• The innovative products we saw at Expo West and the growing interest in non-alcoholic, low-carb drink mixers and international flavors.
• The genesis of Carbonaut, born from a noticeable demand for low-carb options online that weren’t available in retail and it’s rapid growth in both Canadian and U.S. markets.
• The brand’s expansion into gluten-free, low-carb pizzas and burrito wraps and sharing insights into strategy to maintain taste and dietary compliance.

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Transcript

Announcer: You're listening to CPG launch leaders, the show where we interview new product trailblazers. Get ready for inspiration and secrets from the front lines of CPG innovation. Now, here are our hosts, Darcy Ramler and Alan Peretz.

Allan: Welcome to CPG Launch leaders. I'm Alan Peretz, and I'm here with my co host, Darcy Ramler. With us today is Danny Houghton. Danny's a friend and an innovator in the healthy foods category. After co founding one degree organic foods, he led the launch of Carbonaut. Carbonaut's a brand that delivers low carb products that taste just like they came from the corner bakery.

Darcy: Danny, we're beyond excited to have you on to talk about the ingredients that led to carbonauts explosive growth, the brand's innovative approach, and the exciting new ventures into gluten free low carb pizzas and burrito wraps. Before we dive in, we'd like to start each episode with one particular question. Currently, what new product has caught your attention in the market?

Danny Houghton: Well, first off, thank you for having me. I appreciate you allowing, uh, me to come on the podcast. That's such a hard question because there are so many, uh, products, uh, that we see. We've just returned from Expo west, and, um, I'm a bit of a fan of looking at, um, specifically non alcoholic drink, uh, mixers. And, um, there were several brands. I'm not going to be able to remember them off the cuff because they're at home in my fridge. But I found a couple of mixers that were made with Yuzu, um, which is a form of citrus that are lower carb, really nice mixers that I enjoy drinking at home. And so, um, have several of those that are in my fridge that I'm enjoying. Just had a couple of them delivered last week.

Darcy: So of someone who is at Expo West, I have to agree. The beverage category, new, innovative flavors. I mean, it's going in every direction that you can possibly say. And a lot of international flavors also entering the space, which is kind of fun and an interesting play.

Danny Houghton: Well, and you see them starting to mix in, whether it's spicing. Like, I remember seeing a jalapeno blood orange mixer that was non alcoholic, had a little bit of black pepper in it that brings a flavor out. So there's just an incredible mix of. Of different flavors that are becoming more and more, uh, available and unique combinations. And I like that.

Allan: So, Danny, we love a, uh, great founder story. Can you tell us a little bit about why you started carbonaut?

Danny Houghton: You know, it's interesting. Sometimes you catch a pattern or see something that pops up in several different venues, and it gives you an idea that there is a need that the market has. And that's very much what happened with carbonate. Um, Alan, we engaged your company bold strategies to help us start looking at, um, e commerce solutions for selling bread online. And as you started working through some of the detail of what was being sold online, I just remember us seeing just this kind of zoom kind of thing when we were looking at the sales charts and we saw a huge demand for, um, low carb and keto bread online that we were not seeing in retail, grocery retail at all. And it was kind of an early flash that there was demand for this type of product that was not being met in, uh, the retail environment. Then we kind of paired that with, uh, requests as we begin to go to our top customers. Um, and they'd say, hey, have you heard of this keto thing? Are you planning to, uh, are you planning to make any kind of keto breads within your existing brand structures? We started getting asked that a lot, and it was the combination of those two things that made us stop and say, hey, is there really something to this, um, that may, uh, be worth a more warranted exploration? Um, we did not want to bolt it onto our other brands. They each had their own unique selling proposition and verticals that they were targeting. And so we made the decision to start carbonaut, which was a brand focused exclusively on the, the low carb space. And that was a very good decision, but it was really a combination of those two things kind of coming together at a point in time and then having an innovative group that said, yeah, let's pull the trigger and try this, um, in the right way. And, uh, that was kind of the idea behind how the brand started.

Darcy: And as you said, this was about four years ago, so we know the landscape has changed a lot in the low carb and keto market. Can you kind of go into maybe a little bit about those changes and what you're seeing these days based to just four years ago?

