Interview #2: Joe Rotondo
When I shared my thoughts that the NYC CPG scene is undefeated, I wasn’t joking around. This interview, in my opinion, is a perfect example of the power of the NYC CPG community and the connections that come from it.
I have had the pleasure of getting to know Joe over countless events in the NYC CPG community. From coffees to happy hours, I have enjoyed learning his POV on retail from the CPG lens. I figured you would too! I am so excited to share this conversation about the brand he has founded, Smearcase, which is a frozen cottage cheese dessert.
This is the second conversation (first edition here) in an ongoing series with movers and shakers in the retail industry. Have anyone you want to hear from? Please be sure to drop their names 👇
The following conversation has been lightly edited for context and clarity.
Takeaways:
Conventional and Natural Grocery channels are starting to blend as grocers try to get as much market share, but are diluting their value proposition to customers in the meantime
Food, and the reasons someone buys an item, are super personal, and don’t always add up
Brands need to have ingredients that match their value propositions, and customers are noticing
The importance of retail launch sequencing and structure is not talked about enough in the CPG world
Network effects are super powerful in CPG, try to tap into existing larger partnerships (like a co-man and a distributor that already work together)
Try to be as capital efficient as possible, but that can only happen by understanding your costs in and out
Just because you land a large retail account does not mean you should take it, you need a ton of capital and product to make it work
Noah Sobel-Pressman: For those who aren't aware, could you tell us more about Smearcase and how you started it?
Joe Rotondo: I came up with the idea in June of 2023 while I was training for a marathon. After a tough workout, I wanted a healthy ice cream, and I couldn't find it at my healthy grocery store. I was looking for something high in protein, low in fat, low in sugar, low in calories, and with a somewhat clean ingredient label. I thought to myself, ice cream is made from dairy. Dairy is a good source of protein, so where's the protein in ice cream? [Instead of buying anything post-workout], I walked out of the grocery store, without any ice cream. I went home to eat my go-to healthy dessert, which was a bowl of cottage cheese, honey, and blueberries.
That's when the light bulb moment went off. How is there no such thing as high-protein ice cream? How is there no such thing as frozen cottage cheese? [After that thought], I started making this stuff at home in my apartment with my sister, and we came across this recipe that was too good to be true. I started incorporating it into my lifestyle, my routine, and my post-workout habits. Then, I started sharing it with friends and family, other athletes, and other entrepreneurs, and I got a ton of validation on the product and the category. That's when I decided to just go for it!
NSP: Once you had the product developed, how did you decide to go to market? How did you decide to launch things through retail, versus e-commerce? Large retail, small retail, what was your mindset there?
JR: Yeah, so Drew [my co-founder] and I decided that we had to make an impact. If we were gonna do this, we had to do it right. We wanted to be the first to market. We wanted to be the first cottage cheese ice cream, so we launched [as soon as possible at] the fancy food show.
What's funny is I have an e-commerce background, but we totally swore off eCommerce, because of the cost of marketing and the cost of shipping. It would have been about $20 per pint due to the dry ice, overnight delivery, insulated box, the product itself, and the cost of marketing to people to get them to purchase it. [Because of that,] we were 100% all in on retail, and we wanted to own our backyard. We're in New York City, we're in one of the biggest cities in the world. We had access to a ton of customer bases, different demographics, and we had access to the fitness community.
Our go to market strategy was to go to workouts (yoga, run club, etc) and give out protein ice cream. For retailers, we wanted to tackle the one-stop shops in New York that set the standard for new brands and for health in NYC. Happier Grocery, PopUp Grocer, and Park Slope Co-Op were all early retailers for us. Then, GoPuff came on pretty soon thereafter because we wanted some form of eCommerce solution, a spontaneous conversion that we can capture. We officially launched [retail] in July of 2024.
NSP: One part of the retail chain that gets overlooked a little bit is the distribution side, especially with a complicated, good like yours that has such temperature sensitivity. Could you talk more about how you went about finding a distributor and that whole process?
JR: Being a frozen brand, there are so many hands that touch your product. The co-packer, the freight provider, the warehouse, the 3PL, the distributor, the retailer, and then the customer. Early on, we worked with a local creamery that was just outside of New York City, which helped us get into the market. From there, they had connections to a warehouse. Additionally, our advisor at the time had connections to a small mom-and-pop distributor that had access to all the specialty stores we wanted to be in. It was the right place, right time, right people, right connections, and right network. Everybody was already working together, and we immersed ourselves in that little community.
Just a piece of advice for founders out there. It's so intimidating to start, but you have to lean in, and get your name out there. Then, start having these conversations because one person will put you in touch with another, and this organic network effect just happens, which allowed us to get into the market so fast.
NSP: I saw on LinkedIn you recently locked Sprouts, which is super exciting. Congratulations on that! I have been following Sprouts pretty closely recently. It's one of the fastest-growing grocery retailers in the country. They are also expanding a lot in the Northeast here too. Could you share more about that process and at this stage you're at, how you go about evaluating retailers and deciding which to launch?
JR: It's such a good question, and so I think it's sort of not talked about enough, and that's like your retail strategy, your retail sequencing, your distribution strategy. It's key. You can get a deal from Walmart, for thousands of stores, and it’s exciting, but it could be a shiny object, since it’s so much work. You have to ask yourself, “who is the right customer for me?”. It starts there, and then figure out “where do they shop?” Based on that, you can find the right retail partner for you.
