#12 - Justin Mares @ Kettle & Fire

Episode Recap:

ReGen Brands Recap #12 - Justin Mares @ Kettle & Fire

Episode Transcript:

Kyle Krull - 0:00:16
Welcome to The ReGen Brands Podcast. This is a place for consumers, operators and investors to learn about the consumer brand supporting regenerative agriculture and how they're changing the world. This is Jose Kyle, joined with my cohost Dacey. Let's dive in.

Anthony Corsaro - 0:00:33
On this episode we have Justin Mares, who is a serial entrepreneur and the founder of Kettle & Fire. Kettle & Fire sells bone broths and soups and is supporting regenerative agriculture through their regenerative beef and chicken broth. In this episode we learn about Justin's journey from tech employee to CPG entrepreneur. How he built Kettle & Fire from scratch and how they put together the regenerative supply chain for their two regen broth skews. Now this one was a little different since Kyle works with Justin at Kettle & Fire, but they kept it professional, at least most of the time. No, in all seriousness, we really enjoyed having Justin on. He is a super dynamic person and entrepreneur that we love to see supporting regenerative agriculture. Let's dive in. What's up everybody? Welcome back to another episode of the Regen Brands Podcast. We are fired up today to have Justin from Kettle & Fire. So welcome Justin.

Justin Mares - 0:01:30
Thank you for having me. It's tough to be here.

Anthony Corsaro - 0:01:32
Absolutely, man.

Kyle Krull - 0:01:34
Awesome. This is gonna there's gonna be a bunch of weird, awkward moments here, because Justin and I know each other pretty well, and we have a general tendency to, like, want to make fun of each other and to make each other break character and laugh. So this. This might get weird. Just want to, like, preface that for everybody who's listening, you know, right up front. Yeah?

Anthony Corsaro - 0:01:53
For those that don't know why, you know each other, colleagues say say why, so the audience knows.

Kyle Krull - 0:01:57
I'm one of Justin's minions, you know, he's got like a million employees across the world. I'm just one of the few lucky ones who gets to work for this guy.

Justin Mares - 0:02:06
Yeah, I feed Kyle so.

Kyle Krull - 0:02:09
Quite literally. And it's actually like more than money. Food is my biggest incentive. So like if it was like 500 bucks of food or $1000 bonus, I'd probably opt for the food. Noted. Anyways, we'll go ahead and pull. Yeah right, yeah, easy for you. We'll go ahead and get started. We'll dive in. So Justin, for everybody who is not familiar with Kettle & Fire. Give us like a quick lay of the land as far as like what kind of products you make, where can you be found, what's your distribution look like and things like that.

Justin Mares - 0:02:40
Yeah. So the origin story is that we're, we're, we're basically in like 15,000 different stores. Gentleman buyer was one of the first, first like bone broth companies that really came to market and so we launched in August of 2015 first online. Bringing like bone broth as one of the first, you know high quality bone broth products. So now we have a line of bone broths, line of bone broth based soups and a line of cooking broths all made with super high quality ingredients, grass fed grass finish bones as well as a regenerative line that we launched recently.

Anthony Corsaro - 0:03:12
Love it, love it, nice. And what you Justin, I feel like you've started like 1000 businesses so maybe we'll we'll dive into that more later on the podcast I get your newsletter and it's it's it's rock solid and it's fun to learn about it while you're. Yeah, all your entrepreneurial endeavors, but what was the, what was the impetus for a bone broth company? What was the origin story there?

Justin Mares - 0:03:31
Yeah, it's a good question. So we started in, in August 2015, as I said. And basically there were two things that kind of happened around the same time. I was living in San Francisco at the time. I was doing a bunch of CrossFit and the CrossFit community especially then was, was super early on the like Paleo and food as medicine sort of trains. And so I had a lot of friends in the CrossFit community that were using. And starting to incorporate bone broth into their diet both from like a gut health standpoint and also from a you know I I need to recover from these like brutally challenging workout standpoint. And so at the time I both didn't know how to cook at all and was traveling all the time and so basically like couldn't couldn't make bone broth myself even though I wanted to incorporate it into my diet.

Anthony Corsaro - 0:04:14
So.

Justin Mares - 0:04:15
That happened, and then a couple months later, a month or two later after I had like personally experienced this problem, my brother. He tore like pretty much everything you can tear in your knee, like soccer and and so he was looking for foods that could help with his recovery. He lived in Philadelphia where outside of Philadelphia where our family is from and was basically like, hey Justin, what can I do to help me recover from this pretty brutal surgery that I just went through? I recommended bone broth and like he couldn't find any on the East Coast. I couldn't find any good stuff on the West Coast and so decided, you know? There probably should be a high quality version of this product that that exists and as we dug into it, you know we we learned a lot more about why the opportunity was compelling both from a business standpoint but also from a nutrition and function standpoint which I I can ramble on about if you guys are interested.

Anthony Corsaro - 0:05:08
Yeah, please.

Justin Mares - 0:05:11
Yeah. So like, so when we were just kind of digging into this, we realized two things. One. That bone broth is actually a key source of full spectrum amino acids, collagens and nutrients that the average American just doesn't get in their diet. Like as a culture we pretty much have no organ meats, no bone marrow, no like connective joint tissue that we work into our diets. And yet if you look at you know most other cultures under gatherer or other sort of like traditional food cultures, organ meats are are prized and like incorporated into food at almost every chance that they can. And so if you're American, you're like almost only eating cuts of muscle meat and you're missing out on this full spectrum amino acids and collagen that were in, you know, human humanities diets for millions of years. Bone broth is sort of like a uniquely positioned food product that delivers on those nutritional benefits in a way that many others don't. The second thing we realize is that like bone broth used to be in everything like.

Justin Mares - 0:05:47
People used to make, you know, there's a reason that like Jewish grandmas are like, oh, have a bowl of, you know, chicken soup when when you get sick. It's because of like the functional benefits of bone broth and all these nutrients. However, in like starting in the 80s, Campbell's and a bunch of the other these other companies that used to use real bones in there like broth, stocks, soups, all this sort of stuff, switch to water as part of like big foods, big cost cutting initiatives in the 70s and 80s. And so we just saw that there was this like ancient. Super nutritious, highly functional food that was literally not in anyone's diet today. And you know, the big food companies were not really delivering on, so that's why we decided to start Kettle on fire.

