From Sourcing to Shelves: How You Can Build a Resilient CPG Supply Chain with Eran Mizrahi of Ingredient Brothers
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When it comes to creating amazing CPG products, one often overlooked aspect is the difficulty of actually sourcing the necessary ingredients, especially if they are specialty. And that’s where Ingredient Brothers comes in.
In this episode, Eran Mizrahi, co-founder of Ingredient Brothers, is here to break down supply chain logistics for us. He’s sharing the importance of having company partners you trust, why you need to build relationships in the food industry, and how he helps founders solve supply chain problems.
Eran’s advice and insight is so thoughtful, as he sheds light on what can feel like an overwhelming hurdle for CPG founders. If you’re new to the business, this episode is for you.
Subscribe to the Food Means Business Podcast with Hudson Kitchen founder Djenaba Johnson-Jones to hear the personal stories and “secret ingredients” of abandoning your day job and starting a CPG food business.
In this episode, you’ll learn...
[00:53] Eran’s entrepreneurial background
[03:28] How Eran and his co-founder chose their respective roles and responsibilities
[06:18] When businesses should start looking for partners like Ingredient Brothers
[07:44] The importance of building relationships in the CPG industry
[13:03] What supply chain problem-solving looks like for Ingredient Brothers
[15:12] Why CPG founders need to understand their customer base, from a supply-chain perspective
If you’ve wondered how to create steady supply chains, this is one conversation you can’t miss!
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About Eran Mizrahi
Eran grew up watching his father grow a successful import business that was built on integrity and customer service. A South African transplant, Eran started his career at Deloitte. From there, he came to New York to pursue his MBA at Columbia ‘14. Eran was an early employee at Plated, where he focused on building planning and sourcing programs. The team’s collective efforts led to a $300M sale to Albertsons. He then went on to join Nuts.com, one of the world’s largest nuts and specialty ingredient e-commerce companies. He was quickly elevated to COO and quadrupled the company’s capacity to support growth in 2020. Today, he is the CEO and co-founder of Ingredient Brothers, the supply company that’s filling the void Eran noticed when he sat in the buyer’s chair himself.
Connect with Eran Mizrahi:
Visit the Ingredient Brothers website
Follow Ingredient Brothers on LinkedIn
Stay Connected with Djenaba Johnson-Jones:
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[00:00:00] Djenaba: You are listening to the food means business podcast, which features the personal stories and secret ingredients behind what it's like to abandon your day job to start a CPG food and beverage business. I'm Djenaba Johnson-Jones, former marketing executive turned entrepreneur and founder of food business incubator Hudson kitchen.
[00:00:20] Join our community of fellow food business owners and subject matter experts. First to learn and laugh with us as we explore a startup world. That's a little more culinary and a lot less corporate these days. Eran, welcome to the Food Means Business podcast. I'm happy you're here.
[00:00:34] Eran: So glad to be excited to, to be joining you.
[00:00:37] Djenaba: Thank you. So I would love for you to tell everyone about your kind of career trajectory. This podcast is all about people that start with a corporate career and kind of end up starting some type of food business to love to hear about you.
[00:00:49] Eran: Yeah. So I grew up in a entrepreneurial household. So I think that that was.
[00:00:53] Quite a, you know, not unique, but at least definitely added a lot to my experience. My dad came from Israel to [00:01:00] South Africa and that's where I grew up and he started a business with basically nothing and was able to build a pretty good import business in South Africa. And so I think I was surrounded my whole life by entrepreneurs, which was definitely really valuable.
[00:01:12] And then I went and studied finance and accounting like, and did a more traditional route and landed up at Deloitte. And I spent about three years at Deloitte where I really do. Give them a lot of credit to building a really good foundation. I think that people discount sometimes going to big companies, especially when startups are new and sexy and the thing to do, there is a lot of benefit for being in a big corporate and getting some of the structure and rigor that they, that they bring.
[00:01:37] And, but once I was, I was done over there, I came to the U S for grad school. Um, and when I finished grad school, um, joined a VC backed startup that was doing food, and that was really my first foray into food and supply chain. And it felt like I was getting a second MBA, you know, in a VC backed startup, you're just running.
