Speaker 1: Bloomberg Audio Studios, podcasts, radio news. It's five o'clock somewhere.
Speaker 1: Oh well, it means red wine, right exactly.
Speaker 2: Or a little red sauce.
Speaker 1: I'm thinking, you know the Marinara.
Speaker 2: Sauce aisle at the grocery store these days, Carol. Yeah,
Speaker 2: not what it was like when I was a kid,
Speaker 2: where it was like all classico and prego. Remember that
Speaker 2: it really was.
Speaker 1: Can I just wait before you go on? I'm just
Speaker 1: gonna say my mom was always made homemade.
Speaker 3: Wow.
Speaker 1: I know I was spoiled, but go ahead, go on, Wow,
Speaker 1: go on, because not everybody.
Speaker 2: Shade to Susan Stewin, there's also.
Speaker 1: A stay at home mom for a while, so okay,
Speaker 1: she could do that. Well.
Speaker 2: The aisle has moved up scale with more botique options,
Speaker 2: including REOs and the sauce from our next guest company.
Speaker 2: Eric Ska is CEO at Carbone Fine Food. It's the
Speaker 2: maker of Marinera spicy vodka, tomato basil arabiata.
Speaker 3: You like that, wow?
Speaker 2: I practiced that one earlier, Alfredo and more.
Speaker 1: Eric. He disappeared for like an hour or so.
Speaker 2: It was just holding a bottle in the Bloomberg Interactive
Speaker 2: Brokers studio. Eric, Good to see you. Okay, Carol and
Speaker 2: I were talking about this Carbone Fine Foods. Carbone the
Speaker 2: restaurant which is owned by Major Food Group. Let's start there.
Speaker 2: What's the relationship. Just settle the score for it.
Speaker 3: Major Food Group is majority owners of Carbone Fine Food.
Speaker 2: Okay, and inspired by the restaurant.
Speaker 3: Inspired by inspired by the restaurant.
Speaker 2: Yes, what you get in a jar at the grocery
Speaker 2: store from Carbone Marinia, do you get that at the
Speaker 2: restaurant Carbone?
Speaker 3: Yes, I mean as close representation as you can make.
Speaker 3: That's the commercial kitchen. Absolutely, all fresh ingredients. Tomatoes from Italy,
Speaker 3: onions are chopped on site, Garlic's minced on site, basil,
Speaker 3: his hands stripped on site. As we produce a product
Speaker 3: that it cooks for an hour to an hour and
Speaker 3: ten minutes, meeting your homemade taste. What we look for
Speaker 3: restaurant quality, and Mario Carbone is very passionate about that,
Speaker 3: so he tastes everything.
Speaker 1: I kind of love it when I roll over to
Speaker 1: ingredients and what you're seeing is everything I understand. And
Speaker 1: there's no chemicals, there's no nothing like that. I mean
Speaker 1: that to me is super important. How do you though,
Speaker 1: make sure that it is as good as the restaurant.
Speaker 3: So I mean, look, we're very, very involved in the
Speaker 3: manufacturing of this. So the first year I tasted personally
Speaker 3: every single batch before it was allowed to go in
Speaker 3: a jar. Obviously I have a staff now how to
Speaker 3: go one hundred thousand miles on United without leaving the country.
Speaker 3: I live in Las Vegas, so that's my fault.
Speaker 1: How many times did you taste something You're like, nope, nope, nope.
Speaker 1: It sounds like a lot.
Speaker 3: Not that often because I work with people that I
Speaker 3: trust that are very very good at doing this. It's
Speaker 3: a very specialized process. No one wants to cook for
Speaker 3: an hour in a manufacturing facility, so those who do
Speaker 3: it are as passionate as I am about it.
Speaker 2: How do you control that, because I mean, I would
Speaker 2: imagine you have manufacturing facilities in several parts of the country.
Speaker 2: It's not necessarily centralized in one place. Ingredient variabilities based
Speaker 2: on seasons, and those tomatoes that you do get from Italy,
Speaker 2: how do you control for those things?
Speaker 3: So the tomatoes you get from Italy are going to
Speaker 3: be fairly consistent. They come in, we open up number
Speaker 3: ten cans just like the back of a restaurant, so
Speaker 3: or not. It's not big drums tomatoes. They're packed just
Speaker 3: in tomato season, and that's tomato we use. So I
Speaker 3: mean to your point, I might be able to take
Speaker 3: us taste a slight variation in fresh basil because it
Speaker 3: was handstripped at a different time. We've never gotten a complaint.
