Douglas Raggio - What He Learned Reviewing 12,000 CPG Deals & Why 70% of Honey is Fake

On this episode, we’re joined by Douglas Raggio, the founder of Pass the Honey and author of So You Wanna: Start a Food or Beverage Business.

Douglas spent a decade as an investor reviewing over 12,000 food and beverage deals before launching Pass the Honey — a single-serve honeycomb brand on a mission to combat one of the most pervasive forms of food fraud in the world. Today, the brand is scaling rapidly in Kroger, Albertsons, and Sprouts, all while pushing a regenerative beekeeping agenda that goes far beyond what “organic” can promise.

We go deep on Douglas’s non-traditional approach to CPG - from why he believes in margin over virality, to how he’s building a new category in the produce aisle, not the honey shelf. We also unpack key decision points from his book and why most founders misunderstand what “success” really means in food.

Episode Highlights:
🍯 Why 70% of honey on the shelf is fake
🐝 The problem with “organic” honey, and what regenerative apiculture offers instead
📦 Building a new category in the produce aisle, not the honey set
💸 Margin vs. consumption: the only two numbers that matter
🔁 Why Pass the Honey doubled sales after doubling their price
🔍 Why some products shouldn’t “fit” anywhere in the store
🏪 How dump bins unlocked 50–70 unit weeks at Kroger
📊 Top-down vs bottom-up pricing strategy
🚪 Saying no to accounts that don’t meet minimums
⚖️ How Douglas thinks about store count vs velocity
📉 Why 95% of CPG brands fail, and how to avoid being one of them

⏱️ Table of Contents:
00:00 – Intro & Origin Story
03:00 – Honey Fraud & Broken Standards
08:00 – Building Pass the Honey’s Regenerative Supply Chain
13:00 – Advice for Founders Entering CPG
15:00 – Book Lessons: Endgame Clarity & Critical Decisions
21:00 – What Retailers Want: Profit, Not Just Velocity
28:00 – Managing Margins & Avoiding “Store Count FOMO”
36:00 – Brands & Trends Douglas is Watching
38:00 – Final Thoughts & Where to Find Douglas

Links:
Pass the Honey – https://www.freshhoneycomb.com
Buy the book – https://a.co/d/ibCGJbs
Follow Douglas on LinkedIn – linkedin.com/in/douglasraggio

Follow Adam on LinkedIn – https://www.linkedin.com/in/adam-martin-steinberg
Check out https://www.kitprint.co/ for CPG production design support.

Transcript

Adam Steinberg (00:00)

All right. Welcome to Shelf Help. Today we're speaking with Douglas Raggio who is joining us from NYC. Back in 2019, Douglas founded Pass the Honey, a single serve regenerative honey brand. After learning that 70 % of honey is adulterated, in other words, a fraud, which we'll get into here shortly. And before launching Pass the Honey, Douglas spent about a decade on the investor side of the table reviewing over 12,000 companies and deals.

He founded Gastronome Ventures, a fund focused on food and beverage, as well as an advisory firm that worked with PE groups and other investors to turn around troubled food and beverage acquisitions. And Douglas is also a published author and he wrote a book called, Say You Want to Start a Food or Beverage Business. It's really a guide to help aspiring and early stage food and beverage founders navigate all the complexities of building in this space, which we're definitely going to dive into. So yeah, with that, let's get into it. think first off.

Just for the listeners, Douglas, that are not all that familiar with Pass the Honey, maybe just give us a quick lay of the land in terms of the origin story, the why behind the brand, the products that you offer, and where the listeners can get their hands on them.

Douglas Raggio (01:11)

Well, thank you. Yeah, past the honey, all we sell is pre-portioned, called individually portioned honeycomb. So it's a three centimeter cube of honeycomb in a package.

Very similar to what you'd get at like a diner with your jellies or your jams. And the origin was that you mentioned earlier, was that liquid honey is highly fraudulent. It's actually the third most fraudulent food on the planet. So olive oil is number one. Most people know that. Milk is number two globally. It's not such a concern in the US. Yeah, people add whitening agents to it globally. And then if it's powdered for some reason, they'll also add other adulterations to it. But then honey. ⁓

Adam Steinberg (01:44)

interesting about.

Douglas Raggio (01:51)

what

they do is they cut it like drugs. They'll add, you know, here's one barrel of clean honey, and here's 25 barrels of rice syrup, and they'll blend them all together, they'll put it through filtration. So they'll muddy kind of the origin, they'll take the pollen out. And so you can't really tell source. And then you're just looking at sugars. Yeah, it's really difficult to test for. So when I was making honey, lemon, ginger teas just for immunity, you know, kind of going through a really bad investor in a deal.

And so I was getting kind of run down. So I was making honey lemon ginger teas in the morning, like my grandma would make me. And the irony was here I was looking for nutritional benefits and I was getting most likely processed syrups and sugars. And so I started using honeycomb, but traditionally honeycomb is in like a 14 ounce brick.

