Rob Sauermann | EVP of Strategy at Better Choice Company

Haixia Yu: Hello, and welcome back to another episode of the RETHINK Retail Podcast. I’m Haixia Yu and today I’m speaking with my guest, Rob Sauermann. Rob is the executive VP of strategy at Better Choice Company, a rapidly growing pet house and wellness company that owns premium brands like Halo and TruDog. Haixia Yu: Rob is responsible for managing all international sales and distributor relationships, and strategically oversees mergers and acquisitions, company partnerships, investor relations, special projects, and human resources. Prior to joining Better Choice Company, Rob worked at Pegasus Capital Advisors. Mr. Sauermann previously served on the boards of organics recycling and national strategies, and currently serves on the boards of SGV International. Thank you for joining the show today, Rob. Rob Sauermann: Thanks for having me, Haisha. Haixia Yu: Great. Absolutely. You have a lot on your shoulders at Better Choice. Can you kick us off high level by telling us a little bit more about Better Choice, your products and brand identity? Rob Sauermann: Sure. At Better Choice, our goal is to become the most innovative, premium pet food company in the world, and I really want to emphasize the world because we do quite a bit of business domestically in the United States, but we’re also really focused on our growth internationally. What we do is we sell branded premium pet food. That could be kibble, canned food, freeze-dried treats in both the domestic and in the international markets, and we’re really focused on growing rapidly in the space. Rob Sauermann: There’s a ton of demand for high quality pet food out there, and we think that as more and more people treat pets like their own children, we think that that’s just going to continue to grow. It’s a really exciting space to be in. It’s a lot of fun and we’re really optimistic about what the future holds for us. Then just to talk quickly about the brands that we have under our portfolio, I really focus on the Halo brand. Rob Sauermann: Halo is a pet food brand that’s been around for a while, but we’re really focused on revitalizing it. We’re launching a new product Halo Elevate this year in over 2,000 domestic [inaudible 00:02:38] stores, and we’re also revamping Halo Holistic, which is our formula that’s been around for a while and is all about sustainably sourced ingredients and really high quality raw materials. There’s a lot to be excited about. Haixia Yu: Okay, great. Yeah, we all want our dogs and cats to live healthier and happier and a longer lives, just like us. I like that. I like that. Rob Sauermann: Totally. Haixia Yu: Yeah. Rob, you’re responsible for managing the international sales, and Better Choice has built several very strong distribution partnerships over the last few years in China, Korea and Japan, that focus on selling the premium popular Halo brand. How did you do it? Rob Sauermann: Yeah. I think the first thing here about international is partnerships. Partnerships really matter whenever you think about selling your product internationally. Obviously, every pet parent that we sell to cares about feeding a premium pet food, whether they’re in Shanghai, they’re in Los Angeles, they’re in Seoul. There’s a ton of commonality about what the consumer wants, but there’s a lot of differences market to market. When I think about how we sell into China, for example, it’s a very different strategy than maybe what we do in Japan. Rob Sauermann: China’s very online-focused and it’s all about the online experience and sharing through social media. Whereas Japan’s a little bit of an older market and there’s a ton of sales that still happen in brick and mortar. There’s some interesting differences, but we got started in our international business maybe five, six years ago now. We’ve got an incredible partner on our team who’s been selling internationally for 30 plus years. Rob Sauermann: What we wanted to do was find the best partners, best local partners in each of those markets, work on developing a unique strategy for each of those markets. In China, it was about how do we come across as authentic and market to female millennial consumers online? In Japan, it was all about how do we get our product in the right store locations so we can come across as super premium and be where the consumer shops? There’s a little bit of nuances market to market, but I keep coming back to this whole finding the right partner as being the key unlock here. Haixia Yu: Yeah. 30 years of partnerships, that’s very impressive. I agree that I think the partnership development, it’s definitely not a sprint, and you need to think about long term, especially nowadays with geopolitical factors, and then- Rob Sauermann: Definitely. Just to clarify, I’ll just stop right there. we’ve been selling internationally for five years. It’s a 30-year-old brand, but we did move internationally in the last five, just so you know from an edit perspective. Haixia Yu: Okay. That’s great. Okay. Rob Sauermann: Yeah. Yeah, sorry about that. Haixia Yu: No, no, no. That’s still great. Okay. Yeah. Talking about international markets, how do you recognize