Speaker 2: Is it any different parts of the country where the
Speaker 2: where you do many where you actually do the manufacturing.
Speaker 3: No, most of it's here in the East Coast. We
Speaker 3: have a couple of cop backords set up that that
Speaker 3: we work with, but we have a primary that does
Speaker 3: a good majority of it.
Speaker 1: All right, great bottle carbon name very prominent. Why are
Speaker 1: they doing this? Why do they need to do this?
Speaker 3: You know that would be a that would be a
Speaker 3: question for for Mario. But you know, as I've seen
Speaker 3: him ask that question, he's got X amount of restaurants
Speaker 3: and not everybody can get to his restaurants, and people
Speaker 3: want to get there. Yeah, so you wanted to put
Speaker 3: something in the jar that represented the restaurant and allowed
Speaker 3: people to taste the experience of carbone. And that's why
Speaker 3: we're so passionate about what goes in that jar tasting
Speaker 3: better than anything. Our recipes on our site were developed
Speaker 3: by Carbone chefs, so and we've kind of kept them
Speaker 3: simple so the home cook can make it, but they're
Speaker 3: really good recipes.
Speaker 1: Does it create a significant revenue stream potentially? I mean,
Speaker 1: you understand this industry, we didn't. You know, you're a
Speaker 1: former CEO Raos. You know, someone who's been in the
Speaker 1: food and beverage but you know area for a long time.
Speaker 1: Is it something though, when you have a name that's
Speaker 1: known that you can build a significant revenue line.
Speaker 3: Yeah. Yeah, I mean we just finished our third full year.
Speaker 3: We've done eighteen million jars since we launched. We're in
Speaker 3: twenty four thousand accounts, and we're the number seven brand
Speaker 3: in America, number two in natural foods. So it's went very,
Speaker 3: very fast, and it is in large part because we
Speaker 3: had a name that could leverage from a from an
Speaker 3: awareness standpoint. You know, awareness was not massive in the
Speaker 3: Middlewest Midwest, for example, but it was known certain by
Speaker 3: enough people to start something. Yeah, and then you know,
Speaker 3: then the blocking and tackling happens. So building a brand.
Speaker 2: Okay, So this is not your first rodeo. As Carol mentioned,
Speaker 2: your first red sauce Rodeo twenty sixteen to twenty eighteen
Speaker 2: CEO of REOs. That was the period it was acquired
Speaker 2: by Sovos more than four hundred million dollars. Then a
Speaker 2: couple of years later I believe it was what twenty
Speaker 2: twenty one, twenty twenty four, Yeah, twenty twenty four, Yeah,
Speaker 2: when when it Sovos closed its acquisition, or when it
Speaker 2: Silvis was bought by Campbell's for two point seven billion dollars.
Speaker 3: Yeah.
Speaker 2: Obviously some some big growth in the space over the
Speaker 2: last few years. What do you see as driving the
Speaker 2: growth and how much growth is left in sort of
Speaker 2: the premiumization.
Speaker 3: I think it's significant because of the premiumization right the
Speaker 3: you know, Reo started that trend when they put the
Speaker 3: first job on the shelf in nineteen ninety two. So
Speaker 3: if you think about it, it's a long time ago.
Speaker 3: So this has been a long slow build the consumer.
Speaker 3: And you think about other categories like craft beer, right
Speaker 3: that premiumized years ago. So ice cream premiumized with Ben
Speaker 3: and Jerry's years ago. The premiumization in every category is happening.
Speaker 3: Pasta saus finally got its turn, you know, around twenty fifteen,
Speaker 3: twenty sixteen where it started to really really drive from
Speaker 3: a premiumization standpoint, and people are just looking for healthier,
Speaker 3: better ingredients.
Speaker 1: Listen, I can't tell you. I've got a twenty one
Speaker 1: year old and the same thing. We turn everything around
Speaker 1: and we want to know what's in it and we
Speaker 1: want to make sure we understand the ingredients. I am
Speaker 1: curious how big you think it can be, how big
Speaker 1: you want this brand to be, and is it a
Speaker 1: case of you're going to follow the model of selling
Speaker 1: it off at some point?
Speaker 3: You know, there's no decisions made. My partners are young, Jeff,
Speaker 3: Mario and Rich are in their forties. Right, I'm the
Speaker 3: old guy in the room and I love what I do,
Speaker 3: so I'm in no rush and I actually I would
Speaker 3: have never envisioned doing a startup. I went from raos
Speaker 3: to another run where I took a company through an
Speaker 3: exit and I didn't want to do that, so that's
Speaker 3: why I went to startup. So we don't have a timeline.
