Today we’re talking with Koel Thomae, Founder of Noosa Yoghurt.

growth strategyI’m sure you’ve seen the Noosa brand in the thousands of stores they’re in across the country, and today, Koel discusses what it was like growing the business with an extremely tight budget.

Before partnering with an investment firm, Koel and her business partner had bootstrapped their way to a projected $100M a year in revenue. Everyone loves to talk about big investments and overnight successes, which is why I wanted to dig into the early years of Noosa, what it was like growing the company in the early stages to where it is now.

In the episode, you’ll learn:

  • How flexibility in your growth strategy can actually be a good thing
  • Why tactically picking your retail partners is essential in scaling a food startup
  • How to market a brand with a small team and small budget

And plenty more…

Listen to the Interview on iTunes >>>

Show Notes:

Alex: So can you tell our listeners a little bit about your background, and how you came into founding the company?

Koel: Yeah. Absolutely. So I was actually just sort of getting my start in the food industry.

I was working for a start-up beverage company called IZZE, and it was during that time that I had gone back to Australia to visit my family. I’m originally from Queensland which is the most North Eastern state in Australia.

And was visiting my mom, we had just been walking back from the beach and stopped at this just little local corner store.

I saw this tub and it was clear, there was no branding on it, but it had this pop of passion fruit puree which is… If you’ve never seen a passion fruit, it’s like a very…when you cut it open, it’s this like very bright orange color, and it’s got black seeds in it, so it’s definitely very visually arresting, and my favorite flavor growing up in Australia.

And so it piqued my interest, and I picked it up, and discovered it was yogurt. And a few minutes later I was back at my mom’s place having my first taste. And it was just one of those stopping-in-your tracks taste experiences, like eating you know, the best palisade peach on a summer day type sort of moment.

And I just started gushing to my now husband, and you know, he’s used to me being sort of just generally excited about food. So he’s like, “Yeah, well, you know, it’s good, but it’s just yogurt.” And I was like, “No, no. You don’t understand.”

And then ultimately I was, you know, sharing the same story with my mom a little while later. And so she said to me, “Why don’t you call this company?” And I said, “What? And tell them that their yogurt’s delicious?”

And she said, “Why not?” So I ended up contacting this Australian company to learn that they were a small family business just sort of getting started, and sort of, asked them had they ever thought about doing anything from like licensing or doing anything outside of Australia, and they were like, “Oh, no. we’re way too busy.”

So, headed back to Colorado after that, and just really like could not get this yogurt off my mind.

And started doing my own research of species of the yogurt category, and really truly just seeking something that tasted similar, and there was nothing. And so fast forward, two years later, I was headed back for another visit to Australia.

And my boss at the time at IZZE, Drew Grumhaus, was like, “Will you please just contact this company again because you’re driving us all crazy talking about this yogurt.”

And two years is a long time to be, you know, just so fixated on something. So I ended up having my mom contact this family the second time, and ultimately met them at the local surf club over a few beers as you do when you’re in Australia, ultimately convinced them to license the recipe to me.

So, you know, I walked out of this meeting with a very, sort of, informal recipe and license to this recipe, and got back to Colorado again, and very bullishly wanted to build my own facility and launched this dairy branch with absolutely no experience whatsoever in dairy.

We’re sort of on a search for a good milk supplier, and had gone down to the local health department and walked out of this meeting with what they call the “Pasteurized Milk Ordinance”, and it’s this massive, very technical document. And I was almost in tears because I was just like, “This is never gonna happen.” Dairy is highly regulated.

It’s much more complex than I really realized. But that sort of pivoted my sort of thought process. I was like, “Okay. I need more than a milk supplier. I need a great dairy partner to help me bring this concept to life.”

So I sort of started on that search, and I was just in a local coffee shop, and I saw this flier for this family farm in Northern Colorado, great story, in their fourth generation, growing all their feed, not treating their cows with growth hormones. And I was like, “I’m calling them.”