I mean, it's about 30 bucks and it's not a one sitting item and you don't leave it out on the counter because it attracts ants and you don't put it in the fridge because it becomes an ice cube. And so it was just incredibly inefficient and it was incredibly wasteful. so the innovation was what if we just cut this and put it in its individual portion, make it easy to use, make it convenient. Probably the best comparison is the baby carrot. The baby carrot came out and all of sudden carrot consumption 10xed.

We're the convenience comb, they're the convenience carrot. And so we use that format change to introduce new customers to the category. So people that maybe don't know what honeycomb is or more willing to try it with an impulse price point that's under $10. They'll use it more frequently. They'll take it in a gym bag. They'll put it in a backpack. They'll do it for themselves in an al-saiyib bowl in the morning or something. It just doesn't require you to be hosting eight people at your house to plow through a 14 ounce brick of honeycomb.

It just opens up use occasions. And then again, it brings more customers to the category. And so that's really what we're doing is we're having to educate the consumer on what Honeycomb is. A lot of younger generations don't know what it is. We've just moved really far from our food sources. I mean, so bad, Adam, that like, if we place Instagram ads, or we participate in that platform, consumers will ask us, how do you get the honey in there? And

It comes frequently enough to be concerned about our education system. And that was kind of the eye opening. was like, wow, like we have a really, we have an opportunity. It was a, it's a total challenge. Don't get me wrong. But the opportunity is to reeducate the consumer on not only, you know, the fraud levels in honey, but also the role of pollinators in our food system. And telling that story in a honeycomb has a visual change. It's a pattern interrupt.

Adam Steinberg (03:58)

fair.

Douglas Raggio (04:18)

telling that story in a jar of liquid honey next to other liquid honeys is really difficult. It's not a task I care to take on. I'd rather have that like visual singularity that, this is from the flowers, from the bees, cut from the hive. It's the closest thing to nature I've ever seen in the food store, know, food store, grocery store. Why do call it food store? ⁓ Yeah, so that's what we do. That's what we are. We have a full regenerative supply chain. We developed that standards and outcomes with UC Davis. We have a 501C3 with a million acres of research with the intent,

Adam Steinberg (04:35)

Right.

Douglas Raggio (04:46)

at the aim of bringing back our domestic beekeeping industry because without a beekeeper, we lose honeybees and without honeybees, we lose our food system. So giving beekeepers an alternative source of income to source and supply honeycomb, well, creating the consumer demand is I think the equalizer. And then you ask where they can find it. They can obviously find it at freshhoneycomb.com, but we don't do a lot of EECOM. I prefer not to do EECOM.

But we're in most Albertsons banners, Albertsons Vaughn's Pavilion Safeway, United Texas, ACME, getting more and more divisions through the Pacific Northwest, getting more and more divisions through the Intermountain. We're also in Fred Meyer King Supers, which are Kroger banners. And then we're launching three more Kroger banners in the next three months. Smith's, Houston, and I forget the third one.

And then we're with a shop, right? And wake for an east. And then we are in talking to a large natural retailer that has a Southern footprint. So that hopefully fingers crossed will happen mid year, which I guess is.

Adam Steinberg (05:49)

Yeah, you guys are distributing

pretty widely. great. People can find it at a lot of places.

Douglas Raggio (05:53)

Mostly conventional. So we are in conventional grocery. That has been the another kind of thing I didn't expect was that natural channel sees us as a chacutery only item in a deli placement. ⁓ But we've done the testing for years at like we'll move four units in the deli and we'll move 50 plus in the produce department. Plus for a seasoning harvested item with variable weight and variable pricing like we are a commodity.

Adam Steinberg (06:05)

interesting.

Douglas Raggio (06:17)

I am at the whim of global honey prices, just like avocados and berries, like, you know, prices change daily based on weather, based on production, based on volume. And we have to plan, you know, a year in advance for the, you know, the annual harvest. Cause that's when people forget that bees have to pollinate flowers during the spring to store the honey for the winter. And we can't, take it right before the winter. We can only take so much. Otherwise the hides won't survive the winter. So we have to be very cautious and intentional with how we harvest.

Adam Steinberg (06:39)

Right.

It's a noble work though, for sure. I you know, I think I saw you post something on LinkedIn a week or two ago about how big a drop there was in the honey, you know, honey hives is the right term to use, but that's something I've like, you know, known this is a big issue, but it doesn't seem like people really understand how big of a concern, you know, dwindling bee populations are.

Douglas Raggio (06:46)

Okay.

colonies here.

Yeah, mean, it's 60%. 60

% of colonies were lost last year. If you imagine the cattle industry lost 60 % of all cattle or poultry, like people would be bonkers. And maybe it's because it's an insect, like, they don't live very long, they're insects. But like, it takes a year to three years to get a hive up and producing like strong.

