Patrick Tannous is the Co-founder and President of Tiesta Tea, a tea company on a mission to make loose-leaf tea understandable, accessible, and affordable. Tiesta Tea specializes in sourcing over 150 ingredients from across the globe — blending them into loose-leaf teas and herbal beverages.
Patrick and his partner started Tiesta Tea in 2010 while they were seniors in college at the University of Illinois-Chicago. They both have been featured in Inc. Magazine as one of their 30 Under 30 Rising Stars. When Patrick is not working, he enjoys adventuring abroad, playing sports, developing relationships with loved ones, and sharing his passion for entrepreneurship with others.
Here’s a glimpse of what you’ll learn:
- Patrick Tannous shares the origin story of Tiesta Tea
- Who are Tiesta Tea’s customers?
- The transition from loose-leaf tea bags to bulk tea
- Patrick talks about the adoption of loose-leaf tea — past and present
- The game plan for an emerging brand
- The importance of being both a retail and e-commerce brand
- How Tiesta Tea gives back to the community
- What’s next for Tiesta Tea?
In this episode…
What is it that you most desire from a piping hot cup of tea? Do you wish you could revolutionize the way you consume tea?
Tea is one of the most consumed products in the world and, to appreciate it, people should find a tea that is practical and full of the flavors they enjoy. Patrick Tannous at Tiesta Tea has revolutionized the way we can enjoy drinking tea and the benefits it provides. Struggling to find your favorite tea at overpriced specialty stores is a thing of the past.
In this episode of the CPG Troublemakers, join host Steve Gaither as he chats with the Co-founder and President of Tiesta Tea, Patrick Tannous. Patrick shares Tiesta Tea’s origin story, the adoption of loose-leaf tea, the importance of being both a retail and e-commerce brand, and the future of Tiesta Tea.
Resources Mentioned in this episode
Sponsor for this episode…
This episode is brought to you by 1o8 Agency. At 1o8 Agency, we are a holistic digital marketing agency that cultivates brand growth through creativity and innovation. We jump right in to create solutions with measurable marketing intelligence.
The result? Our clients see increased engagement and increased e-commerce traffic, which equals more sales and profitability for our clients.
Episode Transcript:
Intro 0:01
Welcome to the CPG Troublemakers. The place where brands and makers food and beverage nerds and investors all gather to cause a little bit of mischief. We welcome industry leaders, whitespace thinkers and channel partners to come together to turn problems into opportunities. Or, at the very least, have a little fun along the way.
Steve Gaither 0:26
Hello, I’m Steve Gaither, but welcome to the CPG Troublemakers where food and beverage masters service providers get together and cause trouble. Here’s my shameless plug. I’m the EVP of growth strategy for 1o8. They create a nice conversation say that focuses on Grand Strategy package design, as well as direct consumer and Amazon Marketing for the CPG industry. We can be found on the interwebs at 108cpg.com. I have the pleasure of hanging out with Patrick Tannous co-founder of Tiesta Tea, shameless alumni alum, the OG troublemaker? Tiesta Tea may have a look loose-leaf tea a thing. Even revolutionizing the slower velocity set with a bulk motor merchandiser that not only changed the game of the tea set almost across every other aisles. Well, Patrick, welcome, my friend.
Patrick Tannous 1:19
Thank you, Steve. It’s great to be here, man. From the doldrums of my basement in 2010. To both of us in an office and River North in Chicago, it’s great.
Steve Gaither 1:32
To meet up at some tea shop and I went to the Tiesta Tea frat house, as I like to call it.
Patrick Tannous 1:39
Yes, that was a good time, we were all four of us were operating out of the same basement. Me and my partner. So it was cool that you got to see us in that element that not many people get to see where we’re in our house and our office.
Steve Gaither 1:54
I know you well. I mean, let’s start out there man. Go back to the beginning man. I don’t know if it’s a deal of iron before but give me the lowdown.
