James Black (00:00):
Welcome back to the Exchange for Entrepreneurs podcast. I'm your host, James Black, and this week we welcome Bill Besenhofer, the CEO of the Fresh Factory, listed on the CSE under the symbol FRSH. And this is a company that has an expertise in fresh, clean label and plant-based products. They've built a platform to accelerate the growth of disruptive food and beverage brands and are vertically integrated from the farm to the shelf. And my motivation for interviewing Bill simply comes from my own experience as an eater, how do we eat healthier? How do we do this at scale? How do we get better products on the shelves for myself and for my children? We even talk about the old Canada Food Guide and some of the flaws that might have had back in the day. So without further ado, I want to introduce you to Bill. I want to introduce the discussion. I'm really excited by this company and the things they're doing, and hopefully we learn a few things together about what it takes to deliver healthy clean options to consumers in 2023. Enjoy.
(00:58):
Welcome back to another episode of the Exchange for Entrepreneurs podcast. Today I'm thrilled to be joined by Bill Besenhofer, the CEO of the Fresh Factory, symbol, FRSH, listed on the Canadian Securities Exchange. Bill, welcome to the show, and I was really excited to talk to you today because not only do you have a great business, but I've been really fascinated about the food space and just what's been happening over the last couple years, especially since COVID. So we're going to get into a lot of different topics today, but can you just remind viewers and listeners what is the Fresh Factory and what are you, but also what aren't you.
Bill Besenhofer (01:29):
Sure. Absolutely, absolutely. Well, thank you James, so much. Really appreciate being on with you guys again. So who are we? What are we? At the Fresh Factory, really, we've built this vertically integrated platform from the farm to shelf, and our focus is really on the future of the food and beverage industry, which we tend to believe is being fresh ingredients, clean labels, better for you products. And so we've worked with dozens of leading brands, few of our own that we have that we own. Really helping take people through the formulation to the supply chain, to the manufacturing, to all the way through distribution to the end game with their products. And so we've built this vertically integrated platform with really the hope of providing what we call honest food for all, and honest being things that you can see on the backs of a label and not have to worry about understanding how to pronounce those words, things that are better for you.
James Black (02:36):
I'm going to interject with a quick question, and hopefully this isn't a curve ball, but does good food have to be more expensive? In an inflationary environment where everyone's working even harder to try to put food on the table, does having to eat right and clean have to cost more?
Bill Besenhofer (02:51):
You know what? I'd love to say that the answer is no, but there are some true realities, but I think this is where I believe we're different. I feel like this is where we separate ourselves from potentially others in the marketplace. Are we going to be able to stop the entirety of inflation? No, I mean, let's be realistic. That's not going to happen. But with the platform that we've built, as you can imagine, as you bring more people on, there are things that we are able to do from a distribution perspective, from a buying perspective. Working with certain farms, whether they're small or they're large, there's buying power in a lot of what we do. So are we going to be able to stop the inflation or the rising costs? No, because I don't think anybody in any industry has been able to do that quite frankly. The food industry is no different. Now, again, with what we're building, we are trying to give that ability to people all across every demographic, the ability to purchase healthy, clean label food.
James Black (03:57):
No, I appreciate that. So on that front, and I just interject that eating cleaner and eating healthier, if it's an investment or cost over what you can just get to get sustained as a human being, it's a worthwhile investment obviously. I just want to make that clear that eating better is obviously linked to many other health benefits; longevity, mental wellbeing, all these things. So there's no doubt about that. Now, talk to me about some of the trends and some of the maybe habits that you've seen developed through your visibility into this chain that you've built. So are there certain food items or certain ways that people are consuming these healthy foods that maybe you didn't expect to see, but now it's something?
Bill Besenhofer (04:41):
You know what? It's interesting that you say that. When we first started this whole thing, we realized that there was an opening in the marketplace for people that were looking for better for you products. And I tell this story a lot, and I've got two young children, 12 and 10. And one of the things that they have done just because of the evolution of everything, they look at the backs of ingredients and backs of products. Look at the ingredients.
James Black (05:12):
My kids do that too, actually. Yeah.
