work together to get this message out there so that people can understand it. That's essentially what we're trying to achieve. Whether or not it includes a soil mustache is to be determined. But you know, we'll see what happens. I'm not gonna roll it out.

Anthony Corsaro - 00:55:31
Yeah. And I love, I love giving that the audience that concrete example. So thank you for that. And you know, I really think collaborative efforts among brands or entities in food to make a difference to market products, to market commodities. This is not a new, this is not a new approach like we are, we are totally using something that's tried and true and tested and not always for the best benefit. I understand that with some of the checkoff programs and some of the issues that, you know, some of these things have just gotten too big and out of control. But I think what K and I would tell anyone is that through all the work that we've done and probably the 1000 plus conversations we've had at this point, there is such an appetite and a desire and a commitment among the brands to work together. We just need to give them the infrastructure and the vessel to actually channel that energy channel, that capital channel, that intention into something that can go, you know, get stuff done at scale. And so that's what we're really hopeful and and confident that this this will be that

Kyle Krull - 00:56:34
spot on, man. I think that's one of the coolest things about the regenerative movement. And if you think about the, the reason people want to support regenerative brands, at least for the most part, in my opinion is because they, they're thinking about the future and obviously their brand, their organization is important to them, but they, they seem to have a general sense that like we can't do this on our own and it's gonna be better for everybody if we can figure out how to do it together, which is super awesome. Uh But you mentioned the capital and some of the financing and I think it's really important that, you know, kind of taking it back to the first question, like what's harder about being a regenerative brand? Um I think that you should expand on some of your knowledge within the financing world and the capital raising world and debt financing and explain to our listeners like what, what the typical playbook is for a regular CPG brand, why that may not work for a Regen brand and how you see what you would like to change in that space, how that could be beneficial.

Anthony Corsaro - 00:57:26
Yeah, you're throwing a lot at me there, brother. I'm trying to decide where I wanna start because I wanna, I wanna make

Kyle Krull - 00:57:33
sure it's fashion. I'm gonna ask eight questions at the same time. You know what I mean?

Anthony Corsaro - 00:57:37
That's good. It's good. That's why I love you. Um So we always have to start with the macro of. There is no financial reward for a lot of the work being done. If anything, you're at a financial disadvantage for a lot of the work being done. Because right now the commodity food system, the non regenerative, the degenerative food system basically gets to have um they get to be subsidized right by government subsidies. By the way, the markets work by the world that we live in all the things, the desire for cheap food. So, you know, breaking out of that is going to take a lot of different approaches. And I don't by any means think that the Outlaw Ventures early stage venture capital fund is the silver bullet to solve all of our problems. Like, you know, I have a, I need to come up with a, a less grave analogy. But when I look at the financial capital ecosystem around regena brands, it's someone with cancer in their whole body. And so it's like, where do you start?

Anthony Corsaro - 00:58:25
Like where do you do surgery first? When the cancer is spread everywhere? I look at equity capital, I look at debt capital and I look at Phil, philanthropic capital and there is no consistent um win, win proven flows coming in any of those buckets specifically designed for Regina brands. There's some good efforts going on. There's some good grassroots stuff. There's a lot of people trying really, really hard myself included to change that. Um but we, we gotta do it now.

Anthony Corsaro - 00:58:57
You know, there's I got a text from Heather Terry at Good Sam this morning and just and just said, you know, I am constrained because I cannot buy more product from Regina farmers. They do not have someone to sell it to and I need to to better fund the brand so we can take advantage of these growth opportunities that we have commitments from if we can fund basically the the lever to get them done, which that, you know, that breaks my heart and that's what, that's what the work is about. And so all that more high level stuff to come back to, you have to start with early stage venture because any sort of any sort of large scale chain or change, you have to raise money from the people that have a lot of money. And so if you're not super familiar with capital markets or investing like these are the high net worth individuals, these are the family offices, these are the institutions that have billions and trillions of dollars, right? Where if they invest a million dollars, $5 million.10 million dollars into something you know, it's not, it's not a big amount of capital for them. And basically as a venture capitalist, as a fund, your job is to raise a large aggregate of money, 30 40 $50 million and then write those smaller checks that are bigger than the individual companies could kind of go raise without an anchor investor like yourself.