Anthony Corsaro - 0:06:51
Did you have a background in CPG or did you know anything? Well, CPG, what was the what was the story there?

Justin Mares - 0:06:57
No, literally nothing. No, I I I didn't know literally how to do any of this. So I didn't work in CPG. I worked in tech. I was like, you know, working at a. Software company that sold software to software developers. It was like as far from health and vitality and functional foods as you can imagine. And so we had to figure out this stuff a lot on our own. And on the one hand that meant that we made massive mistakes like not hiring a finance team for the first two years of the company. And it all seemed that we, like, thought about things a little differently. And so it meant that we like, you know, went direct to consumer at a time where that was not a thing that like food companies were doing.

Justin Mares - 0:07:07
It meant that we like hired an all remote team and like we truly may have been one of the first all remote teams in like consumer land is. It's just like we did some things differently, some worked, some didn't. But yeah, it was mostly me muddling through and being confused about how to build a business. Yeah, has sort of been the story of the company.

Kyle Krull - 0:07:56
It's worked out pretty well so far. I mean, I continue to be fed, which is the most important thing, and that's a good sign. So company started in 2015, walk us through your arc between you know because Kellon fire was not started to be a regenerative company, right. So you since starting kellon fire have learned about Regen AG and then decided to incorporate some of those production methods into keep trying not to say our products, but I can't really help it, our product line. So walk us through your arc of awareness around regenerative agriculture and then how and why you decided to incorporate that the Kellon fire?

Justin Mares - 0:08:29
Totally, yeah. So it's a good question. I think that I I'm just like personally very interested in health, both from an environmental and personal standpoint. And so when I got into Kettle & Fire, it was like wow, Bone brought this big cool thing like new product that has all these health benefits. Like that's just like inherently exciting to me. And as we kind of operated and ran the company, grew the company. You know we were one of the first companies doing the grass Fed grass finish thing at the time where I was like oh I think grass fed grass finish is like the pinnacle of health you like couldn't even you know can't get any help here that and and as I learned more and talked to ranchers and talked to operators in the in the space and like red and and and just sort of like got a better understanding of not only like the the how the health of of animals in our food system impact human health but also how our agricultural system. Impacts the health of our planet and the environment. It became clear to me that, and honestly too, a big piece of this was reading and being exposed a lot to it be impossible to be on burgers. Like this narrative that the beef is the problem is like the climate problem.

Anthony Corsaro - 0:09:43
Yeah, you're living in San Fran. You're surrounded by probably an army of vegans that are exactly you're an idiot or something. You.

Justin Mares - 0:09:48
Know totally, man. I mean it was like I had, I had many people included one memorable heated debate at a birthday party, someone that worked at impossible. But I had a lot of people that were like very very anti what? You know, like the beef thing. And we're all in on impossible and beyond and like this sort of fake meat will save the planet view. And as I dug into that, I was like. There's something that feels off about this like you know the way to save the planet is to buy our high margin, highly processed products kind of view of the world. And as I talk to more people I I was like you know, digging in, I don't think that industrial agriculture has an answer for the impossible and beyond. So I don't think that like grass fed grass finished like that doesn't really have an environmental answer like the only real. Philosophy and worldview, to me that felt coherent from a like this is how the world becomes a better place from a health, environmental and animal. You know, ethics and health standpoint was the regenerative movement. And so I started getting into it in late 2018-2019, went to like some conferences in the Bay Area, met a bunch of people that were like just getting into the regenerative space. And as I learned more, I was like, wow, there's like like really strong in my opinion.

Justin Mares - 0:10:40
Philosophical underpinnings to this movement and I think that like I'm way more here for and bullish on a movement that like goes, you know, that that incorporates the health of the environment, animals, people, everything into its philosophy and worldview. Then I am in thinking that like the climate is going to be saved by two fake meat companies that are just like further perpetuating a hyper centralized hyper industrialized food system that like I think it's pretty clear doesn't really work well.

Anthony Corsaro - 0:11:41
Let's end it good. That's cool. I'll just say I'll just.

Kyle Krull - 0:11:43
Think to myself. That's going to be a great clip. That's a perfect clip. Fantastic.

Anthony Corsaro - 0:11:50
Yeah, I mean, like in the world without silver bullets, like regen AG is the silver bullet. And like obviously I'm super drinking the kool-aid and super on that team. But like, please someone tell me like really thoughtfully and scientifically explain how I'm wrong because I I haven't seen somebody that can do it. And like it's just it it.

Justin Mares - 0:12:06
It's. It's awesome. Yeah, I I totally agree. I mean I I just wish that like I'm excited to see the movement getting as much traction as it is and maybe I should just be patient. But I like, I I wish that people would be as excited to fund regenerative companies and the like as they are to fund you know The Impossibles and beyonds. Maybe that sort of stuff is like coming where you could make the argument that regenerative agriculture is as profitable and or has this great profit potential as like beyond and impossible when you incorporate like. Carbon recapture and a bunch of these externalities that aren't like priced in the system today, but you know that that's sort of my hope as to where, where this how this movement starts to make sense to like big money, private equity and investor types.

Kyle Krull - 0:12:52
Well, let's let's kind of go off topic here because I know Yvonne's Bernard is a big, you know, idol for you, Justin. And some big news just came out yesterday that I'm sure you've already read. Actually, I know you've read it cuz I read David Tom this morning. You know, you mentioned the difficulty for the investment community to fund like the regenerative space right now. What do you think about what he's doing, and how do you think the ripple effects might change that narrative?

Justin Mares - 0:13:18
Yeah. So, so how do I think about, how do I think about what he's doing in terms of like giving away the company?

Kyle Krull - 0:13:26
Yeah, in the in the way specifically that he did, you know, he didn't just like give it to the employees, but creating the trust and all like that.

Justin Mares - 0:13:33
Yeah, I I think it's. Interesting. I mean it's there's a lot of like interesting corporate governance experience going on. Like you see this in B corpse, you see this in and stuff that he's doing. You see this in like even in like the crypto space like Dows are kind of doing some interesting potential stuff around like more decentralized governance. I think it's really cool and I'm glad that we're running more experiments. I tend to think though that like.

