How to Guide Your Food Manufacturing Business Through COVID-19

The Hartford

Are you the owner of a food manufacturing business that is struggling due to COVID-19? While this global health crisis has certainly transformed the food industry, these changes don’t necessarily have to impact your small business in a negative way. In this episode, Jon Aidukonis and Gene Marks, along with SNACKLINS® founder, Samy Kobrosly, discuss how business owners can actually capitalize on the recent developments in both the food manufacturing and distribution industries.

Executive Summary

0:39—Today’s Topic: What is The Future of Food Manufacturing and Distribution?

4:04—Although grocery shopping continues to embrace the e-commerce trend, many consumers find themselves yearning for the more traditional experiences offered by a physical store.

6:57—If you own a food manufacturing business, your product needs to be available through a variety of different distribution channels so that you can reach as many customers as possible.

8:35—One of the benefits of running a smaller business is that you can implement changes faster than your larger counterparts.

10:34—If you don’t have the capital or resources to utilize every distribution channel, focus on the ones that are most popular among your client base.

12:34—The major drawback to online shopping are the delivery costs.

15:03—To ensure the integrity of their products, food manufacturers should only allow the core processes to be conducted at their in-house facilities; all other aspects of production should be outsourced to specialized processing plants.

Links

Transcript

The views and opinions expressed on this podcast are for informational purposes only, and solely those of the podcast participants, contributors and guests, and do not constitute an endorsement by or necessarily represent the views of The Hartford or its affiliates.

You’re listening to the Small Biz Ahead podcast brought to you by The Hartford.

Jon: Good morning, and welcome back to another episode of Small Biz Ahead, the small business podcast presented by The Hartford. This is Jon. I am joined by my co-host Gene Marks, and we have a very special guest — Samy Kobrosly of SNACKLINS. And we are here to talk a little bit about food manufacturing in a post-COVID world.

Samy: First off, let’s give you a round of applause. That’s the first, that’s the best pronunciation of my last name of all time.

Jon: Samy, how does your mom pronounce it again?

Samy: So I’m from Tunisia originally, so it’s Kobrosly, but you didn’t slaughter it, and I’ll take that all day long, man.

Jon: Thank you very much.

Gene: Hey Samy, this is Gene talking. So tell us a little bit about SNACKLINS. First of all, tell us about the company and also what you do at the company?

Samy: Yeah, so SNACKLINS is probably the biggest joke that’s gotten really out of hand at this point. It really started off as me being a Muslim. I never had a pork rind, and friends of mine would tease me and be like, “Oh man, you should make a vegan pork rind. That’d be hilarious.” And so this joke to make a vegan pork rind ended up working one day. When we had it, we realized that it was more than just plant-based. It was this crunchy, airy, salty, delicious chip that was made with fresh vegetables, and it was low in calories. So it was junk food without the junk. And that’s when the SNACKLINS snowball really started to roll was once we realized that this joke actually had legs, and it wasn’t just to get us free beer anymore.

Gene: Fair enough. And what’s your role there?

Samy: Yeah, so technically, I was the co-founder. So I started this off. Since then, we’ve grown as a team quite substantially, and I’ve settled into my role as I call myself the chief snack bagger. That’s made up clearly. I do a lot of the product development, all the R and D, and I take care of… I’m the factory guy. I really like being in the factory. I like being here when they’re making the product. And so I’ve evolved into more of product development, I guess, like I said.

Gene: Got it. Fair enough.

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Samy: I really like factories. I’m not good with, I don’t like computers and numbers. I love machines. I’m four years old at heart.

Gene: You had said that before, we were doing a little pre-interviewing and getting some information from you. We found you on The Hartford Small Biz Ahead because you had some questions regarding just the future of grocery and shopping. You also had some questions about manufacturing processes that you wanted to keep even if they may or may not make economic sense. So let’s start with both of those. I mean, what do you mean when you say the future of grocery and shopping behavior?

Samy: I mean, I think that even without the past six months of a global pandemic, we knew that things were changing. Already noticed that… and I’m an old-school shopper. So I went to the market with my mom in the morning. I go to the grocery store multiple times a week. I’m old school like that, but I realized that that’s not where it is now. And I was curious as to what you guys really thought was the future. Is it going to be that you’re still going to go to the grocery store, but it’s mainly going to be like going to a mall now where you’re just going to look at the things, and you’re going to go home and try to buy it online? Really where’s that evolution?