[00:01:55] And so there's, you're just able to take chances, um, build projects, do things. And [00:02:00] that was, that was really great. And, and I really appreciate that experience. And that startup eventually sold to Albertsons and I moved on to a company called nuts. com, which is a family business out of New Jersey that sells.
[00:02:10] 3000 products from all over the world. And I was the CEO of the end, you know, throughout my time there, as well as that played, it had seen a lot of inefficiencies within the ingredient space. And so that really pushed me to, to start a business. I'd, uh, you know, in terms of the move from corporate to, to entrepreneurship, I feel like it's always been in my blood.
[00:02:29] Almost like an expectation as if, you know, if your parent is really good at running, then you maybe should be good at running. And so I think there was always this expectation in my head that I needed to start a business. I'd always wanted to, I'd always been driven to do it. And so, um, I was just looking for that outlet.
[00:02:43] And I think, um, going from corporate where I was in service to then working in industry, that's when I really got to see opportunities and I saw them everywhere. And I just chose one and decided to make a jump and get started.
[00:02:57] Djenaba: That's great. So you have a co founder, is that correct?
[00:02:59] Eran: [00:03:00] Yeah, that's correct.
[00:03:00] Yeah. He worked with me at, at nuts. com and I called him up one day on my way home from work. And I said, Hey, I've got this idea. Do you want to quit your job? Timing is everything. And he was at a point in his career and his life where he had been talking about doing something and thinking about it, but hadn't really solidified on idea.
[00:03:17] And I think I just let that spark in him where it was like, okay, let's do this. And we decided in April of 2021, I think to start to make the moves and then we started the business in July. Yeah.
[00:03:28] Djenaba: That's great. I always wonder, cause you're the CEO, correct? And then your co founder is the COO. How did you decide who was
[00:03:35] Eran: going to take which position?
[00:03:37] I mean, there's obviously a lot of discussion behind the scenes. You know, I'd almost, you know, let's say started the business or at least had like the, you know, the blueprint for what I wanted to do. So, you know, for us, it made a bit more natural sense than two people in a room coming up with an idea together.
[00:03:52] I think that, so that made the decision a little bit more natural. Um, I do think there needs to be. Someone, you know, I'd spoken to a lot of [00:04:00] founders before who are 50, 50, and, and they were always like, someone needs to own the decision. And then, you know, 50, 50 splits can work sometimes and be amazing, but usually you want to have someone who has a bit more skin and can actually make the decision.
[00:04:13] So like when you get to that point where there's contention or, you know, two different parts and you're not agreeing that someone can just say, okay, like, let's just do this part and that's it. And I think I love, and I have got that. A really great relationship when it comes to that. And I think I allow him to run in his domain.
[00:04:26] He allows me to run my domain. Then, you know, when there's certain decisions that get made, you know, we try and, uh, You know, make them with respect to those domains. But then at the same time, someone has to, you know, be the person who makes a decision if there is like contention or at least disagreement with it, with the direction.
[00:04:43] Djenaba: That totally makes sense. So tell us what Ingredient Brothers is.
[00:04:47] Eran: Yeah. You know, we're basically a sourcing company. We spent a lot of our times on the other side of the table, working with suppliers and, you know, seeing a lot of frustration around. Price information, quality [00:05:00] information, communication, and really thought that there was a need for someone to come in and build a boutique sourcing company, or at least say not, I wouldn't say boutique is the right word, but a sourcing company that really tries to solve the buyer's problem or the procurement manager's problem, the category manager's problem, the other side, and brings with it a whole suite of services that, that they can rely on.
[00:05:19] And so, you know, we offer everything from sourcing private label ingredients Logistics support, QA support. We really plug in and become an extension of your sourcing team. And so we source everything from coconut milk in bulk that goes into manufacturing to doing private label products that are now in stores nationwide.
[00:05:38] And so I think a lot of What we found is really what we lean on is service. And so if you're using any important ingredient or private label, important ingredients, uh, products, we find that we can add a lot of value to, to your supply chain and drive a lot of savings and quality improvements and free up a lot of time for the category managers to do their, to do their job.
