Latest / Best of Business / Bosses Unfiltered Episode 7: Angus Brown

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Bosses Unfiltered Episode 7: Angus Brown · Best of Business

0:01
Speaker 1: The big winds and the big losses, the hurdles, the pivots,
0:06
Speaker 1: and the emotions, raw and honest New Zealand's great business
0:10
Speaker 1: minds like you've never heard them before. This is Bosses
0:13
Speaker 1: Unfiltered with Kerry Woodhem on iHeartRadio powered by Newstalk ZEDB.
0:18
Speaker 2: It's hard enough to chase a scientific breakthrough, but as
0:22
Speaker 2: my next guest found out, it's even harder and more
0:25
Speaker 2: expensive to defend your breakthroughs time and time again. You
0:30
Speaker 2: probably know a Reaper from the drinksyle at the supermarket.
0:34
Speaker 2: Founded in twenty seventeen, the company behind the so called
0:37
Speaker 2: brain drink was growing at a rapid pace when at
0:40
Speaker 2: the end of twenty twenty three they hit a massive
0:43
Speaker 2: speed bump. That's when the Ministry for Primary Industries and
0:47
Speaker 2: an Auckland University scientist came out and said the company
0:50
Speaker 2: hadn't actually proven better brain function at all. A Reaper
0:55
Speaker 2: found itself in the headlines, but for all the wrong reasons.
0:58
Speaker 2: Angus Brown is the co founder and co chief executive
1:02
Speaker 2: of A Reaper. Now, this is a company that's had
1:04
Speaker 2: a spectacular rise, and there was a hell of a
1:09
Speaker 2: fall in the middle along. There wasn't there. So tell
1:11
Speaker 2: me about the rise first, Let's start positively.
1:13
Speaker 3: Sure, Yeah, how did it begin? How did it begin? So?
1:17
Speaker 3: I so the idea kind of was inspired around I
1:22
Speaker 3: had lost a friend to suicide at high school and
1:26
Speaker 3: then went on to university quickly learnt about what you
1:30
Speaker 3: put in your body is what you get out. You know,
1:33
Speaker 3: often university students, you know, survive on two minute noodles
1:36
Speaker 3: and beer. And notice that my cognitive function and mood,
1:41
Speaker 3: you know, heavily degraded if I gave myself a poor diet.
1:45
Speaker 3: And then my first job after university was selling an
1:49
Speaker 3: energy drink, and I was really excited initially, but after
1:54
Speaker 3: a period of time, I realized that I was just
1:56
Speaker 3: selling you know, caffeine and sugar into mass New Zealand,
1:59
Speaker 3: and I wanted to do something better. Two of my
2:03
Speaker 3: grandparents had died within that first year of brain related concerns,
2:09
Speaker 3: and so I started to think, well, you know, why
2:12
Speaker 3: can't we make something that's natural that's good for you,
2:15
Speaker 3: that doesn't contain caffeine, And could we work with a
2:18
Speaker 3: neuroscientist to develop it so that when we put it
2:21
Speaker 3: through a clinical study we could show that it actually
2:24
Speaker 3: had a benefit to the brain and then if they
2:27
Speaker 3: consumed that regularly, could have made their brain work better
2:31
Speaker 3: and could your brain be healthier over the long term.
2:34
Speaker 2: Which is a really attractive proposition to think that you
2:37
Speaker 2: can take something that is going to make your brain healthier.
2:39
Speaker 3: Yeah, exactly, but it's quite it's rare, like you don't
2:45
Speaker 3: you know, you don't often see that type of promise
2:47
Speaker 3: in a food and it actually delivered that. And so
2:50
Speaker 3: we were really trying to break the frontier of nutritional neuroscience.
2:55
Speaker 3: And so I pitched the idea back to the energy
2:59
Speaker 3: Drink Come and kind of got laughed out the door
3:03
Speaker 3: really And then I came across the newly commissioned food
3:09
Speaker 3: bowl back in the Stephen Joyce era and which was
3:14
Speaker 3: owned and run by Callahan Innovation, and kind of knocked
3:17
Speaker 3: on this thirty million dollar modular food factory and said, hey,
3:22
Speaker 3: I've got this idea for a brain drink, you know,
3:25
Speaker 3: could you guys help? And then so I was one
3:28
Speaker 3: of the first of clients to use the facility, and
3:30
Speaker 3: then a job came up and did you have to
3:32
Speaker 3: pay for that? Yeah? It was quite expensive, probably about
3:36
Speaker 3: four thousand for the day. And my friend and I
3:39
Speaker 3: were pressing at the time blueberries and we were mixing
3:42
Speaker 3: in pine bark and then we're putting it through this
3:45
Speaker 3: really interesting processing technology called high pressure processing, and afterwards
3:51
Speaker 3: the product came out like a jelly. We've created, you know,
3:55
Speaker 3: four thousand dollars worth of blueberry pine bark tasting jelly
3:58
Speaker 3: and it tasted horrible. Oh my, you know, goodness, But
4:01
Speaker 3: we learned a little bit and probably the best thing
4:04
Speaker 3: that came out of it was a job was going
4:07
Speaker 3: there as business development manager and I thought, man, this
4:10
Speaker 3: would be amazing place to work so I could learn
4:12
Speaker 3: more about this whole world of food tech because I
4:15
Speaker 3: have a background in finance and accounting, right, but I
4:18
Speaker 3: found the whole world of fast moving consumer goods really
4:21
Speaker 3: interesting because it was a perfect mix of both commerce,
4:25
Speaker 3: marketing and science. And the science side of things really
4:28
Speaker 3: interested me. And so for six years I worked at
4:32
Speaker 3: the Food Bowl for New Zealand government, helping companies big
4:36
Speaker 3: and small develop new high value food and beverage products
4:40
Speaker 3: for local and export markets.