Danny Houghton: Sure. So, you know, four years ago, it was kind of the wild, wild west. Uh, there was nobody that was really, um, you know, really playing in that space. I shouldn't say that there were some players, but they weren't serious players. And, uh, so it was kind of a race, so to speak. And, um, I can talk a little bit more about our strategy and how we relate to that later, but the competition has, uh, I'll address it from two market perspectives. The, uh, competition up in Canada, which is where our company is located, um, because we got to market very, very quickly, there is virtually no competition at all. Uh, we've been able to take a very, very strong leadership position with over 80% market share of the low carb space. When, uh, it comes to baked goods in Canada, us is a little bit different story. Um, we entered fairly, um, early in the US natural channel, where we're number one in terms of market share in the broader conventional sets. Um, we're not as big a player. That's in large part due to some of the distribution structures that are in place. They're not friendly to independent brands like ours. Um, and we have seen the competition increase meaningfully, uh, in the US market. Um, brands like Herobred, which, which you've probably heard of, great product, has the celebrity stamp of someone like a Tom Brady, um, which is a tough, uh, that's tough competition.

Darcy: That's that guy, right?

Danny Houghton: Yeah, I know, it's like, yeah, the guy throws great touchdown passes, so he must know bread too, right? So, um, anyways, he is a good influencer. I actually have deep respect for his dietary, uh, regimen. Ah, and approach. But then you have other companies like Sola. Um, they're based out of the midwest. Good product as well. Um, very well seeded in the conventional sets. And so you've kind of carved out a little bit more of, um, what I would call a stable competition in the US. Uh, we're able to bring some advantages from the canadian side and that we're importing in from Canada. There's a currency difference there that helps us, uh, be able to compete. So I would say it's matured a little bit. And you've seen some major players establish themselves, you've seen some of the wannabes kind of exit the market as quality product has flowed in. And so it's definitely a. I call it a more mature landscape, uh, today. Um, it's not just someone that is putting something on the shelf with a keto certification on it. Without a real brand identity and marketing structure that's thought out well, that really targets the consumer in the proper way. So, um, yeah, it's kind of gone from the wild, wild west to a bit more of a, um, a, uh, more traditional kind of competition, if you want to say it that way.

Darcy: We were having this conversation recently, as you know, you called out gluten free or whether it be vegan or keto friendly or some of that has become almost table stakes in the area. So developing out, uh, as you said, really developing out that differentiation story for your brand and what it's representing. You know, it's no longer just the iconography of, we're checking the box of being keto friendly. It's really having that full brand proposition that, uh, you guys have been able to develop.

Danny Houghton: It's very true. And, you know, when you look at people that are in the healthy space, they are always looking for what's coming next. And so they may try this type of diet, you know, the whole foods 30 or, you know, keto or paleo or some of these other specialty diets that'll go through, and many times a strict adherence to those can be hard to stay with for a really long time. But what will happen is they kind of educate themselves on some of the core tenets of those various diets and they'll continue to look for those types of healthier products and if they can get something that tastes good that still has one or more of those dietary structures in place. So if you can kind of stack some of those on top of each other and offer them within the same product, that can be a very compelling, uh, value to a consumer. And I'll use the example of our gluten free low carb bread. Uh, gluten free is, of course, a major phenomenon that has continued to grow year over year. And we have another brand called Little Northern Bakehouse where we've been quite successful. And so as we looked at carbonaut, we said, well, hey, let's not just focus on only the low carb component. Can we do low carb and gluten free in combo? And that was very challenging from a technical perspective, but we were able to do it. We had the production facilities where we could go in and make that happen, and we put that out in the market not knowing how it would respond. And that became our number one best selling product. And so then you add in things like plant based, which is a very strong, um, movement as well, the non gmo, the keto certification, you begin stacking some of these attributes together in a product that still delivers on taste and texture, and you're able to create a more compelling, um, product value, um, for the customer.

Darcy: As we're talking dietary trends, and obviously, as it relates into the space that your brands play in, are you giving thought to the US trend of the Ozempic? Snacking, smaller meals, everything that goes hand in hand? You see this shift, I agree with you. It's all a trend and how we're based. Um, but there's a lot of talk on the snack, and I know we're going to talk a little bit about wraps and burrito wraps and pizza and smaller bite bites that are happening out there. Are you seeing that playing in your space as well?