[00:05:57] Djenaba: Yeah, I think it's so important just as a business owner to have [00:06:00] like a go to companies that you, that you can rely on when you need something. So I think it makes a lot of sense to have those types of partners. And that's something I definitely appreciate in my business. I'm wondering, so I work with a lot of businesses that are just starting out, or maybe they're probably up to five years in business.
[00:06:14] And I'm wondering when does the business decide to work with a company like yours?
[00:06:18] Eran: Well, I think, you know, straight away, if they can, you know, for us, we're still a startup. So we struggle to, you know, work with startups because of the volumes And those commitments, but in terms of working with importers or people who know the industry and know commodities, I think that is, you know, to your point about finding your people who you can lean on, that should happen as soon as possible.
[00:06:38] I think that a lot of lessons can be learned. A lot of knowledge can be shared. People love to share knowledge in this industry. They love to talk, but there's no textbook. And that's the problem, right? If you're, if you're putting coconut milk in a product, There are plenty of people that you can talk to that will give you all the information you need.
[00:06:55] But if you go and try and Google and try and get like a single source of truth around what [00:07:00] you should know in order to make, you know, educated decisions and good decisions for your company, that's tough. And so I think finding good partners, Upfront, you may not be able to work with them at the beginning and that's okay.
[00:07:11] Right? Sometimes they just may guide you in terms of decisions you should be thinking about. I think that's really important. Not necessarily working with them directly because of, you know, when you're small and you're new, you may have to make sacrifices, but you need to know the path of, of where you're going so that you don't land up in a situation with an ingredient that doesn't add value to your final product.
[00:07:33] Has a huge margin impact, but also if you change it will change the form and structure of your product significantly, which is very concerning from a, you know, scale and just ensuring that you continue to grow.
[00:07:44] Djenaba: So I was like doing, you know, research on your company. And I, I, the thing that kind of was the through line was like the relationships like, Oh, talk about the importance of like building relationships, not only with like suppliers, but like in general in business,
[00:07:59] Eran: Yeah, I think, [00:08:00] you know, there, like I said, there is no textbook.
[00:08:02] And, you know, when I joined nuts.com, I sat with, um, Jeff, who's the CEO, his uncle every week for an hour learning about the industry, because he just had this wealth of knowledge and was able, you know, I could call him at any time and ask him certain questions that I would not be able to find as easily.
[00:08:19] And, and so there is, you know, the food ecosystem, as I'm sure, you know, is it's, it's a lot smaller than people think. And it's very interconnected. And you go to five trade shows and you start running into people that, you know, and you get, and everyone gets familiar with each other. And I think that is positive and negative, right?
[00:08:35] In the positive, then It's, you know, you, you can like gain a lot of knowledge, you get introductions, people are always willing to share. And those things will open so many doors and the negative, if you do something wrong, everyone will find out. Right. And so you kind of need to protect yourself a little bit there, but I think in general, those are the people that are going to come to bat for you.
[00:08:55] And. As we know in supply chain, it's not about things going right [00:09:00] and like everything's perfect. It's about managing problems. And who do you want on the other line? When you have a problem, do you want someone who you have a relationship with that, you know, will go to bat for you that will help open some doors and help you solve some problems?
[00:09:12] Because a lot of times when you really need those people, it's when There's a time crunch and you have 24 hours or 48 hours to solve something. And if you just, if this is the first time you're opening the door with them, then I think you're, you're going to get stuck. So yeah, we, we spend a lot of time at Ingrid and brothers.
[00:09:29] Developing a relationship with suppliers from all over the world in many different categories. And some of them we haven't worked with before, but I think it's, you know, we spend, you know, we try and, you know, sell them on our vision and what we're trying to do, but also start to develop that relationship, build that trust with them so that, you know, when we do need them and when we do work on deals with them, that, you know, they come to the table and they offer us, you know, access to the types of resources that they give some of their best customers.
[00:09:55] Djenaba: What is it like to work with your company? Can you walk me through? So if I go to the website and I'm making an [00:10:00] inquiry on something, you know, like a lot of contact form or inquire about a particular ingredient, walk me through the steps of what it's like to work with you.