4:42
Speaker 2: Well nursing the idea of your.
4:43
Speaker 3: Own yeah, and they really encouraged the staff to develop
4:47
Speaker 3: their own ideas and their own time and so that
4:50
Speaker 3: you could actually, you know, walk the walk, rather than
4:53
Speaker 3: just tell people how to do things without your own
4:55
Speaker 3: true experience. And this idea just keeped bumbling away and
5:01
Speaker 3: I keept kind of just doing my research. And then
5:03
Speaker 3: we came across one of the world's top neuroscientists in
5:08
Speaker 3: the field of nutritional neuroscience and that's based on published
5:12
Speaker 3: research sited and he's in the top zero point zero
5:16
Speaker 3: one percent of scientists in this field clinical nutrition. And
5:19
Speaker 3: he was based in Australia, and I reached out to
5:23
Speaker 3: him and said, Hey, I've got this idea for a
5:26
Speaker 3: brain health drink. Could you help with the formulation. I
5:29
Speaker 3: want to use at least one ingredient that's unique to
5:32
Speaker 3: New Zealand. I want it to be cafeine free. I
5:34
Speaker 3: want the combination of the ingredients to be synergistic. And
5:39
Speaker 3: I wanted to improve aspects of mental performance and mood.
5:43
Speaker 3: And ideally, if they consumed it regularly, we could make
5:46
Speaker 3: their brain be healthier and work better of the long term.
5:50
Speaker 3: Because the goal for our business is we want to
5:52
Speaker 3: make brains work better through science backed nutrition, and if
5:56
Speaker 3: we can push out a healthier brain for longer than
6:00
Speaker 3: there's less economic burden later on life.
6:05
Speaker 2: And uh.
6:06
Speaker 3: You know this guy was his professor, Andrew Scoley, and
6:09
Speaker 3: he's used to dealing with the Nesleys and the Union
6:12
Speaker 3: Levers of this world. And you know it took a
6:15
Speaker 3: while for him to be convinced that they should work
6:17
Speaker 3: with Angus Brown from Hawk's Bay on this you know
6:20
Speaker 3: novel idea.
6:22
Speaker 2: Uh.
6:22
Speaker 3: And then my business partner, his father part of the set, Robinson,
6:27
Speaker 3: his father Daran Robinson from the Raycon family. They pitched
6:31
Speaker 3: in the original Angel investment for us to commission this
6:34
Speaker 3: world renown neuroscientist to develop this formula, and so it
6:39
Speaker 3: contained this unique to New Zealand variety of black currents
6:43
Speaker 3: we call neuroberry black currents. And I can talk more
6:46
Speaker 3: about the interesting thing in them later. A pine bark
6:51
Speaker 3: extract from New Zealand called in oginal uh and althenine,
6:55
Speaker 3: which is a really popular amino sid found in green
6:59
Speaker 3: tea there. It supports kind of attention and stress and
7:03
Speaker 3: helps to counter the negative effects of caffeine.
7:06
Speaker 2: So in effect, you were looking for a recipe from.
7:08
Speaker 3: Him, Yeah, a recipe backed by like really sound science
7:12
Speaker 3: that we could then take to a university once we
7:17
Speaker 3: had formulated it to then be the subject of a
7:20
Speaker 3: clinical study and so you know, a few months later
7:24
Speaker 3: and a very thick report, we got this amazing document
7:29
Speaker 3: to talk us about to talk through that sorry, that
7:32
Speaker 3: talked through all of the science of our ingredients and
7:34
Speaker 3: the synergy potential, and so that was really cool. My
7:40
Speaker 3: co founder and I he at the time was in
7:43
Speaker 3: the UK, and I was just doing this part time.
7:47
Speaker 3: And then and he comes from an industrial design background
7:50
Speaker 3: and so I was learning food tech. So I was
7:51
Speaker 3: kind of working on the inside and he was working
7:53
Speaker 3: on the outside of the bottle. And then we had
7:59
Speaker 3: and like before foot, but before we had and this
8:01
Speaker 3: is important for when we talk about the low moment,
8:07
Speaker 3: before we had approached that neuroscientist, we had worked with
8:11
Speaker 3: a local scientist on a separate formula and we didn't
8:16
Speaker 3: see a result and it didn't contain our Neurowberry black current,
8:21
Speaker 3: and so we kind of parked that scientist, doctor nik Gant,
8:25
Speaker 3: and then looked at, Okay, how can a formula work
8:29
Speaker 3: and what does need to have And so our attention
8:31
Speaker 3: then turned because a recent publication to come out around
8:34
Speaker 3: New Zealand Black Current, and so we started to use
8:37
Speaker 3: that as our key ingredient. And then we approached our
8:41
Speaker 3: new professor Skolely to help us worth optimizing that formula.