Adam Steinberg (07:08)

Wow.

Douglas Raggio (07:25)

So if you're a beekeeper, like the economics are just getting worse and worse. You know, you can't sell the liquid honey because all the fraudulent imports have driven the price so low that you can't be competitive in the market with real honey anymore. So you're basically forced to pollinate monoprops, which is horrible for the bees, but vital to our food system. So yeah, it's a...

Adam Steinberg (07:26)

Yeah.

Yeah.

Douglas Raggio (07:46)

It's a lot, a lot. And I don't know, I hope we play a role. hope like, I don't think it's an unlock per se, because we still need beekeepers be pollinating monoprops, because that's how our food system in America is built. I don't see that changing for a while. So like, how do you navigate that while keeping beekeepers solvent and bees healthy? So our regenerative outcomes, which is the only outcomes based methodology I'm aware of in regenerative.

Adam Steinberg (08:01)

Right.

Right.

Douglas Raggio (08:14)

that's in market. And that's Honey Bee Health, Beekeeper Livelihoods and Ecological Diversity. And we measure, we test and measure. that, that's our tact.

Adam Steinberg (08:15)

Yeah.

In terms of the honey market today, obviously, as you mentioned, this adulteration and essentially honey fraud is a big thing. I'm just curious, how did we get here? this been a widespread issue for decades, or is this a new thing that maybe regulations changed?

nefarious actors realized

regs are relaxed or has this been

going on for you know decades and it's

just something that people have kind of not known about or i guess accepted for the people that didn't know about it?

Douglas Raggio (08:55)

It's been going on for decades. Consumer demand for honey has increased annually, year over year. Production in America has declined year over year. That delta is filled with fraudulent imports. If you were to go back to time, my wife has weighed, but she's the honey archeologist in the house. She can tell you all kinds of good stuff, juicy details about the origin of honey and beekeeping and its role in agriculture.

But industrialization for one, mechanization is one, because that's when the heating, the blending, and the jarring, I think once you get those processes in place, they can be fudged. But where consumer demand jumped for Honeycomb, you could trace that back to the teddy bear, which was one beekeeping organization that just made it cute.

Adam Steinberg (09:26)

Yeah.

Douglas Raggio (09:39)

I think that was an inflection point of consumption. And then as of the last decade or two, perhaps, for sure the last decade, you got a lot of better few brands touting honey as a healthy sugar, but they're also using fraudulent imports. So they're like pushing the demand up while also supporting the fraudulent actors, which is just a recipe for shit. ⁓

Adam Steinberg (10:02)

Yeah.

Douglas Raggio (10:02)

So yeah, there's a lot of, know, big, big CPG companies touting honey. But then when you test their honey, it's essentially sugar water. It's been flavored like honey. It's not used in pollen stores. There's no nutritional benefits. Honey's incredibly nutrient dense. You can survive off it. I think it's a whole food actually. But yet, you know, what we're getting in a jar typically is not that. It's can have a candy bar, man.

Adam Steinberg (10:25)

buy it in a jar or tube and it says organic honey, does that mean that it's real honey or is that even still fraudulent?

Douglas Raggio (10:33)

There are no organic standards for honey because you cannot fence or feed a bee. Organic is about inputs. So yeah, the USDA says, literally in the National Organic Program, like the guidebook, right, the standards and practices, it says there are no organics practice standards for apiculture, which is beekeeping.

It's one line and it's very clear. If you ask the USDA, the answer is no. You have certifying bodies that will certify it under livestock standards because they can charge a dollar for it is my guess. Some of the more authentic certifiers are stepping away from honey knowing it doesn't fit the rubric.

Adam Steinberg (10:49)

Mm-hmm.

Douglas Raggio (11:07)

It doesn't fit the NOP. You can try to adjust it. There's been guidance that's been suggested for 15 years at the USDA on how to actually have an organic standard for honey. But it's been deemed not a priority for 15 years. And we just applied for another grant. Last year, we were told pollinators are not a priority, which is where private companies have to take the mantle. We're going to take the torch. ⁓

Adam Steinberg (11:28)

Yeah.

Douglas Raggio (11:29)

It's harder, sucks, sometimes it's very costly, but someone's gotta do it. it's, I'm gonna say it's almost pathetic that a company our size is the one that has to fight this fight. But people will turn, I'm confident that eventually the world will get out and people will start.

Like we're already selling our liquid honey from like our excess from our cutting operations to other CPG brands that are looking for that like full transparency and testing. Like we can stand behind our honey. ⁓ Other can say a lot of things, but.

Adam Steinberg (11:50)

Okay.

Yeah.

Sure. How do we eliminate honey fraud? like, I think I know what the answer is going to be here, but can we count on the government to help at all? Or is this going to have to be just driven by the industry?

Douglas Raggio (12:11)

Administrations change ⁓ and there are wild swings. Don't have much hope for current administration on any sort of agriculture that isn't like major stock, like your major commodities.