[00:10:07] Eran: Yes. I think the first question, you know, that will, you know, set up some time with the customer and really understand, you know, what ingredients they're looking for, so, you know, let's go back to the coconut milk example.
[00:10:16] If they're working with coconut milk. Start to understand what is the application that they're using, right? Why are they looking to make a switch or maybe add a secondary supplier, you know, try and dig deep, you know, you know, every ingredient comes with a specification sheet, but underneath the specification sheet, there's a lot more that goes into things in terms of the sensory evaluation, the way the product has worked in manufacturing in the past.
[00:10:38] And so sometimes you'll give a presenter product that may on paper look like it will work perfectly. It will run in manufacturing and the application makes sense and you'll get a completely different output. And so we really try and dig a little deeper and really work with them to see what has worked in the past, what hasn't worked in the past, what are they trying, what variables are they trying to control for And then collect all of [00:11:00] that and then go to our supply base, which is usually not just one manufacturer at multiple manufacturers and try and evaluate which of those will make sense for this customer.
[00:11:09] And, and, you know, a lot of times we're working with large brands. So the onboarding is 12 months period. Right. And so we want to. You know, start the top of the funnel with a couple of different options that may work for them. And then, you know, really dig into the QA side of things, making sure that like we hit all the, you know, aspects that they need from a quality standpoint, you know, as much as there are standard things that people ask for, there is always.
[00:11:31] Unique attribution that people are looking for from a QA and compliance standpoint for each different product. So, you know, making sure that we hit those early on, and then we really sit down and try and understand demand and inventory management, and that's where, you know, not just getting to the contract of, you know, Hey, we were, we're going to supply you it's how is this going to work in practice and we try and really give people visibility into.
[00:11:55] What inventory is in production? How much of this is on the water? How much of the sitting in a warehouse, [00:12:00] how much of this are you able to pull? And what does your demand look like? So that we're having ongoing conversations where, Oh, demand is changing upwards, your mind is changing down. How can we react with you to be better partners?
[00:12:11] And so we know that for buyers going out of stock is the worst feeling in the world. And, you know, you can, you'll get a pat on the back for saving money. You will not. Get the opposite reaction if you're out of stock. Right. So I think, I think that that is something we, we really care about. Right. We put ourselves in those shoes and I think that's the muscle we built, which is reacting when things go wrong, being super proactive, over communicating, and then, you know, trying to do right by our customers always.
[00:12:37] And I think that that customer service. Hasn't necessarily, you know, proliferated through the industry. And I think we're trying to be as aggressive as possible when it comes to customer service, doing right by our customers. Cause in the end of the, you know, if people are buying from you for 20 years and the volume is good, there's enough to go around.
[00:12:54] You can do right by people and still, you know, have a good business. You know, you don't have to cut corners. And I think that that's, [00:13:00] that's been our approach and has, has worked pretty well for us.
[00:13:03] Djenaba: Are you able to give some examples of like maybe brands you've worked with or types of brands that you've worked with and like kind of problems that you've been able to solve for them?
[00:13:10] Eran: Yeah, I think, you know, a couple examples come to mind. You know, there was a fairly large company that was doing a lot of value add locally. It meant many, many more touches in the supply chain for these products. And we started to evaluate the products, the ingredients, and think about what does the right supply chain look like for them?
[00:13:28] And what it meant was, you know, they were You know, basically paying the supplier at origin to process ingredients in a certain way, and then ship it to someone in the U S to process them again, and then ship them to the, to them. Whereas if you just eliminated or restructured the processing step at origin, you could get what they needed in terms of final packaging and configuration.
[00:13:48] And so that was one where we were able to save a lot of costs. make it a lot easier for our customers to manage their supply chain and, and add a lot of value for us. Right. Because we were, you know, we were able to build really good [00:14:00] relationships with people on the ground and give them value add, because now they were doing a little bit more for, for the end customers.
[00:14:05] That was one, one example, which I think, you know, really stands out to me in terms of how we offer service. Other examples is just, you know, when customers come to us and they're looking for like an alternative sweetener for an R and D project. And, you know, because we're not. Constrained by which ingredients we sell.
