← BRAVE COMMERCE
BRAVE COMMERCE
Suave Brands Company’s Noah Knoblauch on Rebuilding Legacy CPG for a Digital-First, Private Equity-Backed Future
00:24:46
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- [00:00]
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- [00:33]
Noah Knobloch
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- [01:15]
Experian Representative
Acast helps.
- [01:16]
Noah Knobloch
Creators launch, grow and monetize their podcasts everywhere. Acast.com.
- [01:25]
Experian Representative
Finding the right audience shouldn't feel like doom scrolling with Experian. It doesn't Experian syndicated audiences help you reach holiday shoppers, car buyers and more across over 200 top platforms. With over 2,400 pre built audiences. There's no more doom scrolling. It's audience targeting you can trust. Made simple. Learn more@experian.com Adweek that's exper Ian.com Adweek.
- [01:57]
Noah Knobloch
We had to fix the house before making it look nice and now we're like going through the whole rebranding positioning. We're going to get all new PDPs by your seed in the market January of next year. We already started to work on the fundamentals of really optimizations for the algorithm, but we couldn't do that if we didn't have our right foundations. And the results were astonishing. In the first 18 months we doubled the revenue on Suave and we're probably going to triple it by the end of this year or early next year. And then we unlocked 40% growth on chapstick just by focusing on the right assortment and putting media behind the right seasons to win Holiday. It was an incredible journey.
- [02:36]
Rachel Tippograph
Welcome to today's episode of Brave Commerce. I'm Rachel Tippograph, the founder and CEO of Micmac.
- [02:42]
Sarah Hofstetter
And I'm Sarah Hofstetter, chairwoman of Profiterra Plus. And this is a show that talks about what's relevant in commerce for the world's biggest, biggest brands.
- [02:57]
Rachel Tippograph
Sarah, you've worked for private equity backed companies, right?
- [03:00]
Sarah Hofstetter
I have through multiple stages, both with 360. I. We never ended up going public obviously. And I've worked for public companies. I took a company public actually. There's pros and cons to both, as have you, my friend.
- [03:14]
Rachel Tippograph
Yeah, I mean I'm currently piggy backed. I have to say now that I've been in the model, it can be really rewarding if you're motivated to execute within a certain time period and you have a singular focus to reward all shareholders. And then I also think it can be stressful because that environment isn't for everyone.
- [03:36]
Sarah Hofstetter
Well, it's interesting you talked about a certain time period. Would argue the counterpoint on a public company is your time horizon is quarter to quarter versus, you know, a two to four or three to five year exit. So I think even the trade offs on time based performances, it's hard to play the long game on any of these things. Whether if you're a public company, you really have to be thinking about how do you manage the short term with your understandably demanding investors. And with pe, you've got demanding investors that are on a specific time horizon. So when you're in it as an employee, the big question is what's my end game here? Right, yeah.
- [04:18]
Rachel Tippograph
What type of career experiences do you want to have for yourself with what types of resources? But it's interesting, I would say in the last few years a lot of my fellow colleagues in the industry who currently work at public CPG companies have gone to private piggybacked. And I also think it's a sign of the times of where the CPG industry is. I mean, it feels like every other week there's a new headline of a divestiture, a sell off. And so it's starting to feel like this model is becoming more and more common.
- [04:48]
Sarah Hofstetter
I think the models change for sure. Sometimes people think the grass is greener. I think what Noah who are bringing on onto the show is an understanding that the grass is just different, not necessarily greener and you have to be just wide eyed on what you're walking into and what that means in terms of the expectations in your job and your role and how you create the right kind of culture within your teams in order to make that happen.
- [05:18]
Rachel Tippograph
Well, on that note, let's bring Noah onto the show today. We are very excited to have Noah Knobloch, head of E Commerce and Retail media at Suave Brand Company. Hello, Noah.
- [05:33]
Noah Knobloch
Hey, friends. Thank you so much for having me. It's an honor to be on the podcast.
- [05:37]
Rachel Tippograph
We're excited to have you. I feel like you're one of the people in the ecosystem that Sarah and I probably have a LinkedIn friendship with. So it's always nice when we get FaceTime with you.
- [05:46]
Noah Knobloch
Yes, the industry is small for sure, but it's great to have FaceTime with you guys.