Especially being in the food industry like us, selling a packaged chip, packaged snack product, to us, it’s really trying to figure out where is it really going? I find myself buying three-hole punches on Amazon, but not my vegetables. You know what I mean? And so is that, do you guys foresee that happening? Is there a change coming? I don’t know. I was just curious to see what you guys thought about this, being the professionals.

Gene: Yep. Jon, what do you think?

Jon: So that’s interesting. So I was actually just nose deep in an insights report on youth shopping trends since March and before and after a lot of the stay-at-home orders. What I found super interesting is that the lack of access to a physical retail environment has created the sense of nostalgia and some level of romanticization of being back in the downtowns, the main streets, and really experiencing retail and consumer behavior. Which I thought was great because I’m like you Samy, I like to experience what I’m buying. I don’t always trust it when it comes online. But on the counter, to keep things going, so many retailers and even traditional local brick and mortars are really looking for ways to have an online presence now just to survive another day.

So it’s going to be interesting how it shakes out because it’s a guess, and I’m by no means a clairvoyant, but I think what we’re going to see is that a lot of places are finally going to accelerate their e-commerce abilities and when able, consumers are going to want to go back. And I think especially, to your point, to true markets, like local retailers, those hearts of the community, because I think they just miss it so much right now. But with that said, I think maybe it’s something where we saw retail go over the past five, 10 years where if it’s something where it’s your good old standard, like baking soda. Do you need to touch it and see it and try it? No, you can probably order that and get it cheaply online.

But I think what we’re going to see is a shift back to small business and probably away from the big box stores where people have some sense of trust. They know the proprietor or they can feel safe physically because I think that’s going to be a continued concern. But I think that people are going to want to have a little bit more control and a more of an intimate relationship with what they buy and how they buy it.

Samy: No, I think I 100% agree. I was actually just in my head when you were talking that just realizing, oh my gosh, without even knowing it myself, I had done exactly what you said where when that first rush came, I remember looking for flour. Like every other American, I was trying to bake bread, and I was looking for flour.

Gene: I was looking for toilet paper.

Samy: And I couldn’t find it anywhere. And next thing you know, I’m literally randomly at this Turkish store up by where my child lives. And I go in there, and I see the guy is selling a 50-pound bag of flour, and I’m like, “Yo, I’ll take it.” And I bought that flour, and I still have that flour clearly. You know what I mean? Because it’s 50 pounds. But I’ve noticed that I’ve actually started to go back to that guy’s store any time I’m out where my kid lives, I go to that person’s store and I’ve created this relationship where I don’t even really, I can get tahini at a Whole Foods. But for some reason, I’m like, “Oh, I have to buy tahini. Oh, I’m going to go see this guy next week. I’ll go do that.” And I’ve naturally gone to this, yeah. I think you’re 100% right. I didn’t really realize it, but I guess I’ve done exactly what you said. So maybe you are clairvoyant.

Gene: Well, I’ve got to chime in here, and I’m not sure I agree with either of you guys. And I’m going to tell you the reason why. I mean, I think we’re living in a world now where people have a lot of choices, and there are different people that prefer different ways to buy their stuff. I mean, look at it now. I mean, there’s the way the population is, some people like to get their news on newspapers, some people like to get it online. Some people like videos, some people like to hear the radio or podcasts. There’s a lot of different ways to get content. And there’s a lot of different ways to buy your product, Samy. And I think the answer that you don’t want to hear is, but it’s I think reality, is that you’ve got to have multiple channels.

I don’t think you can just focus on that small mom-and-pop grocery store because yes, you are right, there is a percentage of people that will want to go to those small mom-and-pop stores, but there’s also going to be an equal percentage of people that prefer to buy their stuff online or some people that like to go to Whole Foods or to Genuardi’s or wherever, that’s just because they want the choice to do that. And I think a lot of businesses that I watch right now, the ones that are just straight brick and mortar or the ones that are just, they’re doing it just the same customers that they were doing five years ago. I think they’re missing out because they’re not expanding to other channels. And I think you’ve got to, believe it or not, have got to be addressing your prospects and your customers in all these different areas. I mean, I don’t know if that depresses you or not, because that’s expensive. But it’s what it is.