Justin Mares - 0:13:34
I I think that it'll it'll for someone at his age you know he's pretty old. He's probably like starting to do secession planning or that. I mean that's definitely what this was. I think that it's it's really like a smart thing and it's probably better than just giving it to someone where you hope that the person that you give the company to or that like is running the company has your values and can fight off the like economic draw towards making worse products that are worse for the environment and worse for people every single year as long as they run the company. So in that sense, I think that establishing the guardrails in the way that he's doing it is awesome. I still though, I still don't think the jury is out on on a B corpse and some of these other things just because I think that it's really tough to serve 2 masters and like in a competitive environment if you have a corporation that's like in a profit maximize versus one that has to like serve or satisfy two different things both like building a valuable company and.

Justin Mares - 0:14:33
You know operating within certain guidelines, I think it's tough. And so like if if I could kind of wave a magic wand, I think that probably the the like change making mechanism that needs to happen or that I would love to see happen is having more pricing of like negative externalities like carbon emissions, carbon recapture or other things. So that everyone is sort of like on a much more even playing field. And can optimize for, hey let's make the best, best company possible. But like the government or some larger institution is is imposing these constraints that lead to a better environment. Like I ultimately think that you know, it's great the Patagonia is that they're doing this. But I do wonder if to some extent these sorts of structures are like planting the seeds to just be out competed and you know lose to a company that doesn't have these sorts of guardrails in place.

Justin Mares - 0:15:28
I don't know, but it's very early. I'm glad the experiments being run.

Kyle Krull - 0:15:59
All my Patagonia.

Justin Mares - 0:16:00
Got you over so.

Anthony Corsaro - 0:16:03
What what I think of when you hear you say that is agree on a lot of those points and we just won't know for quite some time whether it works or not. And it's it is easier for a company like Patagonia that's 50 years old and clearly been profitable for a long, long time to do something like that. Then you know a lots of others in the space and when I think of CPG especially early stage CPG that ramp to profitability is usually so intense and so yeah low capital intensive and so long it might be 5,000,000, might be 10 million, might not be till 50 million, right. And So what what are those other levers like you said like pricing externalities or other things that can kind of level that playing field because. Ultimately, there is no sustainability without profitability. And so that that's got to be #1, it can't come at too high of a cost to where you lose your values and you you just degrade everything else. But there's like this crazy web of all these kind of data points pulling at each other I guess.

Justin Mares - 0:16:53
Totally. Yeah. I I sort of feel like some of this stuff is like, it's like union logic applied to corporate governments, where like sometimes unions are like try to just maximize and like rip all of the profits out of a company. And they end up killing companies and you know, companies shut down because they have union disputes or whatever. And like on the whole, yes, maybe some small unions were left that are off, but on the whole they've just like removed a bunch of companies that were treating them but went relatively well and like are in a worse position. And I wonder if the same thing happens from, you know this like B Corp style movement. But again, I'm not sure. Also a disclaimer, I'm like. Not a very smart person, so this is just me like thinking.

Anthony Corsaro - 0:17:35
About.

Justin Mares - 0:17:35
I'm probably wrong about a lot of this now.

Kyle Krull - 0:17:40
I'm curious though, if you were to start a new regenerative CPG Business Today, what sort of markets would you be looking at? How would you approach, you know, entering the market, you know, what categories are you interested in? Tell us what that would look like.

Justin Mares - 0:17:54
Yeah. So I think it's an interesting question. I don't know that I would start a consumer. I I would basically think about it in a couple ways. I'd look at like where are the categories that where there's like a lot of consumers are like spending a lot of money, where there's where like the input ingredients or the things they're putting in their bodies are like basically commodities right now and where the practices to create those commodities are like not very good. For me that would probably lead me down the supplement route if I'm being totally honest. Like, I think that if you look at like vital proteins or you know, collagen supplements. If you look at like a a bunch of like the the massive, massive supplement category, I literally have no idea like how when you eat a vitamin B supplement like one, what is that second, how does that get? It's like, I have truly no idea. You know, I know how some of the collagen supplements are made and it's like not that appealing and animal health is like.

Justin Mares - 0:18:27
Maybe not at the forefront of how they're just making those decisions. And so yeah, I think that that's probably like a category that I would look a lot into from a regenerative standpoint. But that said, I like, I still think that if I were to like fully start from scratch into the regenerative brand or regenerative focused company right now, I think I would want to take the approach of having a like I would, I would, I would want to figure out like is there a way that. You could benefit from either land appreciation, carbon recapture, any sort of like of the positive externalities that the regenerative movement creates. Yeah, I I think that you'd want to capture that in your company in some way because otherwise you're just buying a higher quality product and selling it for a premium price to. To a consumer and you're leaving a lot of positive externalities on the table. I think if you capture those in some way as a company, then you are like creating a lot more value and have the opportunity to realize a lot more of that value, which means that you'll be a more competitive company, which means that you can continue to like enact your regenerative values for, you know, 5-10 twenty years is kind of how I think about it.

Anthony Corsaro - 0:20:09
Yeah, there's there's another podcast called the Investing in Region Ag podcast that a dude named Coon over in Europe. Has, I don't know if you guys listen to it, but yeah he's the man. I was just on it and he always asked people what would you do with a billion dollar fund? And my like, my answer was like easy. It was like I would buy as much degraded row crop land as I could. I would transition it to multispecies pastured livestock. I would get vertically integrated processing and I'd have a a brand that sells pastured eggs. You know, chicken, pork and and grass fed beef, all pasture.

Anthony Corsaro - 0:20:15
And like that, that to me is where you get the land, you get the real assets piece, you get the processing to manage the margin, you get the end product consumer to manage the brand, the storytelling, and then you invest in media and research to kind of bring all that together. But like, that's that's the dream. So whoever's out there that wants to help raise a billion dollars to do that, I've been whatever, yeah.

Justin Mares - 0:20:57
That looks ready to do totally. I I think if I if I had a billion dollars in order to promote the regen event, I'm actually not even sure I think I would do it in like a sideways way where I would actually like. Probably spend 200,000,000 on trying to like lobby to either remove crop subsidies or add subsidies around regeneratively raised products and and whatnot. Whether that like livestock and you know fruits, vegetables, all that sort of stuff that that feels like such a big leverage point that a lot of people are not necessarily focused on or just lobby to like you know, have the government basically invest in carbon recapture on agricultural lands and like. Give bonuses for doing that, and just make it much more profitable to be a regenerative farmer than it is to, you know, strip mine a bunch of Midwest land for its nutrients and then have the top soil degrade and flow off.