- [05:50]
Rachel Tippograph
You have a background like a lot of the people who have been on the show, as well as who listen to the show. You started your career at Procter and Gamble and and also made your way to the CPG private equity world. This is a hot topic. I have a lot of customers who reach out to me for various career advice and this does come up. So for those who are curious about this type of transition, what do you think should be in their consideration set when thinking about moving to the PE side of the house?
- [06:21]
Noah Knobloch
Yes, I made the move to the dark side. It's a great question and for me, I'm glad that you gave me the opportunity to share because this is my second private equity run in the CPG industry and candidly, the first time I did it when I moved out of Procter and Gamble, I really had no idea what I was getting into. So I joined E Cloth, a sustainable cleaning brand. It was a brand with a purpose, sustainable, friendly. There was equity and it looked like a nice potential exit. So I was just very naive and I didn't really do due diligence and I jumped into it and I was up for a couple of surprises because a year later I had to look for another job because the company was running out of cash. They couldn't afford keeping all the employees that they initially had in their plan. Private equity is, is a very different model than anything that you're used to. When you're coming from a large corporation. The first thing to really consider and to know is that the investors that are buying this company or the organization that you're joining have a three to seven year horizon and they're going to try to sell the company. So that means that there's going to be a change of ownership, there's going to be organizational changes that come with that and you got to be comfortable with it and you got to know that potentially your position might be questioned at some point in the midterm. And it's not for everyone. But like trying to negotiate for equity can help kind of mitigate that uncertainty and make you want to take a risk. The second one is really private equity is all about profitability and trying to drive value. And so when you look for an opportunity that is backed by private equity, try to be super clear on what are the short term goals, what does it mean in terms of profitability, EBITDA growth and how does that compare to top line growth? Because those are two really different things. And you want to understand are you going to join an organization that has realistic and reasonable goals or is it completely out of touch and it's just not going to be something that is achievable? And same thing, like if it's a small organization, ask about their cash flow. Do they have enough cash? Are they cash flow positive? Because when you are in a big corporation those are questions that you don't really have to think of. You're tasked to work in one function and deliver the best of your ability. And in finance or other people are worrying about those things. But when you're in a smaller organization, it's critical to understand the health of a business. And so those are things that like I didn't really ask myself the first time around and I got caught. The third thing to take into consideration is that private equity is really focused on performance and value creation. So what's great is that then you join a group of people who have one goal. Everybody's working against the same thing. It's very stimulating, it's super fast pace. It also means that in some cases I, I've seen or I've heard and experienced even myself on the first time. Like if performance is not delivered by the organization, there's going to be more turnover than what you can be used to in terms of staff. And so it, it's a risk that people have to be fully aware of and understand. Like you have to be at the top of your game and everybody needs to create value because you're working against time. So you have to quote unquote like fail. And that comes with a risk. The last one, which I think it challenges in a great way, but it's a reality. Like you're limited in resources because you're focused on profit. Like you don't have as many tools, the teams are linear. So what I love about that is that you're hands on. You have to be a thinker and a doer. You have to really own the execution of your vision and your strategy. But that's not necessarily for everyone. If you're not willing to roll up your sleeves and get into it and you just want to design strategies and work with teams to execut, you might be a bit out of your comfort zone. And in the same way, like it's not going to be a 9 to 5 and you're probably going to have to work over the weekends and that's the reality. And if you're stimulated and passionate about what you do, that's okay. And for some other people, they have different boundaries and I totally respect that as well. But that's the reality of getting into a private equity role.
- [10:15]
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- [10:42]
Experian Representative
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- [12:04]
Sarah Hofstetter
I think you have this opportunity now from all of your learnings at swoft Brands, which is PE spinoff. You've got Suave, you've got chapstick. You've taken them out of these enormous organizations. Now you have the opportunity to shape and mold it the way you want to. And do that without all of the noise of a bigger company, but with all of the Requirements and PE back that you just led. So let's talk practicalities. How have you been rebuilding them for.