Danny Houghton: A bit. I'll just say when you look at some of those drugs and the way that they function, um, from the limited amount of information I've looked at about them, I think that they can be rather harmful, um, in the long run, from a health perspective. But I do think that the idea of moderating your intake is something that people are becoming more and more, um, cognizant of. And it very much kind of fits into the broader, um, brand ethos of carbonaut. It's finding something that is pleasant and tastes great, um, that has a carb count that's going to fit in a proper way. And part of that carb count may be maybe we don't make a five and a half ounce burrito, maybe we make a four and a half ounce burrito. And that's literally something that we went through and said, hey, we want it to be a higher quality, plant based protein. It's not going to be as big. It's going to be a little bit more of a premium item. And so those are the kinds of things that we're looking at and saying, this deserves some meaningful thought in our R and D process. And, uh, I do think that you have to be mindful of those types of things, but do it in a way that really is ultimately going to resonate, uh, from a health perspective, uh, with that natural, uh, and more health conscious consumer.

Allan: Danny, the branding for carbonaut is fabulous.

Danny Houghton: Can you tell us a little bit.

Allan: About where that came from?

Danny Houghton: What does the name mean to you? Well, thank you for asking that question, because we're very proud of how, uh, carbonaut came about. The idea behind the brand name was the exploration. You think of an astronaut, an astronaut is someone that the space exploration and many times, people on a low carb diet think they have to eliminate baked products. The idea of breads, buns, rolls, bagels, all these different types of things. And so the idea behind carbonate was the idea of exploring, um, baked goods that are low carb friendly, that taste great, that allow people that are in tune with that kind of diet, and have thought, oh, I can never eat bread again. I can actually experience baked goods, and I can, um, make that a regular part of my diet again. And we've gotten countless feedback, uh, notes on social media and from our customers via email and social media strategy said, man, thank you for letting me have bread again, or thank you for letting me have bagels again. So the idea was, hey, you can explore as a part of your low carb diet, and you can still have, you know, the wonderful piece of toast smeared with whatever it is that fits within the diet structure that they have. So it's that idea of exploring and finding something that tastes good, but still fits in that dietary structure. And we found that, um, our consumers have really resonated with it. They look at it and they understand immediately what it's about. And that's the key to a good brand.

Allan: It's very distinctive, for sure.

Darcy: So we talked a little bit about entering the category, finding the timing that you guys came in. There was a lot of white space there and a lot of potential that you were able to recognize. Were there any challenges you feel like you faced entering in? You know, it's not as developed of a category, like you said, the wild, wild west. What maybe were some of the challenges you faced?

Danny Houghton: There were a number of them. Um, and I'll mention, uh, that the first one, that was the toughest in the United States. When you look at, um, you know, the different regulations that are required for your packaging, making a net carb claim is no problem. But in Canada, which is where we're from, um, the CFIA, the, ah, canadian food inspection Agency, was not, uh, willing to let us put a net carb count on our packaging. And the way we had structure a packaging, we had to have a huge net carb claim that was a part of what we were trying to do to get the product off the shelf. Um, but at the same time, we noticed that they weren't policing the market correctly. So we think that there was actually a competitor that reported us and said, hey. And so we went through a major, uh, legal battle with the CFIA, uh, not only to make sure that the rules were being followed fairly, um, but that, you know, we had to figure out another way. They wanted to even not let us use our name carbonate, which was a trademark name. And so we spent much, um, more legal, uh, much more money in legal fees than I had hoped upfront. But we were able to still craft something that was very successful, that was able to convey the net carb count with a simple, um, subtraction of the two key metrics that get you to your net carb. That resonated with our consumers and they understood it. That was probably one of the biggest challenges. Early on, I talked to lawyers a lot and had to arm wrestle the CFIA, which is not fun to do.

Darcy: Um, the other thing, both timely and both time consuming and also wallet consuming as well. Lawyer conversations are never cheap ones.