So I ended up contacting them and connecting with farmer Rob, Rob Graves, who’s the owner of Morning Fresh Dairy, and convinced him to let me sort of come up and pitch the idea to him.

And so you know we met basically in the paddocks over the cows. He thought I was a little crazy. And I ultimately got my mum to ship in samples of the yogurt so he could taste it.

And you know obviously, tasting is believing. And got Rob to taste the product, and he had that similar, you know, sort of, taste moment where he was like, “This is not yogurt.” I was like, “Right?”

I think it’s a pretty, really interesting story in that two complete strangers came together, really bound together by this taste moment, and this belief that it was unlike anything else that you could find in the US. And so we created a partnership and got busy, and as in business, many things take longer than you ever anticipate. We had sort of connected in 2008, and we didn’t launch until January 2010.

So that was when we first came on to the market.

Alex: So had you always known that you wanted to start a company, or was it just tasting that yogurt, you had that experience that this just had to be available to the rest of the people in the US?

Koel: I grew up with parents that were sort of, a little bit hippie-ish. So I had that wanderlust. I mean, my dad’s Canadian, my mom’s American, and we ended up in Australia.

I mean, I’m the only one in my family actually born in Australia. But, you know, they both really sort of followed their own passions and through that created their own businesses and, you know, nothing to the scale of what we’ve been able to create.

With me saying that, I think having parents that did follow their passion and have their own businesses, and you know really instill in me that you do need to have a great education, but you know, don’t be afraid to go out there, and travel, and experiment, and find something that makes you truly happy.

And I think sort of that having that sort of foundation, I was always thinking of ideas of, you know, definitely didn’t have this linear path into food.

But once I really sort of got to Colorado and realized that, you know, I was maybe not going back to Australia any time soon and needed to sort of figure out what I wanted to do with the rest of my life, it really came down to just really thinking about like, “What was I passionate about?” and food has always been that common thread.

And here I was living in Colorado, basically the natural food mecca. I think there was always that spark but it was just…it took time and sort of finally getting to that place where, you know, a lot of different sort of intersections and creating that sort of right moment.

Alex: A lot of the articles that I’ve read and I feel like just in general people love to focus on the success story after all that hard work and all the grinding and the years of not paying yourself, is actually in the past.

So when you were actually founding the company back in 2010, what was it like when you were bringing it to market and actually starting to scale, and what were some of the tough learnings or keys to success in those early stages?

Koel: I mean, you know, there are so many different learnings and sort of tough learnings. Again, I was a first time entrepreneur. Rob definitely was very deep in the dairy industry, but very focused on just a small territory and something that was more traditional, you know, fluid milk and bottled milk through home delivery.

So I don’t think we ever really, sort of, thought of this as you know, “We’re gonna launch this company and have this national brand,” but we knew that it was a proven concept in Australia and that there had to be, you know, more than just Colorado consumers that could fall in love with the product. We were really bullish in the beginning.

We built and bought our own manufacturing facility, and that certainly allowed us to scale and ramp up when opportunity sort of presented themselves.

But then as that success grew, we definitely sort of hit the just capacity roadblocks because we couldn’t, you know, either afford to buy equipment fast enough, or you know, expand the facility fast enough. So that was definitely challenging at different points in the process.

I think one of the biggest stumbling blocks we had was we hadn’t sort of sat down and really sort of formally decided how we were going to grow this business outside of Colorado.

And you kind of get giddy that, you know, every opportunity is a good opportunity. We had a retailer in the East that was potentially interested and then ultimately decided to pick us up, and we thought it was a good opportunity, and it wasn’t.

It wasn’t the right retailer. It didn’t, you know…it wasn’t the right demographic. Our supply chain wasn’t sophisticated enough at that point in time for us to be shipping all the way across the country.

So there were a lot of different challenges there that ultimately we didn’t succeed. And you know about nine months later, we actually pulled out of the retailer by our choice just because we were just hemorrhaging money, and it was our own money so that was even tougher.