- [12:31]
Noah Knobloch
Background so that the listeners can understand. The transaction of Suave Brands company was unique in the sense that Yellawood bought the brand with no human capital. So for the first six months the company was ran by Unilever. While we were building like hiring people, I was employee number five. Everything from scratch, the IT systems, the logistics. And for me that meant I had the opportunity to rebuild all of the digital capabilities from ground zero within like a year of getting up and running. We also acquired chapstick in the same fashion. So I had two legacy brands to start from scratch. My goal really was to focus on making a business that's profitable at first to make sure that Amazon makes money and we make money. So that way once it's profitable we can scale it so profitable and scalable. And so now you're going back to the drawing board and looking at the fundamentals. And so the first thing that we did is focused on assortments for Suave, a brand that's focusing on providing beauty at affordable price points because you can't really sell singles at a profitable fashion. On Amazon it meant moving into multi packs or strategic bundles and partnering with an E comm distributor to help design those bundles with the Wits group. And then for Chapstick it meant really focusing on expanding the flavors that we're selling online, looking at what the previous owners were doing and where they're missing any opportunities within the existing portfolio. And also building a trade up portfolio, trying to bring people into bigger pack sizes. All that to make economics work within the E commerce world with higher price points and bigger dollars per transaction to absorb the shipping cost. And once you have that, then the items being profitable are easily picked up by the algorithm because it's favorable for the retailer. And then you unlock growth and you can put retail media dollars behind it, which is the second part after the assortment. We really dove into a granular matrix of like keyword and product to be very mindful of what we wanted to advertise where on the journey and maximize conversion to fuel that growth. Once we had our profitable assortments, once we fix the core and we got into hyper growth mode, then we could focus, which might be counterintuitive, but we want to focus on that last on like content optimization. We had to fix the house before making it look nice and now we're like going through the whole rebranding positioning. We're going to get all new PDP's by you'll see it in the market January of next year we already started to like work on the fundamentals of really optimizations for the algorithm. But we couldn't do that if we didn't have our right foundations. And the results were astonishing. In the first 18 months we doubled the revenue on Suave and we're probably going to triple it by the end of this year or early next year. And then we unlocked 40% growth on chapstick just by focusing on the right assortment and putting media behind the right seasons to win holiday. It was an incredible journey.
- [15:14]
Rachel Tippograph
So to play this back because I think what you're saying is use the word like counterintuitive but I would just say counter to traditional forms of commerce. You want infrastructure. So infrastructure, assortment, media. And now you're going creative brand building. Correct versus likely the entities where these things were carved out from would have done it the complete opposite way.
- [15:40]
Noah Knobloch
That is absolutely what happened. And by fixing on the fundamentals like we really completely transformed the growth on E commerce.
- [15:48]
Rachel Tippograph
And do you think that this model can work in a publicly traded CPG organization?
- [15:54]
Noah Knobloch
I think the challenge that we have in publicly traded organizations is that they're so big and they're so siloed. It absolutely can work if you have leaders that are working on digital commerce and oversee end to end execution. At my time at Procter and Gamble and I ran Amazon haircare from like 2019, 2021. So it was pre Covid, it was still a bit early. Some functions were like really more on the brand and then sales was executed separately and some of the innovation was not designed with E commerce in consideration. So if you have one owner that can oversee the entire end to end digital commerce, they will be able to make sure that even if they start by a brand, they make sure that all the economics that they're thinking of is proper for the channel. Because that's the challenge is you have a lot of siloed decisions that are being made and if you're doing it wrong from the top, then it's going to be extremely hard to come back and fix it. So the mindset needs to shift, the ownership needs to be different, but can be totally doable at a publicly traded company.
- [16:59]
Sarah Hofstetter
Let me ask you a question on that. To challenge the convention, if you've got a digital commerce, you almost like create a new silo of digital commerce that works in pure play theoretically. But what happens when you're talking about, I mean I happen to have recently bought a whole bunch of suave products on Friday Through Walmart, opd and I have the cart to prove it. With that in mind, if you're not thinking about the in store experience and the physical shelf and the digital shelf.
- [17:27]
Noah Knobloch
Like yeah, that's fair.
- [17:28]
Sarah Hofstetter
If you create that world, then you're putting baby in a corner.
- [17:31]
Noah Knobloch
Now that leader that I'm talking about needs to have an ecom omnichannel view, meaning it has to partner like I partner with my brick and mortar sales folks as well to make sure that when we design an assortment, either the price point works for the entire market or you come up with different sizes to make sure that you have a pure play that really is going to drive the growth. Meeting all the platforms requirements while you have a different configuration that really meets the consumer needs in brick and mortar. And if that doesn't work, that's where like strategic bundling can make sense in segments where obviously suave is bigger in brick and mortar. So that's going to win all the time when you have to make a decision and we can't make it work for both channels. But then you can be creative using third party partners that can help you build E commerce configurations that are not exactly what would fit best but still work and are attractive for consumers because of the convenience. They might be a little more expensive than your traditional price architecture, but there's a little more lenience on Pure Play. There's a convenience play where people are willing to buy just to get it shipped at their home. And so back to your initial question. The mindset needs to be omnidigital. Does it work for both Pure Play and not? And if it doesn't, you have to be able to find a solution for Pure Play either in multi packs or in bundles that will leverage the playbook. That's for brick and mortar.