Bill Besenhofer (05:12):
I mean, I told this story a few weeks ago. My daughter's in science class and she comes home and says ... looking at something the back of the label and like, "Dad, this thing causes [inaudible 00:05:28], something not good for you." I'm like, "Yeah, honey, that's right." "You're not putting that type of stuff in your foods, are you?" I'm like, "Absolutely not. That's not what we're doing." So you start seeing the younger generation. It's important. And again, it's not just the younger generation now, it's all generations are really starting to look at it because again, there's data, there's studies behind the fact that with healthy clean product and food, that should in theory help with the extension of a better quality of life.
James Black (06:02):
Absolutely. And I do see that education reaching my children as well, who are a touch younger than yours, and it is incredible. They still like to eat candy and junk food, but they-
Bill Besenhofer (06:11):
For sure. For sure. But they actually know ... I mean, again, I think with data is power, and now with so much data that's out there, people are actually able to understand and they want to know. And that's why when you talk about even the inflation and it costs more, people are investing more in themselves. So while that cost is increasing, I do believe that even myself or anyone else, you're still worried about your own health and wellbeing, so you're willing to spend extra money there. So maybe we don't have that extra app that's necessary on my phone, because you know what? It's more important to eat the right foods and be healthy.
James Black (06:50):
Absolutely. And I would think for kids, these obvious role models, now, we can't be LeBron James or Tom Brady, but these guys talk as much about their nutrition and regimen and their health and wellness regimen as they do their practice schedule. So to me, I also see that playing out quite a bit. Now, innovation in food, it isn't just the thing you put in your body, it's the delivery systems and the packaging. Can you talk to me a bit about how you guys fit into that, part of the innovation cycle?
Bill Besenhofer (07:21):
Yeah, absolutely. So again, I really do believe that a lot of what we're doing at the Fresh Factory is at the forefront of the food and beverage industry in general. And so with that, it's not only just about the foods that we make, but it's obviously in the packaging and the things that we can offer. And we might not be the first in some cases, but I'll give you an example. We've got a shot line, which is a two to four ounce shots where we're able to bottle up clean label fresh press juice that can be utilized, and we distribute all throughout the United States to multiple different customers.
(08:02):
And so when you look at that, that space is growing rapidly. You also have a space where we look at innovation as it relates to healthy snack bars. If you go down some miles, you'll see probably about 2000 different bars there. Well, there's refrigerated healthier bars that are now starting to come out there. Those are types of things that we've started to help be a player in that area. And so we start to see some of that innovation to try to obviously differentiate ourselves, but also offer a clean healthy product for everyone.
James Black (08:38):
For sure. And we've always been warned that the middle of the grocery store is where the health hazards are. I don't know how we're fixing that.
Bill Besenhofer (08:48):
Again, I go back to this is how we started the Fresh Factory. We noticed and realized that there wasn't anybody out there that was able to do healthy clean food and have shorter shelf life. 90 to 120 days would have great freshness to it. A lot of the manufacturers or people out there were making products that were something that you basically take to the middle of the store and sit there for two to three years or sit on a shelf someplace else before it gets delivered. Well, the only way you can do that is by adding additives and preservatives to it, which we now have come to realize that not all of that is the greatest and healthiest for us. And so you had mentioned and asked earlier, "Well, what's something that differentiates you or what aren't we?" That's not us, right? I mean, we're not somebody that's going to put products or ingredients into a product that is going to have it sit for many years before you actually eat it. Every product of ours is consumable within at minimum 90 and at most maybe six months at most.
James Black (09:53):
So obviously you have to have a robust and capable supply chain to get this products in a timely manner. Anything you want to say about how you actually get the products, especially in a post COVID era where we're all aware of what happens when food doesn't get to the grocery store, what have you learned about that?
Bill Besenhofer (10:09):
So I would tell you this. Look, we had our challenges too, but through COVID, again, because of the platform that we built and the relationships that we were able to have, it really did allow us to pivot and move fairly quickly through the supply chain to be able to get the necessary ingredients and/or packaging to our customers. And so obviously for us as we built this, we realized how important supply chain is. Obviously, every day always trying to get better, but having those established relationships, especially with multiple different farms across small to large, has really benefited us, and more importantly, has benefited our customers.