Anthony Corsaro - 0:21:53
Absolutely.

Kyle Krull - 0:21:54
So when you get around for office and just like.

Justin Mares - 0:21:58
These this is never all right. I couldn't imagine a worse thing to do to for my quality of life.

Kyle Krull - 0:22:10
OK, I feel like we've gotten so far off track it's hard to get back on track. Like I'm not even sure where the conversations gonna head at this point.

Anthony Corsaro - 0:22:18
I got, I got a question. So not non like non purely retained question, but about bone broth, obviously super sleepy category when you came in not a lot of innovation you guys have done, you pumped out so many skews, so many cool innovations in that category. Take us through this like the product development art, right? Because there's the region piece in there, but then there's also like these ready made soups now instead of just the broth. So like I, I want to get into the nitty gritty of just pure CPG strategy, how that all came together and what you learned and saw there.

Justin Mares - 0:22:47
Yeah, so we started first with with a beef bone broth basically like we we saw that there's a rising interest in like grass Fed grass finished. No one had a grass fed grass finish like broth stock much less of bone broth. No one knew what bone broth was and so we were like okay, this is probably a good place to start. We'll come out with a premium product. We'll be the first one using grass fed grass finished and one of the first players in the bone broth space. From there it was like chicken was a super obvious one and then beyond that it was like we surveyed and talked to our customers and we found that like they were drinking our product and you know if you like walk down the broth in stock Isle. And ignore Kettle & Fire like no one is buying like Pacific stock, you know, and like drinking that on a regular basis because it tastes bad and B, it has like almost no nutritional value and so on. On our case, we found that because it tasted good and it actually had nutritional value and customers were like drinking bone broth for their gut skin and joint health that they actually wanted flavors. And we were like, oh, well that seems.

Justin Mares - 0:23:29
Interesting. Like the reason that you don't see a ton of flavored broths and stocks in the center of the aisle is because no one's drinking those products as soon as people are like drinking them. And like the taste actually matters. When you're experiencing the product directly as opposed to just working it into a soup or like cooking rice in it or whatever, you have the opportunity to introduce flavors and other function. So we did that as our next lineup. We also saw that consumers were using it in soups, so we launched a line of bone broth based soups with.

Justin Mares - 0:23:55
Similar like nutrient dense bone broth profiles, but you know but a convenient kind of meal that they could eat on the go. And that was sort of like our main, our main innovation focus until we launched regenerative last summer. I guess it was, yeah. And then that that was regenerative was like less of a consumer facing innovation like if you don't know what regenerative is, you're like. Okay, I can buy Kettle & Fire beef bone broth or I can buy their most their more expensive beef bone broth like sweet. Thanks for the options guys. You know, but it took a lot of supply chain innovation and work on our end just to find certify just like do a bunch of work to to basically make a product that we can stand behind. And because we are working on it very early in the regenerative movement, I would say like we were getting on calls with Whole Foods where.

Justin Mares - 0:24:48
The way to educate their buyers about like, what is regenerative, why, why is it interesting? Why is this not regenerative organic and you know, like walk them through a bunch of like the nuances of the regenerative movement and like why we made certain product decisions that we did.

Anthony Corsaro - 0:25:34
Yeah, I'd love to hear more about the supply chain and how you set all that up, even just at the beginning for grass Fed grass finish and also for region. I think our audience would be super intrigued by that.

Justin Mares - 0:25:43
Yeah. So early on. You know we we were we didn't know what we're doing and so we were basically just like calling and emailing a bunch of different ranchers. You know producers and just being like hey we're trying to do this grass fed grass editioning. How do we source bones in X quantity. You know in in this size we spent a lot of time like some of these things sound simple like sourcing bones and then you cook them and then you put them in the product for us we spent so much time trying to figure out like. OK. Where do we source bones that are grasp of the grass finished where their quality and and raising standards are are up to ours. Then like what bone mix do you use is like a thing that you just never think about. Like we basically have to find the bones that had the highest collagen and amino acid content per like cooking you know, chunk of cooking time. Yeah like just a weird.

Anthony Corsaro - 0:26:38
Crazy, yeah.

Justin Mares - 0:26:39
Yeah, like you make bone broth at home and you're like. Whatever I'm throwing, like the whole chicken carcass in, it's fine. It happens with this whole little stock pot. You're not like measuring nutritionals. You're not doing a bunch of stuff. Wait.

Anthony Corsaro - 0:26:50
What are the best bones? What are the best bones?

Justin Mares - 0:26:54
Kyle, do you know?

Kyle Krull - 0:26:56
Femur, knuckle Patella, those are the biggies. But, you know, I wanted to have you dive in. And yeah, I'm trying not to talk here because it's like Justin's sort of doing my job. He's selling bone broth.

Anthony Corsaro - 0:27:07
Right now.

Justin Mares - 0:27:08
So I'm just. I'm.

Kyle Krull - 0:27:09
Just trying to watch him learn. Well, you know this. The bone selection, I think is one of the most unique parts about Kettle & Fire versus a lot of the other bone broths in the space is, I mean, you never see that on the back of a package. It doesn't say like knuckle bone, femur bone, you know, Patella, Bony. It'll just say bones or it won't say bones. And right now, there's not really any regulation in the bone broth category as far as like who can claim bone broth on the front of a label and whether or not it actually has real bones in it, which to just its point earlier really diminishes the potential nutritional quality of the product. So it's sort of this weird unregulated space right now. Think kombucha before like the DUI incident, right. So it's, it's a, it's a challenge for us as a company to figure out how do we accurately communicate the fact that we are indeed higher quality. We do all these things not unpacked, it's really hard, but Justin knows more about what everybody else has in their parks. So, yeah, curious to, you know, dig into that a little bit.

Justin Mares - 0:28:05
Yeah, it's, it's really hard, I and so yeah, so we, we basically. I think you'd ask like, how did we, you know what, what was setting up our supply chain? Like, we just had to spend so much time, so much energy, figuring out the ideal mix of bones. Like our first, our first batch of bone broth, which we made was like we didn't know what cuts of bones to use. We didn't really understand like cook times. We didn't really understand a bunch of trade-offs and we didn't understand even like how to cook them. Like basically if you have, you know, a stock pot and you're throwing bones into it and you're cooking it for 24 hours, you get it at home.