a new market opportunity, and what kind of data are you looking for to guide the new market entry? Rob Sauermann: What I would say is the first thing that we’re looking for is is there a demand for the same product that we manufacture in the United States? What we don’t want to do is to create a bunch of product lines that are specific for individual markets, because we don’t pick up economies of scale in our manufacturing and our branding, anything that we’re doing in the United States. What we want is we want to find markets where there’s intrinsic demand for our US manufactured product. Rob Sauermann: Then we also want to look at markets where there’s a high level of pet ownership or a growing level of pet ownership, and there’s a lot of interest in feeding premium ingredients. I’ll give you a good example in contrasting the opportunity between China and in Europe, for example. When you think about growth in China, pets are rapidly becoming part of the public consciousness. The pet ownership in China’s doubled in the last five years. The category’s growing at 30% annually. There’s a ton of interest in feeding premium food, but there’s also not a history of pet ownership historically. Rob Sauermann: There’s not brands that have been there forever and are entrenched and are known as the highest quality, so there’s a lot of market opportunity, which is the perfect environment to be in. But then when you think about Europe, where we don’t sell today, people have the same love for their pets in Europe, but there’s much more of an established infrastructure around European pet brands, right? If they’re living in Germany, they just as rather buy a European manufacturer pet food brand as opposed to paying that extra dollar to get something from the United States. Rob Sauermann: We think there’s a little bit less of an opportunity there. Whereas in China, people are paying a premium because they know it’s such a high quality product. I think that’s an important part of our market strategy. A great example too what we see in Asia is Latin America really being, I think, an area of growth for us where there’s a similar dynamic of, “Hey, the best products are made in the United States. That’s what I want to feed, so I’m going to go out and seek out that brand.” Haixia Yu: Great. I think, overall, you’re looking at the consumer behaviors to drive your new market entry, and then to follow up on that is, to be more specific, it can be very incredibly difficult to understand the nuances of the new market customers and their day-to-day habits. What steps exactly has Better Choice Company taken to get to know its customers in different regions, and then what have you learned? Rob Sauermann: Yeah. I think the most important thing is whenever you start out and look at a new international market is to not assume that you know what the consumer or wants, what their purchasing habits are and that it’s going to be exactly the same as the United States. I think that was what allowed us to be really successful in Asia, where we actually had quite a bit of research and A/B testing of our products and positioning with our distribution partners to go and figure out what the right message was. Rob Sauermann: Taking a step back to what I said earlier, finding the right partners on the ground is super important because, look, I live in New York city. I used to travel to Asia before COVID hit, but hopefully I’ll be back over there soon, but we’re having to rely on our partners for everyday knowledge, right? As a somewhat smaller brand. We’re not a billion dollar business with offices all over the world. What I really focus on is having that day-to-day relationship with our distribution partners so we can work together to develop a strategy. Rob Sauermann: A good example, I’ll just use a case study, is we are Halo Holistic product, which is selling really rapidly in China, Korea and Japan, is all about sustainability, and it’s also there’s a giving back message as well. One of the products that we use has Marine Stewardship Council certified fish products. It’s a really high quality ingredient. What we did was we worked with our local partners to do and sponsor a reef cleanup in Shenzhen where we had a bunch of local folks that either worked with the Halo brand or folks that they knew to go and do a brand sponsored reef cleanup. Rob Sauermann: That was something that I think not a lot of brands are doing, particularly not a lot of Western brands, and it generated a tremendous amount of exposure on social media and it’s very consistent with what we do in the United States. There’s a brand continuity and there’s just a market opportunity to do something different too. Haixia Yu: I’m just curious, did the partner in China come up with this marketing idea? Rob Sauermann: They did. That was something where we gave them brand guidelines and they thought, “Hey, wouldn’t it be cool if we could bring this to life with a campaign like this?” What’s great is they’re our distributor, but they’re also our marketing arm and country as well. It’s allowed our brand to feel much more authentic as opposed to a bunch of Americans trying to figure out what the average Chinese