Where gut health meets hypergrowth with Ben Goodwin from Olipop
18 Mar 2024 (6 months ago)
Introduction and two truths and a lie
- Becca and Dom introduce the podcast and discuss their favorite types of soda.
- Dom doesn't drink soda regularly, but enjoys it occasionally when he goes back home to Florida.
- Becca mentions that they will be speaking with Ben Goodwin from Olipop, a company that produces a gut-healthy, low-sugar, high-fiber soda.
- They play a game of two truths and a lie, with the options being:
- Ben started in the kombucha business.
- Olipop's revenue last year was $150 million.
- Ben is the CEO and still in charge of creating all the Olipop flavors.
Olipop introduction
- Olipop is a new type of soda, the first major innovation in the soda category since diet soda in the 1980s.
- It is called a functional soda with 2 to 5 g of sugar per can compared to over 40 g in traditional soda.
- Olipop contains 9 g of soluble fiber per can.
- It tastes like regular soda but provides health benefits supported by research from Purdue and other leading universities.
- Ben Goodwin, the founder of Olipop, dropped out of college at 20 to start a kombucha company.
- He was attracted to the health and wellness industry due to his own childhood journey of being overweight and anxious.
- At 14, he changed his diet and approach to health, which positively impacted his emotional and cognitive functioning.
- This led him to learn about the microbiome and the brain-gut axis, inspiring him to create Olipop.
- Olipop aims to make empirically validated ingredients and nutritional strategies accessible to as many people as possible.
Researching the microbiome
- Olipop's nutritional strategy is based on research showing that fiber, prebiotics, and nutritional diversity benefit the microbiome.
- The company conducted its own independent research, focusing on the viability of probiotics and identifying key factors in non-industrialized diets that are missing from industrialized diets.
- Olipop established a Scientific Advisory Board with experts in the microbiome field to guide their research and ensure scientific credibility.
- The company published a mechanism of action white paper with 152 citations supporting their product's nutritional strategy.
- Olipop's research confirmed that their product ferments beneficial short-chain fatty acids, leading to an invitation to the White House Hunger Nutrition Summit and opportunities for insurance reimbursement networks.
- Olipop is now a reimbursable product for about 25 million Americans through Medicare and Medicare Advantage, increasing accessibility to their premium product.
The industrial diet in America
- The industrial diet is the post World War II Western diet.
- Advances in hybridization, petrochemical, and food additive technologies during World War II have led to:
- Drastically decreased micronutrient concentration in the soil and food, including fiber.
- Increased natural and artificial flavors, colors, and preservatives.
- This combination sends a message to the brain that it should be getting critical micronutrients, but they are absent from the underlying food, leading to nutritional depletion and an overabundance of calories.
- The industrial diet contributes to the high prevalence of type 2 diabetes and digestive distress in the US, with significant emotional, physiological, social, and economic implications.
Transitioning from research to product development
- Most entrepreneurs commercialize research immediately without implementing scientific scrutiny.
- Olipop's approach involves combining research with commercialization to ensure a quick turnaround of research-informed products.
- Brands and flavor profiles can create powerful emotional relationships with consumers, making behavior change challenging.
- To encourage mass adoption of healthier products, companies must make it as easy as possible for consumers to transition.
Product nostalgia and marketing
- Nostalgia is a key factor in getting people to make healthier alternatives.
- Olipop's watermelon lime flavor is an example of how they incorporate nostalgia into their products.
- The nostalgic anchor is the starting point for flavor development, and then the flavor is evolved to be ownable and push the category forward.
- Soda has deep resonance for customers because it was there for them during core developmental memories.
- Olipop is trying to speak to soda's place and its own place as a part of people's social and familial experiences.
Market share in the beverage industry
- Olipop's founder, Ben Goodwin, believes in focusing on the quality of their product rather than worrying about competition.
- Olipop's product has multiple reasons for entry, including great taste, fun packaging, compelling nutrition facts, and a nostalgic feel.
- Goodwin believes that many new innovations in the beverage market have flaws that will prevent them from scaling successfully.
- Goodwin cannot comment on whether the big soda industry has approached Olipop to copy their product or buy them out.
- However, he acknowledges that Olipop's disruption in the market has likely caught the attention of these companies.
Olipop’s 200 million dollar year
- Olipop grew from $74 million to $200 million in revenue in one year.
- This growth was achieved in less than 30,000 retail doors, which is unusual for a company of its size.
- Increased shelf expansion, successful marketing strategies, new flavors, and increased organic demand contributed to this growth.
Targeting food deserts
- Olipop plans to address food deserts by expanding into small format stores and convenience stores, which are often found in these areas.
- Partnering with insurance offerings and local organizations focused on hunger and nutrition can also increase accessibility for low-income communities.
Time management as CEO
- Goodwin still manages new flavor creation despite his leadership role.
- He enjoys the creative outlet and direct customer connection that formulation provides.
- Goodwin recognizes his strengths (vision and leadership) and weaknesses (management) and builds his team accordingly.
- He emphasizes the importance of continuously adapting to the changing environment to succeed.
Fundraising and pitching investors
- It's wise to speak to CPG investors when pitching a CPG product as they have different expectations for scale and return dynamics.
- CPG investors tend to be more methodical and picky, aiming for a higher success rate and a different return on investment.
- The fundraising process involves considering the length of the runway, what should be accomplished by the end of it, and the timing of the next fundraising cycle.
- Olipop has been fortunate to have more investor interest than they could accommodate, due to their operating team, product strength, industry experience, and connections.
- Fundraising decisions have focused on choosing the right investors to work with, structuring governance and board matters, and ensuring adequate differentiation to warrant continued investment.
What’s next
- Olipop plans to introduce new flavors, including one tied to a fun partnership.
- They aim to significantly expand their retail presence, potentially doubling the number of stores they are available in.
- The company will focus on developing their "Real Love Makes Us" platform, sharing stories, and involving customers in the conversation.
- Ben Goodwin attempted to create a lemon peel serrano pepper flavor inspired by a lemon peel drink he tried in Japan.
- The carbonation caused bits of pepper to go up into the nose when smelled, resulting in sneezing.
- Goodwin has since figured out how to address this issue.
- Goodwin currently has a five-way tie for his favorite Olipop flavors: tropical punch, classic grape, cherry cola, lemon lime, and watermelon lime.
- These flavors are his go-to choices and are always in his fridge.
Host commentary
- Olipop, a health-conscious soda brand founded by Ben Goodwin, achieved $200 million in sales, surpassing its initial projection of $150 million.
- Despite being a relatively new player in the competitive beverage industry, Olipop has secured a notable 10% market penetration in households.
- Goodwin personally develops all of Olipop's flavors in a lab, demonstrating his hands-on approach to product development.
- The growing focus on gut health and microbiomes has contributed to the increased demand for products that address digestive issues, aligning with Olipop's offerings.
- Discussions have emerged regarding the potential deductibility of Olipop for medical purposes, although further clarification is required due to the complexities of working with large medical and insurance entities.
- Olipop's success is attributed to its appeal to consumers seeking healthier alternatives to traditional sodas, tapping into the nostalgia factor while offering low sugar content and no caffeine.
- Despite the competitive beverage industry, Olipop has found success and is available at various grocery stores, including Whole Foods.