Patrick Tannous 2:05
Yeah, so basically started Tiesta Tea to bring loose-leaf tea to the mainstream here in America after a study abroad trip. We noticed that tea in specifically loose-leaf tea was really all over Europe overseas. Anywhere you go and overseas, you’ll see loose-leaf tea. And so we wanted to bring that here in the US. We were part of the University of Illinois in Champaign. And we did a business plan competition we happen to meet Jimmy John, good old Jimmy John from Jimmy John’s sub sandwiches. And he helped us kind of create the brand and create the vision for what we wanted to do. And as a college 21 year old college seniors we hung the pavement just start going door to door and solid, the whoever would take it and now today we’re at about 6000 doors. We’ve been around 10 million sales last year. And yeah, we’ve got our solid business, our hands.
Steve Gaither 3:03
Well going back to that. By the time I met you, you guys had the house slash office slash warehouse. slash whatever the heck it was. How did you first start playing? Was it? Was it a retail game where you’re not going to pawn coffee shops where you go to retail?
Patrick Tannous 3:25
That’s a great question. And, you know, it sounds close to so cliché, but it was really, we didn’t really know who our customer was at the beginning. And so with something like tea you can sell anything anywhere, right tea is consumed in almost any establishment. And so in the early on, we would walk into salons, fitness centers, grocery stores, cafes, restaurants, you name it, and try to sell tea. And it wasn’t until we did a 500 door day-to-day trip where we went to 500 in 20 days 25 doors a day. And we really realized who our customer was, we realized that grocery stores had all this tea, but none of it was loose-leaf. So we saw a niche in that arena. And so that’s when we really started focusing. So the first 25 customers are so sporadic because they want to listen. But then to get to the next level, we kind of found that the grocery stores were, we were actually solving a problem for them. And the problem was that they didn’t have loose-leaf tea, we could become that provider. And so we started going after every grocery store that didn’t have loose-leaf tea, and that’s kind of how we got on the shelf.
Steve Gaither 4:33
Well, somewhere along the way and went from what loose-leaf tea in a bag to something else. How did that go?
Patrick Tannous 4:43
Loose leaf tea in a bag…
Steve Gaither 4:48
Compared to the bulk play, how did the bulk play come?
Patrick Tannous 4:45
So that came at a trade show. We actually never intended to do bulk tea. When we first started the business and now bulk tea is two, three million dollar business for us, but at the tradeshow someone from Safeway actually came to us and said, hey, I’m doing this whole big bulks development in my stores. And I wanted to do some tea, like, have you ever thought about putting your teas in bulk. And so we did that. And we saw some great success people really took well, you could see the tea, you could smell the tea, it was at a better value on a price per cup basis than anything in a tea bag or anything on the shelf. So we started seeing some success with that. And so we just develop programs and almost standalone. So if you didn’t have a bulk set a bulk display, we could give you our own bulk display and turn that into like a tea store within the store. So that’s kind of how that evolved. But that’s one of the benefits of tradeshow Stevens you never know who’s going to kind of pull you in a direction that you didn’t know you wanted to go to help you grow your business.
Steve Gaither 5:54
Well inside know you at a trade show you’re a different animal. We can be talking about the most important emotional thing of all time. You see a buyer badge you are literally shut me out of the way and dive is a beautiful thing.
Patrick Tannous 6:11
Yeah, I believe, strongly trade fairs are the best place to meet buyers. It’s like that person you’ve been trying to email for the last two years. And you see them walking by. And it’s like, all right, there’s your shot. And always wants to remind you got one shot, you got one chance, and you know, trade show, you can capitalize on those chances. It’s where it comes from man.
Steve Gaither 6:39
So the bulk play too, that always intriguing, right, because a lot of folks maybe in the nuts sent that we’re kind of doing it a little bit in the coffee set. But I kind of equate it to, you go to yogurt place where you make your own yogurt cup is what like 50 cents an ounce somehow I walk out of there with $832 where the odor isn’t the same thing when you go in bulk set and the velocity numbers go outside. Is it because people are self-serving? Do they over-serve? How was that play?