- [18:58]
Rachel Tippograph
So on that note, using Amazon for example, you know there's been tons of studies how E commerce presence impacts offline sales.
- [19:06]
Noah Knobloch
Yeah.
- [19:07]
Rachel Tippograph
So as you partner with your commercial teams, how internally are you helping show that incrementality that you might be driving for the business even beyond Pure Play E Commerce?
- [19:16]
Noah Knobloch
Yeah, that's a really tough question and I wish there was a simple answer, but if there was like we weren't, we wouldn't have our hard jobs. It would just be like a very easy job. But retail media answers a lot of your question, especially when you start from scratch, when you have a new strategy or a new brand, like proving the value of retail media is easier because you can really focus on like non attributed sales and you can like Measure it month over month as you scale media across both the in store omni or your pure play. And see like as you dialed up your ads, are you seeing your organic sales grow? Another factor that we measure also to do that is as we tried to like spin the flywheel in a very strategic way of one product on certain keywords to try to grow organic sales like a tool like Profitero helps us track like our organic rank and are we growing our organic rank and is that coincide also with the growth of organic sales. So that way you really see like the full spectrum of your impact of your media. And I think for stores it goes even beyond that because at Walmart like retail media can be a true trial driver especially for innovation when you have only a couple months to prove out the productivity of your SKUs with merchants and it's all about the turns or else they're going to question if it's going to live another year in the mod reset. And so like focusing on lower funnel helps like drive trial. And then we measure like long term repeat purchases and like see the long term incrementality. So you have to like being able to either like capture short term incrementality by measuring organic sales and like organic ranking on site to see the impact or you have to have a long term mindset trial and repeat purchases and try to see like okay, like if I forget about roas and I'm trying to talk to my Walmart merchant, do I have a high click through rate? Meaning if my shopper sees the ad, are they inclined to buy so it's relevant and then once they're on the pdp, how's my conversion compared to like the benchmark or other products in my portfolio, meaning they really like it. And then those are indicators that you can bring back to your merchant and be like look like we might not have the right positioning in store, but if you put the product in front of the shopper they really love it. And so let's work on a better strategy for year two. And all of a sudden you save another year of distribution or like if you have a limited store distribution, you expand your store count and then your media starts paying out much bigger in the long term. So I think the incrementality needs to be measured in like true business opportunity through organic sales or long term growth, especially in the CPG world where you can capitalize on an ltv.
- [21:57]
Sarah Hofstetter
So one thing that you know has been a hot topic if you will are emerging channels like TikTok Shop and When you've got legacy brands like the ones that are in your portfolio. How do you think about the role of that versus some of the newer insurgent brands? Like do you have a right to play? If so, how do you find that? If not, yeah, what do you do to work around it?
- [22:22]
Noah Knobloch
I think beyond TikTok shop and TikTok as an emerging channel, I think social commerce is becoming like key. Everybody who wants to be relevant in five years must find a way to win. It's very relevant what you just said because we had our Yellowwood partner, which is our PE firm, internal e commerce summit where we have there's like six brands in the portfolio and we all came together to discuss best practices and talk to industry experts and we brought in the CEO of trendio Live, Alex Perez and to get his perspective and he shared some point of his studies. Like today I think the social, like the video commerce industry is about 300 billion across the US and Europe. So we're excluding China because China is already very mature and it's projected to be 1.8 trillion by 2030. What's even more fascinating in the study that he shared is that like TikTok is going to play a role. But by 2030 the study showed that TikTok would only have 25% of the video commerce business and that another 50 to 60% would be done through YouTube and Meta. And so like you need to find a way to win in this channel. Mass content production is going to be key to be relevant in algorithms and AI is going to play a pivotal role in your supply chain either through monitoring the outreach and the relationship with the content creators, they're going to help you get there, or even through just creating AI generated content. This weekend I was scrolling through my LinkedIn and I came across the post of this company called Make UGC. It's a British company and they do AI UGC content. And the CEO was claiming that over the last 24 days they did a test where they had live streams with AI models wearing clothes, showing clothes and answering live questions and then generated over $100,000 in those three live streams over 24 days. So it's there, it's happening. Like, even if it's not a profitable channel from a sales standpoint, it's going to be more effective, it's going to have a much more productive CPM than some of your traditional media. So then you challenge yourself instead of looking at profitability. If you're looking at awareness, is this more efficient than running some traditional ads or what's the right media mix that you're going to have to go towards. And so like, yeah, you could think that Suave has no right to win on TikTok shop because 299 shampoo like, good luck. But the reality is like sales are not going to happen on TikTok. Shock sales are going to happen across the US but people are looking at TikTok and then they're looking at YouTube. And if you're not omnipresent in the algorithm, then you're going to get your cake eaten by brands like native and Dr. Squash like they did in the last five years. And we saw what happened recently with the acquisition and how both brands grew. So it's a must reach.