Adam Steinberg (12:14)

That's true. Yeah.

Douglas Raggio (12:23)

Even in previous administrations, it was deemed not a priority. So I don't know, you know, we are actively through that. That's why we have the 501 C3 is it is foundational. It is private donors. It is, know, our own research, but we enroll the entire industry, the agriculture industry. Yeah, it's a lead by example. I don't I hope that there will be some sort of.

Government intervention maybe on imports of fraud or testing parameters or even labeling like not allowing organic like giving an exclusion Because it doesn't fit the rubric but We've looked at a couple different tax of ways we could potentially lobby Nothing see I don't see a direct path yet

Adam Steinberg (13:05)

it sounds like the more players in the space that are doing it the right way have a similar viewpoint to you, the better. So for aspiring founders that want to start up a honey brand of some sort that is offering real honey in a similar track that you guys are.

How should they get started? How should they think about building a brand in this space? And what's actually gonna be key to get on retail shelves? Like you guys have had so much success with so far?

Douglas Raggio (13:33)

I would suggest joining the regenerative AP culture working group, is the 501C3, participating in the development of the standards practices and testing, like being active in that small but mighty group that is looking for change. And then when you're looking for sources,

qualify them through those qualifications and test. We have to use nuclear magnetic resonance testing. We look for, one, any sort of contamination, pesticides, things of that nature, antibiotics to the parts per billion, which is 1,000 times more than the NLP. We also look for sugar water feeding, which is another form of adulteration. We do a pollen analysis to validate it's from the regions that we've qualified. We do a forensic on the ground audit with beekeepers to verify that they're getting paid fair wages.

Yeah, I think. and then we're developing the ecological side. Like that is still how do more bees positively or negatively impact the ecosystem with native pollinators, but also with forage. Like more bees, more flowers, right? Like that happens. So we are working with a group that's developing what our testing protocols are around.

Adam Steinberg (14:33)

moving beyond the honey space specifically, you just have so much experience in this food and beverage space in general. Just talking about building brands in this space in general. think one thing I noticed in your book, you talk about like a series of make or break decision points that most founders are presented with

along the way of building the brand that can really ultimately make or break their business. So I'm curious.

in your mind, what are the most perilous decision points where the majority of trip ups happen and how can founders maybe approach these to avoid falling into the abyss, one might say?

Douglas Raggio (15:07)

There's a thousand ways to skin a cat, right? And I don't believe there's any right way or wrong way, which is why that book is a choose your own adventure. Like it's not, there is no mandate. There's no, the only way to build a CPG brand like Kick Rocks. The one thing that I tend to fall back on though is get like founders need to be really clear on their outcome. What do they want? You know, just because let's say you're in a probiotic soda or a healthy soda.

Just because your competitors raised a ton of money does not mean you have to raise a ton of money. Like they may have a different outcome. Like when you take venture money, your outcome typically becomes binary. It's either sold or be bankrupted or written off. When you choose a different path, and maybe that's starting at farmers markets, way different business. Maybe you get personal joy interacting with people for that long every day. I don't, but other people do.

Like, I would those like real clear moments do if you're a founder starting a CPG coming in the middle of it or like you're in a couple years in, take a weekend, go somewhere you feel really comfortable. And like, just clear the space and get the noise out of your head.

If like to skydive, skydive. If like to motorcycles, ride motorcycles. If you like to go read a book in a coffee shop, do that. If you like to go to Disneyland, like go to your happy place, wherever that is, and do whatever your happy activities are, and let your brain just decompress, and then ask yourself the questions like, what am I doing this for? Is this because I want, I think there's a huge opportunity in the market to be the next Coca-Cola, and I'm the person to drive that?

Or am I looking to put my kids through college and have a nice home and a nice life? Like people, pardon my French, people shit on lifestyle businesses, but those are some of the happiest people I've ever met.

So lifestyle business can be anything from a couple hundred thousand to several hundred million, billions perhaps, who knows? But I know people that have lifestyle businesses that are in the $300 million range. That's a real business, but it's the philosophy behind it. They're small teams, it's not managing global enterprises, it's they keep it lean, they keep it tight, and they do the same thing really good over and over again, which maybe is boring to some people.

So it's that getting clear on what you want out of life, like before anything else. Like if you have a marker that says, want to make $10 million before I die, I would not go raise venture capital money. That's a hard way to get $10 million. Go have a company that sells $3 million a year and do it over five years. And there you go. Like you're good. So yeah, there's just different paths. I don't see a lot of people

There's so much FOMO and so much noise on LinkedIn of, you know, store counts and new store launches and new SKU iterations and new flavors and new fundraising rounds. Like, okay, like how's your P &L? How's your balance sheet? You know, are you stressed at night because you have 30 people sweating you? Like the venture world and the venture backed companies, timing the market is, it's impossible.

