Once Upon a Farm: Reaping the Fruits of Years of Labor

Voiceover:
Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Robert Moskow:
Welcome everyone. This is Rob Moskow. I'm here live at TD Cowen's 10th annual Future of the Consumer Conference. I'm very honored to host a podcast today with CEO and founder of Once Upon a Farm, John Foraker, who I've known for many years and is extremely well respected and accomplished in the CPG industry, and well-loved, John, as well.
John Foraker:
Thank you very much, Rob. I appreciate that.
Robert Moskow:
And I know that's very true from everyone I get to talk to in the industry. So I thought we'd just go through a bunch of questions here and start at the beginning. Maybe give us just a few minutes about your start in consumer packaged goods in general. What did you find compelling about it and how did that lead you to Annie's in 1999 when you started there?
John Foraker:
Yeah. My first job out of college was a bank training program and I trained into being a corporate lender at Bank of America for about seven years. And one of the things that I saw there is I worked on the wine industry portfolio, and we had brands that had multiple brands coming from basically the same underlying grapes, and one could get, like, 19.99 for the bottle and the other one would struggle getting 11.99, and I was fascinated by that. Why is that? It's the same product.
And so, I went to business school and used that as an excuse to shift over to something new. I got into a food startup right during business school. And then, that led to me putting together some investors to buy control of a small company called Annie's on the East Coast. At that time, it was a very tiny little business, about five or six million in revenue. Worked there with them for a very long time, took that company public in 2012, and then sold it to General Mills, and then came over here in 2017.
Robert Moskow:
How did you then transition to Once Upon a Farm? When I was on the sell-side at my previous employer, I got to cover you, and Annie's was a real success story. It had a logical buyout from General Mills. Maybe you can take us from there. You stayed with the company for a couple of years, and then what happened?
John Foraker:
Yeah. So I told General Mills I'd stay around as long as I could to help them integrate it and help them with the culture of the business and all that stuff, and they were great and we had a great relationship. But one of the things that we agreed is that after I sold Annie's, I would be able to invest in other businesses, as long as they were not competitive with Mills, which was cool.
And one of the spaces I thought was really interesting was fresh baby food. I had done a bunch of research at Annie's, our team had, around households that were forming with kids, and you would ask parents what they were doing, what brands they were buying and stuff, and a lot of them would say they're making their own baby food. And you'd ask why, and they'd say, "Because nothing in the category meets my standards." Yet, we had high-pressure pasteurization and we had other technologies, and you're like, "Well, why is no one doing that?" And it was kind of crazy, it was such an obvious white space.
So I looked around, I could not find anybody that I wanted to invest in. Although, there were a few small people doing it. And then, one day, about a year later, my phone rang and a friend of mine in the industry said, "Hey, you've got to meet this company. It's called Once Upon a Farm. They just got going on the West Coast and they just created the brand." And so, I got on the phone with Ari, one of the two co-founders, Ari and Cassandra, and a couple of days later, became their biggest outside investor. And then, just followed them for a little while.
And then, in 2017, Jen Garner's manager had been looking to do something in food for a long time, for many, many years. And they had come across this company and they saw that I was in the investor deck as an advisor or whatever, and they said, "Well, we know Annie's. We need to ask this guy why he's involved because we're interested." And so, we met, we hit it off, and then, ultimately, we decided to join Ari and Cassandra in September of 2017 when this thing was the size of a lemonade stand, basically.
Robert Moskow:
And you can see John and Jen and Cassandra also on many TV commercials for today, right?
John Foraker:
Yes. Yeah, right. Yeah, we are.
Robert Moskow:
For Capital One. But that's John in the background doing his greatest acting turn.
John Foraker:
Yeah. Carrying my cherries, yeah.
Robert Moskow:
Yeah. Doing great. I remember your stories about literally going to trade shows with Jennifer Garner and marketing to anyone who would come to the booth. Maybe you could start with, tell us a little bit more about what that was like, because you're really getting your hands dirty to try to build the brand at that stage.
John Foraker:
Yeah. I use that term that we were the world's most famous lemonade stand, because all this press goes out about Jen joining this company, Once Upon a Farm. People look it up and they're like... We were literally the size of a lemonade stand. So we really had to build the business. We had to put a supply chain in. We had to figure out what customers we were going to go after, what our portfolio looked like. We had to do all of it at the very small level. The business was less than a million dollars in revenue when we got there.
Jen has been involved in the business in so many different ways and is almost every day still. And the first thing we did was we basically got on an airplane, we flew all over the country and met with every customer that I could think about meeting with and saying, "Hey, we're trying to build this new category. Do you guys want to be at the front end of it?" And it was kind of overwhelming, a lot of people wanted to do it. And we grew a lot faster than I thought we would. We had to navigate all the challenges and pressures that come with that, forecasting and making enough product, but not too much. Refrigerated, short shelf life, you can imagine all the challenges that come with that kind of really fast growth.