Patrick Tannous 7:09
The velocity numbers go up the I think the biggest thing is your per-store sales go up the most instead of selling, when you sell for an example, we have 130 store chain that did about 1.2 million in bulk last year. So 130 stores 1.2 million, that’s almost 10,000 of store. Right? When you compare that to if you’re just in center store on the shelf, those velocities are almost 10x. Right? So for us, when you think about teas, traditionally a slow-moving category. Yeah, it’s not like you’re grabbing go beverage. So getting into a store and moving your traditional SKU movement, it’s not big, it’s not big dollars. So bulk was a way for us to get more investment, get more dollars out of our retail partners, and then invest more with those dollars to try and grow with them. So for us it was economically it made a lot more sense than selling one or two units per SKU per week on the tea set.
Steve Gaither 8:13
Well kind of back it up on this educational loose-leaf tea ready. I mean now today it’s almost an AMA to get the game. But back when you were starting off, mostly tea was an anatomy. So talk to me about how to do a educate and me I noticed, you sound a little what he called a sachet is an ESL, the brew master and things like that. When did the education turn into a fulcrum point player?
Patrick Tannous 8:38
I would say it’s always been a focal point, but it kind of we started seeing the fruits of our labor really sampled during COVID. Right in 2020. We sold around 2000 of those brewers in 2021 we sold 15,000. And so consumers were at home. And when you’re at home, I mean frankly speaking right before this call, what did I do? I went and made myself a cup of tea. Right? It’s like you’ve got that four or five minute window and people are at home that yeah, they can do things for themselves a little easier. And so we started seeing a lot at home consumption went up about 18% during COVID. So that’s kind of where we believe. I believe loose-leaf tea kind of turned the corner. It was so hard to sell it in 2015 2016 You know it was not an easy sell. But now especially with the environmental conscious consumer who doesn’t want us throw away every time you get a tea bag you got all the waste that goes with it. With loose-leaf tea. You don’t have any of that And then there’s also a value on the price per cup. The difference between loose-leaf tea and bags, really the only thing bags has over loose-leaf is it’s more convenient. But when people are at home, and they’re not having to rush to the office every day, convenience becomes less of a factor.
Steve Gaither 10:01
I mean, even in our office environments today, we have a little sleeve tea little pouches. The first time I ever saw them was what it was yes. And I couldn’t figure out how to illustrate it was funny how far we’ve come as a society on something that wasn’t a part of my everyday now I just take it for granted. I like to think you’re a part of that story, especially on the loose-leaf teas. Now, now talk to me about so called Tea was sort of a play, you’ve played the ready-to-drive game and you play the food service game. So both from a TDP and other categories, as well as other channels, what’s been the successes or the thanks, that you sort of found in the experimentation.
Patrick Tannous 10:47
So one of the beauties of bulk that we found is there, the slotting requirement is a lot less, which is obviously a big barrier to entry. What I’ll call just regular center store. slotting is, I mean, Steve, honest to God, I could probably put chocolate covered, this is gonna sound crazy, you’ve probably put chocolate-covered shit in a bag and label it and just pay slotting and get it on the shelf. And the retailer won’t even try it. But because you’re paying the slotting, they’ll put you on. And then six months later, 12 months later, well, whoever else is coming in with the slotting, they’ll take your spot. And so that that’s just so hard for small brands, especially when you’re dealing with distributors and you have chargebacks coming in on top of the slotting becomes so hard to make money from bulk was a great poll bulk was definitely in play on that side as well to avoid that. And then in food service. And what was the other channel you mentioned?
Steve Gaither 11:49
Oh, just ready to drink?