Adam Steinberg (18:08)

You

Douglas Raggio (18:19)

Like it could shift in a day That's the part that just is scary. So I I prefer optionality Which is you know a profitable company healthy margins? Consistently and not trying to do too much do less is really my mandate for me personally because otherwise I get overwhelmed I get I don't get good like I start to get ratchety My wife doesn't like it. I don't like it dogs don't like it See ya

Adam Steinberg (18:22)

Yeah.

Yeah.

Yeah.

Douglas Raggio (18:46)

But that it's to each their own man. That's a long way to answer saying figure it out yourself. ⁓

Adam Steinberg (18:50)

Yeah, yeah, it makes

sense. Maybe more specifically, you might say a similar thing, depending on what your situation is. with the current market environment, guess I'm mainly referring to all these tariffs that are happening. And it just seems like more economic uncertainty for.

founders that are kind of,

in the thick of it or, early in building their brands, any feel like new kind of these similar make or break decisions that are coming to play for them that they're going to have to keep in mind or will be facing now or may be facing in the not so distant future and any thoughts about how they can best navigate.

Douglas Raggio (19:23)

It sucks right now. that is like to see prices, not just the tariffs, but like the ripple effect of like large buyers moving supply chains to smaller countries that don't have tariffs and jacking the price up because now demand has increased. Like it might be the tariff for one thing, but like coconut sugar. I heard that went up four acts overnight and it wasn't from tariffs. It was from the buying shift.

to other lower tariff regions driving the price up in those countries. Like, I don't know how you get through that. But I am confident that things do change. know, administrations come and go. And this was, you know, this was a piece of paper that somebody signed their name on. Like, I don't, is it governance? Is it legislation? No, it's not yet. It's it's decree. And I don't know how long decree lasts. So I've heard daily.

across just because I have a bunch of friends that own companies in different industries. Daily someone is either shutting down for a period of time or shutting down completely. I just can't like not worth it anymore. And that's tough. That's a really tough call to just get hit with something that...

But know, in CPG in the last few years, we got hit with COVID, got hit with the iOS changes for all those DTC brands. And now the tariffs, it's like, if you can live through this, man, shit, I feel like you can live through a lot. It seemed like it was less chaotic, you know, 10 years ago. But maybe it wasn't. I wasn't, you know, at a mature company yet. there's always something, Some runs are bigger than others.

Adam Steinberg (20:51)

Yeah.

Sure.

There's always something. was about to say there's always something.

Yes. A few things I think about when looking at an earlier stage CPG investments, sometimes the things that I think about are

including, obviously, does the product taste amazing? Is the overall product experience really, really good?

You know, two, does the brand have a clear place on the shelf?

is it clear like what aisle or section it's going to slot into? Like if the retailer, if the buyer says, I don't know what to do with this, it's probably more challenging. It seems like velocity is a big thing. Curious from your perspective, when you're thinking back in your investor hat days, or maybe still to this day, what does your checklist look like and what are like the most important items on your list?

Douglas Raggio (21:36)

Checklist has evolved. There was a checklist before. I wouldn't say there is one now. Companies are so young at the venture stage, like it's a total crap shoot. Like it's...

I don't think you can really tell. Maybe the founder, like it's the team, people say, but some of the biggest wins were total anomalies. were things that didn't fit in the store at the right place.

They were things that weren't being done. They were things that were considered dumb or weird or never would sell. I think part of the ills that hit the industry was all the venture money, which I participated in, which is also the catalyst for me getting out of insurance CPG is that too much money, too many iterative bullshit brands coming out, like with no real differentiation. Like, I don't know. It was like, just, things got real crowded in the store. And then everyone was fighting for Shell space, which drove prices up of if it was slotting fees,

Spend everyone was flooding Facebook and Instagram with ads and those got expensive which caused you to raise more money so I Mean look at us. I sell pre-portioned honeycomb Like it doesn't have any spot in the store. We're told it goes in honey because it's honey, but it's not It's like putting the G the berries with the jam like we're a cut seasonally harvested item and liquid honey is highly processed

So we took years trying to figure it out where in the store we moved most and we get pushbacks till this day with retailers like, well, we don't want to dump it on the floor. It's like, well, how do you sell your wonderful pistachios? that's a dump in. Well, then you have dumpings on the floor. Like, what are you talking about? But then you get groups like Kroger that, you know, their master stroke was putting two dumpings on the floor next to each other and they are ripping units.

I mentioned earlier before they started recording, like 50 to 70 units a week at $5.99, like consistently, is insane numbers for an item that's not being heavily promoted, not being put on end caps, not being heavily marketed. Like we don't have a marketing budget. We just kind of like hope for the best with the dump and on the floor. That'll change. But like we're a young company that's cash strapping, growing fast, like that further straps are cash. So.