8:46
Speaker 2: And so the old recipe didn't have the black currents.
8:49
Speaker 3: You correct and yeah, like different ingredients, and so we
8:55
Speaker 3: chipped around this idea when you first gave us the
8:57
Speaker 3: report and we bought all the ingredients and we put
8:58
Speaker 3: into a bottle and added water. We almost sped it
9:00
Speaker 3: back out again because you know, it's got pine bark
9:02
Speaker 3: in there, which tastes like park but we threw clever
9:06
Speaker 3: natural flavors and working with our ingredient suppliers, and this
9:11
Speaker 3: pine bark extrac company is from New Zealand and they've
9:13
Speaker 3: now invested in US. And then the Black Currents come
9:15
Speaker 3: from New Zealand and one of the largest grows in
9:17
Speaker 3: the country has invested in US. So we were started
9:20
Speaker 3: to become vertically integrated with our supply chain, which is
9:24
Speaker 3: really cool. And then once we got the flavor right,
9:28
Speaker 3: we took it back out to the the academic world
9:32
Speaker 3: and said we want to study this. We think we've
9:34
Speaker 3: got something. And then they said, well, if you wanted
9:36
Speaker 3: to study a beverage, you need a placebo, and we thought,
9:39
Speaker 3: oh man and so we but it had to be
9:42
Speaker 3: a taste match placebo and a carb or hydrate match
9:44
Speaker 3: placebo and a vitamin C match placebo. So it took
9:47
Speaker 3: us a whole year just to make a placebo just
9:50
Speaker 3: so we could go back to the science community and
9:52
Speaker 3: say we're ready to be studied. You know, how much
9:55
Speaker 3: is it going to cost? And so we got a
9:58
Speaker 3: quote and then we use investment from the ingredient suppliers
10:02
Speaker 3: and our existing angel investors to commit all that to
10:06
Speaker 3: a clinical study.
10:07
Speaker 2: And how much was it? Because a lot of natural
10:11
Speaker 2: vitamin suppliers and herbal extract people say that that's the
10:15
Speaker 2: big turn off for them, as they just simply can't
10:18
Speaker 2: get the money for the testing.
10:20
Speaker 3: Yeah, it's really really expensive. I would hate to think
10:23
Speaker 3: how much we've spent on our clinical research to date,
10:27
Speaker 3: but a clinical study would cost anywhere from eighty thousand
10:32
Speaker 3: dollars to one and a half a million. But we
10:37
Speaker 3: from the foundation of our business, we wanted to invest
10:39
Speaker 3: more in the science upfront and whatever we could afward
10:42
Speaker 3: later on marketing, because we think the science is more
10:46
Speaker 3: defensible if we can actually show something right. So we
10:50
Speaker 3: raise the money, did the first study and that was
10:55
Speaker 3: at the University of Auckland with Associate Professor Andrea Brakhaus.
11:00
Speaker 3: It was in twenty three healthy athletes and one a
11:06
Speaker 3: day for seven days of our beverage resulted in a
11:10
Speaker 3: statistically significant improvement in kind of reaction speed and accuracy
11:18
Speaker 3: under fatigue. So we fatigued these athletes and we gave
11:21
Speaker 3: them a Stroop test afterwards, and we found that the
11:23
Speaker 3: accuracy accuracy score was improved. But then we learned that
11:28
Speaker 3: under the food Code in New Zealand, we couldn't even
11:32
Speaker 3: really talk about any of those results because you needed
11:36
Speaker 3: to put it through. To do a health claim, you
11:40
Speaker 3: need to do two clinical studies and have both the
11:43
Speaker 3: same outcome at the same set as the same primary outcome,
11:47
Speaker 3: and you kind of need to like duplicate it. And
11:50
Speaker 3: as we're finding this out, we were kind of committing
11:52
Speaker 3: to new research elsewhere because we were finding signals that
11:57
Speaker 3: maybe this, if it works in athletes, maybe we should
11:59
Speaker 3: look at their brand drive neutropic factor and take their
12:03
Speaker 3: bloods and look at how they perform against you know,
12:06
Speaker 3: kind of oxygen deprivation or pollution.
12:09
Speaker 1: The honor story of being in business, talking the wins
12:12
Speaker 1: and the losses Bosses Unfiltered with Kerry woodhem On iHeartRadio
12:17
Speaker 1: powered by News Talks EDB. What it's really like to
12:22
Speaker 1: build a business in New Zealand. Bosses Unfiltered with Kerry
12:26
Speaker 1: woodhem On iHeartRadio powered by News TALKSB.
12:29
Speaker 2: Presumably you've got a finite line of funding, so there'd
12:32
Speaker 2: be all sorts of amazing tests you could do if
12:36
Speaker 2: you had unlimited money.
12:38
Speaker 3: Yeah, correct, So you'd have to drill down.