Patrick Tannous 11:51
Oh, yeah, so Food Services is great. But you really do need, you need a lot of volume to make it work. And most of the time, you need to go through the right distributors to hit the right doors, you need to create programs for food service. Whereas in grocery, it’s less of a program more of a get on the shelf put together a discount program, but food service, it’s just a totally different beast. And so we never really had success food service, and then ready to drink. I mean, that category is so tough. When you’re talking about fresh beverage, right? When it goes into the cooler, the produce cooler, we found out and just from talking other people are turned in money in the time when we’re ready to drink. But it’s such an expensive business to upkeep and scale with your margins tend to get beat down, the shelf space fighting for it’s a lot more competitive, because you’re in the perimeter of the store everybody where everybody wants to be. So it was challenging to make money. And at the end of the day, Steve with all this in the capital markets have tried out, man, the days of funding your business off angel investors, it’s no longer a thing. It’s done. You’re gonna get some angel investors to help you grow your business. But the fund losses those days are over, in my opinion.
Steve Gaither 13:13
Well, yeah, I mean, it’s funny, I mean, the game plan for an emerging brand is different today than it was right it used to be almost like a tag play, right? Raise the money go to market you can even build in a burn go to where it mean, I think working capitals can kill a ton of brands, deaths, very expensive. Investors, a lot of them for emerging brands are sitting on their wallets. And even if they are stroking and check kids out, have much-decreased valuation from a form toward this idea of even of positivity there was is probably a safer bet. And that comes from not only the right categories and trying to stay away from slotting and free fields, which are free money that you mentioned on the other side, the bill backs thing from for exports that come with distribution. How has sort of checking that those margins from day one and picking the right categories? Is that a formula for success? Have you done what you did before back in the day? Right? Could you do that today?
Patrick Tannous 14:17
I don’t think if you don’t have good margin, you can’t live in this game anymore. I think you used to be able to do and win. If you had good growth, you can forego good margin and use the growth to kind of raise capital and fund losses. But nowadays, if your margin my opinion your margins are 40 or above, you’re probably going to probably going to have some profitability issues.
Steve Gaither 14:33
Was that 40 before or after transplant?
Patrick Tannous 14:37
After transplant?
Steve Gaither 14:39
Okay. So, and then come in for the bulk game is your merchandising, do you have to invest more in merchandising on the ground?
Patrick Tannous 14:52
Absolutely, yeah, we’re actually in the process of hiring a merchandising company to go in and do it. It really all depends on the type of store you have. Because some stores have their own bulk foods managers, and so they’ll take care of the merchandising, but stores that don’t have that you have to go in there and merchandise it. And again, it makes it justified when a purse store is doing costs 10,000 a year. If you’re paying a merchandiser, 25 bucks a visit. It’s justified based on that volume, your annual volume, as opposed to sending a merchandiser in when you’re only doing 25 bucks per store based on to units per week. It’s a lot harder to justify it.
Steve Gaither 15:33
Based on your current model and what you see as the economic environment, I’m assuming your KPIs and metrics are more velocity and margins compared to your distribution. Right?
Patrick Tannous 15:43
Yeah, absolutely. per store, volume is really important. And margin for sure. I mean, if you again, it’s like we’re not doing deals where we don’t make the clothes. Really, really pretty simple.
Steve Gaither 16:00
It’d be negative, Nancy on this side. But assuming that working capital is a big problem for a lot of things, one to $10 million companies, if you can support your existing retailers, the fact that retail pricing went up and cash should be starting to finally be on a little bit of a deep breeze for you now. Is it your thesis that we double down and hit hard the fact that your competition might be dwindling by the hour?
Patrick Tannous 16:27
Yeah, man, it’s definitely a thought. It’s definitely a thought. And I think we’re the first competition that’s kind of going to go away, in my opinion is going to be some of the e-commerce players who just start selling out of their garage, they buy some stuff and there’s nothing that’s how we started to. But during the pandemic, you started noticing tons and tons of companies just kind of coming out of the woodwork on Amazon on e-commerce selling products. And so I think a lot of those guys are gonna have a harder time. And those I believe are some of the companies that may take a hit during this next phase.
Steve Gaither 17:09
On multichannel approach is seen once again. I think you will learn as well. I’d like to hear a multi-channel strategy between retail direct-to-consumer and Amazon but right-sizing each and trying to get them to play it back and forth. Is that the right formula for you? Or is it hanging just retail screw the other two? Are you finding a nice mix between the three? Maybe with the last x paid expectations they then he could have gotten in COVID? Are you still finding TTC and Amazon profit only supporting a retail?
