French is at a crucial moment in her company's growth. She and co-founder Dustin Baker built the brand by targeting "natural" consumers--people who care about nutrition and the origins of their food. In other words, people like her. An avid boxer, French is lactose-intolerant and couldn't find a low-sugar, post-workout protein drink that wasn't chalky. So, starting in 2013, she and Baker--who had already founded the juice brand Rawnature5 together--tinkered with recipes for two years to come up with a line of nondairy shakes. Most flavors have 18 grams of protein and no more than six grams of sugar. (The secret to keeping the sugar down without sacrificing taste, French says, is using monk fruit extract as a sweetener.)
Several health-food stores in the founders' hometown of Chicago carried Rawnature5 and, in 2014, were willing to support the brand's pivot to non-dairy, plant-based drinks. Two years later, Koia, as the company came to be called, was ready to move to health-conscious Los Angeles on the heels of a national Whole Foods deal that raked in $3 million in sales in 2017.
When French got the opportunity to take Koia into more conventional retailers, including Walmart and Southeastern grocery chain Publix, she went for it, and the company ended 2019 with revenue in the tens of millions of dollars. But the beverage line, which will have 14 SKUs as of April, hasn't taken off in larger retailers the way it has in natural-food stores. The founder says she needs a few good, high-impact marketing moves to bring Koia more brand awareness in large retailers.
French, who grew up with Fubu clothing, says she's long admired John for transforming what was a household operation in 1992 into a $350 million apparel brand by 1999. In fact, just after Koia moved to L.A., French spotted John in a hotel lobby, but she was too shy to introduce herself. Afterward, one of her investors chided her for not handing a Koia to John. "I always thought, 'Well, if I have another opportunity ... ' " French says. "This is that opportunity."
John: Why did Koia take off?
French: Koia took off because we listened to consumers' needs. We spent a lot of time doing in-store demos, so we were able to iterate as we went along. Another thing we did was use the same kind of packaging that juice products have--with all of the ingredients on the front of the label. We had only five ingredients, so we made it an easier decision for the consumer.
John: Good idea.
French: We originally planned just to dominate the natural channel, but we got an opportunity to get into Publix, which is now our second-best retailer, and we've expanded to Walmart, Target, and 7-Eleven. Our numbers in conventional retailers aren't as strong as our numbers in natural. They're two different customers.
John: So the customers in conventional retailers, why are they picking up the product?
French: Because it looks great, they might have seen it somewhere, they're curious, or they have the money to spend $4 for the product. But the normal Walmart consumer isn't going to spend $4 on something they've never tried before.
John: Right. Is Walmart asking you to reduce your margins or your price?
French: We had to come down on price.
John: And that's making your margins suffer.
French: Yeah. And we're not moving as much product in these retailers. So my question is: How can we make a big splash? What are some effective marketing techniques to reach this consumer? We do a lot of demos and we have a robust field marketing program, but it's not really moving the needle.
John: What's the reason you want to grow outside of the natural category?
French: It's where the dollars are. It can help us scale to $50 million, $100 million.
John: It can also bankrupt you. There are three ways to deal with any consumer in the world: You acquire a new one, upsell a current one, or make one buy more frequently. Those are the only ways to do it. And it's 21 times harder to acquire a new one than it is to upsell or make one buy more frequently. The natural consumer is getting more and more powerful every day. Is there a way to dig deeper with them, whether it's more stores, or more countries, or growing your business online?
French: Online isn't an option for us. We don't have a direct-to-consumer business.
John: So why aren't you starting now? When somebody picks up a Koia from the store, who picks it up? Do you know them? Do you know their email address, or how to contact them?
French: No. Now that we're in bigger stores, we have no way of collecting that data.
John: When you sell online, you have that data.
French: We tried, and we were losing money doing that because of freight. And we don't have multiple warehouses across the country--just a warehouse and manufacturing here in L.A.
John: You're using a plastic bottle?
John: There are a lot of people shipping direct to consumer. How are they doing it? If you're at the mercy of the retailer, they'll push your margins down. You're also 10 steps away from the money. When you sell directly to the customer, you get all of the things you needed in the early stage of your business. When you started to really grow, you adjusted your formula and packaging, and you made the customer feel important.
French: What are some unique ways we can spread brand awareness online?
John: You have to figure out if you've gotten the most out of your consumer, because the natural consumer is the biggest advocate and brand ambassador. Take Bombas Socks--it's the No. 1 company I've ever invested in on Shark Tank. The reason it grew to $240 million is that every time you buy a pair of socks, it gives a pair away to the homeless. People talk about that. What do you give back to your consumer? Why will they brag about you?
French: We need them to brag about us. I love that. I know a big part of your growing the Fubu brand was working with celebrity partners to help spread awareness. What's your advice for finding the right partners?
John: The more popular the celebrity, the more challenging it is, not only to deal with them but to afford them. And you don't really know who their consumer is. Take Kim Kardashian. Twenty-five percent of the people who follow her love her, 25 percent hate her, the other 50 percent are men who just think she's beautiful. So you just went down to 25 percent of the 100 percent you're paying for.
French: I never thought of it that way.
John: Don't go and pay for a big name. You want somebody on social media who could be into fitness or a mom who's just healthy. She's not really a public figure, but she has 1,000 people following her, and 95 percent of them love her and follow her for a specific reason. So you have to figure out how to get narrow and deep with those people. You have to find a way to get this product online and on social media. And to get the cost down on freight. I'm sure you'll be able to solve both issues.