Danny Houghton: It's not the place you want to be spending your time in a startup, but uh, it was a necessary evil to get started. The other thing that was always a constant challenge, um, to think through is the benefit of being first to market and having an agile approach to get product on shelf quickly. Many times you have to kind of compress your R and D timeframes and say, you know, do we want to launch a product that's 85% of the way there to get on shelf first, or do we want to wait another six months and have it be 100% perfect? And you know, we said, you know, we'd rather be first to market and be on shelf and take that 85% and then let's catch up in line as we're going and we'll go through a continuous improvement process. It may involve us having to change packaging once or twice if we've got a tweak, you know, a recipe here or there, or add something else to get a little bit better. That turned out really to be an important strategic decision, but also a challenge that cost us, uh, you know, cost us some money upfront as we had to go through some of those changes, um, from a packaging perspective, and then just finally dial in those, those recipes. So that was a bit of a challenge as well. The other thing is, is, you know, we were kind of in a new baking space where we were using new ingredients that we had not, you know, formulated with previously, specifically in the area of resistant starches that act a bit like a fiber. And so there were times that, you know, we'd place an order, we test something with a vendor, and then we'd find that for whatever reason, that specific vendors ingredient would not perform on the line the way we had hoped. And so we had to go through several vendors before we would find, even though they had the same spec, anything that comes from one place versus another will perform differently. And so we had to go through this kind of process of elimination to find the ideal, uh, suite of raw material providers that work best on our line. And so that can be painful at times if you have failures of batches or things of that nature. And then the other thing I would note is kind of two, two and a half years in, we went through the whole, uh, coronavirus challenge where we saw costs of, um, inputs just skyrocket and had to work through the process of when and how do we take price, because our, our inputs are coming in so, uh, meaningfully higher and at the same time want to stay profitable, but don't want to depress the rapid adoption of our products by hiking the price. And so we had to go through a very thought through process that was mindful of, hey, we're still a brand that's in an expansion mode, trying to gain market share, but at the same time, not to do that at a point where we're beginning to sacrifice profit and the ability to keep, uh, moving the company forward from a financial perspective. So you have all these kind of things that are interwoven in a startup space and that you have to kind of juggle the balls and make sure that you don't let any of them drop.

Allan: Danny, you've had a couple of launches since the initial launch, so you've had, um, pizza, uh, dough, you've had, uh, burrito wraps. Can you tell us a bit about the innovation process that gets you to those products?

Danny Houghton: Yeah, so we had the benefit of access to a manufacturing platform, um, because of some of our sister brands that basically allowed us to launch breads, buns, bagels, hot dogs, hamburger buns. We had all that in place both for gluten free and for regular. And so we were able to quite rapidly innovate in, uh, those areas, and we began to say, okay, um, once we get through these products and we've launched them, where do we go next? And, um, the idea became, hey, we're working kind of with carriers, which is what you call bread or a tortilla, whatever you're putting in it. Maybe we need to look a little bit more at the meal format. And, um, our certification, uh, for keto has different sets of low carb targets that are used for different areas, and it's a little bit higher for a meal. And so anything, we had an internal cap that said, hey, we don't want to go, uh, on a per serving basis. We don't want to go higher than 3 grams of net carbs for any one of our, for a slice of bread or anything else we're doing. But we said, hey, if we're wanting to begin, starting to move from just the idea of baked goods, you know, or carriers that, that are being used in the low carb space to a meal, you know, what's the best way to do that? What's the best way to broach that? Because the ultimate goal is to become kind of a low carb company that spans, you know, categories that people will recognize and say, hey, I know them. They make good quality product, and whatever we create, they'll be interested in. So we said, well, hey, we're making tortillas already. Ah, we're making pizza crusts already. Maybe we ought to look at the idea of a topped pizza, and maybe we ought to look at the idea of a, um, burrito or wrap. So from that perspective, we began to look at our products, and we said, hey, as we're looking at this pizza crust, we formulated it, but we may need to strengthen it a little bit, um, because it's going to need to hold the sauce, hold all these carriers. We were going to be doing some custom, um, based, um, plant proteins. And so we had to go back and actually reformulate it, which is a very, um, challenging, technical thing to do because you're limited with your toolbox of ingredients that you can use because you've got a gluten free certification, a keto certification. And so your ingredients are limited to do that. But we were able to accomplish that and go through a series of tests where we said, yeah, this crust will be able to hold these, uh, ingredients. And then in a similar way, um, uh, looking at the burritos, we actually have burritos that are both, uh, just a keto certified that's not gluten free, but also three that have gluten free low carb wraps. And then looking and saying, okay, how do we develop flavors in a high protein kind of content product that, um, is really going to be compelling for the market? You don't see a whole lot of it out there. Um, most of your burritos are using things like beans or rice, which are very nutritious, but, um, are lower cost, what we call kind of filler ingredients, where we're looking at a smaller serving size that's much higher protein content, mixing it with some of our carriers to create what we believe is a really compelling value proposition. So the idea was to say, how can we branch from our, our carrier base into more of a meal, uh, type of scenario? And that was the thinking behind the burritos. Um, and the pizzas.