Samy: No, I totally get it. I mean, I always jokingly say, I’m like, “Hey, but where are the cool kids buying stuff though? How are they buying stuff?” And that’s what we’re focused on. I think that’s part of being small is that you may have a lot more hurdles, but the nice thing is you’ve got a much smaller truck. So you’re like, you’re trying to pull a U-turn in a Fiat versus a 53-foot semi-truck. You know what I mean? And so we can make these changes. Also real quick, just want to say to you, I appreciate the Genuardi’s shout out, man. It’s been a minute so.

Gene: I’m a big Genuardi’s fan. I’m also a big Wegman’s fan as well.

Samy: Yeah, Genuardi’s, man. For people that don’t know, if you have a Safeway now, it probably was a Genuardi’s back in the day if you’re in the Northeast.

Gene: That’s exactly right. Yeah.

Jon: In Connecticut, we have Stop & Shop and Shaw’s and ShopRite. And I feel like all the Shaw’s are now gone except for there’s one over the tunnel in Boston. It’s not even the tunnel. It’s when you’re driving up the Mass Pike, if it’s still there, and it’s this semblance of my childhood grocery shopping.

Gene: I tell you the other thing that I think is it’s happening, and it’s happening quicker than a lot of people give credit for is the whole Amazon cashierless stores. They’ve got a dozen Amazon Go stores opening. They have plans to open up thousands of them over the next five years. And some other supermarkets are going the same way where, they’re small grocery stores. You walk in, you pull the item off the shelf, you zap it with a QR code on your phone. You’ve got the Amazon app. So with your credit card, and then you just throw it in your bag, and you walk out the store. Because people want fast, fast convenience to buy their stuff. So then you’ve got that population too. You’ve got all these people that are some… There’s like you said, Samy, there’s the cool kids, and that might be where some of the cool kids shop going forward is the Amazon Go type model.

And I think as a food producer or a snack producer, you’ve got to be prepared to go after all those different channels, if you want to maximize yourself. If you can’t, then the only thing I can recommend to you is, because you’ve got limited resources like everybody else, is you’re going to just have to make a bet on which two or three channels are going to really be the biggest and focus on that. That’s my thought.

Samy: We’re lucky because we’re shelf stable. So that makes sense to me. We can do that. It can go there. Now, is there any particular facet of the food industry that you never foresee going online?

Gene: Well, I mean, again, Jon, I don’t want to jump in here first. What are your thoughts on that?

Jon: So I don’t know. So online shopping is one of those things that still confuses me as a person. So I can spout out all the stats I see, but I don’t know if I actually instinctually believe any of them. But I think that everything will eventually end up, I think in my head, it’s like the things that are perishable, but you can already get that. So the Amazon-Whole Foods merger was, I think, a big signal to say we can ship and sell anything online, even if it’s organic, locally sourced vegetables, which is nothing I ever thought of. I think what’s interesting is how will that play out in terms of category performance over time? So, Samy, like you, so I’m someone doesn’t even buy clothes online unless it’s something super specific that I can only get from an online retailer, but I like to touch fabric.

I’m not really a huge try-on guy. But I like to know what I’m getting because a really good picture can be really deceiving. And I take that approach with other things. So if it’s any personal food, hygiene product, those are the things I want to know where I’m getting them from and see them, which might just be the older soul, the older-aged millennial me. But I haven’t really let that go. So I don’t know, Gene, to your question, and Samy to yours. I think everything will go online. I just don’t know how everything will perform over time.

Gene: Yeah, and I think it’s anything. I think the staples, like milk and bread and meat, those kinds of things are never going to be really popular online, because let’s face it, those are the kinds of things you just buy as you need it. They expire very quickly, and they don’t make good for an online thing. But the tipping point for online will be cost. I mean, we were ordering a ton of stuff on Instacart and Uber Eats and from our local stores or the grocery store, whatever, and it was expensive. I mean not only are the prices a little bit more, but then you have to pay the delivery charge and tip the delivery person. And we stopped doing that because we’re like, “Hey man, I’d rather risk COVID than pay that extra $10 fee. Jesus.”

So I think the tipping point is when it gets to the point where it is just as cheap to buy it online, that all of your foodstuff as well as going to the store, I think there’ll be a lot of things like paper towels and toilet paper and laundry detergent, stuff like that, that I think more and more people will buy online as things go on.

Hey, Samy, only because from a matter of time, you had asked another question which intrigued me about manufacturing processes. Specifically about holding on to key processes even at a smaller scale. What did you mean by that?