James Black (10:54):
So I can't help but mention last week's guest was talking about homegrown mushroom kits for exotic mushrooms. And I wonder if you had any thoughts on where that style of ... Obviously we can't grow all our own food in most suburban environments, but are you seeing that trend play out or even working around that, or what do you think?
Bill Besenhofer (11:14):
Yes, yes, and yes. We ourselves have investors of our own company that are in that space where they're looking to grow their own food at home. And do I think that that's going to stop? No, I don't. I actually do think that'll continue to grow as time goes on and technology gets better. For us, as the Fresh Factory though, a lot of times we won't necessarily help people as they do the that. I think where we would help them out is if as maybe not the at home kit systems, but as people have started to scale some of that business, and I think the company you're talking about, we would probably be able to partner with someone like them so that it's not just a one solution, hey, here's the product, but they could create multiple products with it, and that's where our innovation team would actually work with them to help scale maybe a product that has an ingredient that they're growing, and then turn that into a brand of some sort down the line.
James Black (12:20):
Cool. Yeah, see, I never thought of this show as a matchmaking mechanism, but you never know. Okay. Well, Bill, one of the trends ... I mean, obviously the big trend in food over the last few years was plant-based protein, someone called fake meat. There was a big story in Bloomberg about it and Beyond Meat, which I believe you were an investor in your fund some years back, which has fallen a little bit out of favor in the market and these things happen. But maybe talk to me how you guys have navigated the lumpiness of certain trends like that, where people may have thought we hit peak meat, likely not the case, but we're not going to deny that there going to be further innovations in plant-based protein and maybe even the cellular level. We've seen some cool examples there. And I just want to get your perspective on what the market has reacted to with the fall of "fake meat" and how you guys are navigating it knowing that you're quite diversified.
Bill Besenhofer (13:17):
Yeah, for sure. So I think with us and I look at the types of products that we make, I mean, really the focal point of what we're doing is its healthy clean label. It's fresh, right? Yes, while there may be some plant-based, we don't play in the meat sector of that. It really truly is plant-based for salad dressings, dips, hummuses, juice, things of that nature. So for myself, as you ask that question, are there trends? To me, I only see the trend of it going up and when I say up, I'm talking about the fresh clean label. I don't want to say it's a movement, but it really is.
(13:59):
We just mentioned this to our kids, it really is all about fresh and clean label. That's not a fad. That's not going away. That's just true knowing what you put in your body, and you want it to be as clean as possible. So with that being the case, in my mind and the site and thesis that we have, the growth opportunity for us is endless, because there isn't anything that's going to stop that.
James Black (14:25):
Right. It's funny because I was actually talking to a colleague last night about healthy eating, and he's been on a bit of a journey and he's had great success with it. And he was saying, one of his rules was you need to be able to look at something and know where it's coming from. So piece of chicken, that came from a chicken. The barbecue sauce, who knows where that came from, right? And I think that was part of the plant protein issue was the product would look like a hamburger and then you wouldn't know what came into all that, all the ingredients and feed stock to make that product. And it wouldn't necessarily be healthier, it would just be different.
Bill Besenhofer (15:07):
Yep. Totally.
James Black (15:10):
Yeah.
Bill Besenhofer (15:11):
It's crazy because as you talk through that, that's again, something that the Fresh Factory, what we do, we're the highest form of food safety certification you can get, which is an SQF, formally a level three facility, which is in Canada, would be equivalent to like a BRC. And so when doing that, you have to know where all your ingredients come from. Has to be signed off. There's strict rules as it relates to the ingredients that you're putting in and knowing where it comes from and when it came and what lot. And so there's all of that that plays into all of the healthy, clean, and knowing where your food comes from. Because at the end of the day, you're right. I mean, people are curious now. Maybe years and years and years ago, probably our parents maybe didn't ask as many questions, just believed in what they were given. Society has changed. That's not the case anymore. When we ask more questions and sometimes than the answers though.
James Black (16:13):
Oh, yeah, you don't have to look any further than ... I'm 40. And when I was a kid, we had the Canada Food Guide, which everyone remembers. 1990 era, Canada Food Guide was a joke. It was 80% carbs, and it was like ... Yeah. And you know these things are supported by certain special interest groups and whatnot. Okay. So let me just talk about corporate performance for a sec.