Patrick Tannous 17:40
Yeah, absolutely. I think that is the formula I really do. I think if you just do e-commerce, it doesn’t feel there’s something about going to a physical store and seeing the physical product and actually physically holding it as opposed to just an e-commerce. It’s just there. When you look at a lot of the e-commerce brands that group blew up on e-commerce where are they? No, they’re in retail. The first one I’ll use this trap. I think I saw Trump at Target the other day. They started online. But in order to kind of get I believe that next and vice versa, right and a lot of people started retailing when they go e-commerce we started retail. And we went to e-commerce. And now if you look at our revenues, it’s split about 50/50 half e-commerce half retail. And I believe that during COVID e-commerce supported really supported the business then once COVID last year COVID subsided and kind of went to pre-pandemic levels. Retail was really the driving a lot of the growth. So it was nice to have both. And then I think we saw retailers are really trying to be unique right now. At least some of the ones I’m working with. They need something different to drive consumers into the store. And because they’re competing with e-commerce too. So how do they do that? Well, bulk program like the one we have is something that you can’t get on e-commerce. It can only be purchased in store it’s more of a shopping experience. So I do think you need a little bit of both. And then Amazon, there’s just so many consumers on Amazon. But if you’re not on that you’re missing out on an opportunity to get in front of what is it? I don’t know how many billions of people shop on Amazon, but it’s quite a lot. So and for us, we do Amazon vendor and seller, which has been helpful for us. And we actually are profitable Amazon, which I don’t think a lot of brands are. But again, it’s making sure you have that margin above 40.
Steve Gaither 19:31
It’s almost the same as your margin calculator, just different names attached to them, right instead of a distribution and fulfillment by Amazon instead of a trade spat. Its Amazon spend. But as long as you’re making your margins, it’s in great channel.
Patrick Tannous 19:46
Yeah, absolutely. And there’s no better way to show that you can succeed than having Amazon reviews.
Steve Gaither 19:52
Definitely. Hey, one of the things I’ve noticed too, is I saw posting, you always been big into giving back not only in entrepreneurs, that’s the reason why we’re giving to a couple minutes. But also you’ve got spread the board and all these other things. Talk to me about one sort of how that conscious capitalism, money, the fact that they’re not separated, talk to me about how nonprofit in the new beginnings sort of became really part of your mantra.
Patrick Tannous 20:21
Oh, man, we just got done with spread the warm. It’s basically what it is. It’s a charity event where we go into the streets of Chicago, one day, you’re in January, and we pass out gloves, scarves, hats, dude wipes, chomps, beef sticks, toiletries. And this year, we passed out 3000. And it was really stressful. I’m not gonna lie. And it’s sometimes you wonder, like, why am I even doing this? Right? There is no, you don’t get anything on the bottom line. And I had to remind myself that I do it. At the end of the day, where I’m super lucky to be in this country, I’m super lucky to be talking to you. I’m super lucky just to do what I do and be born in the United States of America. And I feel a profound greatness, and gratefulness, greatest gratefulness for everything that I have. And so I believe a lot of people out there, I’m blessed. I’m lucky, I’m blessed. It’s like how many people say they’re blessed, don’t do anything about it. I’m fucking blessed. Steve, I’ll tell you, man, I am super blessed. And I feel it’s my duty as somebody who’s been given so much without doing anything, to give some of that back. I didn’t do anything to be born in this country. I didn’t do anything to be taught the native language of English and to be born in a amazing city like Chicago, and I have all these people around me that can help me. If you go to Egypt, you can see a guy who’s just like me, but didn’t get lucky enough to get out of there. And to sit in the seat I’m sitting in. And so I just find that because I’ve been blessed or given all this resources. It’s my, don’t get me wrong, I’m not rich. I’m not anything more than most people. But I believe most of us here have an extraordinary amount of resources that most people don’t have. And because of that, I feel the need to share it. And personally, I wish more people would I wish more businesses would. 10 years ago you saw a lot more businesses giving back and doing that but you don’t really see that anymore. And so I do challenge businesses to try and do some of that.
