Starday, a New York-based food start-up seeking to develop new brands based on sophisticated data and research, has rolled out its first product into 2,000 Kroger Stores, the company said last week. Gooey Hazelnut Cocoa Spread, launched under the Gooey Snacks brand, is an all-natural chocolate-hazelnut spread that is low sugar, vegan, gluten-free and made without palm oil, the company said.
It is planned as the first of several CPG food products from the company, which was founded by four veterans of the technology and food industries. Starday has already launched a second brand, All Day, as a line of spice products available for direct purchase online. The company is currently in talks with retailers about introducing that product at retail as well, Caroline McCarthy, co-founder and VP of growth of Starday, told SFA News Daily, in an interview in which she discussed the company’s approach to creating new products and its plans for growth.
Could describe your data-driven approach to creating and scaling brands?
I often say that we are building a food conglomerate the way that software tech companies have been built for years—taking an approach that looks at de-risking product market fits in the beginning by using both first- and third-party data to understand where there are current needs in the market that are not being met.
We do this in a variety of ways at different points in the brand life cycle, but it comes back down to our in-house data engine, which is constantly pulling in everything from keyword research, to things that are now trending, to looking at rises in specific diets, and changes to consumer behavior. We also do our own customer paneling and surveying as well so that we can better understand, where are we seeing consumer demand? Where is that demand not being met? And what products can we build and create brands for in the food space, where we know that there’s a demand?
The other thing that we do that's really important is that we take this testing approach throughout the entire development cycle. We're not just waiting on data that, says, “OK, we're going to go build this." We test absolutely everything about the brand—the flavor, the texture, all the way through to the point that everything that is on the label is tested as well. We make sure that we are not only meeting consumer demand, but that we’re also marketing ourselves in a way that we know is going to stand out on-shelf.
Can you talk about how your data and testing approach led to the launch of your first two brands, Gooey Snacks and All Day?
With Gooey, we really saw that there was a lot of data and trends around people looking for lower-sugar, dairy-free, and gluten-free alternatives to childhood and nostalgic favorites. We saw an open opportunity there in our data and consumer testing for, basically, a healthier and more sustainable version of Nutella. It's obviously a longtime family favorite. We saw a lot of people that were looking for lower sugar, dairy free, and then also there’s the palm oil issue on the sustainability side.
When it came to All Day, we were also seeing a ton of research and data in our signals around folks that have been cooking at home more. We see that as a trend not just for the pandemic, but also a trendline that we expect to continue. There is a focus on creating foods that are a little bit healthier, and there’s a lot of data around the type of flavors that people are looking to inject into their recipes. We are catering to that home chef who might not be a gourmet cook themselves, but we can bring that level of chef expertise into their food and flavoring, with the data that we saw in terms of the type of flavors that folks were looking for, and then crafted by our chef. The idea with All Day is that you can just sprinkle it on, douse it on very liberally, and you have a pretty magical meal without tons of instructions, or four-hour prep time, or anything like that.
What were the keys to getting Gooey onto Kroger’s shelves?
I think Kroger is definitely a data-first grocer. They have their 84.51° data and analytics group. They appreciate the approach that we had taken to understanding the data and getting the demand for Gooey de-risked from the outset—the deep understanding we had of our consumers' demographics, and the target market, and really how to drive additional velocity in the stores.
Our conversations with them were really about the deep understanding we had of the consumer needs that we were meeting, and also how our data-driven approach not only makes Gooey a fantastic product, but is also something that we apply in understanding the growth plans, and the marketing plans, and things that support Gooey in-store. We’re able to talk about some pretty advanced digital and out-of-home [marketing] tactics, so that we're not just getting Gooey on shelves and leaving it. We’re taking some unique approaches to support the launch and continued sell-through rates on shelf. So, I think there was also that understanding that we would be a good partner to them, and would be there to drive increased velocity and also drive traffic in stores.
What are some of the key differences in supplying brick and mortar stores, and are you adjusting your operations at all to meet that demand?
Because we've always had large-scale aspirations from the beginning, and we set up our operations to operate like a large-scale brand from the get-go. We got involved with a [third-party logistics firm] very early on, we have made sure that with all our co-packers, everything was ready to scale. I think in general, for a lot of the newer brands, once you go to retail, it can be a huge shock. I think our goal was always to be able to scale these brands as quickly as possible, and so we really did not have any major adjustments to our operations or strategy to support Kroger.
How are the current challenges around sourcing, packaging, the supply chain and ingredient inflation impacting Starday?
Probably everyone is still scrambling looking for things like jars and lids. We really haven't struggled so much with ingredient sourcing. Similar to how we had promised ourselves we were going to be ready from the operations side to scale quickly, I think we also kept that approach in mind when we were doing our initial supply-buying strategy, so we've really been able to keep ahead of that. Things have popped up here and there, especially with some of the shipping delays, and things like that, but we have been fortunate overall.
I will say, though, that just the exorbitant cost of shipping that every brand is facing when you’re doing digital is something that I think can take a lot of new brands by surprise. Especially if you're shipping something that costs $9, the shipping cost itself can be significantly higher. That's been another advantage about having a very retail-first approach.
What are your plans for future growth? And are acquisitions a possibility?
So much of what makes our products magical is the data that goes into understanding of the “why, what and how.” Never say never, but I don't think acquisitions are going to be a main focus for us right now. We really want to be building these brands ourselves. We have two in market, and then we’re looking to launch about four to six more within the next year, depending on a couple different category changes that we'll be looking at.
And then we will also be looking at extending the current product lines. You'll see us, based on consumer demand in our brands, looking at what are the extensions or different form factors that we want to be adding on as well.
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