Bill Besenhofer (16:37):
Yeah, sure.
James Black (16:37):
Again, we don't go too deep into the numbers on this program, but as a company, you're not a spec plate like a mining company per se. So there's a lot of those in the public junior space. And for me and my observation, the expectations for companies such as yours are a little more tougher. The fundamentals really apply. You have to make money, you have to make sure that you have runway. Talk to me about how you're managing those expectations, because it sounds like you're doing a great job on the product side and the fulfillment side. How about the financial side?
Bill Besenhofer (17:09):
So I think we've been really lucky. We'll do some quarter earnings release here in the next month or so, but as I date back, even to the end of Q3, we're seven consecutive quarters in a row of record growth. I had envisioned that to continue to go on. We found ourselves at very close to EBITDA positive. And I think in the next few quarters here, we'll find ourselves getting over that hump to profitability. And so for us, it is a manage, because you're growing rapidly. And I think one of the things that myself as a team we've had to do is really take a hard look at the types of customers that we're bringing in. And I mean that they're all great, but there are some customers that are better suited for what we're doing than others. And so having a lot of opportunity because of the fact that there aren't a ton of manufacturers that are in the healthy clean food space like we are, we've got to get a lot smarter and had to get smarter on the types of customers and partners that we could partner with and grow with.
James Black (18:22):
Yeah, no, absolutely. I always think about the book Shoe Dog from Phil Knight and the challenges he had meeting demand through his product because of the terms and the ... Yeah. So I'm not an accountant, but man, they made it through. But [inaudible 00:18:36]
Bill Besenhofer (18:37):
All the while, manufacturing in general is not the easiest. Always. Food manufacturing is another hurdle. And then now you do fresh food manufacturing. Quite frankly, I think that's maybe one of the hardest things you could possibly do, because no one ingredient is the same, right? It's a living, breathing. It's growing. So sometimes things don't taste the way they are because they're coming off the field. I mean, that's the way it is.
James Black (19:06):
And it's super regulated. And you're also dealing with, like we said, trends which shift like the wind.
Bill Besenhofer (19:14):
Yes.
James Black (19:16):
Well, okay, I think this perfectly sets us up for my final question, which is, Bill, what's the legacy you're trying to build with this company, and what indications will you have that you've made progress on this front or maybe have succeeded in building this legacy?
Bill Besenhofer (19:33):
That's a great question. And I'm not going to speak just for myself, but from my co-founder and everybody else that's helped build this whole business. I mean, I think the legacy that we're really trying to leave is that we are really at the forefront of healthy clean label food. That we're a major player out there helping to move everybody forward. And I think one of the ways that we can measure our success with that is by our customers, who are the customers we're working with that can let us know that they've got mind thesis and are growing like us, believe in what we're doing from a healthy clean label space.
(20:17):
And I mean, look, we're not there yet because that's just we're not there yet. But I do think we're right on track with the right people. And I say that because, again, of our go into this diversification. If you go across the many different sales channels that we have from a direct to consumer to leading retail brands, to working with large retailers or your healthy quick service restaurants, we're working with a lot of those main players out there that are growing at rapid paces. And so for me to see that and us help with their growth shows that, you know what, we're on the right path here.
James Black (21:04):
Yeah. It's a creative, and you've mentioned product market fit, which I've been told is probably the Rosetta Stone or the key to unlocking the potential of any business really. And it seems like you're really finding that out. Bill, thank you so much. I really enjoyed our discussion today. That's Bill Besenhofer, CEO of the Fresh Factory, FRSH on the CSE. Bill, thanks and consider coming back on again.
Bill Besenhofer (21:30):
Absolutely. Thanks, James, for having me.
James Black (21:32):
All right. Have a wonderful day. Thank you again for listening to the Exchange for Entrepreneurs podcast, a proud presentation from CNSX Markets, Inc. operator of the Canadian Securities Exchange. As a reminder, the viewpoints on this show do not reflect those of the exchange and are solely those of the guests and do not constitute investment advice. For more information about the exchange, its services and listed companies, please visit www.thecse.com. Until the next show, thank you for listening, and don't forget to hit the like or subscribe button on your favorite listening platform. Thank you so much.