Justin Mares - 0:28:10
Whatever, it's like such a small amount of liquid and so it just kind of blends together. When you're making bone broth in 2000 like gallon steel drums the and you load the bones at the bottom. What you get is like a super rich and Hardy bone broth at the bottom and then like more and more watery stuff as you get to the top. And So what we didn't realize is like this is just an example of like doing anything is hard as soon as you dig into the details as what we didn't realize is like if you're. Opening the bottom of these steel drums, roughly the 1st 60 to 70% of your bone broth or of the cartoons you're filling are like really delicious. And the the last 30% are basically water and like customers who get basically water boxes are like not stoked about that. So we had to figure out like how do we install paddles that like churn this stuff and like evenly distribute it.

Justin Mares - 0:29:08
Just a lot of a lot of work. Wow one.

Kyle Krull - 0:29:35
Of the other things that was tough in the beginning and Justin, you you can probably tell more about the story than I can. But it's when you go to a coat packing facility that makes broth and you're asking for a 24 hour cook to tie up their lines for 24 hours for a category that doesn't exist. They're like, no, like leave us alone, you don't know what you're doing. Like you're a tech guy, you know? Or an 18 year old kid. Like get away from us. So yeah, what? What was that like?

Justin Mares - 0:30:02
Yeah, I mean so we we contacted almost 500 different Co Packers. A Co Packer is just someone that like manufactured.

Anthony Corsaro - 0:30:09
Her product?

Justin Mares - 0:30:10
Yeah, it took a long time.

Anthony Corsaro - 0:30:12
Wow.

Justin Mares - 0:30:14
Yeah. And, and I mean the most common response was like who are you? And you know, you don't have any background in the space. It didn't help my brother, my brother that I started the company with. When we started it, he was 19 and so it was like. Who are you? Have you hit puberty yet? You know, we weren't funded by anyone. This is not a category that existed. And so it was just like a very hard sell. Like they were like, wait, you're going to tell us to change the way we do our, our operations? You're going to like be the longest thing we cook by like a factor of 10.

Justin Mares - 0:30:28
And this isn't a market and you're not funded and I don't know who you are. And you have no consumer. It's like, why? Why am I even talking to you? You know what I mean? They were fired, so.

Anthony Corsaro - 0:30:56
Talk to you, they were they were pumped on.

Justin Mares - 0:30:59
Yeah. Yeah. So it was rough like from figuring out how to actually make the product and like find someone that would take us on as a customer was a big challenge.

Anthony Corsaro - 0:31:10
I mean coordinating.

Justin Mares - 0:31:11
All on top of it.

Kyle Krull - 0:31:14
Yeah. I was gonna see what were the challenges in in finding the new suppliers for the regenerative product lines. You know the region, beef in the region chicken, you know what? What were the goals and why did we end up choosing the partners Kettle & Fire shows?

Justin Mares - 0:31:26
Yeah. So, so there were a lot of things this when we started looking into this, this was 2020 and and and basically like at that time and still today there are not a lot of regenerative suppliers or like farmers, ranchers and the like that are falling regenerative principles. And that's not because, like, these people are evil. It's because, like, we're very early in this movement. And I think that it takes time. Like, if you talk to anyone like Katie and Taylor from force of nature slash slash epic, they're doing a regenerative farm outside Austin where I live. They're awesome. And they're like years into this. And they're just now starting to like really see the benefits of of the regenerative transition, the soil health is coming back online, all this stuff.

Justin Mares - 0:31:44
And so all that to say is like, if you were looking for a regenerative supplier in 2020, you better hope that like some rancher or farmer was interregenerative agriculture before. Like I even knew it was a thing, you know what I mean? And like, not, not to say like, wow, I'm some hot trendsetter. It's just like this is like a a thing that there's not a ton of awareness even today. And for those people that are aware, they had to be aware of it and working on it for multiple, multiple years. And so it's really tough to find those partners.

Justin Mares - 0:32:12
And we eventually found some we also like with some of them basically agreed to like hey, this is going to be an investment we're going to make from a product standpoint. And so our guarantee and like the size of our brand and and distribution base meant that we could go to some partners and be like hey, you have a small regenerative operation right now. If you want to like transition more towards regenerative like we can actually help make that more, make that make more financial sense for you because we're we're going to like. Be a good partner for you for the next, you know, 51015 however long years. And so yeah, but it was, it was a lot of like a lot of just getting intros, finding suppliers, talking to them. A lot of talking to suppliers that like said they were regenerative but maybe necessarily weren't or maybe missing on a couple areas that we cared about a lot of like talking to them and getting you know soil nutrient density tests and carbon.

Justin Mares - 0:33:10
Samples and like all this sort of stuff, interviewing them about their supply chain and and their, their ranching and growing practices, like all these sorts of things. So it was, there's a lot of work that I would say our team hadn't necessarily done before because like people really haven't done that before. It's like, you know, getting a regenerative supply chain. It's like a very new thing.

Kyle Krull - 0:33:56
And why did we decide to launch two specific regenerative SKUs as opposed to just making our entire product line regenerative?

Justin Mares - 0:34:05
Yeah, it's a, it's a good question. So the reality is that like as bullish as I am on regenerative agriculture, the, the regenerative movement I think will really start to take off once like there's consumer demand for it. Like you saw this in the 80s when organic became a thing. It's like for a while there's like all these weird mom and pop stores that are selling organic foods and no one knows where organic is. And so like you know, nothing really changes. Then consumers start to have a real pull and demand for organic foods, which means that companies like Whole Foods and others kind of sprouted up sprouts, you know, came up to like serve that that demand on the consumer side today that there's not that much demand. There's some and it's growing and it's great, but like there's not overwhelming demand for regenerative products and so that means that there's not an overwhelming, overwhelming number of regenerative suppliers and so like. If we wanted to, we couldn't transition our our like entire business to regenerative agriculture like there's just not enough suppliers and our business is that enough is, is that enough size that we you know it would just be there's not enough supply of bones that fit our regenerative sort of criteria for us to transition the entire business to that to regenerative so far. So our goal is like we launched the regenerative line, increase demand, do our small part and increasing demand for. For generally regeneratively raised animals, we also do some consumer education which hopefully increases demand for regenerative. And as we kind of do these two things, hopefully more suppliers go regenerative, which then means at some point we can transition more and more of our line until you know 5-10 years out like I would love to be a fully regenerative bone broth brand and have really played a role in in making that happen.