Anthony Corsaro - 01:00:01
And, you know, I just think we're at a really interesting time where there's a lot of early stage brands with a lot of promise and they have all these challenges that we've mentioned about being regenerative and they have all the typical challenge of being an early stage CPG brand. But they're, they're crushing it. I mean, they, they're coming through it, they're getting national distribution, they're selling, you know, they're selling even at a, at a higher SRP, like they're marketing, they're growing their social phones like they're doing all the right things. They're just really capital constraint, you know, it's not, it's that they have some, they have some grave unknown flaw that makes them a bad investment compared to their peers. Like they are just very capital constrained because uh most investors I don't think understand them. They don't get the regenerative context and they're not getting any value for all this extra credit work that they're doing that we've talked about. Um and, and I don't know if the venture capital model solves for that. I really don't.

Anthony Corsaro - 01:00:54
It probably doesn't, but I do think it is the best way to raise money, money from the people that have it, invest it, make a return, create a lot of impact and scale a lot of great brands. And then say, hey, look y'all, this is very, this is a very viable, you know, asset class. And basically in the in the fund world, you have to do 1234 funds usually well and then you get the opportunity to, to innovate and maybe change some of the terms, change the time horizon, change the return expectation, but we almost have to do it the less the less regenerative way to start. Um I'm sure there's people out there that disagree with me. Uh But that's really my theory of change is how do we create the next five epic, you know, uh exits to General Mills to me, early stage venture capital that is focused on regenerative CBG specifically that can harness all the synergies of those brands that can really be focused on that, that can find ways to find innovative coin investors and rising mechanisms and, and all the things. I mean, as you can tell, I'm totally going to nerd out on this and just get way too passionate about it.

Anthony Corsaro - 01:02:05
But

Kyle Krull - 01:02:10
you should man, you have go for it.

Anthony Corsaro - 01:02:12
You, you, you have to start with a dedicated entity with that focus with that mandate that is accountable to do that. And I think the rest sorts itself out after that,

Kyle Krull - 01:02:25
I'm curious to get your perspective on out of all the places you could invest money. Why do you feel like investing in regenerative brands is so critical to scaling this movement?

Anthony Corsaro - 01:02:37
Yeah. Oh, there's so many, there's so many good answers to that. And we're like we're putting the V one, the version one of the pitch deck together right now. So all this is like super fresh in my in my brain. Um when you look at capital allocation to regenerative brands significantly lag behind other asset classes. So you know, I look at farmland and I see that as there's probably 10 plus billion dollars of regenerative farmland, professionally managed investments, right? There's I would say, and I haven't done the math yet or done dug in a pitch book yet, but sustainable ag tech venture capital, I guarantee we're above five or 10 billion, right? Um And then you look at infrastructure and brands and I bet infrastructures for sure, less than 500 million. And I know brands is less than 100 million. And I'm talking about funds and strategies specifically dedicated to regenerative, right?

Anthony Corsaro - 01:03:16
And so when I look at those circles, I just say something's something's not right here because all that stuff we grow outside of what you know, isn't food, it has to get sold through infrastructure and a brand. And so how can we have $10 billion allocated here and less than 100 million allocated over here like something, something's got to give if we're gonna make that even. And if we're gonna create regenerative supply webs, supply chains and regen from systems, you know, we just can't, we can't have this massive imbalance. And so, you know, as an investor, you're basically just betting that that trend of viable investment opportunities is gonna continue downstream because it has started upstream and, and done well. So that's one part of it. I think the second part of it is look consumer as a venture asset class that trades at a 3 to 5 X type multiple at exit is proven that you can put together a strategy, you can make money, you can make venture style returns.

Anthony Corsaro - 01:04:08
I think it's much, much, much harder to be a good consumer investor than it is to be a tech or a farmland investor. No offense to any of those folks. They're doing awesome work and I salute them and I invest in their funds and all the things. Um So it's harder. It doesn't mean it's impossible. It doesn't mean it can't be done, doesn't mean it's not viable.

Anthony Corsaro - 01:04:31
Um And I think we're gonna be in a really, really interesting time period where you've earlier in this show, talked about the last 10 years and some of the changes in CBG, we've seen a lot of bad dumb money come into CBG in the last 10 years. We really have and we've seen a lot of bad brands be funded that were operated under a growth at all costs, mindset and weren't really that differentiated and really have not, I don't think created lasting change in categories or in the, the ecosystem overall. And if we can fund and operate some of these regena brands correctly, they're the exact opposite profile of that. It might take a little longer, it might look a little different. You know, we might have to flex a little bit on some of our standard operating procedures. But those are the folks that can bring the highest integrity, the most innovative and the greatest game changing solutions in CPG.

