Kyle Kaler
Appearances
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
At that point, now the work begins for us to set up the relationship with the distributor. So we sell to the distributor. The distributor then sells to the retailer.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
I took a lot of things out of my diet, you know, grains, wheat, corn, soy, like all of these things. I took a lot of processed foods out of my diet and couldn't find a whole lot on store shelves that tasted really good as well.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
And, you know, we recently raised prices last year for the first time in, gosh, six or seven years. And we're not making any more money off of that price increase at all. So, yeah, we have to raise prices or else we'll just never survive.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
And so, yeah, threw all these dried fruits and nuts and seeds in like a food processor and like blended it together and just ate it like that for a snack.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
That's a great question, and I'm trying to be really careful about what I say and how I say it. Yeah, it is fun. Complex? It can be complex, yes.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
You know, you would think it would be as simple as, you know, distributor buys my product, and then once they buy it, you know, it's their responsibility, and then it's their responsibility to sell it, right? But the reality is that it's not as black and white at all as it would seem.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
So most distributors have a guaranteed sale clause where I am guaranteed to the distributor that the product that they buy from me will get sold.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
And if it doesn't, the cost comes back to me. Either I have to buy it back or I have to discount it to get rid of it. Or maybe it expires and I have to pay for it to, you know, get thrown away.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
So, you know, this was a few weeks ago. We had an invoice that had a $2 charge from a retailer. And the distributor tacked on a $40 administration fee on top of that $2 fee. And so individually, $40, not so much, but repetitively done over and over again, adds up to a lot.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
Yeah. So we have somebody that works with us and their sole job that they do for us is to look at all of the chargebacks and fees that we get charged on the distribution side and try to determine which ones are legitimate and which ones are not.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
Yeah, no, there's not really much of a way around it. If we want to grow and become a larger company, a national company, we're going to have to continue to deal with distributors and continue to have to take on potential partnerships and relationships that are not profitable.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
It's very much a flawed system and an imperfect system.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
I just walked into Whole Foods Markets headquarters in Austin with this product in a bag and was like, hey, I have a product that I think would sell well on your shelves. And, you know, there was a woman at like the front desk that was like, well, do you have an appointment or like anything? And I was like, no, I just I think this would sell well in your stores.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
And she looked at me like I was a little crazy and was like, OK, we'll give it to me and I'll give it to the buyer. A few days later, got an email from the cereal buyer and said, hey, I got your product and I think this is great. Let's talk about if you guys want to be on shelves.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
I would say that selling a product through distribution to retail will never be profitable for the manufacturer. Ever. As a small and emerging brand.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
It's a great question with the hope that with some sort of like additional scale and additional volume, we will be able to kind of break out of that mold at some point. And so, you know, the hope is that those relationships do start to become somewhat profitable or at least break even to some extent.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
That entire system certainly needs an overhaul. Generally speaking, I think there needs to be a lot less consolidation within our food industry. Most food categories in the grocery store are majority controlled by like three or four companies.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
We have a big consolidation problem where the majority of food that's produced, shipped and sold in this country is controlled by very few people or very few companies. And so I think if we took steps to increase competition across the board, I think that we would see big changes in the price of food and what consumers are paying for it.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
Yeah. Let's just say I don't talk people into getting into the food and beverage business at all. In order to fund your business, you need to understand the economics of it and what it takes to truly grow and scale. Because the reality is that to truly grow and scale a food company in grocery retail, it costs a lot of money.
The Journal.
The Mysterious Fees Inflating Your Grocery Bill
And if you don't come from money or have money or have easy access to money, it's not going to be a good proposition for you.