12:39
Speaker 2: Into the ones that we're going to be able to correct,
12:43
Speaker 2: give you defensible claims.
12:44
Speaker 3: Yeah. And so so that first study was kind of
12:47
Speaker 3: like our breakout study. We got some good press for it.
12:52
Speaker 3: We had the All Blacks reach out, and you know,
12:56
Speaker 3: we've been supplying elite athletes from around the world and
12:59
Speaker 3: elite teams since then.
13:01
Speaker 2: How did they hear about it?
13:03
Speaker 3: Well, when you published the research and Black currents, you know,
13:06
Speaker 3: the nutritional industry, nutritionist industry kind of all hears about it,
13:11
Speaker 3: and the black the All Blacks nutritionists kind of you know,
13:15
Speaker 3: we've got in touch.
13:16
Speaker 2: And so you didn't go knocking on doors. They came
13:19
Speaker 2: to you saying we'd love to trial this.
13:22
Speaker 3: I think it was just both ways. I think yep,
13:24
Speaker 3: the science stacks up. This is pretty interesting. Yeah, we'll
13:27
Speaker 3: take a look. And yeah, we've been.
13:28
Speaker 2: There were there were great headlines at the time. I remember,
13:31
Speaker 2: I've been buying it and.
13:32
Speaker 3: So and so we got into Pharaoh's, we got into
13:35
Speaker 3: New Worlds, and then I went full time after that
13:37
Speaker 3: left and you know, the New Zealand fod innovation. The
13:40
Speaker 3: food Bawl guy has almost kicked me out, said you
13:42
Speaker 3: need to go. This is you know, this is your thing.
13:44
Speaker 3: And so yeah, we kind of our distribution and sales
13:49
Speaker 3: continued to grow, and yeah, we went from we doubled
13:52
Speaker 3: revenue year on year for I think like four consecutive years.
13:57
Speaker 3: And then at the peak before this whole the snaffoo
14:01
Speaker 3: and then the economy, we were the eighth fastest growing
14:06
Speaker 3: company by Deloitte Fast fifty and then the fastest FMCG
14:10
Speaker 3: company and I think yeah, and so we were hitting
14:13
Speaker 3: roughly just on a ten million revenue.
14:16
Speaker 2: So that's good. Yeah, so you're feeling positive, you're doing
14:20
Speaker 2: feeling good in the world, you're making money, you're paying
14:22
Speaker 2: back your investors.
14:24
Speaker 3: Yep, and we're funding you know, at this point in time,
14:27
Speaker 3: a considerable amount of studies across University of Auckland and
14:32
Speaker 3: Plant food Research. We had launched into Australia and you know,
14:37
Speaker 3: we're kind of hitting three thousand outlets. Steven Adams invested
14:41
Speaker 3: in us, the two of the x CEOs of Zesbury
14:46
Speaker 3: invested in us. The founder of Convetera.
14:49
Speaker 2: Everyone wants a pie.
14:50
Speaker 3: And these guys are like my heroes, especially, you know,
14:54
Speaker 3: the Conveter and Zesbury. They've built big international businesses around
15:00
Speaker 3: high value New Zealand food ip and that's what we
15:05
Speaker 3: wanted to replicate in the brain fruit space. And you
15:07
Speaker 3: were yeah, and we still are. And then and then
15:13
Speaker 3: we launched and then our second study was published. And
15:15
Speaker 3: these were kind of just getting published as when they
15:18
Speaker 3: were being completed and submitted to the journal, so we
15:21
Speaker 3: didn't really have a structured timing on when now we've
15:26
Speaker 3: got we've had nine or ten kind of underway, and
15:29
Speaker 3: we've published sex now and we've got a fu more
15:31
Speaker 3: in the pipeline of this clinical research. And we had
15:38
Speaker 3: one study come through and the scientists were saying, yeah,
15:41
Speaker 3: we boosted. We tested your formula on elite cyclists and
15:48
Speaker 3: being Exposed to pollution was at University of Auckland and
15:52
Speaker 3: we found that those on ard Eppa versus the placebo
15:56
Speaker 3: after seven days consumption had a higher VO two max
16:00
Speaker 3: reduce cough symptoms, and we could shave twenty seconds off
16:05
Speaker 3: their four kilometer cycle time trial. And so we as
16:09
Speaker 3: a co founder and I saw this, well, oh this
16:12
Speaker 3: is awesome, and then we kind of you know, drafted
16:14
Speaker 3: up our pr plan and then launched. And then suddenly
16:17
Speaker 3: and then we started to We hired a young neuroscientist
16:21
Speaker 3: and we were we grew like twenty three staff and.
16:25
Speaker 2: From the two of you to twenty three. Yeah, and
16:27
Speaker 2: how many years.