Anthony Corsaro - 01:05:21
In my opinion,

Kyle Krull - 01:05:33
I need your spot on man. And I love the way you kind of framed up, the way the funding model is working today with the on the ground investment with like actual conversion of acreage into a et cetera and so on and so forth. And the way like I visually, I visualize what you were saying there is like, you know, there, there's a dam, right? And the brand is the dam. And if we don't invest in the dam, like we're not gonna let enough of that flow of the investment that's taking place prior to consumer adoption. Like all that investment is just gonna sit there until we can get people to figure out what this is and what better way to do that than via a brand. I can't think of anything. So I think you laid that out really, really well.

Kyle Krull - 01:06:00
Um And you can use the term like downstream effects, right? And that's just I I think you're spot on and it, it really gets me excited because, you know, as somebody who loves the planet and loves the, loves the world and, and health and human health, I just so happen to work in natural food CPG. It really feels like potentially one of the biggest unlocks in helping to scale this thing is via the regenerative brand, you know, so it gets me really excited about the opportunity. Um And I, I'm just grateful that we, you know, somebody with your investment knowledge is here to help, to work on these problems because like I mentioned before, that is way outside my domain of expertise and uh just grateful for the one who collab we got going here, man.

Anthony Corsaro - 01:06:53
Well, I definitely don't know everything and I'm recruiting an epic team to help me with the things that I don't know and trying to learn every day and look, you know, I've placed some capital in the space but we're nowhere, we're, you know, we're nowhere near where we want to be. And I have, I have a lot of issue with the fact that I get good deals in my inbox every week that I got to say no to because I just don't have the money yet because we haven't raised the fund yet. So my, my urgency is really high. I think like Joe from Serenity kids said on one of the episodes, the truth is on our side, the consumer uh trends and where, you know, what consumers want to buy, why they want to buy. It is on our side. I think the commitments that the large multinationals have played and how they're gonna have to satisfy those and how they're gonna have to do that through M and A s on our side. So I just think there's a lot of amazing, um you know, amazing head winds or excuse me, tailwinds that we can take advantage of that right now aren't trickling down to the way the brands operate.

Anthony Corsaro - 01:07:36
But I think capital is the greatest way that we can unlock that for them. Um capital and this whole commercialization group you're talking about with the coalition.

Kyle Krull - 01:07:57
Yeah. And, and, and to me, there's two primary reasons why it's so much harder for regenerative friends and outside of everything else that we just talked about from a fundraising perspective, specifically within the CBG world, right? Number one outside of Moonshot, which was acquired by Patagonia provisions and is sort of like the first quote regenerative exit on my radar. There isn't really a proven concept and that was sort of a, you know, buying, we don't know. Let me figures in that. Let me,

Anthony Corsaro - 01:08:19
let me stop you there though. The list is a little bit bigger than that. You're right. Moonshot. Passer to Purdue. Some people would say vital farms. IP O would be one epic to General Mills and then some people would consider Annie's to General Mills. So I it's more like those five in my brain and you can tell that I've done the research to put the pitch check together. But you're correct recently. That's the only one and we don't know the finances of it. So sorry to cut you off. But I think

Kyle Krull - 01:08:44
from the there, there is yet to be like a real proven track record of like this is a brand that started out as focusing on regenerative and has gone through, you know, jump, jump through the hoops, gotten to national distribution made it. So they wanna make it and exited. And because of that, that's like a big reason. We're not seeing a lot of investment in the space right now. That's part one, part two, I think from an ESG perspective, there are a lot of companies out there who want to like make these EHG claims but because there isn't a accountable and this, this is my buddy who works at Deloitte. He's on, he's on par track. He, he works a little bit in the ESG space and he says that one of the biggest things holding region back is the lack of agreed upon science is how do we track these ESG claims? The fact that we can't track carbon sequestration and quantify that value benefit.

Kyle Krull - 01:09:20
So that people can put it on their quarterly earning statements, makes it more difficult for those large investment firms to want to invest in this space. So, if we could figure out how to do that, I think they could open up some doors to me. Carbon sequestration is kind of like a Pandora's Box where the science doesn't really agree on anything right now and it seems really, really hard and it's a huge uphill battle. I don't know if there are any additional things we can make about improving soil organic matter or water retention rates. And like you can put that on a statement somehow and it makes sense. But those to me feel like two hurdles burdens whatever you wanna call them holding back the potential flow of capital into the regenerative CPG space today.