millennial woman wants to see on social media. Haixia Yu: Right. The learning and living local parts, a lot of them are on the local partnerships? Rob Sauermann: Exactly. Haixia Yu: Yeah. Right. Then how do you evaluate the partnerships then? I believe that there are a lot of distributors out there in different countries. I’m familiar with China, Korea, Japan as well. How do you evaluate them? Rob Sauermann: Yeah, I think that’s a great question. Obviously, there’s a reputational element that comes with that. I think for us to get to a place we’re even willing to commit to that level of spend on a program like that, there was quite a bit of test and learn execution stuff that we had done over the years. We’re very sophisticated internally as to what ROI metrics look like on online platforms and online campaigns. We have a team that really understands what metrics drive success and we can evaluate our partners on those metrics. Rob Sauermann: While we might not be the only hand in creating content, I think there’s an area of opportunity there for folks to fall in line with our own metrics that we’re setting. I’ll give you a good example of a campaign actually that we did, really resonated in Asia, that we had actually developed in the United States, which was a campaign around healthy digestion and the proof being in the poop. It was actually even more successful in Asia than it was in the United States, the campaign. It was originally supposed to be. I think it’s all just being totally open and transparent and wanting to work together with your partners. Right? Haixia Yu: Right. Rob Sauermann: And feeling they’re part of your company almost. Haixia Yu: Right. Yeah. I agree with you. Trust is probably the most important qualities in terms of the partnership development, and then you’ll be surprised how creative the other part is willing to participate. Yeah. Rob Sauermann: Totally. Haixia Yu: Yeah. Then did you involve celebrities for your marketing campaigns overseas? Rob Sauermann: We did. We did. We partnered with a male fashion model in China and in our Asian markets. His name’s Zaule . He’s a cat owner, a huge proponent of adoption of cats rather than breeding, which is very much in line with our sustainability focused message and he has a huge following in China, in particular, among our target audience. It’s a lot of fun working with someone that’s really passionate about, not just the brand, but really the message, and that authenticity was a huge reason why we ended up selecting him. We take the approach in the United States that we want all of our celebrities that we might partner with to be authentic because I think the consumer can really see through these fake partnerships. Haixia Yu: Yes,. Yes, they can. Yeah. I like the word authenticity a lot because you have to be authentic in the modern market, and nowadays the consumers are very smart and picky, and then they wanted to be part of the great brand story that’s authentic, that’s relatable to their own identity or their own brands, their own lifestyles. Yeah. Rob Sauermann: 100%. There’s a great example. I remember, and not to call out a specific campaign, but I was flying through the Dubai airport connecting somewhere and there’s this ad I kept seeing, which was Bradley Cooper smiling and eating Haagen-Dazs. I was like, “Who is this for? Who is this ad for in the Dubai airport?” We’re trying to not take that strategy. Right? Haixia Yu: Right. Okay. I agree. Yeah. I like how you are approaching this international growth. Very impressive growth internationally and a very impressive strategy as well. Then how has Better Choice companies, this Halo brand, been able to establish the homogenous brand image across a globe? Rob Sauermann: Yeah. I think it always starts with the products and delivering the best ingredients for pets, and that can take the form of a lot of different product attributes. Last year we were [inaudible 00:17:11] around $50 million of revenue. Our goal is to grow really rapidly and be north of 100 million gross sales by 2023. There’s a lot of … That homogenous brand identity is super important as you think about growing. Rob Sauermann: When I think about our offering under Halo, we’re launching Halo Elevate, which is designed for pet parents to have natural ingredients that they know and trust with science-backed results. High levels of nutrition, high levels of supplement, nutrients in the pet food. That I think just links throughout everything that we do, whether it’s in the United States or in Asia or Latin America or Australia, is just having the best quality pet food for your pets. Then I think the brand identity where that plays in, again, goes back to that authenticity. Rob Sauermann: I think that’s actually a pretty good word to use to link through everything that we do in each market because we’re going to tell the whole story of Halo Elevate. It’s going to tell you exactly what’s in our pet food. What’s on the front of the bag is what you get. It’s a very clear message. We’re not trying to hide ingredients or anything like that. The same is true on our holistic product, which is all about again, that ingredient traceability, sustainability, high