You know, your question of like, I would probably try to find the ones that didn't fit anywhere in the store that seems super weird. Like, I tried to fund a seaweed snack company with some of our limited partners in one of our deals. And those, they were all from Houston. They were a bunch of oil guys. And they just laughed me out of the room. Seaweed, who's gonna eat seaweed? I was like, my God, man, like.

It's niche enough to win some dollars and carry a premium and a margin. You start getting into these crazy cluttered categories and good buy contribution margin. You're to have to out market Perfect Bar and Kind Bar and Kellogg's with RX Bar. I don't want to fight those fights.

Adam Steinberg (24:28)

Great point.

Douglas Raggio (24:28)

And

then like also like price point, like people forget the Siette. I think Siette started at $2 tortilla. It was like a crazy expensive tortilla and it was also fresh. It wasn't like in the end cap. It was like in the cooler. Like that's not where people were shopping for tortillas, but like they had their fundamentals in place and they scored a massive awesome investment for the family and the win and just recently exited. Like that didn't fit anywhere. A healthy tortilla, like, you know, if you're a total pessimist, like Hispanics are a

healthy tortillas is what you would say. But it's like, maybe they are. Maybe other people want a healthy tortilla, like never thought of that. So yeah, checklists be damned. you know, they say riches are in the niches, right? Like, find those, like, but find something that has like some like solid assumptions behind it.

Like we had some strong assumptions going in. Like we thought that Honeycomb hit some trends. We thought that making convenient would sell more. And we built for scale. And so that had some merit. We're not just selling to your mom and pop local retailers. Like we can support a Kroger and Albertsons to be named natural retailer in the South.

So yeah, that's different. And I came at it little differently. So maybe that's why we were able to raise money with friends and family. I didn't have cash to pioneer a new category and create a new commodity. So we did raise some money, but it was on favorable terms to us and our investors are patient and they all looking for distributions at a certain point. I don't intend to sell the company. So that goes back to like, what did I want out of this? I wanna have fun. I wanna do things I like. This is enjoyable. Not without its hard days, but

Adam Steinberg (25:41)

Yeah.

Totally.

On hard days, the fun hard.

Douglas Raggio (26:07)

Yeah, there's a reason we do it, right? It's like that's the other thing. We're sent to make a buck and you have this like weird, you know, green grass, New York shrub grass water company. Like, come on. I'm making up names as I'm looking out the window. But that's where we kind of got for a while there was just these kind of like weird iterative things that like just because you can do it doesn't mean you should do it.

Adam Steinberg (26:30)

Yeah. How do you think about, often talk about, talk to founders and

more seasoned operators and there's always this balance and some investors I've talked to, there's always this balance between focusing on velocity and how fast the product's moving on the shelf versus expanding into as many retail distribution points as you can.

I'm curious how you think about that balance and do you have a similar mindset in terms of do feel like velocity is more important and only focus on expanding your distribution points when you feel like the velocity is at a high and stable level or is it kind of a case by case basis?

Douglas Raggio (27:04)

I think the common dogma of velocities before store expansion is appropriate in more established categories, where there are things like category reviews and defined sets. I could see why that makes sense there. I've never had to live through it, so I'm not an expert. I'm not by no means. like, a, Kroger aside,

We still move very well, like everywhere, like 24 plus units a week in most stores. Like the low end, it's like six or 10, which is still high for a CPG item. But we have a much higher margin, like profit for the retailers. And when you start telling the profit story for us, that was difficult because produce...

looks at sell through percentages. Like they look at, we get a case of oranges in, they have to sell 70 to 80 % of that within a week, otherwise they go bad and they can't sell them. So like their whole model and how they look at their category is ranked by sell through percentage. And here we have a 96 count bin. So like in the beginning, we were selling through 30, 40 % in the first week or two, and we were at the bottom of their like ranking for their items and they didn't like us. And it's like, whoa, whoa, at the profit you're making. Like you're making three dollars.

profit on every ring like you're not getting that an orange so that was something that you yes I love the unit velocity the more the merrier right don't get me wrong but because we have a price point and a perceived value in the market by the consumer and a profit profile for the retailer we don't have to sell as much

Adam Steinberg (28:20)

Right.

Douglas Raggio (28:40)

And because we're a totally new category for produce, like a new item, we're incremental. Like we are 100 % incremental. We're not pinching a berry sale. We're not pinching a salad sale. We are purely 100 % incremental income to a retailer in produce. So.

Our story is a little different, but we do fight that story of like sell through. it's like, Hey, don't look at this at this level. Look at this as a P and L like, right now, thank goodness, you know, retailers are starting to look at profit more than, you know, sell through like dollars. Keep the lights on margin. Doesn't so we wiggle on margin. have their, produce has their 45s. They want, it's like, we don't expire. So do you really need a 45? Cause you don't have spoilage. And that's been a negotiation over years and you get a retail that gets it.

it moves like that's us right now with Kroger and and you don't start with Albertsons like Albertsons the Safeway and NorCal was the first one to really say this is something interesting and let's do it and they committed the time and the space and the dollars meaning like they took they took our advice on on price a lot of people don't and they don't see the same results and we have to come back to him and say won't you try this like we talked about so yeah that's

Adam Steinberg (29:45)

Yeah.