[00:14:21] We really try and always look where, you know, we love going on, you know, explorations and trying to push the boundary. And so when R& D teams come to us with those types of requests, then we're able to, you know, stretch and try and figure out all the different things we can offer. And we try and narrow it down and then start to send samples and go through that process.
[00:14:38] So I think those are, you know, those are some of the success stories where R& D teams really value. You know, the extent that we're willing to go to try and figure out the right supply chain for them. And then I think we're able to re engineer supply chains in a way that maybe other importers are not willing to do because we have the resources and we have the team to manage those as we scale up a program.
[00:14:59] I [00:15:00]
[00:15:00] Djenaba: think that's really important because you're really acting almost as a consultant because it's not just about, can I get coconut milk? It's about how can I get it in the most efficient manner? It may also save us money in the long run. So,
[00:15:12] Eran: yeah, and that benefits everyone, right. In the end of the day, of course, you know, it benefits us to win more business, but it benefits them because we add resources in a very structured way to their team that, you know, you said something at the beginning, which I love, and I was speaking about before this, which was having that go to supplier.
[00:15:30] Like we need to be the people you phone first. And we hear that a lot from our customers where, you know, we always just, if even if it's a weird ingredient or something, we don't think you guys do, we'll just send it to you just in case. So, And usually that sparks creativity for us and we go for it. And sometimes we win, sometimes we don't.
[00:15:46] But there's no negative learnings when you're trying to build a business and trying to, you know, really write down what the global ingredient supply chain looks like. So, you know, we always take on those projects. So what advice do you have for [00:16:00] a new food entrepreneur? If you're starting in the, in the retail space and you're trying to build something for your customer, I think actually defining who that is, is really important from day one, because sometimes you'll speak to a customer and they'll.
[00:16:13] Show you a product that is really built for, for lack of a better words, an O 1 customer. Someone who's willing to pay X amount and they want certain ingredient claims and they, you know, they really believe in the super premium niche and that's fine. And if you're building for that, then understand that market size.
[00:16:30] But I think what people do is they build that product. And then they say they want it to be on Walmart shelves. And I think that that then means that you have to almost pivot your persona. Now it doesn't mean that your initial early adopter may be the person at O1, but that's not who you're building the product for.
[00:16:47] Right. And I think that that sometimes gets found as in a pickle when it comes to building a bill of materials that makes sense from a margin perspective that will actually scale to the level that they need and will [00:17:00] have the, you know, Complexity that Um, or lack of complexity that will allow them to scale as efficiently as possible.
[00:17:07] And I think sometimes that gets complicated. And I think that's where building relationships and having a lot of conversations, not only on the sales side, but also on the supply chain side to really figure out, you know, which ingredients do you need, which ones will give you access to scale, which ones could be a problem.
[00:17:25] And it doesn't mean only choose. Ingredients that are mass and easily accessible, but just understand that if you choose five that aren't, that's a lot of work. Whereas if you choose one or two that you're going to take a stand on and say, okay, we're going to work with our suppliers to develop that out.
[00:17:41] We feel confident that this is an angle that will help us. That's great, but don't try and use every ingredient that's a little esoteric or limited supply and doesn't give you access to scale if that's what you want. And so I see a lot of founders struggling with that as they, as they grow. And it, it, You know, sometimes it means a lot of sacrifices along [00:18:00] the way.
[00:18:00] And I think it's a, you know, it's a, it's an evil circle. When you start making sacrifices, you get into that habit. I think try and like formulate at the beginning with like conviction and just stick to that conviction because you know, you can change supply chains and you can build incredible things.
[00:18:14] You just can't do it with every single ingredient in your, in your product offering.
[00:18:19] Djenaba: What do you love most about being a food entrepreneur?
[00:18:21] Eran: Everything. I mean, I think going into the food industry is it's a, it's a cruel world because it's so tough. And I think obviously I have it easier than if you are a restaurateur and like love being a chef and that's, that's your poison, that's really, really hard.