Steve Gaither 22:33
Well, you can enjoy it outside just from the way you’ve sort of got this international all the way to right here at home sort of thing even I know you went sourced all your teas and you went to talk about what happens overseas and obviously spread the warmth in Chicago. We’ve got the full sort of gamut from internationals re are home.
Patrick Tannous 22:53
Yeah, we built water wells we built for water wells in Nigeria for our farming community. And I mean, if you go out there and just water is such a precious resource. We’re here in Chicago, we’re sitting on the largest freshwater, natural lake and almost in the world and Lake Michigan. And if you go to Nigeria, the people who are farming some of our products, they don’t have access to water. And man, can you imagine waking up in the middle of night and not being able to drink water like I wake up thirsty, and it’s like, I’ve got a cup of water right next to my nightstand every night. But in some of these other countries, and most of us don’t know this stuff, but in other countries, they don’t have that water. They have to walk miles to get it three, four times a day. You walk to the fridge, it takes you 10 seconds. But if you want to get water, you have to walk three, four miles. And then you got to carry buckets on your head and bring it back for your children. And then you got to use that same water to cook to clean to drink, to wash all of it. And again, it comes just feeling extraordinarily blessed and the desire to share it with others who don’t get it.
Steve Gaither 24:04
Yeah, that sort of leads to going back to once again, I see you as the little sleepy I see us and I’m sure consumers see you it’s not authentic brands, right, which is, there’s so many brands that did the TOMS Shoes by parachutes get a pair of shoes, sort of not saying the tongues wasn’t great in that thesis. But so many companies, when he met with me, they’re like, oh, by the way, we need a cause in order to market something. That’s right. And to be once again, it’s authentic part of what you do. And it’s a reason to believe but it’s you guys don’t follow me, you just go out there and get to do the work, which I mentioned. Consumers and buyers probably see the way you handle your brands the same way.
Patrick Tannous 24:46
I hope so I do. Sometimes you don’t feel like you get anything from it. But that’s when you got to remind yourself that you’re not doing it to get anything from it. Excellent. That’s the reason why you do it to begin with.
Steve Gaither 25:08
And so you know that toughness, they want to do something nice for somebody and don’t tell anybody about it. Right?
Patrick Tannous 25:11
And it really is, it’s a hard thing to do, especially in the heart. Yeah. Especially the more effort you put in, the bigger our charity events get truly the more effort we have to put in. And like this year, I’m arguing with my teammates on what time they’re going to be there and what time they can leave. And it’s like, it turns into a lot more stress than a charity event should be
Steve Gaither 25:33
You’ve mentioned something earlier and stuff. And this isn’t a bad rap on buyers. After COVID category reviews said and kept getting pushed and pushed and pushed. And it almost seemed like buyers really for a while but he didn’t want to meet with people. I am sensing and electric. I think you mentioned something about it in our last little chat was most buyers now and retailers are realizing they need the brands to keep the consumers coming back. I think it’s what some Africans have stashed somewhere. Like once somebody buys new product at a grocery store. They’re like 60% more likely to shop over the next six weeks, something crazy like that. So have you seen buyers once again, finally being back and excited to be at the shows and it’s buying again?
Patrick Tannous 26:21
Yeah, I definitely have more so this year than last year or more. So these last two years of pre-COVID. But a lot of it started I would say in March or April of last year, I saw a lot of excitement. A lot of buyers were excited. I think there’s still there’s one disconnect though and that’s the slotting right as much excitement as some of them have. If buyers are expecting younger brands to pay for that slotting an environment like this where you don’t know when your next orders coming in. Doesn’t make sense. Right. And so the bulk deprogrammed thankfully we didn’t have to pay much slotting on that. But we’re definitely people the buyers want something different for the ones that I’m seeing, you know, they’re they you can’t win against Amazon if you have all the stuff you have to have something different.