16:29
Speaker 3: Oh this is over this like four year period, but
16:31
Speaker 3: you know, the first three years there were five of
16:34
Speaker 3: us and then so we had this team and so
16:37
Speaker 3: we were like we were running really quickly, and I
16:41
Speaker 3: think there were we hired a young neuroscientists and a
16:45
Speaker 3: young marketing team, and then they were starting to talk
16:48
Speaker 3: about the published research on our ingredients and our published
16:51
Speaker 3: research on our website. And I think that became, you know,
16:58
Speaker 3: the attraction of our competitor to complain to the MPI
17:01
Speaker 3: that hey, these guys can't say this because as per
17:06
Speaker 3: the ruling, to do health claims you have to do
17:09
Speaker 3: you have to file it through a systematic review and
17:12
Speaker 3: the schedule, so and we didn't really have a clear
17:17
Speaker 3: and it's still not clear because people are still different,
17:21
Speaker 3: companies are still saying different things around and it has
17:25
Speaker 3: been clear, but whether it's regulated or not, whether you
17:27
Speaker 3: can actually communicate your published research to your consumers. And
17:33
Speaker 3: one piece of feedback we got during the it's called
17:37
Speaker 3: the snaffoo, was that we weren't even allowed to have
17:42
Speaker 3: the link to our own published study on our own
17:45
Speaker 3: product that they can pick up in the supermarket on
17:47
Speaker 3: the website because according to MPI at the time, that
17:51
Speaker 3: was considered a health claim. But our minds were like,
17:54
Speaker 3: we've published this piece of research, shouldn't and it's publicly available,
17:58
Speaker 3: shouldn't we be able to communicate we found there. But
18:02
Speaker 3: I'm happy with how the strict ruling is in New
18:05
Speaker 3: Zealand because it raises the bar compared to say, the States.
18:09
Speaker 3: But what we're struggling with right now is that American
18:11
Speaker 3: competitors with non compliant packaging are coming into the New
18:14
Speaker 3: Zealand market and we're not seeing much kind of pushback
18:18
Speaker 3: on those.
18:20
Speaker 2: Tell me about the snaffo.
18:21
Speaker 3: So we had so we had a journalist come knocking
18:27
Speaker 3: on our door to say, hey, we hear that you're
18:31
Speaker 3: going to get a letter from MPI. Zone and Zack
18:34
Speaker 3: and I going, you know what, letter from MPI. We
18:37
Speaker 3: don't really know what's going on here. And then we
18:40
Speaker 3: had MPI touch base us, say we're going to issue
18:42
Speaker 3: you a notification. It turns out whole bunch of competitors
18:45
Speaker 3: had complained about our science communication, which I met at
18:51
Speaker 3: the time, looking back, was probably a bit bullish and
18:54
Speaker 3: a bit confident, but we were being true to the
18:57
Speaker 3: published evidence out there on the ingredients that we were using,
19:01
Speaker 3: or on the on the research that we were publishing
19:04
Speaker 3: on our finished formula. And so we had MPI come
19:09
Speaker 3: down like quite heavy handedly on and having and we
19:13
Speaker 3: had to put a notification on our website that the
19:20
Speaker 3: claims that we were making around our ingredients were unsubstantiated.
19:26
Speaker 3: And we knew that we like the science was telling
19:30
Speaker 3: us that, but we hadn't filed that information through their
19:34
Speaker 3: preferred schedule in their preferred format. So we got this
19:40
Speaker 3: notification from MPI that we were making claims that we
19:44
Speaker 3: shouldn't have. And then it came down to the They
19:48
Speaker 3: were most worried about the packaging and we then updated
19:53
Speaker 3: the packaging and the only update that's noticeable to the
19:56
Speaker 3: consumer was a little wee plus on the front of
19:58
Speaker 3: our packaging next to the word brain drink and making
20:03
Speaker 3: it clear that it was related to at the time
20:05
Speaker 3: vitamin C, even though we ruled out vitamin C and
20:08
Speaker 3: our clinical research. Two days later, an article came out
20:14
Speaker 3: from the Herald that we were making we were misleading
20:17
Speaker 3: consumers and we had misleading claims, and then you know,
20:21
Speaker 3: we suddenly I had one news turning up on our doorstep.
20:24
Speaker 3: And then that night we were on primetime News and
20:30
Speaker 3: there was a whole piece on us that was already
20:32
Speaker 3: prepped that had in the and TVNZ it had brought
20:37
Speaker 3: in an ex quote unquote expert scientist to comment, and
20:42
Speaker 3: they chose the scientists that we had worked with on
20:47
Speaker 3: our old formula that didn't work to comment on our research,
20:54
Speaker 3: and he was not aware of what we had coming
20:57
Speaker 3: in the pipeline through University of Auckland around primarily around
21:02
Speaker 3: this next study which is pretty game changing where one
21:05
Speaker 3: a day of our performance drink for twenty eight days
21:10
Speaker 3: and thirty eight healthy females result in a thirty three
21:14
Speaker 3: percent improvement and working memory and a twenty odd percent
21:18
Speaker 3: improvement in mood. He thought that we were marketing the
21:23
Speaker 3: product that we tested with him that didn't contain the
21:26
Speaker 3: black current and didn't contain the bioactives that we had
21:29
Speaker 3: in market, and so he gave us a lashing and
21:33
Speaker 3: we never got our right of reply live. So the
21:38
Speaker 3: whole world, well all of New Zealand got introduced to
21:41
Speaker 3: us on primetime television as the drink that wasn't backed
21:46
Speaker 3: by science and was making unsubstantiated health claims. Yet we
21:50
Speaker 3: are still the only beverage in supermarkets that has clinical
21:54
Speaker 3: research on it that's per reviewed and published.