Darcy: The real question is, how many burritos and pizzas have you ate over the last year?

Danny Houghton: I've eaten quite a few. Eaten quite a few. And actually, it's a very fun process. Uh, and it gets more fun as you get closer to the end and they get closer to, uh, uh, perfection and being ready to go. But, uh, a lot of fun. That's a fun process.

Announcer: Hi, Jesse. What brings you to the airport, Mike.

AD: Jesse: I'm off to the headquarters to share an update on the big launch.

Announcer: Oh, I've heard it's selling really well. Care to share your secret?

AD: Jesse: Well, just between us, it's all thanks to bold labs. Their exclusive digital test market research allows, um, you to optimize your product marketing and pricing before the big launch.

Announcer: That sounds fantastic. How can I learn more?

AD: Jesse: Just visit www.boldlabs.com. It's all right there.

Darcy: This is the final call for flight 723 to Chicago.

Announcer: Looks like we'd better go. Thanks for the tip, Jesse.

AD: Jesse: See you soon, Mike. And remember, bold labs is ready to help your product soar.

Darcy: Absolutely. Get to nurture it all the way. You know, it goes from that whole vision to really seeing it come through and also seeing the things you would probably never imagined to be. The stumbling blocks sometimes pop up and you. It's always a unique experience, as you said. But as you kind of went through, you know, there's a, we talked about a little bit about the taste and nutritional profile and having to balance those and how that would resonate with consumers. You know, for a while it was okay. If you're taking out all these ingredients or it's only net this many carbs, how is it going to taste? So were there any unexpected hurdles, um, you really saw in that area?

Danny Houghton: Yeah, um, yes, lots of hurdles. Um, I mentioned the strength of the pizza crust before. That was definitely a challenge. But even when you look at something like a tomato sauce for the pizza, each one of these adds up net carbs. And so it's like, what kind of coverage can we do? Um, when we looked at the plant based proteins, the keto certification, which is still very important to us, uh, given the quality of the ingredients that it requires, the fats, uh, in a keto certification are much higher quality. We wanted to keep that when we want to start looking at plant based proteins, because we really emphasize plant based as much as possible within the brand and are committed to plant based proteins. Um, we began to look at what was available that was already made, and it was like, yeah, this won't work, because none of the fats that were used in the formulation of these products were compliant from a keto perspective. And so then the question became, okay, we're going to have to custom formulate our own plant based proteins, and we're going to have to commit to certain volumes as we scale up. So there's a game there financially that you have to play. And then beyond that, even we were saying, hey, we want to make sure that this is gluten free certified as well, in the case of the pizzas. And so you're pulling out gluten, which is one of your top items that you'll use to formulate a really tasty, uh, plant based protein. And so we were able to do that. Um, we found a co packing partner that could do that for us and did it very well. We went through three rounds, I remember very specifically on one specific plant based protein to get it right. Uh, from a gluten free perspective, it was a bacon that we put on our um, plant based bacon we put on our um, pizzas. And so, yeah, uh, it was a constant math game to make sure. We ended up using all 10 grams of what is allowed for a keto certified meal and, um, making sure the taste really, really delivered well. But it was, uh, not an easy task. You know, it took a lot of work.

Allan: Danny, are these, uh, are most of these products shelf stable? And if not, how are you dealing with that?