quality proteins. Rob Sauermann: The authenticity where that plays into in the marketing side is authentically talking about what it’s like to be a pet parent. We’re really excited to talk about the joys and the challenges of being a pet parent every day and how it’s not just an image of a Golden Retriever running across a lawn catching a Frisbee. That’s probably not what you do every day with your dog. Rob Sauermann: It’s more about all those amazing day-to-day moments that you see with your pet. We really want to make that come to life, and I think that will play through in each of our international markets in terms of how we market. It might take different forms, but again, it’s all about being [inaudible 00:19:39] that authentic great food for your pets. Haixia Yu: Yeah. Just following up on that, I think customers in different regions may relate to your brand’s story in a different way. Then do you offer customized products in different regions? Rob Sauermann: What I would say is we … I agree with you. One thing that is nice is that dogs and cats don’t really know if they’re living in the United States or if they’re living in China or they’re living in Australia. There’s not as big of a variability in terms of product offering, if you will. Sure, I think there’s some examples of different skews performing better in certain markets. But I think there’s a little bit … We have an advantage to where we can sell pretty similar products across different markets. [crosstalk 00:20:49] Haixia Yu: That’s great. Yeah. That’s great. Yeah. Rob Sauermann: Yeah. What I would say though is it probably takes … It’s more about the form of the products than anything else and who we’re marketing to. In Asia, for example, there’s the cat market, the premium cat market is actually a little bit bigger than the premium dog market, whereas in the United States, the premium dog market is a lot bigger than the premium cat market. There’s some nuances there, but all in all, we’re serving the same dog or cat the same meal. Haixia Yu: Right. Yeah. That’s interesting. Yeah, I agree. I think probably the form factor of the packaging for the owner, pet owners is more important than the variety of the product itself. Yeah. Great. Rob Sauermann: Exactly. Exactly. Haixia Yu: Great. Yeah, to wrap up the conversation, I think I have to ask this, the pandemic. How does the pandemic change the pet food market landscape, and what are the trends you’re seeing? Rob Sauermann: Yeah. I would say that the pandemic, it’s been a super interesting … had a super interesting impact on our business. I would say there’s been some positives, positive developments as a result of people staying at home more, spending more time with their pets. I think it’s accelerated the trends around the humanization of pet food because … or pets, because the more time you spend with your dog, the more you probably want to feed it treats and you want to treat it like a kid. Rob Sauermann: I think that’s a natural outcome. I would say on some of the challenges, like everyone else, we’re selling a durable consumer good that flows through global supply chains. We’ve been lucky because we’re actually an exporter out of the United States into our international markets, so we haven’t had as much challenges getting product out of the country as maybe some other folks have had getting in. We’ve stayed in stock on a lot of our products, which has been great. Rob Sauermann: I think really when we think about all the challenges and all the hardships that the pandemic has caused, we hope that pets are, in some ways, a stress reliever and an [inaudible 00:23:13] emotional outlet, and I know that my cat has definitely played that role over the last couple years for me. That’s what we care about, right? Is just delivering the best food so our pets can be happy, and then we can be happy by extension. Haixia Yu: Yeah. Any new pet food category you’re seeing is being in the developer mode? Rob Sauermann: I think what I would say on the innovation side is the freeze-dried space is growing really quickly. We have the new line I was talking about, Halo Elevate has … It’s actually a free stride coated kibble, so it’s super palatable for dogs and they love that fresh meat taste. That’s a space I think there’s demand for it in every market on the freeze-dried side. Rob Sauermann: I think that’s going to be an interesting space for growth. I think just with treats, generally, there’s always opportunities for new and innovative treats, interesting proteins. We have a vegan line that performs really, really well, which is … I think it’s unique, right? As humans, it’s again that humanization, right? Haixia Yu: Yeah. True. I agree. Because everyone in my neighborhood wanted to a puppy when the pandemic started. Then I agree, I think we should and need to treat our pets and dogs as one of us. Haixia Yu: Thank you for the insight for conversation on building success for partnerships internationally and getting to know your customers and then channels locally. It was a great conversation. Rob Sauermann: Thanks for having me. Haixia Yu: Yeah. Thank you. Then everyone else, have a great day. Thank you for listening.