21:57
Speaker 2: That must have been devastating.
21:59
Speaker 3: Yeah, it was. It was. It's haf We lost about
22:00
Speaker 3: two million dollars worth of revenue that forecasted year because
22:04
Speaker 3: of you know, most of New Zealand being introduced us
22:07
Speaker 3: for the first time as this like snake oil marketer.
22:11
Speaker 2: I was talking to a colleague who said, why are
22:13
Speaker 2: you still at work because normally I'm off early. Yes,
22:15
Speaker 2: after my show, and I said, I'm interviewing the founder
22:19
Speaker 2: of Adepa Drinks. Oh, they're the ones that got into trouble.
22:22
Speaker 3: Yeah that so everyone thinks that we're like these naughty
22:26
Speaker 3: kids that you know, got into trouble when we don't.
22:29
Speaker 3: We essentially don't work. And yet like we've got five patents,
22:33
Speaker 3: we've got six human clinical studies showing statistically significant improvements
22:38
Speaker 3: to my brain function, mood meant performance, biomarkers, neurotransmitters don't mean.
22:46
Speaker 3: And yet it's really really hard for us to actually
22:48
Speaker 3: be able to publicly communicate that because of how the
22:54
Speaker 3: food codes is set with because no one's really done
22:58
Speaker 3: this before and so.
23:00
Speaker 2: So were you sitting on the couch watching one news
23:03
Speaker 2: unfold my two.
23:04
Speaker 3: Year old two odd sons going daddy and it's just like, oh,
23:07
Speaker 3: here you go, son, Like, here's your your dad on
23:09
Speaker 3: TV for all the wrong reasons. And then it went
23:12
Speaker 3: on and breakfast the next day. On the breakfast, the
23:15
Speaker 3: same neuroscientist, Nick Gant again completely purpooed our science. We
23:21
Speaker 3: never got any chance to also go on and rebut
23:24
Speaker 3: or have our neuroscientists, you know, to talk about and
23:27
Speaker 3: correct him on some of the false statements that he made,
23:30
Speaker 3: and he did make false statements, and then we then
23:34
Speaker 3: communicated to him through the University of Auckland, Hey, are
23:36
Speaker 3: you aware that we have this, this, this, this, this,
23:39
Speaker 3: and this in terms of the research that's either published
23:42
Speaker 3: or coming through from a data read out perspective through
23:45
Speaker 3: to peer review in publication. And then like five or
23:49
Speaker 3: seven days later he went back out onto the detail
23:53
Speaker 3: and kind of renegged and eventually omitted to the reporter
23:57
Speaker 3: that we did have you know, statistically significant effects. And
24:02
Speaker 3: you know, one day he hopes to have us on
24:05
Speaker 3: as LinkedIn as someone you know that he's worked with
24:07
Speaker 3: and so. But at that time the ship had sailed
24:10
Speaker 3: and most of New Zealand had thought that we were,
24:14
Speaker 3: you know, these people being misleading.
24:15
Speaker 2: What was the worst not having the writer reply or
24:18
Speaker 2: having your your integrity impugned or it's.
24:23
Speaker 3: Probably just being stuck in a rock and a hard place,
24:25
Speaker 3: because we were like because the MPI had issued this
24:29
Speaker 3: notice to say, hey, you can't make those statements about
24:32
Speaker 3: your ingredients, you know, unless you do submitted health claim.
24:37
Speaker 3: So we submitted a health claim now and are waiting
24:39
Speaker 3: on the approval for that, and if we get it,
24:42
Speaker 3: we'll be one of only you know, fourteen companies in
24:45
Speaker 3: New Zealand that's got a health claim over the line
24:47
Speaker 3: and the other thirteen you know, big multinationals were the
24:50
Speaker 3: smallest company by far, but we didn't know what we
24:55
Speaker 3: could or couldn't say. And I was so scared that
24:57
Speaker 3: if we spoke truly about the science and you know,
25:01
Speaker 3: really defended ourselves properly, that mp I would say, no,
25:04
Speaker 3: you're even in more trouble and we're going to pull
25:06
Speaker 3: the products off the shelves, which would have resulted in
25:08
Speaker 3: even more of a revenue declined for US.
25:11
Speaker 1: Wins, losses and the real stories behind our great companies.
25:16
Speaker 1: Bosses Unfiltered with Kerry woodhem on iHeartRadio powered by News TALKSB.
25:23
Speaker 1: The big lessons from New Zealand's youngest and oldest entrepreneurs.
25:27
Speaker 1: Bosses Unfiltered with Kerry woodhem on iHeartRadio powered by NEWSTALKSB.
25:32
Speaker 2: One of the things I found when because we advertise
25:38
Speaker 2: a fish oil as part of the natural nutrients on
25:41
Speaker 2: the show, and a study came out saying it didn't work.
25:45
Speaker 2: But the fisher Will capsules didn't work. It was just purely,
25:48
Speaker 2: you know, a placebo, and people of their own volition.