Speaker 3: We believe there's a tremendous amount of growth, not only
Speaker 3: in Sauce but in Italian Like we have a platform
Speaker 3: brand that I could if we wanted to go beyond
Speaker 3: we see a significant amount of growth in sauce in
Speaker 3: the next two to three years. So I'm not doing anything.
Speaker 3: I believe in maniacal focus when something's working, So it's working.
Speaker 2: Eight to ten bucks roughly give or take you for
Speaker 2: a jar. Are you seeing any pushback from consumers on
Speaker 2: on higher price stuff as we speak?
Speaker 3: Not, I mean not that I'm seeing. I mean, of
Speaker 3: course people will make comments, you know, friends, friends in general,
Speaker 3: or my brother who wait still it's on sale to
Speaker 3: buy it, but we all But for the most part,
Speaker 3: I think I think Raos has you know, I give
Speaker 3: I give Rayos a lot of credit. And the people
Speaker 3: before me who built Rayos slowly and painted right, they
Speaker 3: really did a good job, and they built a model,
Speaker 3: and they built they built a category. So that eight
Speaker 3: to ten is not sticker shock for everybody anymore. It
Speaker 3: is for certain people. And I get it. But once
Speaker 3: you try that product, the amount of care we put
Speaker 3: it into what goes in that jar, it's worth it.
Speaker 3: Here's a problem, Carol.
Speaker 2: What feeding your kid the pasta sauce that you buy
Speaker 2: as adults, because then they get hooked on it, and
Speaker 2: then you find yourself in situations like us ordering huge
Speaker 2: jars and then they're like, I want you.
Speaker 3: Know, that's a problem.
Speaker 2: I mean, that's the expensive pasta sauce.
Speaker 1: And that's the thing. I mean, not every pasta sauce
Speaker 1: is the same, no doubt about it. How do you
Speaker 1: manage the growth or the expansion of the brand in
Speaker 1: a careful, thoughtful way? And do you need to?
Speaker 3: Yeah, of course I do. I think brand is everything,
Speaker 3: so you have to make sure it's working before you know.
Speaker 3: If you've got initiatives and something's not working, fixed that
Speaker 3: before you moved it the next thing. Right, We grew
Speaker 3: fast because it was working. But had I saw, you know,
Speaker 3: some resistance, I would have worked on figuring out that
Speaker 3: resistance before I expanded. I started. I started in the Northeast,
Speaker 3: and my intention was to stay there for eighteen months.
Speaker 3: But within eighteen months I was national, right, and I
Speaker 3: didn't expect that the intention was to go slow. I
Speaker 3: didn't expect it to go as fast.
Speaker 1: As its stories we're asking for you guys, or.
Speaker 3: What we had stores asking for us we had, Yeah,
Speaker 3: I mean all everything, you know. The customer that I
Speaker 3: thought would adopt it immediately took a year and a half,
Speaker 3: which was whole foods. But you know, we started in
Speaker 3: twenty one. Yeah, pandemic luck going on, buyer changes, you know,
Speaker 3: so on and so forth. So it took a little
Speaker 3: longer with that particular chain. But now if you go
Speaker 3: into whole foods were very well represented.
Speaker 2: Hey, one thing I noticed about your career is you've
Speaker 2: been in this industry for decades at this point, and
Speaker 2: you started off. You've really rode the wave of different
Speaker 2: trends at different points in your career, like the juices
Speaker 2: in the early part of your career, like Fresh Samantha's
Speaker 2: Naked Wallas and those sorts of things, and then popcorn
Speaker 2: rayos a little later in your career. What's what's the
Speaker 2: trend that you're seeing play out right now? Sort of
Speaker 2: the next trend.
Speaker 3: It's really hard to say. In today's world. It's gotten,
Speaker 3: it's gotten muddy. But any anything that's going to be
Speaker 3: higher protein is on point. You know, you did a
Speaker 3: segment on g LP once. That's going to drive I
Speaker 3: think new innovation, that's right, and healthy innovation. I everything
Speaker 3: points to at least the doubling in usage in a
Speaker 3: last in the next call it five years, and the
Speaker 3: households that are on it they're actually showing a decline
Speaker 3: and how much they purchase a grocery stores. So it's
Speaker 3: interesting much bigger decline in convenience stores because if you
Speaker 3: think about snacking, right, that's that's what's going to get hurt. Right.
Speaker 3: I think good food is always going to do well.