And it was a long time before we could actually go back to that retailer, and represent ourselves and have that success point.

But it did make us sort of stop and think about how we would grow successfully and rather than, you know, every opportunity just thinking more thoughtfully around, “A, is this the right retailer, the right consumer? Does this fit into our overall marketing strategy? Are we able to support it?”

So I think it was moments like that that really allowed us to think smarter about how we would grow.

Alex: And so how did that influence your growth strategy after working with a retailer that’s nowhere near Colorado?

Koel: Yeah, you know, it’s just a great sort of turning point. And sort of really inflection point for us to become that national brand was in 2012, Target actually came to us and said, you know, “We’d love to test you in our Super Target formats.”

And because I had had experience with Target from my IZZE days, I knew this was a game changer from, you know, this national landscape.

And they were all in. So we really felt this level of partnership that they were going to, you know, take… Well, we only had four, I think five skews at the time, but they were gonna take all five skews.

They were gonna, you know, give us great position on their category, and really wanted to partner with us.

And I think that was sort of a big key in who we decided to work with is that, you know we were still this very small, unknown brand and we needed people to be a partner and give us the right runway, and allow us to sort of test and learn, and Target really was that retailer for us as far as, you know, a national footprint.

But it also… From my experience, I knew that for us to succeed in Target, you know, we had to sort of put other things on hold, because they do have a very sort of demanding supply chain process. And while I had lived through it, a lot of people on my team had not.

So it was really understanding, you know, the right retailers, being able to sort of say, “No” to other opportunities to make sure that we were focusing and really doing that partnership justice.

Growth Strategy

Alex: How did that relationship with Target develop or get started? Did they reach out to you or had you met them or reached out to them?

Koel: They actually reached out to us. We had been out at Expo West, which most people know in the food world that that’s the largest natural products tradeshow in the country. And we actually decided not to exhibit for the first two years.

Again, just wanted to really sort of iron out those kinks before we sort of said “Hello” to the national playing field. And it was there that Target discovered us, and I think they’d also seen us at the smaller retailer in Minneapolis. And they just fell in love with the taste of the product, realized that it was very unique.

And I think we’re very forward-looking in the sense that the whole category was sort of exploding with Greek largely driving that, but wanting to sort of be ahead of the innovation curve and the trend curve and really sort of saying, “Well, what’s gonna be next after Greek?” And so sort of rolled the dice with us as a sort of very small, unknown brand.

And because we really understood the supply chain piece of working with them and the partnership, we did a great job. And probably two months later after launching in their Super Target format, they actually came back to us and said, “We’re really pleased with the early results, and how our guest is responding to Noosa. We’d love to roll you out to another 1,000 PFresh Stores.”

And you know, again, I sort of had to sort of bite my tongue and not say an immediate “Yes.” Like get on the phone with… I went to farmer Rob and be like, “Okay. Can we actually make this much yogurt?”

And again, he was like, “We can, but you have to stop selling to other customers for a while.” So I think again, just understanding those from that learning into the early years, knowing that this was a game changer, the right retailer, the right consumer, and that to go all in we had to say “No” to other opportunities at that sort of point in time.

Alex: So had you guys developed a strategy or a goal of where you wanted to be…once you guys started getting traction and figuring out, “Wow, this is actually working.” If it was, “Okay, sky’s the limit,” or it was like, “Well, now we have this opportunity, so adjust our strategy in this way.”

Koel: It was a combination of both. I mean, we certainly had a lot of inbound interest, but we were also actively going out there and trying to create those opportunities. So once we got a foothold into…

So we expanded into Whole Foods in Southern California, so all of a sudden, you’ve got this opportunity because you’re in distribution in this region.

You’ve got sort of the premier retailer carrying you, but then looking at the retail landscape in that area and saying, “Okay, who are all these sort of, what we would define as the A Retailers, you know: great partners, great consumers,” and going after those opportunities and really sort of filling in that region.