Danny Houghton: No, they're not. So in the case of the peat, well, I should back up our regular, um, line of baked goods. Uh, our breads, our buns, our bagels can be either merchandised, uh, in the freezer or can be sold ambient with a ten to twelve day shelf life. So they can live in either area. And we have different retailers that will, depending on what their strategy is, we'll have them live either in the frozen case or in the fresh bread aisle. When it comes to the burritos and the pizzas, those obviously are frozen, um, products that you'll take home and either bake or microwave or put in the air fryer. And so, yeah, kind of different use cases depending on which product we're speaking about.

Allan: And from a supply chain standpoint, what does that mean for you in terms of partners?

Danny Houghton: And, yeah, so, you know, because our broader family, uh, of companies uses, you know, kind of cold as our, I'll call it as our shelf life extender. We don't put a ton of really strong shelf life extenders into our products. Cold is our preservative. And so our distribution network is primarily frozen, in fact, almost exclusively except in a couple of local cases, western Canada. Um, so the nice thing is, is that these new product lines fit nicely into the distribution structure that we have already. But when you look at it from a more of a retail perspective, um, there are meaningful, um, costs that, uh, you have to pay to play, so to speak, listing fees or free fills of two to three cases per item that you have to pay, uh, to gain access to the retail frozen, uh, sets. So there are some meaningful, uh, costs involved with that in rolling out new products for, uh, sure, but getting the product there, uh, we have the benefit of the supply chain, uh, from our sister companies that is very helpful to us.

Darcy: You mentioned making a conscious decision to really market the products as low carb rather than just strictly keto. Can you dive deeper into the rationale behind that strategy and where it really originated from?

Danny Houghton: Yeah, you know, moving all the way back to the beginning when we were doing this analysis of, you know, uh, keto, flagging pretty strongly on the e commerce analysis we were doing and getting asked these questions from the buyers as we were debating internally. The big question was, is this a fad or is this not a fad? You don't want to invest all of this money on a concept that's going to be a flash in the pan. And we went back to our experience in launching one of our other companies, little northern Bakehouse, which we asked the same question about gluten free. And, uh, the bet was correct on that one because gluten free is here to stay. And that has been a strongly growing category that we continue to benefit from one of our other brands. But the question remained. It's like, you know, the keto, you know, the idea of such strong protein is that something that can be sustainable, uh, you know, an animal protein kind of diet over a long term? You look at Atkins and some of these other things, you know, you see a cycle that comes through, but then, you know, it kind of, you know, tapers off, so to speak. And so we said, you know, but at the same time, there's always going to be fat people, if I can speak directly, and they're going to want to. It's an issue that we have in America. We need to be, uh, real about this. And just said, I think there's going to be a demand for people that want to have lower carb options. The decision was, if that's going to be the case, then we need to build our brand construct around that idea of low carb rather than keto. And we've seen a number of other keto brands that have really, they were strong at the start, but they've really tapered down. And you don't get the same kind of, um, traction with the keto product now. But the low carb seems to have a staying power, um, because of the way that we structured it. We found that that hasn't impacted us in the way that it has many other keto focused brands. We wanted to have the keto, we wanted to have the keto, um, certification, but it's just a certification along with some of our others. And we did not build it into our broader brand construct, so to speak.

Darcy: As you said, like Keto to me, a lot of times you think of it, Keto is a diet. Low carb is a lifestyle. Speaking from a woman in her forties who was learning the term low carb, that carbs do not do the same thing to my body as they used to. Um, it is, it's a lifestyle choice. And when you can look at something and make a conscious decision to have a lower intake, just like sodium, um, you're always going to try to make that healthier decision.

Allan: So, Danny, you're in a fairly crowded marketplace now in terms of competition. What do you do to make the brand stand out?

Danny Houghton: That's a great question and it's a tough one, um, because we're not a brand that tends to, uh, have millions of dollars to spend like some of the big competitor brands that we have. And so, um, we try to be a little bit more, if I can call them, kind of guerrilla marketing tactics. We try and really lean in in our customer service and our social media channels. We find that people that are living kind of the low carb lifestyle tend to be much more active online and looking for tips and tricks and the latest products. And so we try and have our staff lean in there heavily. Um, we do attend a lot of trade, uh, shows, so we dialogue regularly, kind of that middle of funnel, uh, approach, and then we kind of lean.

Allan: In a little bit more.