Anthony Corsaro - 0:35:55
And the economics don't work right now because your premium price as is your your hyper premium or super premium probably for the two regen SKUs as you need to be. And so you know like I said earlier you've you've worked in a lot of different businesses. So I'm super kind of curious to hear you're just like what's the macroeconomic for this deal right because I do think it's consumer demand. We've talked about the subsidies earlier. I think both those are huge factors. Organic hasn't scaled to the level that we need it to or want it to right. So we can't, we can't let the same thing happen to region so. How do we avoid all that? I mean that's the $1,000,000 question. So curious your thoughts there.

Justin Mares - 0:36:28
Yeah. So, so I I think that this is where like This is why I think a lot about like externalities like in some ways you could you could look at organic and be like OK why, why is that maybe challenging or why hasn't that like taken over the world yet. And I think that in many ways it's because one non organic crops are are highly subsidized and two. All of the like pesticide runoff and all of these other like negative externalities that come with non organic industrialized farming, they're not priced. There's no like cost to them. You know like a farmer just sprays their crops, it runs off into the water, it makes a bunch of people sick. It like you know causes a bunch of disease of inflammation and like doesn't matter to the farmer. They they're still making you know as much money as they were had that not happen. And so why then So what that means is like the entire cost of the the increased cost of going organic.

Justin Mares - 0:36:49
Get 100% pass on the consumer in effect. I think that you know right now the same is true in regenerative like if you want to shop and eat regeneratively that cost is getting passed on to the consumer and the consumer is paying a premium at the end of the day. Like I I think that if you know there were carbon credits or carbon recapture credits or or sort of like any sort of thing that you could any sort of like a pro environmental pro climate sort of economic. Plan, deal, whatever you want to call it that. Regenerative farmers, landowners and the like could take advantage of where it makes it so that either it's more profitable to become a regenerative farmer or you can like make money by selling carbon credits and then lower the price of your regenerative products so that the consume, you know, to the consumer they go, I can buy conventional or regenerative costs is roughly the same. I'm going to go to regen every time. That's how I think that you see like massive, massive, massive change in the system.

Justin Mares - 0:37:48
Until then though, I do think that unfortunately it's like, you know, probably the consumer ends up paying a slightly higher price to eat regeneratively and healthy, although there's also like some other interesting ways around that, some of which I'm like kind of working on. So we'll see. It's complicated. There's all that.

Anthony Corsaro - 0:38:38
You you just took us there. So let's go there because I think what you're working on is super cool and I think our audience would be super interested in that. And I enjoyed reading about it kind of in the daily Tomic and then your personal newsletter lately. So share, share what you have been working on there, Justin.

Justin Mares - 0:38:51
Yeah. So, so one of the core things, I think that one of the core challenges is like in the US today. It is like easier and cheaper to be unhealthy than it is to be healthy. Like basically you look at 11 of the top.

Anthony Corsaro - 0:39:04
Say that again. Say that again for everybody. Say that again. Does that's the sound bite that we?

Justin Mares - 0:39:09
Need to get yeah, it is. It is. Today in the US, it is easier and cheaper to be unhealthy than it is to be healthy. And like you look at basically 11 of the 12 killers of America, top 12 killers of Americans are all related to chronic disease, which are all like related to our food and food environment. And the big reason for that is like a bunch of people make money, pharma, big food companies, Big Ag, all of this stuff when you indulge in products that are highly processed, high margin and are bad for you and very far fewer people make money when you have a healthy individual. And so one thing that I think is really important is like I think it's really important to balance that equation. So you know we're, we're sort of on pace of the country to. Possibly go bankrupt in the next 20 years if we, like, don't rein in our healthcare spending. You know, it's approaching 20% of GDP. That's looking like it'll double in the next 20 years and almost.

Anthony Corsaro - 0:40:04
All of that.

Justin Mares - 0:40:07
Yeah. And and almost all of that is, you know 85% of that is spending on chronic diseases. And so I think that yeah, right, like preventable or at the very least addressable through like better lifestyle, food environment and the like and so. I think that like a key thing that we have to figure out as like a country and a people is like, how do you make it so that it is not an economically dumb decision to be healthy. And so something that I'm working on is basically there. There's an interesting sort of potential like loophole here where or something like HSA or FSA accounts, like health savings accounts or flexible, flexible spending accounts, but it's basically this pool of money that consumers can use. To spend on their like healthcare expenses today that's used on like sunscreen, pharmaceuticals, surgery, stuff like that. However, if you have a doctor that says hey, you're someone at risk for XY&Z chronic condition, which unfortunately is almost every American because like almost everyone in the country is sick or at the risk of getting some sort of chronic disease. If you have a doctor that says hey, you're at risk all of a sudden you can spend pretax HSAFSA funds.

Justin Mares - 0:40:53
On everyday health and Wellness spend. And so we started something called true medicine, it's true medicine dot care if anyone wants to check out the very basic website. But basically what what we're trying to do and we're like very early in thinking about is how do you allow people to tap into pretax HSAFSA funds that in a way on so that they can spend it on everyday health and Wellness spend and thus kind of like balance the equation of you know. It's all of a sudden maybe more affordable to spend on healthy stuff than it is on unhealthy. Like if you're using pretax funds to buy something that has a 35% premium to a conventional product, that's basically a break even for you, you know what I mean? Like by using pretax funds, assuming you pay an income or make more than like 50 or $60,000 a year, you know you're saving anywhere between 20 and 45% on on by using pretax dollars.

Kyle Krull - 0:42:18
I want to dig in a little bit deeper because I think you mentioned Wellness spend, right. So when you say Wellness spend that could potentially include healthier grocery options or what? What all does that entail?