Steve Gaither 27:11
Regarding slotting in free funnels right if there’s five adverts and trade spend two or three slotting free feels bad demo from one display good because those philosophies, right. I’m dirty COVID Obviously the rise of clicking, click and break sort of came about between curbside pickup and Instacart and shed. And on the sales agency side I was pitching to my coworkers to negotiate and get slotting of refills, and actually put those dollars to use it and collected brick which is still pulling off the store shelf. And what do you think like Kroger, I think laid the first are dropped the first domino, right they’ll actually waive slotting and free refills. If you put 5% Spend against Kroger Dan Cohen was putting money into kroger.com you’re automatically in the system on when you’re in distribution. But I tend to see a two to four-time loss which even if you got to one time is much better than paying for or giving away product if you omit any luck, what sort of retailers and their online programs. I know, some are more advanced than others like rover, others might be lagging. You had any success?
Patrick Tannous 28:16
Not that I can point to directly, unfortunately, haven’t really done much with it, I would say but haven’t really seen anything from it either. Done a little bit of my bada.
Steve Gaither 28:28
Oh, any luck with that motto this stuff like that.
Patrick Tannous 28:32
No. I mean, it’d be frayed, we just turned it off because they wanted so much money to keep it on. Especially I bought it, they wanted so much money to keep it on. And you couldn’t pinpoint a ROIs, you couldn’t pinpoint where it was coming from. It’s a lot. It’s not as the data wasn’t as clear. So we turned it off.
Steve Gaither 28:51
And that’s sort of the basis to once again, if kilberry your retailers have that the fact that you can get transmitted credit for it. And theoretically, if you can get ROI attached to it. Once again, slotting in free fields will kill brands, build backs will kill brands. So always negotiate in dense slotting and free refills whenever you can. Right.
Patrick Tannous 29:12
And I would say it’s definitely that question that you asked in regards to the online retailer, it’s probably better for brands that are not focused in bulk. Because most of our programs are so bulk focused that we’re not focused on doing like center store movement, you know, it’s the bulk, really focus on moving the bulk product, which we don’t use through the eye bottles and things of that sort.
Steve Gaither 29:33
So that makes sense to right. I’m not gonna do a pickup order of my yogurt parfait, when the whole value is once again I get over bulk and over-served. That might not be the best spoon for the Senator. So I so have you pulled away from ready-to-drink and food service benefits.
Patrick Tannous 29:50
All of ready injuries we got out of it. It was about a $2 million business. And once the kind of the pandemic hit margins were at like 30 something and you think oh, well with volume, we’ll build those margins up. Well, inflation supply chain, so margins dipped down to low 20s. And then once you have any supply issues or broken pallets, you’re losing your arm and your leg. So we got rid of it, we discontinued it. Actually, we’re in all Kroger stores, not all 1000. We’re in about 1000 Target stores, we had 40 ounces, we had 16 ounces. And yeah, we sat down with our review with our Kroger buyer. And we’re like yet, we’re not going to do it again. Right, we’ll supply you. And he appreciated it. He appreciated that we let them know. And left in good graces. And honestly, our margin shot up last year was about 43% gross. And the year before that was about 35%.
Steve Gaither 30:58
I believe I mean, sort of take your own advice or that twist from once again, what you’re talking about even a positivity and margins. Most important, you pick the bad margin seems particularly good margins, right? No matter how that affects distribution or total revenue.
Patrick Tannous 31:13
Yeah, we didn’t grow. We went from like 9.3 to 9.5. So we distributed, yeah, we grew our EBITDA and we discontinued $2 million line of product. So it’s one of those things where, doesn’t look great on the if you just compare year by year, but when you peek under the hood, the car got a lot healthier.
Steve Gaither 31:38
Yeah. And so fast forward meeting again two years from now and having a podcast here. They’re troublemakers. Tell me what Tiesta Tea looks like, man?