Douglas Raggio (29:48)

I don't know. think, yeah, back to the answer your question. Depends on the category, depends on the item.

Adam Steinberg (29:53)

Yeah, that makes sense.

You mentioned P P&Ls on that similar track. When it comes, I just read a bit about some of the stuff you mentioned in your book. And when it comes to projecting cogs and margins, what are like the most common ways that operators get this wrong? And I assume it's mostly under shooting, but yeah, what are the most common ways that founders get tripped up on this piece?

Douglas Raggio (30:19)

The belief that you're gonna make up margin in volume like It doesn't happen that quick like you'll never get there half the time right like it may take Yes, yes, you could make up margin in volume. But like are you gonna get to the ten million dollars to do? So you might not want to reconsider your cogs and that's what I highly suggest people is a Lot of folks do bottoms up

Modeling like it costs us this much we're to charge as much we this much margin for you know, and now people are starting to think marketing dollars and contribution margin is the new buzz term verse gross margin, which it was, you know, five years ago. but for us, because we work in perceived value, nobody has a pre preconceived notion with our honeycomb costs, we're not an egg or you know, beef. so we work off perceived value.

And when we started price testing, we found that our sweet spot for consumers is $6.99 and $7.99. And anything below that doesn't move as well. So we price off that. And yeah, with that, we also get allowed to, because we do have now the margin we're able to plow back into the supply chain. So those dollars are put to work. They're not just put in a pocket somewhere.

Adam Steinberg (31:29)

Yeah.

Sure.

Douglas Raggio (31:34)

But that's what allows us to sustain and maybe weather some storms and did I do it right? Did I luck out? Like we tried to price this thing lower in the beginning and just didn't sell. I thought I had a total dud. There's an adage I've heard since that says if it doesn't sell, double the price. And sure shit, man, it seems to work. ⁓ Yeah, we don't go like too high. Like I'm not aggressive. I'm not a Louis Vuitton. But yeah, that's a

Adam Steinberg (31:50)

Hahaha.

Douglas Raggio (32:00)

So yeah, I would say it's more about like really see what the consumer's willingness to pay is. Like do a top down pricing, not a bottoms up, or do both, see where they land. If they're close, great. If they're not, then have some conversations.

Adam Steinberg (32:07)

Yeah.

On a similar, like a bit of a similar track in terms of like managing margins, selling into retail, it seems like the more and more, not only retail outlets that you get into, but the different retailers, actually entities that you're working with, it seems like the more like one-off requests a brand may get from retailers, whether it's like,

You know, Costco wants a special SKU or pack size or I don't know, Walmart or Target or something. They want to do some retailers specific, you know, retail specific media and ads

How do you think about brands

balancing the need to go above and beyond for those retailers and.

acknowledging and acting on some of those one-off requests versus I think the more and more that you do, obviously that impacts budgets and resources. How do you kind of maintain that, trying to go above and beyond versus maintaining margins, if that question makes sense.

Douglas Raggio (32:59)

Retailers, retailers specific. I mean, we get a lot of random requests from a lot of like.

Smaller operators and no, I'm not creating a new bin for you for your 30 stores. I'm sorry like And those are also the ones that are most likely to paint any asses down the line They don't want to pay on payment terms don't want to buy to minimums like no but like a Costco Costco is known to be incredibly good to work with like and You I think you want a special skew and cost like that's their thing And they've proven their model works over and over again. So and Walmart to that degree to like big enough buyers

There's wisdom like they know their categories. They may not know specifics like for us It's a little weird because like no one's really selling honeycomb to our levels. So we become the expert But you know when it comes like pack sizes and configurations and where it fits in the store You know our biggest wins have been because retailers have asked us for something Like our dump in came from a request from Northern California Safeway and like our refill program like the actual case count and refill count was directed by the retail

And that's been a huge unlock for us. Kroger, like I said, they're master stroke. We've had retailers put two bins in the department, but Kroger put them together. And like, I thought that was a weird look, but man, the numbers don't lie. Like now we should put bins together. Like, so there's certain things like that that are easy wins that are just best practices. But yeah, it's no secret that your smaller accounts...

are typically the ones that are the most noisy.

Adam Steinberg (34:31)

Yeah.

Douglas Raggio (34:32)

We don't have venture money behind us. So I don't have to take, know, shitty business. I don't need to get doors. It allows us some flexibility on who we choose to work with. You know, and we've recently just started cutting accounts. Like, sorry, like if you can't buy minimums, you can't pay shipping. Like I will ship you a pallet, you know, cost loaded in. But if you want three cases, I'm not eating shipping on that. And you're not going to pay me in like 30 days. You're going to pay me in 60. Like, no, like why?