So it took us a while. 2019 was the year where we really figured it out, where we had been marketing in the very beginning toward positioning as baby food, but we actually realized that it was really two and three year olds that were eating the product mostly. And so, we made some shifts in our packaging and our communication then, which just resonated almost overnight, and the business just then really took off. And then, since then, it's just been a very high-growth enterprise.
Robert Moskow:
Were there babies on the packaging at the time or was it-
John Foraker:
No, no. We said, on the products that we had at that time, they were positioned over in the dairy set, but they said baby food on them, which was very out of context for the aisle. And so, we took that off and we just put no added sugar on and made the packaging a little more colorful and stood out a little more, and that changed alone, just the business doubled and then doubled again, doubled again. And then, we never stopped working on baby. Obviously, we have a big initiative in the baby aisle, which is a big business now and growing really fast. But anyway, that was the journey, the entrepreneurial journey we were on to our first hundred million.
Robert Moskow:
And maybe we should talk about the product a little bit more. So for those listening to this who don't have little kids, what makes this product so convenient and more nutritious than the others on the market? What made it so disruptive?
John Foraker:
Yeah. We take fresh vegetables and fruit and other cool ingredients, like chia and the like, and we blend it up just like a mom or dad would in their kitchen. And then, what we do is we submit it to high-pressure pascalization, which basically never gets over 40 degrees and it uses pressure instead of heat to knock down pathogens and yeast and things like that to give you a little bit of shelf life. And as a result of it not being treated with heat, it has all the natural colors and flavors and vibrancy of fresh product even 60 days after you've made it. It tastes like you just made it.
It's kind of an amazing technology that showed up in the US first in the cold-pressed cheese business. A brand like Suja, for example, they were one of the first to use it very successfully. So the products, because they're not submitted to heat, more vitamins are retained and there's just natural nutrition from the ingredients and parents can taste it. They can taste it and they can see it on the spoon. And then, we put it in a pouch, which is a super convenient format that parents really like.
Robert Moskow:
A parent in the audience was nodding her head just now, so clearly the product is resonating and they get it, so congrats to that. So Once Upon a Farm's a certified B corporation. Annie's was too. Why is that designation important for the mission of the company? And is it ever difficult to balance all the constituents that are entailed in that designation?
John Foraker:
Yeah. We're a public benefit corporation, and that means in our articles and corporation, we have some language around trying to advance organic agriculture and lessening our footprint from the environment and taking care of farm workers, et cetera. I view those things as very aligned with developing a really strong brand. The kinds of things that we do in our supply chain, working with an outside certifier called EFI to ensure that the labor in our supply chain is being treated fairly and equitably, and that they have a seat at the table, and their own governance results in better quality, and that's one example. Our partnership with Save the Children, where we're providing them product under our Million Meals commitment to them is creating great brand exposure for us.
So I believe companies that are PBCs, there doesn't have to be a conflict. In fact, if you're building a consumer brand, we know that consumers care about a lot of things. They care about price, value, taste. Obviously, you've got to win there, you have to be competitive there. But they also care about a lot of brand origin story, and where does this come from, and is this made by people that I can relate to or that I think share my values? Those things are very powerful, and we use the PBC elements of the business to wrap that around the brand to give it more depth, and as a result of that, we have a really strong, loyal following. Even today, we spend a fair amount on media growing the business and driving it, but word of mouth is still our number one way consumers find us. It's just one parent just going... They're crazy about the brand and they're telling their friends.
Robert Moskow:
You've extended the brand in many different product adjacencies, and I'm sure there's a balance there between when you really want to hammer the core of the business, which is the pouches, and then extend it further into outside the refrigerator, into snacking. So how'd you go about that process? When did you know it was the right time to start extending it that far?
John Foraker:
Yeah. Entrepreneurs, that's always one of the tensions, is when do you extend? I learned a lot of lessons at Annie's that I brought over here, and one of the lessons I learned at Annie's was we took that brand into too many categories too fast when we were too small. Some of those things turned into very big things that are big categories today for General Mills, but a lot of them didn't, and there was a lot of distraction and geometric complexity that came with it.
Si when I came over here, I was like, "We're going to get onto our core. We're going to figure out what our core is and then we're going to really focus on that." And we did. For about seven years, we didn't do anything outside of those core pouches. The pandemic helped with that a little bit because it was kind of hard to focus on anything else during that time. But we did that, and then we launched, in '24, we launched into the dry baby snacking category, which a lot of parents were asking us for, and it was overnight incredibly successful and has turned into an extremely big business for us and getting big faster.
But we're going to be very careful about that. About every 12 to 18 months, we'll go into some new adjacency or category. We think that's the right pace. It is our strategy to move to be a brand that's in multiple categories around the store, working with retailers to market the brand that way. And then, we know when we get two brands... About 40% of our consumers are buying two things from us, two different categories now, and when they do that, their basket's way bigger, they're way more loyal, so it's a great story for us and the retailer. So we're going to continue doing that into other lunchbox categories you'll see us develop over time.
Robert Moskow:
And you most recently launched a protein version in the pouches. Can you talk about why that was important for the brand, and any early read on it?