Patrick Tannous 31:46
That’s a great question. I think it would look like everybody knows what loose-leaf tea is. I think you’re you hit it on the head with the educational piece. More people need to know how to make loose-leaf tea like right now sometimes by hand someone to sample and be like, what do I do with this? As opposed to if you get a sample of a beef stick or an AR x bar, you know exactly what to do when they eat it. So I’m hoping in two years, we’ll have a lot more consumer education to where loose-leaf tea is truly a mainstream thing. And people aren’t always drinking bag fees and more so they understand the value that loose-leaf provides. And yeah, it’s on a mission to make loose-leaf tea understandable, accessible, affordable. So at the end of the day, if we can give consumers a loose-leaf tea that they understand that they can get it easily and that they can feel they feel as affordable then I believe I did my job.
Steve Gaither 32:43
Okay, well the last question is loaded because this thing is called the CPG Troublemakers. Troublemakers was your baby Ben, tell me about the troublemakers and the first folks sitting around the table and how it all started. And because I can’t do this without giving props and OG.
Patrick Tannous 32:59
I appreciate it, man. For those that don’t know, the first time I met Steve, I was 22 years old. And Steve actually came in my house, as I kind of mentioned, we were working out of our basement and Wrigley Illinois, in Chicago in Wrigleyville. And Steve kind of came down and really took a liking to what we were doing. And he had a lot of experience in industry so we wouldn’t hang out he would teach me a couple of things here and there. And we would probably network like once or twice at least a month and go out for drinks and just hang out and the next thing you know we’re inviting all of our we’re all kind of young and learning together we would invite a lot of our Chicago friends in the food industry shout out I heart Kiwa, Simple Squares, Bee’s Knees, Kimberly Yeah, so we would literally mean a couple of Peter and Jared.Peter and Jared were a couple. So we would meet like once a month and just talk shop. And then next thing you know, we kind of made it official where we were going to create a group, the Windy City troublemakers and come together once a month and share our battle stories and our victories. And that’s kind of how it all started.
Steve Gaither 34:14
And is still alive and being a guide a little bit or uncomfortable. Actually, during COVID we had a little bit of clubhouse when there’s nothing better to do. Now we still get together every couple of months and Graham are Kaizen, it’s no agenda. No, it’s happening. It’s just a bunch of flicking them people give it time.
Patrick Tannous 34:33
Yes, it is. I love that I got a lot of value out of to like just meeting food and beverage people, investors, wherever maybe. I actually met one of our lenders that one of the events don’t gate capital there at one. So yeah, definitely very valuable. And something that like, if you’re trying to figure out what to do next, troublemakers is a great place to help you figure that out. If you feel kind of like, Alright, I need to figure out what to do here. Go and be with like-minded peers who have also been in the same shoes. And I’ll give you a good idea as to which path to take which direction you want to go down.
Steve Gaither 35:07
Yeah, I mean, that’s sort of the thesis, right? So I’ve been in a for a bunch of years. So that consider is for aiming for food brands like nobody, no alcoholic, trust somebody listen to other drugs and throw it. Same thing with food and beverage people and give me the best advice all day. But if somebody is going through the shit or just made it through the shit, you believe their story, right? So that’s why one, you’re one of the graduated sort of members of the group. The peers and mentors sort of help each other out. It’s a great vibe that all came from the ledger lovely, Patrick.
Patrick Tannous 35:40
Thank you. Appreciate it, man. All right, well, then, so please, good work keeping it alive. Dude. You really kept it alive. Nothing better than Oh, you’ve done a great job keeping it alive and making sure the spirits so still what it what it was.
Steve Gaither 35:56
Well do me a favor, go to the grocery store, buy some Tiesta Tea and buy overfill that bag? No. Let’s go on to Patrick and all the great things he does is great grill. And look forward to talking to you guys in a couple of weeks. Patrick, thank you for your time, brother.
Patrick Tannous 36:13
Thank you, Steve. Good to see you, my man. Appreciate the conversation.
Outro 36:18
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