[00:18:39] And, you know, even CPG founders, I have so much respect for because of just how. challenging it is out there and just the, the, the competition that you're up against and like the barriers. But I still think that there's this emotional connection. I get to talk about food all day long and I get to think about ingredients and we have a team that spans across the world and we are meeting with suppliers from all over the world.
[00:18:59] [00:19:00] We're learning about different tastes and yeah, we're just playing our little part in like this huge ecosystem and it's a lot of fun and it's always changing. It doesn't stand still. It's very tangible. And when you're at a dinner table, people understand food, right? And so they get excited to talk to you.
[00:19:14] So, yeah, I think, I mean, I've loved food since I was a kid and always loved cooking and just had this, we met with a caterer yesterday for our wedding and his excitement, like we were just bouncing, but I think that that's what you find when people love food and they love being in the industry. You just bounce off each other.
[00:19:32] I'm sure you get that energy in other fields, but that's where I found my energy and I really enjoy it.
[00:19:36] Djenaba: Yeah, I feel the same. I think it's a, it's a lot of fun for sure. So, you know, you are an entrepreneur and sometimes we work a lot and I'm just wondering, like, what do you do for relaxation and self care?
[00:19:49] Eran: Well, I'd say I'm not the best at it. You know, definitely the first two years of the business was, you know, like that definitely took a backseat and not always easy in managing stress and [00:20:00] anxiety and all that balance. I think that that it's really hard to, Find that balance and I don't have kids or other responsibilities and I found it really challenging.
[00:20:08] So I think I don't want to, you know, sugarcoat and say, I have that figured out. But I do think, you know, I find a lot of joint cooking. And so we, we host a lot of people. And for me, that's my favorite thing is just to entertain and like escape and do something that forces me to concentrate so much that I can't think about all the problems I have at work and all the issues I have.
[00:20:27] So, you know, I try and do things that push me out of my comfort zone a little bit so that I'm not able to. You know, if I go on a walk, I can think about work really easily and of course I'm going to do it. Or if I do something relaxing, even if I go on vacation, I can think of work, but when I'm cooking and trying to make a meal for 20, 10 people and it's, I've got two hours to do it.
[00:20:46] Like, that's all I'm thinking about. And so for me, that's the way I escape and, and let my, you know, give my brain a bit of a pause.
[00:20:57] Djenaba: So at Hudson kitchen, we have what we call a money [00:21:00] bell that we ring when we're celebrating something. So I'm wondering, what are you celebrating?
[00:21:04] Eran: I mean, the big thing for us as the team, we, we've built it. We've gone from 20 to 40 people in the last year. And it really feels like now, you know, that type of growth in a, in a small company is significant and the beginning is really, really hard to build communication and process everyone's remote.
[00:21:18] We're across like four different countries. And I, and I really do feel like the team is very aligned and everyone's really working and focused. And for me, that's just a huge win. And so it's like, you know, you're building the machine and now you just got to put stuff into the machine to, to crank out more volume.
[00:21:34] And so, you know, that's been a big win for us. And a great feeling when, when you see, when you see the team at work. So yeah, maybe selfishly, that's been really cool to, to see an, an experience.
[00:21:45] Djenaba: That's awesome. So thank you so much for being here. Please let everyone know where they can find out about you and Ingredient Brothers.
[00:21:52] Eran: Thanks so much for having me. This is great. You can, you know, find us at IngredientBrothers. com. We're very active on LinkedIn. So look us up there [00:22:00] and then we're at all the big food trade trade shows. So if you see us, come say hi and let us know what you're, what you're struggling with.
[00:22:06] Djenaba: Thank you.
[00:22:08] Eran: Thank you.
[00:22:09] Djenaba: The food means business podcast was produced by Hudson kitchen. It is recorded at the studio at Kearney point and Nixon edited by wild home podcasting. Our theme song is by Damien DeSandis and I'm your host. Djenaba Johnson-Jones, follow Hudson kitchen on Instagram at the Hudson kitchen and to get food business.
[00:22:27] It's right in your inbox. Sign up for our newsletter at the Hudson kitchen. com forward slash newsletter. Listen, follow, and leave a review on Apple podcasts, Spotify, or wherever you get podcasts until next time.