Samy: So I was trying to take the example of us. So we do manufacture our own product, but when you peel it back, it’s because we’re manufacturing only a certain process. Correct? And I guess we’re trying to find out if you have found any value in other companies in doing that same way, almost like doing a consultant style for their manufacturing. So let’s say if you are baking cookies, and you have this great flour factory right by you that you can get amazing flour, maybe you’re just doing all the mixing in one spot. But then 100 miles up the road, there is a place that can cook your entire month’s worth of dough in eight hours, because it’s someone like Keebler, who’s been baking cookies forever.

And so I was curious if you have found out are there certain key manufacturing practices that people should hold onto in their house? Or, I mean, you guys have seen Shark Tank. I was on it too. And I mean, you seem to see half the sharks got out the second they heard I was manufacturing myself, and I didn’t want to go to use a co-pack. And I was just curious as to what your guys’ thoughts were on all that.

Gene: See, I don’t agree with the Shark Tank guys on many different things, but there’s certain things that I do agree with, and it’s a very specialized world that we live in, Samy. And gone are the days, I know you used the example of Keebler or I have a big Nabisco plant near me where I live in Philly which smells amazing, but they more and more over the years have just outsourced more and more. I mean, it used to be back in the day you had the manufacturing plants that did it all from soup to nuts. And nowadays, it’s a contracting world, and it’s a specialized environment. And I’m just having this conversation right now with another client. They do manufacturing, they actually coat and fill paper and film products.

They cut them, and they roll them, and they provide coding and converting of them. And we’re like, “This is too much, man. You go and they’ve got 100 employees. You’ve got to cut back some of these product lines and have somebody else do the work outside and just focus on what your core thing is.” You know what I mean? And I think that’s what you’ve got to keep in mind. You’ve got to say, we can’t do it all. And we’ve got to focus on what our core processes that we do best. What is it that you guys do best? I mean I know you like to be on the floor, so what is it that you think you guys do really well?

Samy: So I think what makes SNACKLIN really unique is our use of fresh vegetables. Everyone else that’s making a pea puff or a bean chip or something like that, those are all dried legumes, usually and dried dehydrated vegetables. Now you don’t have to be a rocket scientist to know that a fresh piece of garlic tastes better than a garlic in a powder form. And so our big thing was that we were using these fresh vegetables, these beautiful, fresh mushrooms that we get from Pennsylvania. Fresh onions, and we’re making this delicious SNACKLIN chip. And we actually make it right before it’s fried. When we were initially looking at it to install the frying machine, the seasoning tumblers, the baggers. I mean, that’s a massive expense for someone like us.

And then we started looking, and there’s companies out there, co-packers or co-manufacturers or facilities that can fry thousands of bags of chips in minutes where it would take us a full shift to do that. And so with our example, was we realized that we were really, really good at making the unfried SNACKLIN. And then we can find places to fry it. That also was a logistical reason too. I mean, clearly bags of chips are all air.

Gene: Fair enough. I mean, I don’t know, I think that’s what you need to be focusing on. And I think that all those other extraneous things you just mentioned should be considered to be subcontracted out. I know we have only have a minute or so left, Jon, do you have any final thoughts on that?

Jon: I think you have a really interesting product. And I think especially right now, snacks are, I think, what most people are enjoying most of their days. So to your point to have junk food without the junk is pretty compelling. So I hope that you can get some broader distribution going and get your product in front of people because it seems like a really interesting one, and I’m excited to see where it goes. But, I say don’t turn away too far from the local brick and mortars because I think that’s an opportunity for you, especially when people are back on the street again.

Gene: Got it. Makes sense. Well, listen, Samy, this is a great conversation. I wish we had more time to talk. But hopefully, you’ll come back and give us some updates on what’s going on with SNACKLINS. Your website is snacklins.com, S-N-A-C-K-L-I-N-S.com. Samy, what’s your favorite product?

Samy: Of mine? Oh, right now I’m super into the nacho. The nacho is getting released into stores slowly but surely, and it’s good. And it’s also dairy-free, in case you care. It’s delicious. Also, we’ve been talking about production the whole time, and my marketing team’s staring at me from the corner. I just want to say shout out to the marketing team. You guys are beautiful and amazing too.

Gene: Well, thanks Samy. Great conversation. I appreciate it. Thanks everybody for listening. For more information on this podcast and other great tips and help and advice to help you run your small business, please visit us at smallbizahead.com. This is Gene Marks and thank you, Jon, my very special co-host on this podcast. And we look forward to speaking and doing our next one very soon.

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