Speaker 3: That's that's the way I look at and healthy food
Speaker 3: because those people, I you know, just having interviewed a couple,
Speaker 3: they tend to get healthy. Some of them tend to
Speaker 3: get help healthier. At the same time, how if necessarily
Speaker 3: are looking for better ingredients, is it like the.
Speaker 2: Visceral reminder that you're stabbing yourself with, don't know, a.
Speaker 1: Pen I think, you know, I know initially from folks
Speaker 1: who've done it too. I mean, they don't like the
Speaker 1: taste of food, right, and so they kind of, I
Speaker 1: don't know, they almost kind of go through a little
Speaker 1: bit of a cleansing to some extent and think, I
Speaker 1: don't know, it's just interesting to watch.
Speaker 3: That could be. I do have a daughter that is
Speaker 3: using it, and that when I say I am to
Speaker 3: read someone, it's close close to yeah, but you know,
Speaker 3: she's like at Barry's boot camp in the morning now
Speaker 3: and like you know, really healthy, which is great cool.
Speaker 1: You do wonder if it's a case of and not
Speaker 1: necessary for your daughter, but others who tried to lose
Speaker 1: weight couldn't lose weight, or whether it's because you know,
Speaker 1: they're diabetic or whatever. And finally, Ken and I think
Speaker 1: it feels really good. They feel so much healthier, and
Speaker 1: I think want to kind of stay in that place
Speaker 1: would be would be my gut. But so I'm curious
Speaker 1: if gop one is really ultimately the dry having forced
Speaker 1: in a lot of the food companies. Is it upstarts
Speaker 1: that all of a sudden become the giants or do
Speaker 1: the giants have to buy the upstarts because they've got
Speaker 1: to catch up and they evolve, they're disrupted, Like, how
Speaker 1: do you see that playing out?
Speaker 3: I think it's all the above. I think you have
Speaker 3: new product development going on in big food already, would
Speaker 3: be my bet. I mean I don't know that certainly,
Speaker 3: but that would be my bet. And they're going to
Speaker 3: look at upstarts because sometimes buying growth is easier than
Speaker 3: creating it.
Speaker 1: So what about the beverage space. We've been talking a
Speaker 1: lot about non alcoholics kind of a tease for some
Speaker 1: of our conversations on our weekend broadcast, but we are
Speaker 1: increasingly we often, do you know, no joke, a wine
Speaker 1: segment on Friday or a liquor segment, and we've already
Speaker 1: had a couple of non alcoholic guests.
Speaker 3: Yeah.
Speaker 2: Our pursuit section in our Bloomberg Business Week the year
Speaker 2: is it the yearhead issue or is it it's just
Speaker 2: like kind of preview.
Speaker 1: Yeah, I'm not sure which is well.
Speaker 2: Anyway, there's a huge section on non alcoholic drinks, and
Speaker 2: the innovation that's happening there is pretty incredible. Are you
Speaker 2: seeing that among the folks you are, you know, you're
Speaker 2: kind of in the part of a group where you've
Speaker 2: been innovators in the food industry for the past twenty
Speaker 2: twenty five years.
Speaker 3: Yeah, I mean massive trend. The whole move to non
Speaker 3: alcoholic is really being pushed by gen Z who's just
Speaker 3: not drinking as much and you know, having kept in touch,
Speaker 3: which a lot of folks I know in the beer industry,
Speaker 3: I sold a lot of beer distributors and have a
Speaker 3: lot of friends that sell beer distributors. They're struggling. I
Speaker 3: mean when I say struggling, they're struggling for growth. Yeah,
Speaker 3: you know, I can't say their businesses is struggling. It's
Speaker 3: just they're not selling as much as they used to
Speaker 3: and they're having to make the necessary changes to that.
Speaker 3: But a lot of them are getting into non elk
Speaker 3: in a big way.
Speaker 2: I mean, Consolation Brands lost almost a fifth of its
Speaker 2: value recently when they miss quarterly sales estements citing lackluster
Speaker 2: consumer demand.
Speaker 3: I mean that's a big deal.
Speaker 1: Yeah, this gentleman next to me, my co host, I
Speaker 1: mean you're a non alcoholic. Yeah, folks, yeah, it's the
Speaker 1: part of that group.
Speaker 2: And I noticed it among friends too, where everybody's drinking
Speaker 2: less at this point. So back to Carbone and the
Speaker 2: innovation here. I was pretty shocked when I was preparing
Speaker 2: for this, and I went to the website to see
Speaker 2: just how many varieties you have of this? Is there
Speaker 2: a plan to push beyond red sauce or is it
Speaker 2: just vary variations on the red stone.