Because as we sort of thought about marketing and on our very limited budget… But thinking about marketing in the sense of, you know, if we’re going to tweak any sort of real sampling program into that market outside of in-store, you know you have to have enough density of retail presence to really make that investment worthwhile and get that return.

So that’s sort of how we started thinking about it, is you know, if an opportunity opened up in a great region, try and go and fill that in with all the great retailers in that area to be able to really think then, “How can we do some interesting marketing programs to, you know, build that trial and awareness?”

Alex: As you mentioned as a start-up, marketing budgets are usually pretty tight. You still managed to scale quickly. Do you have any pointers for our listeners who are in that same position that are looking to do the same thing as far as scaling?

Koel: It’s interesting. Two thousand and ten was definitely a really exciting time as far as how you could connect indirectly with your consumer. But as sort of this one-woman marketing team, I had to be really smart as I sort of thought through that, because we really had no budget.

When you spread yourself too thin you don’t do anything well. So it was really recognizing this sort of opportunity of social media platforms, and I was like, “I think Facebook is the one. I’m just gonna focus on Facebook and do it really well,” and that was before, you know, Facebook really had this Pay-to-Play model too.

So it was an interesting time that it was more just your time, versus having to invest all this, so your own you know, fans would actually see your post. So we sort of were able to leverage that in the sense that really connecting directly with those consumers and every post was responded to.

I definitely sort of realized that there was also this unique opportunity with a direct connection to really embrace people that were as excited about Noosa… I learned from that first sort of taste moment, and you know, I would try and connect with them directly and say, you know, “If you’re willing to send me your email address, or your mailing address, like I’d love to send you a coupon, or a sticker, or a t-shirt.”

And also obviously with food, tasting is believing. So we realized that there was, you know… That’s where we would have to cast a lot of our initial budget. I would say you have to be willing to really put yourself out there.

In the early days, I was part of that sampling team. So I was in the grocery store, I was at the farmers market every weekend you know making those direct connections. And you have to be willing to put in the time and energy when you don’t have a large budget.

So I think those were sort of some of the small things that we were doing that really had the power of word of mouth. For somebody to say, “Oh, I actually met the founder when I was at the farmers market,” and being able to tell somebody else I think goes a long way.

For me to be that person interacting with people on Facebook at the time I think also was really powerful in sort creating that word of mouth. And word of mouth has been huge for us without that big budget.

Alex: Well, it’s clearly paying off for you guys and has paid off that. Had you had marketing experience in the past?

Koel: I had a marketing degree but never had really done anything of the true value of it. As I was truly trying to break into food, my resume looked I guess, sort of spotty to most people because I had worked as a waitress, I had worked for non-profits. I was working in an IT company at the time.

But once I got into IZZE, you know, even though I was working in the operations team, I really was so excited and saw this amazing opportunity working in this small start-up to learn sort of all facets of the business. So I was very bold and basically asked to sit in on any meeting that they were willing to let me in.

And they did. They were amazing to sort of just say, “If you can get your job done, you can do anything else that you want in the company.” So that was a great grounding for me from not just marketing, but sort of all facets of the business.

Alex: Well, you guys are clearly doing something right. You had Target reaching out to you, and then through your exciting growth you also had a private equity partner take out a majority stake, make a majority investment.

And correct me if I’m just making assumptions or glazing over any of these facts, but what was it like getting that first call from your current private equity partner?

Koel: Well, we actually… We actively went out looking for these people, and that was primarily motivated by the fact that we were running the business solely and had never take outside investment.

I had had my first child, so there was, you know, added complexity in my life. And we we’re starting to actually see some direct competition coming directly, you know, at us.

And Rob and I sort of both sort of took a step back and we we’re like, “Oh, my gosh, we’ve actually created a real company, a real business.”

And that growth curve was not flowing, and we realized that it was a good time to look at taking on an investment partner to really allow us to think bigger, smarter, faster.