Anthony Corsaro - 01:10:17
Yeah, I'll start with the second one. First, the second one agree. Uh There's a lot of work and money being put into that. You look at like what a general mos is doing with a Qantas and a regrow to track their supply chain or track significant parts of their supply chains and regions and quantify some of those environmental metrics. You look at some of the startups in the space like a merge impact and, and many others and sorry if I forgot to mention you all the homies out there. Um But I think there's a, there's a ton of, there's ton of effort and money that's gonna go in and we're gonna solve that problem. So I'm gonna put that one on the shelf and say we will have a solution for that. Will it be the perfect solution? Will it be the most equitable solution? Will it be properly priced? I do not know, but I believe we're getting closer and closer to quantification and scientific rigor that can do some damage there. Um You know, the exit piece is what the exit piece is.

Anthony Corsaro - 01:10:50
It's really hard to have a proven exit when this term is still very new. Obviously, the way of farming is not new. So I think you can do some organic comps. I, I am gonna go out and tell, you know, potential investors in the fund that all five of those exits I see as viable exits that are relatable to, to the path that we're trying to, to blaze. Um And I think you can look at some, some players that haven't exited. I mean, nature's path, Doctor Braner Lundberg, like, I don't know for sure, but my assumption is all those businesses do over $100 million simple mills like and just because they haven't exited, they've created really, really healthy businesses where yes, they have regenerative programs by name and certification now, but some of those products are not any different than they've always been and they've always been regenerative.

Anthony Corsaro - 01:11:27
So, um I think you're, I think you're correct and I would add that context to it is all I would say on the viability of the proof of concept in the exit scenario.

Kyle Krull - 01:11:58
No, I think that's, that's the right as a salesman. I hate to use the term spin, but I think that's the right perspective to bring, you know what I mean? So it's like you're, you're looking for those, maybe not 100% the exact, you know, Rx Bar or Lily's Chocolate model, right? But close enough to really say like you can make a legitimate comparison to say that, you know, this is why I believe this to be successful. There is an established track record and uh I think it's really important to bring to the table because I mean to, to my point like my brain doesn't register those as the same exact, you know, CPG PC funded Exit Success story. And I think that maybe I should reframe my perspective to put those into the realm of like, yeah, you know, regenerative is maybe more of a viable, tried and true concept that I had previously taken it, you know what I mean?

Anthony Corsaro - 01:12:45
And I'm not gonna name names, but I think we have a nice cohort of plus 50 plus 75 plus $100 million brands that have not exited yet that will in the next 3 to 5 years. And so that I think will be good win for our sales on the fun side and get momentum and add to that list

Kyle Krull - 01:13:04
totally totally agree. Um, we have a few more things on this list that I don't know if we had time to go through, man. I think we've been going,

Anthony Corsaro - 01:13:14
I think we call it. We're like, we're like right at uh 15 minutes past the hour, this, this feels really, this was really good and whole and complete and, um, you know, I hope it's, I hope it's informative for people. Uh You know, I think we get so used to trying to make, trying to make sure whoever the guest or guests, like, story comes out that we maybe talk to each other about a lot of this stuff. Um And I know we got a lot of positive feedback after episode 16, the last time we, we did this. So we'll see what people think and if it's something that they wanna see us do more, we, we'd be happy to do it.

Kyle Krull - 01:13:48
Yeah, I agree. It'd be, it'd be cool to like, get, you know, listen from you just like, what do they want us to talk about? If anything, you know, what do they want to hear our perspectives on, you know? Um I think they could, it could be cool.

Anthony Corsaro - 01:13:59
Yeah, absolutely. So, I think the call to action for audience is, you know, let us know what else we're not talking about that you want us to and if anything that we talked about today resonates and you want to get involved and you want to help like we are all about collaboration and rising tide lifts, all boats. So let us know, appreciate you brother. This was fun, man. You're a legend.

Kyle Krull - 01:14:17
Agreed. Same to you brother. I appreciate all your work

Anthony Corsaro - 01:14:23
for show notes, episode transcripts and more information on our guests and what we discuss on the show. Check out our website regen-brands.com com, that is regen-brands.com com. You can also find our Regen recaps on the website. Regen recaps. Take less than five minutes to read and cover all the key points of the full hour long conversations. You can check out our youtube channel Regen brands podcast for all of our episodes with both video and audio. The best way to support our work is to give us a five star rating on your favorite podcast platform. Subscribe to future episodes and share the show with your friends. Thanks for tuning in to The ReGen Brands Podcast brought to you by the Regen Coalition and Outlaw Ventures. We hope you learn something new in this episode and it empowers you to use your voice, your time and your dollars to help us build a better and more regenerative food system. Love you guys.