Danny Houghton: Where we spend our advertising dollars to try and gain exposure in kind of more of a retail media format, we find that that is something that's quite effective for us, um, where we're able to both educate about the product, but have a decision for, uh, a product purchase, be a part of that marketing, um, uh, awareness plan that we do. And that's worked fairly well for us. And so as a starter brand, you have to be very careful where you kind of hedge your bets. That's the way that we've structured, um, trying to bring a brand awareness. The other thing we're able to do is, uh, we'll spend a little bit more on the traditional trade side to have a markdown or a bogo or something that just gets the product in somebody's mouth. Um, because our product is so compelling, when you taste it or eat it, it's like once you try it at one time, um, you're very likely to come back again and then that feeds that top of funnel strategy, and then it just comes back down again. So that's been kind of the strategy that we've taken thus far. It can always, of course, be tweaked, but it's worked pretty well for us thus far.

Darcy: And with Silver hills, you've launched three brands before you launched Carbonite. Correct.

Danny Houghton: So, yes, we've just launched another new one, uh, I shouldn't say have launched. It will be launching next month called the grain escape, um, which is a gluten free, grain free, um, little free preview here. Um, that'll be hitting stores, uh, end of May, beginning of June. But yes, we do tend to, by.

Darcy: The time this comes out, it will be perfect. It will be during launch time, so it will be perfect.

Danny Houghton: Danny, there you go. But yes, we like to launch brands. We like to develop a specific vertical that we like to focus on and develop a really refined, uh, message that goes to that consumer and, uh, then really push that down through the channel. We've launched a number of brands, so.

Darcy: Launching a number of brands and now launching a brand new one, as you're saying. What personal lessons have you brought into, let's just say this latest launch, even maybe things you learned during the carbonaut launch?

Danny Houghton: Yeah, I'm kind of the internal champion. Uh, some people like to throw stuff at me for this, but I really believe it's an important and key component, especially as what I'll call a small to midsize manufacturer. You have to be agile, you've got the real small guys that don't have some of the manufacturing capacity, that are downstream of you, that can really innovate and move quickly. And then you have the big multinationals that are to the north of you that don't innovate fast or quick. And so your advantage really has to be in your ability to recognize trends, to be really thinking in an innovative space. And then once you lock onto that idea, execute it at speed. And that's been, I think, probably, um, the thing that I've learned the most is you got to put a quality product together. But if you can maneuver and get to market first and be the first to market mover, it gives you a tremendous advantage where others have to kind of either buy that and if they're bigger or they have to seed over a longer period of time and go through the challenge of scaling up from a manufacturing perspective. So we've been able to do that in several of our other brands. And create a manufacturing footprint. So for us, really, it's about speed of execution and a high quality product getting to market first and kind of staying at the cusp of that innovations. What's coming next? In the case of carbonate, the timing was perfect, the offering was perfect, and we really saw the success just kind of skyrocket. But I really attribute it to the combination of a really high quality product that was executed at speed and brought to shelf as a first to market mover. Uh, that's the first thing that jumps out.

Darcy: Absolutely. There's a reason why so many enterprise brands have turned a little bit more to the model of acquiring these brands that are, quote unquote, disruptive brands. And it's interesting because as we work with brands and clients, there's such a space. No longer examining your competitive set at shelf is the right thing to do. It's looking at it, like you said, in that digital space, seeing the opportunities, looking at the ratings and reviews, where is the white space? But also, what is the consumer? How are they searching? You know, I always say the, the Amazon search bar came just as good as Google when COVID hit right, that the consumer's going there and just looking for what, what they have a need for. So being able to really look at that side and, and look at that digital shelf is, is changing the game of where, you know, who really is taking share.

Danny Houghton: And many times, to your point, I think the digital shelf has become so much more relevant. Uh, it certainly was a key role player in our development of carbonaut to see the demand there and something that was not manifesting itself at all in traditional retail, which is where companies like mine typically play. And so to be able to leverage that kind of knowledge and then take it and move on it quickly in the other realm as well as the digital at the same time. Um, those are very important components to your point.

Allan: So, Danny, I know most people don't have the benefit of seeing you right now, but you've got this low carb.

Danny Houghton: Crystal ball in front of you.

Allan: What do you see when you look into that?

