On this episode of The Plantbased Business Hour, Elysabeth comes to you from Expo West in Anaheim, California. She discusses the state of the plant-based sector with Noah Hyams, Founder of Vegpreneur, and Rodd Willis, Director of Natural and Specialty at Dot Foods.
This episode was another audio only episode. Below is the transcription from the section of the podcast with Rodd Willis, Director of Natural and Specialty at Dot Foods.
Elysabeth: Hey everybody, interview #2. I am still on the floor at Expo West Natural Products summit if you will in Southern California. I’m here with Rodd Willis from St. Louis, Missouri from Dot Foods. Now every year I quote them as you know and I’m always mentioning their stats usually throughout the year because their stats are so great but I want you to hear it from the source yourself. Rodd, let me ask you, how was your revenue 2023 over 2022?
Rodd Willis: Yeah, it was excellent actually. We had a really great year. It started out a little bit slow and we were really in the low to mid single digits going into the mid-year but by the end of the year our year-to-date ended up over 20% and it still continues to basically blow through that number into 2024. So we were hoping it wasn’t just a seasonal trend at the end of last year, but it appears that it’s a start of, you know, kind of a new trend line for us. We see if going higher from there.
Elysabeth: Okay, so just a little bit of clarification. When you had year over year, I believe it was 2021 over 2020 it was 40% growth. 2022 over 2021 was 20% growth. Now on top of that growth 2023 over 2022 is 20% growth. So continued big growth. Tell everybody what you specialize in so we’re clear about the products.
Rodd Willis: Yeah, so we do really all the better for you type of products so anything that Spins would track in their system we would qualify as a natural specialty type item and so we’re seeing the trends especially with plant-based milk and dairy is a big area. The other thing that we’re seeing is a lot more points of distribution being added to the space. So we’re getting a lot more customers trying these products, which is usually a leading indicator.
If they’re trying the product, they start small and then they grow into it. And so our numbers on new trial as well as, you know, new customers are actually trending well above the 20+% that we experienced in 2023 on the overall sales growth side.
Elysabeth: And that tends to lead future sales, right? So if you’ve got a new-pointed distribution, they start out small, they try something, and they like it. So you’re anticipating future growth to be as high as well?
Rodd Willis: Yes, exactly. You know, people come to Dot to discover new categories and items, and so they might be a traditional food service distributor that sells to mom and pop restaurants, but the clients at those restaurants are asking for new and more healthy options and so that distributor is then forced to source those and we’ve already done the work to get them those products into our system that makes it easy for that distributor to pull from us.
Elysabeth: Right, so they might start out saying, “Oh, I want oat milk like everybody else on the planet,” but then they might add more, is that right?
Rodd Willis: Yeah, they might add more, or there might be another SKU, another flavor, or another type of product. Maybe it’s a different pack size. You know, somebody doesn’t need a large pack size, they need more of a grab and go single serve type item. So they’ll start out with the Barista Blend item that goes to a coffee shop as an example, but then somebody wants an actual 16 ounce product or something like that. You know, those are additional sales and new items that are the same product, but they’re just in a different form that meets the needs of that consumer.
Elysabeth: Okay, so we had talked about how you really see that there’s a lot of cash on the sidelines and that this is a good time to be investing. Can you elaborate on that?
Rodd Willis: Yeah, I would tell you that the buzz right now that I’m hearing out there is that there’s a lot of money on the sidelines really, you know, looking at what the next big thing is going to be and where is the market headed in terms of innovation, “better for you” products, are these items getting more or less space on shelf in retail? And for the most part, you know, that space is expanding, it’s not contracting.
Even when you look at somebody like Walmart as an example, they continue to add more and more “better for you” brands and that’s going to a consumer that maybe in the past hasn’t been a traditional buyer of those types of products. So they’re becoming a lot more mainstream. So the more mainstream the items become, the more consumers are in the fold that you can sell to and the bigger the opportunity can be. So I think that’s what the market is starting to figure out.
Elysabeth: Okay, so this is awesome. So you do restaurants, mom and pop stuff, food service, but you’re also doing Walmarts and grocery stores.
Rodd Willis: That’s correct. So we sell into every Walmart distribution center in the country. We’re in every big retailer as well as some of the distributors that serve that space and really the story is pretty much the same wherever you look. So, we’re seeing more and more interest in the category, more and more trials and new items, and we see nothing but upside for the foreseeable future from where we’re at.
Elysabeth: Am I allowed to rattle off some of the stats that we talked about?
Rodd Willis: Sure, you can rattle off whatever you’d like.
Elysabeth: You had talked about representing about 400 brands. 300 of them had great growth. Your department, so the specialty plant-based department, brought in about $2 billion for the company and your department was basically the only one that had growth. Everybody else was pretty much flat, is that right?
Rodd Willis: It’s pretty much right, yeah. I mean, we had certain pockets that grew but when you really look at the big picture most of the action is right here in this natural specialty space.
Elysabeth: And when you look at food growth for conventional sectors, it’s what, two to five percent?
Rodd Willis: Yeah, I would say so. You know, in a good year you might get seven or eight but normally it’s not getting twenty to twenty four. It’s well below ten. So anything you can get above that number you’re taking business from somebody else.
Elysabeth: Awesome, so we all know that oat milk and plant-based milk are then- we’ll call them mainstream. They’ve arrived, they’ve done it, and they’ve succeeded. What’s the next thing to pop?
Rodd Willis: Oh, that’s a good question. I think functional beverages are really going to be a major story moving forward. You’ve got brands like Olipop and Poppi and things like that, taking traditional items like a soda and making it better for you, which appeals to people that are soda drinkers that still like soda but want to buy something that tastes as good but is actually better for their gut health. I think that the category of functional beverages are just getting started.
Elysabeth: That’s so interesting to hear. We all know that plant-based meats have kind of, you know, it’s confrontational. When you slip plant-based protein into a cookie nobody really knows if the eggs are there or not, but when you say, “Hey, give me that burger” and I’m going to give you something else in return, it’s a little bit like, you know, “over my dead body.” So, are you seeing a decline or a stabilization in plant-based meats, or what are you seeing out there?
Rodd Willis: Yeah, it’s a good question. I would tell you that we’re seeing that it’s fairly steady right now. In food service it’s steady and growing. In retail it’s down a little bit but I think the big players will continue to be the big players. I think for new entrants or people that don’t have scale it’s going to be a challenge.
Elysabeth: Okay so we still have our work cut out for us but otherwise pretty good news. Rodd, thank you for speaking with me.
Rodd Willis: Thanks for having me. I appreciate it. Good luck with the show.
Elysabeth: See you next year for sure.
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