Speaker 3: So we're in red already, we're in white already. So
Speaker 3: we've got Alfredo's on the shelf and five of them
Speaker 3: in Whole Foods. They all haven't been announced red. I
Speaker 3: think I still I still have ideas. So there's going
Speaker 3: to be new reds, Like we just launched one. Putinesque
Speaker 3: is a famous Italian sauce, but it just doesn't sell
Speaker 3: in the United States. People don't understand the word, and
Speaker 3: anchovies are pro polarizing. So I created Mediterranean Marinara, which
Speaker 3: is what alos and capers, and I took the anchovies
Speaker 3: out and we took the name off and we're going
Speaker 3: to see how it does. It's on the shelves in
Speaker 3: one retailer right now. An initial initial poll looks very strong,
Speaker 3: so you know, we'll see where that goes. So white
Speaker 3: will be a definitely a drive Pesto will be in
Speaker 3: the future. I have some I have something in that
Speaker 3: I'll announced at some point. Give us a little bit
Speaker 3: that is going to going to be interesting in the
Speaker 3: red space. But you're still in sauces, not for the
Speaker 3: foreseeable future, because if something's working, why would I dilute
Speaker 3: the focus of my team, myself, my chef, you know,
Speaker 3: we have a full time chef. That but you do
Speaker 3: develop things for while.
Speaker 1: I mean you look at the website right too, and
Speaker 1: you do have you know, some little gift sets that
Speaker 1: you do that you can buy with some pasta.
Speaker 3: Is that apparel selection too.
Speaker 1: Yeah, yeah, I mean, can do you expand this out
Speaker 1: to potentially?
Speaker 3: So I got to tell you, Mario Carbone designed that
Speaker 3: apparel and it's amazing and and like the celebrities that
Speaker 3: have been seen wearing that apparel so far, it's it's
Speaker 3: a great marketing tool. You know, Mario himself is a
Speaker 3: fashion designer, so it's a it's just really been helpful
Speaker 3: to us. So I see us doing a little there.
Speaker 3: I don't think if it will never become a primary business.
Speaker 3: The gift sets will never become a primary business, but
Speaker 3: they're a reminder when you when you get a gift
Speaker 3: and this Carbone and it reinforces the brand.
Speaker 2: Hey, you know, I think a lot of people see
Speaker 2: Carbone in the grocery store and they equate it with
Speaker 2: Raos and sort of that same level of premium. Contextualize
Speaker 2: for us their scale versus your scale right now, and
Speaker 2: to what extent you're sort of nipping at their heels.
Speaker 3: You know, I mean, they're likely at this point I
Speaker 3: have to I have to do some math. But you know,
Speaker 3: eight times bigger than us in sauce, nine times bigger
Speaker 3: than us in sauce. We it's interesting because initially I
Speaker 3: thought we would be pulling a lot from Raos. But
Speaker 3: we have a gen Z millennial millennial consumer. If you
Speaker 3: think about my if you think about the owners of
Speaker 3: the company, they're in that age group. If you think
Speaker 3: about how they hit pop culture, right, everybody wants to
Speaker 3: go to Carbone and then they talk about it when
Speaker 3: they go to Carbone. So we get all of that
Speaker 3: that awareness from the restaurants, and it is to a
Speaker 3: younger consumer. So I don't think we've boughted Rares at all.
Speaker 3: I mean, as a matter of fact, their growth given
Speaker 3: their size, is still very strong. Wow. So and you know,
Speaker 3: I mean, look, we're the fastest growing in America, but
Speaker 3: we're spots behind them in the list right. So yeah, uh,
Speaker 3: you know my goal is my goal is to get
Speaker 3: there one day.
Speaker 1: What are you having for dinner tonight?
Speaker 3: What am I having for dinner? I will be on
Speaker 3: a plane.
Speaker 2: I knew I was going to say, we have to
Speaker 2: let him go.
Speaker 3: He's got a probably probably a cliff park.
Speaker 1: Are you.
Speaker 2: I'm so sorry all that flying from Vegas. It's not
Speaker 2: even a hub, So you're you're just doing a lot
Speaker 2: of connecting flag United Work's not.
Speaker 1: That it's correct, keep it, keep us up to date.
Speaker 1: When you're ready to talk about the next thing.
Speaker 3: Well I will, I will for sure. I mean, we
Speaker 3: always have development going on and it would be great
Speaker 3: to let you know about it.
Speaker 1: Thank you so much, CEO of Carbone Fine Food, joining
Speaker 1: us right here in our Bloomberg Interactive Broker Studio. Thank you.