Justin Mares - 0:42:27
Yeah. So, so it includes healthier grocery options. Like there's basically 108 different foods that that there's a large body of research shows is good for you. Grass fed, grass finish, you know, meats are on that, bunch of like well sourced seafood is on that. Fruits, vegetables, nuts, stuff like that. And then outside of that, it also includes, like for many people, fitness spent. So, you know, maybe like a Peloton gym membership. All these sorts of things are in that bucket of this is a thing that will help you be healthier and not sicker, and thus you could spend your HSA, FSA funds on that thing.

Kyle Krull - 0:43:04
Right. So take the average, you know, call it, you know relatively successful person in America is probably getting taxed 20 to 30%, right. So you're saying they could take that money higher? Oh, yeah, 25 to 35. No, we're not all in your tax bracket, Justin, just for the record.

Justin Mares - 0:43:22
I.

Anthony Corsaro - 0:43:24
Know if you looked into the.

Justin Mares - 0:43:25
Tax stuff? You'd be shocked.

Anthony Corsaro - 0:43:27
It's, it's, it's higher.

Kyle Krull - 0:43:29
Yeah, well, give us the numbers then. So what's the average person get taxed at?

Justin Mares - 0:43:34
I don't know about the average, but I mean the average person doesn't pay income tax. So like, you know, there's less than half of the country that is paying income tax. You know and and I believe you start paying income tax at the level of I think it's 60 something, $1000 a year. And if you look at like blended federal and state, most people are paying somewhere between 25 and 30% that's kind of at the low end. At the high end you know people in California are paying upwards of 52% in the higher earning kind of income bracket.

Kyle Krull - 0:44:06
And So what you're saying is we could potentially allocate. Their grocery spend, if it's on those designated 108 products that are healthier, deemed healthier by somebody research and they could get pretax money to subsidize the premiums they're paying for those either regeneratively grown or organic or whatever type products. Is that right?

Justin Mares - 0:44:25
Yeah, basically like you can rather than saying, OK, I get it, I earn a dollar, I pay $0.30 in tax, and then I get to spend that $0.70 on food, you earn a dollar, you keep that dollar and you spend that on. Then you you have higher purchasing power which you can allocate towards brands and companies that are help that are like investing in a better food system and are leading to a better you know better more economical, healthier better environment planet people all that stuff you know just better for you kind of foods and by using that bucket of pretax spend you know my my hope is that all of a sudden the the equation goes from like God I'm spending so much extra to eat organic, grass fed, regenerative whatever to like. I can actually invest in my health through this, through this channel because there's this like nice little kind of legal and tax advantage that I get from actually investing in preventative care. And as far as I know, this is literally the only mechanism by which you can use where there's a tax advantage or any sort of like insurer or other reimbursement advantage to investing in preventative medicine or preventive care. It's crazy.

Kyle Krull - 0:45:33
Yeah. So let's say, let's say I want to sign up. You know, I I want to take advantage of this. Like, what do I need to do?

Justin Mares - 0:45:39
You go to true medicine dot care and you'd sign up, fill out a quick survey that around some of your like health and Wellness, you know, family history. It's it's like takes like 5 minutes potential things that you're at risk for. We would then pair you with a physician who would, if, assuming you qualify, like issue something called a letter of medical necessity. That letter of medical necessity effectively allows you to use your HSA or FSA card on everyday like health and Wellness spend. And then true medicine basically works to like help make sure that you stay in compliance and can take advantage of this sort of like bucket of HSA, FSA spend for everyday health and Wellness stuff. So we'll partner with you for a year and like do all of the grunt work on from a tax compliance telling you what to buy, what brands are good, what brands are and you know what what. Food products, fitness things qualify, all that sort of stuff. So basically like walk you through using this tax advantage bucket of spend on health and Wellness stuff.

Kyle Krull - 0:46:39
Incredible.

Anthony Corsaro - 0:46:40
I love it.

Justin Mares - 0:46:42
We'll see next time I'm on this. I could be like, Yep, that bombed. I was an idiot.

Anthony Corsaro - 0:46:49
Words of words of a true serial entrepreneur. I love it. Is there any loopholes for people that don't have Hsa's or FSA's? Like is there a way to do that? Medical?

Justin Mares - 0:46:57
Letter and then like.

Anthony Corsaro - 0:46:59
Get a tax break on the back end. Like have you researched that at all?

Justin Mares - 0:47:02
Yeah, unfortunately not. It's definitely an area that we're like looking into. But unfortunately I think like HSA, FSA is the best, is the best thing today that exists for you to like get you know, take advantage of of this sort of spend.

Anthony Corsaro - 0:47:16
Yeah, well, we're talking money, so let's let's go back to Kettle & Fire. We've done a nice, we've been like frogs number from Lily pads, but I think we've got it in a nice little Symphony, so. How have you? How have you funded? Beautiful?

Kyle Krull - 0:47:29
Metaphor.

Justin Mares - 0:47:30
Wow.

Anthony Corsaro - 0:47:30
I mean, come on, metaphors and analogies, how, how have you funded the company today and how has that like take us through the fundraising arc of the company and how that's correspondent to various like milestones for the business?

Justin Mares - 0:47:44
Yeah. So we started the business. When we started the business, I basically like fund I I basically like emptied my my savings account to pay for our first production run. You know, we bought 30,000. Yeah, we bought 30,000 cartons of bone broth, which, you know, fortunately it's shelf stable. So it was a savings account in just a different form. But I basically had to like empty out my savings account and and that's how.

Kyle Krull - 0:48:11
But literally in liquid form savings account.

Anthony Corsaro - 0:48:13
Literally liquid day-to-day.

Justin Mares - 0:48:15
Highly.

Anthony Corsaro - 0:48:15
Liquid.

Kyle Krull - 0:48:17
Yes.

Justin Mares - 0:48:19
So, yeah, so, so we we funded it basically that way like our first, first production one was. Was just literally my savings and then borrowed a tiny bit of money from my parents. You know, I think it was like 2 grand or something that they helped to chip in and I paid for most of it. And then and then after that, we ran the company for 18 months. We were profitable somehow. We didn't have a finance team, so we had no idea how profitable it was. But like our our sort of guesses got us through the first, you know, 18 months. And so we were profitable because we were selling a product online at $12.00, like the same box you could buy today at the store for.

Justin Mares - 0:48:25
749 is like, you know, it's $12.00 back in the day. And so we're profitable. And then 18 months later we got in the Whole Foods. We got into fifty Whole Foods in two regions and we were like, oh, this product is moving incredibly well. And we were selling it at 999 with no marketing support, no sales people, just us like fulfilling P O's and like hoping that they sell, you know. And yeah, and one skew, it was like 1 tiny skew on the top shelf at 999.