- [25:01]
Rachel Tippograph
You've said so many things because you're clearly a practitioner and. But I think the big thing is marketing and sales is blurring not just within the organization and not just within retail media, but also now in the world of social and creators. I think the big struggle is what you're getting at is that a lot of brands, you tag the word commerce onto social, you tag the word shop onto TikTok and they want to look at it through a sales lens when truly it's actually a marketing brand building channel.
- [25:32]
Noah Knobloch
Absolutely.
- [25:32]
Rachel Tippograph
I think a lot of this will shake out over the next few years, but it's awesome to see you leading the way. I also appreciated in our preparation for this, you talked about like a TikTok shop fail, but I don't think it's a fail. I think you learn something fundamental about business and how to apply it to other channels.
- [25:49]
Noah Knobloch
Yeah, no, absolutely. So much is going to change over the next couple years. If you're not ready to fail, you're just going to fall behind and that's going to be the failure.
- [25:58]
Rachel Tippograph
So, Noah, it's been such a joy to pick your brain, but we got to ask you our famous last question, which is, what's the bravest thing you've ever done?
- [26:06]
Noah Knobloch
I was really thinking about that because I had a couple ideas. It's a tough one. I want to go back to my roots when I was an intern, when I was trying to get my first full time job. So. Background? I grew up in France. I was an intern with Procter and Gamble back then in Netherlands and I was trying to come to the U.S. i was a citizen, so I didn't really need sponsorship or anything. And I applied through the regular process. I had one year of Procter and Gamble experience. I thought, okay, like I'm going to be a little more Relevant versus other applicants. But the HR was really confused on the process. Like, this guy lives abroad. Does he need a sponsor? Does he not? Do we take our local interns? And so I was at the end of my internship and I thought, if I. If I don't get a foot in the door, I'm done. I'm never going to be able to work for parking gamble. That's my dream. And so we were at the summer event of the Netherlands organization and I just walked up to the general manager and I presented myself. Hey, I'm Noah. I'm an intern. He said, yeah, I heard you did some good things for us over the summer. How can I help? I was like, well, I'm trying to get this position in the US like, come see me before you leave. And I went to see him at his office and I explained the whole situation. Two weeks later, I got an invite to Cincinnati for interviews. Like, if I had not done that, I probably would have had a completely different career that would not be on the show today. So sometimes you just have to take your courage and really believe in yourself and believe in what you want to do and be brave.
- [27:25]
Rachel Tippograph
Noah, something tells me that you still would have ended up on this show. I love that story about advocating for yourself, especially recognizing an opportunity in the moment. And I think what everyone's also going to take away from this episode is the passion that you have. It's infectious and it came through to that gentleman. It comes through to us on this show.
- [27:44]
Noah Knobloch
Thank you. No, I love what I do and I love being around people that have as much passion because it's contagious.
- [27:49]
Rachel Tippograph
We will all be following what's happening at Suave Brands and thanks for your time.
- [27:54]
Noah Knobloch
Thank you guys.
- [27:56]
Rachel Tippograph
If you like what you heard and you want to explore another PE backed company that was a spinoff from a publicly traded company, go check out an episode we did with Blue Triton, now known as Primo brand cmo. Cary, tell a friend. Write a review. Thanks for listening.
- [28:29]
Experian Representative
Finding the right audience shouldn't feel like doom scrolling with Experian. It doesn't. Experian syndicated audiences help you reach holiday shoppers, car buyers and more across over 200 top platforms with over 2,400 pre built audiences. There's no more doom scrolling. It's audience targeting you can trust. Made simple. Learn more@experian.com AdWeek that's E X P E-R I-A-N.com AdWeek.
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