It was a very thorough process because we both wanted to stay engaged in the business, and wanted to find that right partner who really just understood what we were about, and that was making bloody good yogurt.

So we didn’t want somebody that was, you know, really coming in to sort of cut corners on the quality of the product. And we ultimately… It was interesting as we were going through the process actually hit our first, you know, major capacity constraints.

And so as we were trying to, you know, finalize things with, you know, a potential partner we could have narrowed it down to two groups. This happened and it was horrible timing on many different levels.

And we needed to be transparent and sort of sat down and had this hard conversation with these two different groups, and it was ultimately Advent that we partnered with.

And it was from that sort of hard moment that I realized they were the right partner, because they asked the right questions, they weren’t hysterical about the issues that we’re having. They were like, “What can we learn from this? How do we not do this again?” And just fundamentally, they were like, “You have to deliver on every level,” but fundamentally, quality was key in their mind.

So it’s been tremendous for us, for both Rob and I because I think it’s really allowed us to refocus on what we do best. For me that is, you know, obviously being out there and being the face of the brand, and helping with innovation which is what I love to do.

And for Rob, he continues to sort of geek out in his farmer engineering role, but he is, you know, he’s the gateway of our quality, and so to have him constantly involved on the production side of the business has been key as we grow.

Alex: I’m sure there’s a culmination of things, but is there a specific instance or a time in your mind where you and your business partner had the realization that, “Okay, we need some outside financing,” or, “We need some more funding here.”

Koel: Yeah. I mean, we both had, you know, obviously, the smarts to keep growing this and driving it, but I also think we realized that the business is on the sort of trajectory to do over $100 million in revenue.

And really proud of like, sort of getting into that point but realizing that through, you know, my experience even just at IZZE that some entrepreneurs don’t know when to get out of their own way and bring in the next level of expertise.

And growing a business from 0 to 100 million and then beyond that is something very different. And I think we both agreed that we wanted to protect what we had created and that we needed, you know, people that had done this before in that sort of next level to get ahead of that.

Because we we’re already sort of behind in the sense that the business was being run that we were sort of opening ourselves up to some real challenges. So I think just being a little bit smarter about looking into the future and knowing that finding that right partner could take time, we wanted to get ahead of that.

Alex: So how has your role changed over these past few years?

Koel: I am having the time of my life. And it’s not to say that I didn’t have the time of my life sort of in the early years, but a lot of pain, and suffering, and heartaches, and you know, that just daily grind is really been sort of shared in the sense that, you know, when we brought our investment partner, it was still me and one other contracted person running sales.

So imagine, you know, we’re a $50 million-plus business sort of… With this run rate deliver 100 million.

That’s a lot of moving parts. I had a very small marketing team, so… And I don’t wanna put words into Rob’s mouth but for the fact that both of us have been able to find great people that are as passionate, if not more passionate about the brand to sort of help run it to that next level, but still be involved in that way that the brand is not losing its essence and I think that is so key.

Even like simple things. I mean, I was sitting in a marketing meeting and I was like, “I don’t think that’s brand standard.” And just to be able to like have those guard rails and be having fun is truly a very unique opportunity.

Alex: So what’s next? What’s on the horizon for you and Noosa?

Koel: So, again, talking about innovation. Obviously Noosa, when we launched in 2010, we were backing all of the trends as this whole milk, full flavored yogurt. And from a brand perspective, you know, somebody that wants to have fun and not take things too seriously.

And so I think all of those things are still what we look to as we drive the business forward. And we know that yogurt’s still from… When you look at other western countries and you know, per capita, Americans still eat a lot less yogurt.

So trying to really understand how we can bring more into that eating occasion is really how we’re thinking about innovation. So we’ve got some exciting stuff launching this summer that really will, you know, I think push, you know, yogurt out of that just simple breakfast occasion.

Alex: I was, I think is the mango habanero, is that right? One of the sweet heat combinations?