We knew who our customer was super early on. We knew our exact customer, how we wanted to talk to them, and where we wanted to show up for them. We know that they shop at the Natural Channel. The Whole Foods, the Sprouts of the world. A little bit after launch, we were put in touch with Sprouts, and they were super bullish on what we were building. Based on those conversations, we did a regional test last year in Florida. This year, we decided to go national with them after many collaborative conversations with our category buyer. She really cared about the brand, the business, and she wanted to make sure that we were ready to support this size of a launch. You need to be able to have enough product [for a launch this size]. That means your supply chain, your manufacturing, needs to be ironclad. Also, you need to make sure that you have the dollars to market effectively, and are well capitalized, so that the product moves off the shelves. You need to be prepared logistically and strategically to make sure you can support the rollout.
Overall, I am super excited about Sprouts. They have three shelves dedicated to the protein ice cream section, which is great for the category. It shows that there's a market for it. What's cool is that we still remain the first and only cottage cheese-based ice cream.
NSP: One comment that you hit on right there that would be interesting to dive further into is capital strategy. There are a lot of emerging brands, both retailers and CPGs, that read this newsletter. What would be your advice to emerging brands on how to handle that capital strategy and be as efficient with their dollars as possible?
JR: You have to understand your own risk tolerance. Everybody's situation is different. You can start a brand and work a 9-to-5 during the day, and have this be a side hustle at the beginning. There's nothing wrong with that. Alternatively, if you have a cushion of cash that you can support yourself, then go full-time. It's really a case-by-case basis. We're under the school of thought, how far down the field can you get, how fast can you do it, and how cheap can you do it. You want to spend as little money as possible and do it in the shortest amount of time. That requires a huge amount of discipline and ambition. It requires grit and hard work.
It requires a ton of effort, but I was excited to leverage my network and inner circle [to help build the brand]. My brother and I worked on the branding. My sister and I worked on the recipe, and then I brought Drew on full-time as a co-founder to help with the launch and execution. I really leaned on my inner circle and identified their schools and talents to see who could help me get to that next step. [I always default to] what can you do yourself to roll up your sleeves and save on some cash.
NSP: I think to take a step back, you've spent a lot of time with different grocery chains at this point. Everywhere, from small to large chains. There's a lot going on in the industry, macro-wise. I'm wondering, in your mind, is the traditional grocery model something that you feel is structurally broken or more just in need of reinvention?
JR: I think from my perspective, we're seeing this divide. Specifically, for me, I'm in the protein world, so I'm very focused on nutritional value. I focus on the macros. I focus on those health trends. In CPG, we know people want to be healthier. That is the common denominator, but how we arrive there is a little bit different. You have the camp that is focused on natural, being a little bit more holistic in their approach. [On the other hand], you have this, like, ultra-scientific bio-hacking, longevity approach. How can we hack the system to get the best possible macros, and the least amount of sugar and fat in calories? How can we hack the system so we can live longer? What drug can we take? Is it GLP one? Is it Ozempic? Is it Adderall? Is it EPG? Are they supplements? Those are the two camps.
To your question, there is a conventional and a natural grocery channel [traditionally]. But, even the natural channel has been infiltrated with these “BS” products. It's very murky, it's very cloudy. [However], we're starting to see chains pop up that really have hard values. In grocery, you have Meadow Lane and Nude coming up, for instance, with Erewhon, being semi-established. I think we're seeing conventional looking into emerging brands and innovation on the more healthy side, but then you see Whole Foods wants to have a section for Goldfish, Oreos, and Coke. Everybody's trying to capture market share. Everybody's trying to drive volume and margins. We know it's a penny's business. We know that margins are thin, but it's interesting to see how the lines are starting to blend, but then you have specific brands and companies put a hard line in the sand.
NSP: I think what you're also getting at is that there is no such thing as an average consumer. The average consumer is actually super broad and amalgamous in terms of what they want. For instance, take a traditional whole foods shopper, who wants organic, but sometimes they are going to want Goldfish. If goldfish are there in the store and they buy it, 99% of the things in their cart are going to be organic, but then they are going to throw in Goldfish or something else because that's what they grew up eating, or for some other reason that shapes food preference. Food is so personal, and I think that's super interesting.
In addition to these customer behavior trends, what else do you see redefining retail in the next 3 to 5 years? What are your thoughts there?
JR: What I'm excited about is seeing how CPG can get a little bit more personalized. How can we go way deeper, and maybe even see more product line extensions. Additionally, I truly want to see brands stand up for what they actually believe in. If you say you're going to be all natural, then be all natural. Don’t put BS in your products. I think it's somewhat phony that you have a ton of these brands at Expo West that are just still pumping their products with artificial sugars, artificial sweeteners, and artificial proteins. I think this choice is to the detriment of the customer. There is a lot of health washing, similar to what we saw in fashion, green washing, where people say this is a sustainable t-shirt. Well, no, it's really not sustainable if it's made with harmful dyes and synthetics. In food, we are seeing a product packed with protein, but what's the quality of that protein? I think customers should demand more transparency. I think brands should operate with more integrity. I hope that the standard continues to be raised. I think the bar will continue to go higher, and brands are gonna have to spend, since it's expensive. However, I think there are ways for us to create abundance that we can then drive these prices down to make health more accessible for everybody.
NSP: Joe, thank you so much for your time. I really appreciate your insights. For the last question, I have to ask, is retail dead or alive? Why do you think so?
JR: Retail is more alive than ever. If you're a brand doing D2C only, you're not going to survive. You need to have a multi-channel approach. People are still shopping in the grocery stores, and people are still shopping in person. I still discover my new favorite brands in the grocery stores. I think it's up to the retailers to create a better customer experience, whether they're leveraging AI or whether they're leveraging ergonomics. Additionally, I think Whole Foods is leaving a blank space for someone to come in, like Sprouts, to fill that void that they've started and then created. Overall, retail is back. People are shopping in person, and I'm excited to see what's next!
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