John Foraker:
Sure. So protein's obviously such a big thing, and we had been working for a long time on protein in our kid line, trying to get protein in there and make it taste great, and as a result of that bar we set for ourselves, we hadn't done a lot because it was very difficult to get to a protein claim and have it taste good.
But we also knew in the baby space, there was a real need. There was a brand in the shelf-stable side of the business, competitor brand, who had done an extremely good job building meat protein as a foundation of their shelf-stable line, they were having a lot of success with it. And we talked to our consumers, and overwhelmingly, they were like, "Yeah. Please, do that." So we worked really hard on it. We're the first certified organic, the whole line is certified organic, fresh, and meat and bone broth. And then, also we have some legumes, some black beans and chickpea products.
We launched those products and started shipping them at the end of March. That assortment's aimed at our baby coolers, where we're at about 3,700 at the end of the quarter. They're highly productive and highly incremental. We can see that almost immediately just in the data. So we'll see. That's all just trial at this point, right? It's still early. But we expect the repeat to be really high on them. Products tested really well. So we think that's going to be a significant line for us and we think it's going to just further our productivity into coolers, which is one of our big initiatives, is to hopefully someday put more than 15,000 coolers out there, have them be so productive that they really drive the whole category.
Robert Moskow:
And just thinking out loud, it would appear that the proteins are very different occasions for kids to be consuming them versus the fruit and vegetables. Is that true too?
John Foraker:
No, they're not.
Robert Moskow:
Are you finding different occasions as well?
John Foraker:
They're not really different occasions, actually.
Robert Moskow:
Oh, really?
John Foraker:
No. They're mealtime, they're snacks. Parents are using them just like any other pouch.
Robert Moskow:
Right. Okay. Once Upon a Farm came public in January?
John Foraker:
February, early February.
Robert Moskow:
February, pardon me. Has that led to any kind of changes internally? You had to do a lot of prep to become a public company and add more processes. How has that transition been? Has it been seamless or is there anything that's been a little more challenging?
John Foraker:
No. The biggest surprise is that there's been no surprises and no changes.
Robert Moskow:
Oh, really? Yeah. Well, maybe because you did it before.
John Foraker:
Yeah, we did it once before. Yeah. We could talk later about what it was like right when we went public at Annie's. There was an adjustment period, let's just say that.
Robert Moskow:
I remember that too, yeah.
John Foraker:
No, we very much knew what to expect, and we've been preparing to do this for three or four years, and we're well-positioned. So when I came back in the office the day after we went public, it was basically like just get right back at it. I mean, it's the same projects we're working on, just keep doing them. So we had built some different structures and capabilities around in the business to be able to support being a public company, but we had already done that and had been practicing with them, if you will, for a period of time beforehand.
Robert Moskow:
The theme of this conference, and I think a lot of conferences I've been to, is CPG companies using technology that's accelerated to get trial from consumers, find consumers in the most efficient ways. You've been marketing for a long time. What are some of the tools that you're using that you're most excited about at Once Upon a Farm that are relatively new?
John Foraker:
In the digital marketing space, I mean, that space in peer-to-peer marketing has just... Every year, it's transforming 50%. I mean, it's unbelievable. The pace of change there is unreal. So I'm very excited about that, being able to create these really big audiences and connect with them in a very personal way.
AI is basically permeating every corner of these businesses now, from testing ads to creating personas to test products against, I mean, you name it. In every functional area, there's some use for that technology that's being charted out, and we're trying to maybe not be at the bleeding edge of that because of the risks involved with that, but basically to pick up the use cases that are really good and use them as fast as we can. We're focusing on that. But to me, it's identifying consumers, connecting with them very authentically, digitally, really fast, and then being able to sell to them. TikTok Shop's a great example. We're just trying to meet consumers where they are, and the technology's changing so fast, the entire marketing game's changing so fast, it's unreal.
Robert Moskow:
So we're running short on time. Are there any misconceptions that you think investors have about Once Upon a Farm in its early stage? What do you think you need to do over the next couple of years to keep building trust with the investment community?
John Foraker:
As a new public company, I think investors want to make sure that the growth that we're talking about and that they're seeing, they want to make sure it's durable and resilient. There are a lot of companies that said they're going to grow a lot, and then they slow down over time. We believe that it is and that we'll be growing for a long, long time. The business has been running around adjusted EBITDA breakeven by design. We could have made a lot more money in this business over the last couple of years, but we've been investing in top-line awareness trial and household penetration because we think that's the right thing for the brand. But we also know that we need to pivot that to profitability, and we're planning to do that and we've said we're going to do that. I think when investors realize how big this business is going to be and how profitable it's going to be, their attitudes will shift a bit. And we'll see. It's all about execution. If we just execute well, I think they're going to love what happens.
Robert Moskow:
We're going to end it there. Thank you so much for joining us-
John Foraker:
Thank you, Rob.
Robert Moskow:
... for the Future of the Consumer Conference, and it was great to see you again.
John Foraker:
Nice to see you, Rob. Thank you very much.
Robert Moskow:
Have a good conference. All right.
John Foraker:
You bet.
Robert Moskow:
Thank you.
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Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.