Koel: Raspberry habanero?

Alex: It could have been that. I was just like, “I could eat this with some pita chips or something. This is delicious,” as more than just when you are just eating with a spoon.

Koel: Yeah, and I mean, that’s been a great thing is really we’ve been able to sort of push boundaries but used Colorado as our test market.

We’ve built such a great following here, and we’ve got such great retail partnerships, and obviously awareness that it’s allowed us to sort of push the boundaries of what people expect from yogurt and test and learn in a great market as we’ve been, you know, sort of get that piece of concept to take it out to the rest of the country. So that’s been… It’s been fun.

Alex: Now, we’ve got a few closing questions that we ask each of our guests. What’s the best piece of advice that anyone’s ever given you?

Koel: I really feel like I’ve been so fortunate on this food journey that I’ve had so many people supporting me and sort of giving me that mentorship. But really, the best piece of advice I’ve been given was from my boss at IZZE, and it was really encouraging me to just stop thinking and talking about it, and just go out and do it.

Because maybe I wouldn’t have picked up that phone that second time, going back to Australia to you know, get that recipe that really, you know, allowed us to start all of this.

But then I think about another great piece of advice as I really got into sort of the thick of the business, in that, you know, again, we were this full fat, full flavored yogurt, and just talking to somebody that had sort of said, “You know what? As a consumer good, you can’t be all things to all people.”

And that was really, really helpful because it’s… Again, I was, you know, out at the farmers market and getting so much input about like, “Well, have you thought about this?” and “You should do this.”

And that piece of advice really reminded me to stay true to what was fundamental to why we started the business, and that was making a really good quality, delicious, yogurt, and just staying true to that focus.

Alex: And I think both are so important especially with building a brand and just as an entrepreneur in general, or just in life. Just stop thinking about it and go out and do it. And it takes guts to go make that second call after you were like, “Well, they didn’t bring it up, so maybe I shouldn’t do it.”

Koel: Yeah.

Alex: So is there a book that you like to recommend to people?

Koel: So I’m actually almost embarrassed to admit this, but I probably have read only a handful of books since I’ve launched this. And one book I have read and it wasn’t business related that I will absolutely love, my mom gave it to me, it was called “Penguin Bloom.”

And it’s a story about this odd, little bird who ultimately saved his family. And it’s just a very moving, poignant but impactful story.

And I think to me, it sort of reinforces that life is very precious, but that for me personally, to be successful you need balance. So I would just say to anyone, I mean, you know, read books that aren’t just business focused, but you know, give you balance and give you perspective.

Alex: Now, this is the last question here. So this is a little tough, but if you could travel back in time to teach your pre-Noosa self something that you’ve since had to learn the hard way, what would that be?

Koel: I definitely am somebody that is very like goes on my intuition, and there were a few moments early on when my gut, you know, my intuition was like, “That’s not right for the brand,” or, “That’s not a good decision point.”

And maybe just you know with different business partners sort of in the mix, wasn’t vocal enough when I knew that deep down I was like, “That is just the wrong just sort of decision point or path.”

And I feel like I’m fortunate that I was able to recognize that early on, so I would just say, “Really understand and trust your gut and your intuition, because 9 times out of 10, they’re the right decision.”

Alex: That’s great advice, and thank you so much for coming on to the show. It’s been a pleasure talking to you and just getting to hear about the success of Noosa, and how despite all the amazing success that you’ve had, you’re still so down to earth and I think that speaks truly to the brand, and has done the brand very well.

Koel: Well, thank you so much for having me. This was really fun.

Alex: And where is the best place for people to go check out what Noosa has up next and what you guys are working on?

Koel: Definitely check out our website, and that’s “yoghurt” with an “h”, dot com. But also follow us on Facebook and Instagram because that’s where we definitely will be teasing our fans with what’s coming up this summer.

Alex: Wonderful. Thank you so much, Koel.


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