Danny Houghton: I think that there is going to be continued and ongoing demand for thoughtfully curated products that are lower carb, that still deliver from a taste and a texture and a quality perspective that will begin to move out into other new, uh, product categories. I do think, and especially the ones that are very high carb, you think of something like a pasta. We've not seen somebody that's really done, in my view, a really good low carb, high protein pasta. That's off the charts. When you look at carbs, um, you know, pizza is something that we're into. You know, some of these other foods that are higher carb, they're going to continue to say, can you create something that doesn't taste like cardboard? That still, you know, it's a pleasant eating experience, but will help me kind of achieve some of my other health goals that, um, that I want to accomplish without sacrificing, you know, too much of the. The pleasure of eating. And so, you know, from our perspective, our commitment as a brand is to say, hey, um, you know, we want to continue to broach new product categories. We want to create things that are really going to be compelling for you to include in your daily regimen of what you eat that will contribute to, um, a better quality of life for you, um, without sacrificing that taste or texture that we all love and enjoy. And so that's kind of what we see the future looking like and where we're hoping to be able to continue to serve our customers.

Darcy: Well, I laugh at the thought of, you know, you're bringing up pizza. And my daughter came home yesterday from being at a sleepover, and she said, mom, I had two new things that I had. And I said, okay, what were these two new things, and how do I introduce them into your diet? And she's like, well, we had this really thin pancake for breakfast, which I realized, and she was like, it's called a crepe. And I was like, aha.

Allan: Uh-huh.

Darcy: And then she brought a blast from my past. She said, they took bagels, and we made pizza bagels. And I was like, and there it is. And I always love to see, as you speak, of trends, where they're going. And I also think even in the low carb, we can say sometimes it's a dietary thing. I also think, being a mom of two, we're trying to make healthier choices, not only for ourselves, but also set our children off on the right footstep, too, to a healthier lifestyle, a healthier diet. Um, those are things that we're actively, always going for in trying to make the right decisions.

Danny Houghton: Yes, absolutely. It's an important thing to make sure that you're. We only have one life on this planet, and to be able to live that to your fullest potential and feel good. Everyone wants to feel good. And if you're able to be a little bit more mindful of what you eat and how you're eating it and what the values are in that food, um, that are still enjoyable, but are going to contribute to a higher quality of life and exploration of new types of things as well. That's the ideal.

Darcy: Absolutely. Well, Danny, we want to thank you so much for sharing not only your story, but carbonate's story. It is stories like yours that remind us to keep innovating, stay inspired, and let's all continue to redefine the world of CPG innovation. Thank you so much.

Danny Houghton: Appreciate you having me. My pleasure. Thank you, Danny.

Darcy: So I have to say, having on Danny, I know he's, um, a client of ours, but it was so fun to hear more behind the story and about the innovation process and how carbonaut truly came to life as a brand.

Allan: Yeah, it was great having a front row seat, uh, to that as well. And I'll tell you, I think one of the things that really makes these guys stand out is they live it. So Danny is a very healthy eater, um, going and visiting a client. You always expect to have that big, indulgent meal together. And we had that big, indulgent meal, but it was all healthy, uh, which was really shocking to me.

Darcy: Absolutely. And I think he touched on an interesting thing about innovation is they've been, um, able to now launch four brands that really have identified what their benefits are, what they're bringing to market their share of the market. But even with the Carbonaut brand, they were one of the first to market. Imagine having 80% of share, like you said, in Canada, and still number one. And yet they're not stopping at just being the keto, the glute, you know, the low carb option from breads. They're expanding and seeing how far can we take this? This is a lifestyle choice. This is something that once we're introducing the consumer to the brand, how. How far is up with the burritos and the pizzas? And also challenging themselves to go outside of, like you said, that baking category.

Allan: Yeah, I'm excited for the pasta. Um, you know, reminded me a bit of the, uh, focus, uh, from an innovation standpoint that quest has when we, when we spoke to Stu, uh, over at quest. But, um. Yeah, no, it's fascinating. How do you build trust and bread and then take that and expand that to so many other places that, uh.

Darcy: There'S a need, there's such a need for this consumer wants to be healthy, but they don't want to give up life's indulgences. So what's better than a burrito and pizza? If I could have a healthier option to have one of those you know, that's music to my ears.

Allan: Mine too.

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