25:52
Speaker 2: It came on the news and people of their own
25:54
Speaker 2: volition rang in and said, well it might be, but
25:57
Speaker 2: I find that my knees are so much better when
25:58
Speaker 2: I take it. We've got a whole host of callers
26:01
Speaker 2: that rang in without prompting yes to say that for
26:04
Speaker 2: them it worked. A couple of days later they came
26:07
Speaker 2: and said, oh, okay, we weren't comparing apples with apples.
26:11
Speaker 2: They've done the science wrong. It was all about the headline.
26:14
Speaker 2: But we'd had customers that would jump in and said, actually,
26:18
Speaker 2: for me, it works. Did you find that with your customers.
26:22
Speaker 3: Or you too knew no?
26:23
Speaker 2: No.
26:23
Speaker 3: So we had a really loving and loyal consumer base
26:28
Speaker 3: that genuinely feel the effects. And my mum has been
26:32
Speaker 3: running our customer service for the last you know, since
26:35
Speaker 3: we launched in twenty seventeen, and she's got this list
26:39
Speaker 3: of thousands of customer testimonies of really interesting, cognitive concerned
26:46
Speaker 3: consumers feeling a really noticeable felt effect with our products.
26:52
Speaker 3: So that was the thing, the engine that kept us
26:54
Speaker 3: going going. We think we've got a good product. The
26:56
Speaker 3: science actually is true. You know, we're now starting to
26:58
Speaker 3: talk to big multis globally about this science. We just
27:02
Speaker 3: have to deal with this momento, this little issue that
27:06
Speaker 3: we've got in New Zealand.
27:07
Speaker 2: But it's not really a little issue.
27:09
Speaker 3: I mean you, I mean it follows us around. So with'
27:11
Speaker 3: on Google when you search, there's still a misleading headline
27:16
Speaker 3: from TV and ZED and if anyone's listening from TV
27:18
Speaker 3: and Z, can you please remove it? Because when you
27:20
Speaker 3: search us in Google, it comes up with something around
27:23
Speaker 3: to say, I can't remember the exact language, but no
27:28
Speaker 3: evidence found in clinical studies or you know. So people
27:31
Speaker 3: when they look at us internationally they see this TVNZ
27:34
Speaker 3: headline and it's damaging to us. And so that was
27:38
Speaker 3: really tough not being able to have our voice during
27:41
Speaker 3: that moment because we were so scared.
27:44
Speaker 2: And did you think about sewing?
27:46
Speaker 3: Yeah, we thought about deformation, but we had already had
27:50
Speaker 3: to defend our formula against two copycats, which had cost
27:55
Speaker 3: quite a lot of legal resource. We were already filing
28:00
Speaker 3: patents and international markets for the combination of our ingredients,
28:05
Speaker 3: and we just thought, like we were just deflated, and
28:08
Speaker 3: we thought, let's just you know, try and let's just
28:11
Speaker 3: figure out a game plan of how we can you know,
28:14
Speaker 3: fix this and then just you know, build and go
28:18
Speaker 3: for the air.
28:20
Speaker 2: But it could have put you under, couldn't it.
28:22
Speaker 3: We Yeah, so we had to we had to do
28:25
Speaker 3: an emergency capital raise. We we put in you know,
28:29
Speaker 3: put in our own money to including investors, and to
28:32
Speaker 3: keep the business going. We had to do homes on
28:35
Speaker 3: the line, no thankfully, but and we had to do
28:41
Speaker 3: a restructure, so we we laid off I think five
28:45
Speaker 3: staff in total over that period. And yeah, it was
28:51
Speaker 3: extremely brutal, to be honest.
28:54
Speaker 2: Did you ever think about burning the village to save it,
28:57
Speaker 2: like letting go of the area name and bringing it
29:01
Speaker 2: back in another form?
29:03
Speaker 3: Yeah, not really, I think we have. You know, we
29:08
Speaker 3: our sales, although they dropped, we're still reasonably strong in
29:13
Speaker 3: the category. And you know, we're still over the last
29:17
Speaker 3: fifty two weeks, we're still the number one selling functional
29:21
Speaker 3: chill drink and supermarkets like Woolworth's and haven't look at
29:25
Speaker 3: the data recently for food stuffs, but you know we
29:27
Speaker 3: constantly rack in the top five and that chilled drink section.
29:30
Speaker 2: Would any distributors say, I don't want to stop you.
29:33
Speaker 3: No, the retailers were, okay, it's when there's a product recall,
29:37
Speaker 3: which we've just had as well this year and are
29:41
Speaker 3: cleared through. That's when they don't want to sell it
29:44
Speaker 3: and rip it off, but they go is it? Is
29:46
Speaker 3: it an ecal? And you go, no, what's the problem?
29:48
Speaker 3: Then they just they carry on. But we lost a
29:51
Speaker 3: huge amount of momentum, and we lost the trust of
29:55
Speaker 3: a whole bunch of new consumers that we may have
29:57
Speaker 3: been been able to attract, but were made aware of
30:02
Speaker 3: us for the first time as this as this company
30:04
Speaker 3: that you know, didn't have any science and yet it
30:07
Speaker 3: was the complete opposite.