Adam Steinberg (34:58)

Right.

Douglas Raggio (35:02)

am I working with you? So maybe that's a shitty mentality. I don't know. But I mentioned earlier, I just try to be last man. I don't have that pressure of exit, exit, exit. We're profitable as of last month. So we've been profitable month in that. like,

Adam Steinberg (35:03)

Right. Right.

Douglas Raggio (35:19)

The Kroger was a domino that for us was like, I think it's also a signal to the rest of the industry, like, okay, this thing works. Like a major retailer put a major program together and it's moving major dollars.

But now we can't, if everybody wanted tomorrow, we couldn't do it. So we have to obviously still manage the cash flow. have to manage our growth and we have to manage our suppliers and make sure we're harvesting enough and getting our allocation for next year together enough. So we're not paying through the nose, know, May, June, July next year when the seasons, know, comb supplies are dwindled and cost is going up.

Adam Steinberg (35:37)

Right.

yeah, you're able to control your destiny a lot more

and you can kind of make decisions based on what feels best rather than always having to have paper growth always at the top of mind, which creates a lot more flexibility. Yeah.

Douglas Raggio (36:04)

Yeah, it's just different. And that's a pro-con. But I would love

to have an extra million dollars in the bank. That would be like, yeah, but so what's the trade off? Not enough for me. Not enough.

Adam Steinberg (36:10)

Sure.

Any brands or trends or categories across just the CPG food and beverage space in general that you're particularly excited about?

Douglas Raggio (36:28)

I'll give a shout out to Ari Roz at Coconut Coal and Noah. I mean, my wife has a text thread with like four other women that when they see Coconut Coal hit the stores here locally, they buy all of them and then they like distribute it in like a black market back room deal. Like I've never seen anything like that in my life. And they're delicious and like they're just good people doing good work. So.

Adam Steinberg (36:44)

Yeah.

Douglas Raggio (36:55)

Like that, I look, if I can think of any one part of the category that's that's like, just kind of like stand out. That for sure comes to mind solely the I mean, I love their their dried mangoes, but that's that's just from everything I see. And I don't know much. It just looks like they have their fundamentals in place.

Adam Steinberg (37:09)

Mm-hmm.

Douglas Raggio (37:16)

But again, don't know what's on the inside, but I don't see them shouting from the mountaintop every time they get something, which is an indicator of something. You see them a lot of places, so slow and steady. And then our North stars are really brands like Driscoll's and Avocados from Mexico. We've really taken a lot more inspiration from the, how do you market a commodity because...

Adam Steinberg (37:23)

Yeah.

Yep, totally. I like solely a lot of brand.

Douglas Raggio (37:41)

When I started this, my CPG brain went like customer demographic benefits uses, like all that shit, which we can't make any claims because we're a commodity. Like we're made by an insect. Like I can't say how much zinc or, know, vitamin this or vitamin that or glucose is in, it depends on the comb. Just like you can't it was vitamin C's in an orange, right? And then like, if you're a commodity, like who's the audience for a banana? What's the uses for a banana? Like they're so broad and we fit in the same category that.

Adam Steinberg (37:47)

Yeah.

you

Right.

Douglas Raggio (38:09)

It's a blessing and a curse at the same time, because people don't know what honeycomb is, they don't know how to use it. But the avocado 20 years ago, nobody knew what it was, it was really expensive, but they didn't know to use it. So we have a very similar trajectory of the avocado, I see. Yeah, so that's where fresh. Fresh is the category I'm most interested in in the store right now.

Adam Steinberg (38:24)

Yeah, that makes more sense. That makes more sense.

Yeah, I love that. I love that. Well yeah, Douglas, this has been really awesome. I think you shared a lot of really valuable info. Anything else you feel like you want to share?

Douglas Raggio (38:42)

No, man, this has been, I appreciate the interview. It's been, it's covered a lot of topics, which is good. Usually they're kind of, usually interviews stay in the lane, but I like bringing a lot of my experience as minimal or maximal as it may be in different areas to the table. So thank you for that. And yeah, if anybody's listening, go ask your retailer, why don't they have honeycomb?

Adam Steinberg (38:49)

For sure.

Yeah, it's been great.

That's for sure. I was about to ask where can people find you and also follow along the other company as well?

Douglas Raggio (39:07)

we don't do a lot of activity on, Instagram and social media. I'm probably most active on LinkedIn. ⁓ so that's that. People can always hit me up there or just Douglas at honey feel better.com. they can buy it at fresh honeycomb.com, but really, you know, Albertson's Kroger banners, man, Sprouts. just go into the store and ask them for it. If it's not there, it can get there. Cause we have codes. Cool.

Adam Steinberg (39:13)

Cut.

For sure.

Awesome, really appreciate