Justin Mares - 0:48:54
Like, I don't know many people are buying it as a prank or something, but if for whatever reason it was like it was moving. And so at that point we were like, OK, we had an opportunity and I believe we got Whole Foods national approval and they were like great, this is going to be expensive to do this roll out. We should probably raise money. So we raised about 900K in 2017, I believe early 2017 and then. That rollout went well. Our retail numbers continue to be really strong and as we got further down the road, we like saw that there was a bigger, bigger opportunity in the Bone Roth space. And so in 2018 we decided to raise $16 million from some like well known consumer investors and and yeah and that kind of funded the rollout from like I think it was two or three thousand stores to now the 15,000 that we're in.

Justin Mares - 0:49:52
And so we're now you know having we've raised almost $20 million total and today we're like profitable and you know in a good spot as a company.

Anthony Corsaro - 0:50:31
Love it, yeah, love it, man. And doing the savings account for the first production run. Oh, baby.

Justin Mares - 0:50:38
That was yeah, it was interesting.

Kyle Krull - 0:50:44
Yeah, scary, but it worked.

Justin Mares - 0:50:45
Out. Yeah, definitely, definitely scary. But. But it was also like, you know. I believed in like our early metrics were good and I like believed in the category and our ability to build something more than I did like you know any sort of stock portfolio at the time. So. So I think it was it ended up being a good but then maybe.

Kyle Krull - 0:51:04
I should just like the category maybe, but I mean stock chicken stock. I don't know too many 200 things.

Justin Mares - 0:51:13
Yeah, I've got a lot of stocks.

Kyle Krull - 0:51:16
Liquid, stock, broth, whatever. So this is a question we ask everybody at the end. I feel like we've already kind of addressed it twice. So I'm going to challenge you to come up with a different answer. But what needs to happen for regenerative brands to have 50% market share by 2050 and you can't say externalities.

Justin Mares - 0:51:36
Good question. Well, interestingly enough, I think that we are going to find out. That I'll say a couple things. I think one, I won't say externalities, but like there's a lot of climate and climate related investing that's happening. And I think that as it becomes more apparent that regenerative agriculture in my opinion is one of the best vectors for making climate change. Like you could actually see a lot more people putting ESG earmarked dollars into regenerative agriculture. Which would just mean that more people would transition over to regenerative and like chase that that pile of money. I think that would be a a broadly very good thing. So I I think that that's like 1 macro trend that would go a long way and like if people are investing in regenerative farmland and you could prove that like farming and ranching regeneratively led to more, you know, carbon uptake or whatever.

Justin Mares - 0:52:11
There's there's like a pretty nice equation where you could say, okay, there's just going to be a lot more people farming regeneratively which brings price down, which means that more people will buy it. That's sort of one thing. The second thing I think that is interesting is like today we're like pretty blind to the nutrient density of our foods. Like if like you go to the grocery store, like you buy an apple and it's like an apple. Like you don't really know like you know what's the nutrient density of this apple versus. That that's conventional versus this apple that's organic versus this one that's like seasonal and local and like picked at a certain time and all this sort of stuff. It's just an apple. I think as we get a better sense of the nutrient density of what we're actually putting in our bodies, whether that's from like a, you know, like I'm doing mass spectrometry at my house, just like measuring the micronutrient density of a bunch of like foods or something. But it's not the retailer level or it's just like a more known thing that people talk about. I don't know.

Justin Mares - 0:53:03
But I think that the other way that like regen could be be 50% of sales by 2050 is like if we have a better understanding of how regenerative AG impacts nutrient density of different foods that are raised via regenerative methods. And if consumers are actually being responsive to micronutrient density as like a driving factor in their in their sort of purchase decisions. Like I know I would you know if I was like. This conventional apple has like 1/10 of the micronutrient density that that like a regenerative apple is and it's like the regen one's like 10% more expensive. I'm going to buy the regen apple. It's just like I think that there's this category of of things that you just need to make more legible and bring into a consumer's awareness so that they can make that decision for themselves, you know. But, but yeah, I think as if we move in the direction of having like micronutrient.

Justin Mares - 0:54:01
Style like nutrition labels or even just get a better sense of the the nutrition density from conventional all the way to regenerative. I think that like, it'll give the consumers a chance to actually like spend more money and vote with their wallets on on something that can like make their lives and help.

Kyle Krull - 0:54:44
Better you love that answer.

Anthony Corsaro - 0:54:47
Yeah. You hit on all three of the big buckets that we get all the time. And I think you summarize it really well. It's economics, climate, health, that's it. We can connect and deny to those three things. It's going to be a winner.

Justin Mares - 0:54:58
And we're going to figure it out. Has anyone else given the micronutrient answer before?

Kyle Krull - 0:55:03
Actually, Tim from philosopher Foods, Tim's got an interesting answer, but he wants to put a better nutrition label on the front of his product. To say like this is not just what's in my food and have it be more robust than the current, you know, US family we have to use, but also include what's not in the label, I'm sorry, what's not in his food, so the glife state and everything else. So it's a it's a little bit of a different take on what you had. Described, but I think it's still very much in the same day.

Justin Mares - 0:55:28
Totally. That's really cool, yeah.

Kyle Krull - 0:55:31
Yeah.

Anthony Corsaro - 0:55:31
Dude, thanks so much for joining us, man. Awesome conversation. Love what you're doing and just appreciate you.

Justin Mares - 0:55:37
Yeah. Thank you so much for having me on. I really appreciate it.

Anthony Corsaro - 0:55:45
For show notes and more information on our guests and what we discuss on the show, check out our website, regenbrands.com. That is regen-brands.com. You can also check out our YouTube channel, Regen Brands Podcast for all of our episodes with both video and audio. The best way to support our work is to give us a 5 star rating on your favorite podcast platform and subscribe to future episodes. Thanks so much for tuning into the Regen Brands Podcast brought to you by the region coalition and Outlaw Ventures. We hope you learned something new in this episode and it empowers you to use your voice, your time, and your dollars to help us build a better and more regenerative food system.

Anthony Corsaro - 0:55:52
Love you guys.