30:09
Speaker 2: Well, how did like with that kind of pressure and
30:11
Speaker 2: that kind of stress and that kind of like there's
30:14
Speaker 2: nothing worse than being wrongly accused. How do you deal
30:17
Speaker 2: with that? Did you take up running or karate or
30:20
Speaker 2: scream into the void?
30:21
Speaker 3: Or yeah, well I'm lucky I have a brain drink
30:23
Speaker 3: company that supports my mental clarity and mood. But yeah,
30:28
Speaker 3: certainly like really supporting family, really supporting investors, and really
30:33
Speaker 3: supporting customers, and that those three things kept us going.
30:38
Speaker 3: And yeah, I probably went for a few extra runs
30:41
Speaker 3: and did some breath work in the shower and you know,
30:43
Speaker 3: maybe to cry on the shower that night. But yeah,
30:46
Speaker 3: we knew that the science was too strong and the
30:48
Speaker 3: ip that was coming through and this molecule that we've
30:51
Speaker 3: discovered in black current, which is our most exciting discovery yet,
30:55
Speaker 3: which no one really knows about, is the thing that
30:59
Speaker 3: kind of kept us going through that that period of time.
31:02
Speaker 3: And so since since that storm in a teacup, it's
31:07
Speaker 3: a bit more than that. Yeah, but like for us,
31:10
Speaker 3: it's just kind of.
31:11
Speaker 2: Rooster to feather dust. You were just amazing and then.
31:15
Speaker 3: You're then suddenly yeah, I know we and so we're like, okay,
31:19
Speaker 3: what do we need to do to fix this? And
31:21
Speaker 3: so from a we cleared our packaging problem that MPI
31:25
Speaker 3: had with us, you know, as fast as we could.
31:29
Speaker 3: They then dropped the the kind of the ruling that
31:32
Speaker 3: we had to have the notificational website, so that went down.
31:36
Speaker 3: We published three studies since then on our finished formula
31:43
Speaker 3: or on our molecule and black current. We filed our
31:49
Speaker 3: our health claim through the schedule.
31:52
Speaker 2: That ent through the proper channels, through the.
31:54
Speaker 3: Proper channel, and it's our first health claim and we
31:56
Speaker 3: plan to do more in time. But you know, at
31:59
Speaker 3: this point and time, you know, the economy is tanking.
32:02
Speaker 3: Our revenue and cash reserves are tanking, so we don't
32:05
Speaker 3: have the budgets that these internationally owned you know, Big Soda,
32:10
Speaker 3: Big Energy. During companies have to you know, blast the
32:13
Speaker 3: entire nation with the message. We can barely afford to
32:16
Speaker 3: do a campaign in Auckland alone, let alone nationally. So
32:21
Speaker 3: it's been a rocky road to recovery. And then on
32:24
Speaker 3: top of that, we've faced the doubling of the global
32:28
Speaker 3: black current commodity price. And we think partly because of
32:32
Speaker 3: COVID and you know, immune boosting foods, but partly because
32:35
Speaker 3: of the research that we were publishing on black Current
32:37
Speaker 3: increased the demand. We had a product recall two months
32:42
Speaker 3: ago of the fault of our manufacturer, the same manufacturer
32:45
Speaker 3: that does Carma, Coola and a whole range of New
32:47
Speaker 3: Zealand owned beverages and and so we had product recalled
32:52
Speaker 3: off the shelves. So it's been like probably our toughest
32:55
Speaker 3: year to date, to be honest, Just when you.
32:57
Speaker 2: Thought you were getting out of the the tough period,
33:01
Speaker 2: it gets tougher.
33:02
Speaker 3: It gets tougher, you know. But we're not dead yet,
33:05
Speaker 3: and we're never going to give up. And I think
33:07
Speaker 3: the thing why not, Well, because when.
33:09
Speaker 2: You walk away and start a new product that doesn't
33:11
Speaker 2: have the baggage and doesn't have the.
33:13
Speaker 3: Well internationally, we're still you know, desired, So we had
33:21
Speaker 3: an influencer from South Korea come in and suddenly our
33:24
Speaker 3: capsules have got four hundred plus reviews online and South
33:28
Speaker 3: Korea and we sell a large amount of our capsules
33:31
Speaker 3: in that market.
33:32
Speaker 2: Do you think you have to be a bit nuts
33:35
Speaker 2: to be a successful entrepreneur exporter? I mean you have
33:40
Speaker 2: to believe, don't you.
33:42
Speaker 3: You have to have blind optimism for sure.
33:44
Speaker 2: And that was Angus Brown from a Reaper talk about
33:47
Speaker 2: dealing with adversity. I feel like you said nothing but trouble,
33:51
Speaker 2: but he still manages to be optimistic. If you want
33:53
Speaker 2: to hear more stories about what it's really like to
33:56
Speaker 2: be a boss, make sure you check out our full
33:58
Speaker 2: Bosses Unfiltered Serah is on iHeartRadio or wherever you get
34:02
Speaker 2: your podcasts. Among others, there are conversations with Rod Duke
34:06
Speaker 2: from Brisco's, Wendy Pie from Sunshine Books, and Roger Gray
34:09
Speaker 2: from Ports of Auckland See soon