For our third episode, President & CCO Ethan Whitehill chats with Tim Webster Founder, CEO & Chairman of Heirloom Brands & Farmer Direct Foods. Tim shares his journey of developing successful brands and selecting the perfect investment for growth. We also get his top picks for consumer trends in 2023.
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Episode Transcript
Ethan Whitehill: Hi, I’m Ethan Whitehill, president, and Chief Creative Officer at Crux. This is “To The Point,” a brand new podcast by Crux the un-agency. Through this podcast, in our work, we strive to fuel business growth by elevating brands and amplifying missions. My guest today is Tim Webster. He is the founder and CEO and Chairman of Heirloom Brands and Farmer Direct Foods, a fast-growing, wholesome food brand based in Kansas.
Tim also serves as managing director for Bomar Holdings and Growth Consulting and Investments LLC. Bomar Holdings is a private investment partnership seeking control investments in high-potential companies and growth consulting that assists clients with strategic planning, organizational development, financial and operating performance capital raising, and has a unique approach to improving return on capital. Tim will be sharing insights on growing successful brands, selecting the perfect investment, and emerging consumer trends for 2023. Tim, welcome “To The Point”.
Tim Webster: Thank you. I’m excited to be here this morning.
Ethan Whitehill: It’s great to have you. You have had an illustrious career and you’ve had an interesting beginning. We were just talking earlier about how you got into maybe this entrepreneurial spirit, and I’d love you to share that story.
Tim Webster: Sure. I grew up in a family of entrepreneurs, two of my grandparents started businesses. Both of my parents started businesses, and I knew I didn’t necessarily want to work in the family business, so I always admired my dad’s nose for opportunity. He would travel around the world and come back with products and become the exclusive US distributor that included French Quill toothpicks. We were the exclusive US distributor of pheno monza racing boats, and Italian cigarette boats, which was cool.
The one I was giggling about this morning was he was on the Queen Mary going across to London, and they had padded toilet seats on that boat, and he decided that we should be selling those. One summer in high school, my job was to drive around with cushioned toilet seats. Cushion soft and try to sell those to restaurants, hotels, consumers. And that is the very humble beginnings of my exposure to consumer products and entrepreneurship. Growing up around entrepreneurs and seeing the thrill of building things was really what shaped me.
So, after a few years of working in professional services, I got the opportunity to be a part of the founding management team at American Italian Pasta Company, which grew into the largest pasta producer in the U.S. So, working with a mentor who had been the president of Kellogg Foods, got the chance to learn the business as a very young general manager, kind of souped to nuts.
Although my original origins were in professional services. I fancy myself as a reformed financial person and a marketer at heart, which is really where it all began.
Ethan Whitehill: Thinking about that experience, what is it about the CPG world that really got you excited?
Tim Webster: We have a common colleague who works in the digital space, and that’s a different world. I like working with physical products. I like making things, I like building things and I like the opportunity to see what I’m selling in stores, in restaurants. I’m an atom and not a bit person. For me, it’s like a perpetual Rubik’s cube that you’re working on, and I never get bored with that.
Ethan Whitehill: Your latest puzzle is heirloom brands, and you are launching, or you have recently launched Farmer Direct Foods. Let’s talk about that a little bit.
Tim Webster: We formed Heirloom Brands in March of 2022 with a group of my partners in Bomar Holdings, which is an investment partnership we’ll probably get to in a minute. But we also attracted several folks that had experience working in sustainable agriculture, and that’s really the focus of what we’re doing with heirloom brands and Farmer Direct foods. Heirloom was formed as a capital funding mechanism to do acquisitions and build brands. Our first action within Heirloom brands was to acquire Farmer Direct Foods.
Farmer Direct is a cool business. I encourage everyone to look at our website and follow us on the various social platforms. It’s a very noble endeavor. Farmer Direct was founded by a group of farmers 30 years ago to promote and build demand for white wheat grown in central and western Kansas.
They believed that white wheat was going to be a revolutionary force in the market, allowing you to have whole grain nutritional benefits with the great taste of more traditionally refined products. Then there are also aspects of what we’re doing that relate to water conservation. All those things we really feel good about as investors because we’re bringing something of unique value to the consumer.
We’re bringing more economic value to the farmers and we’re taking care of the earth. And the folks that I’m partners with have all had a big success. And we really like the idea of doing good while doing well. We don’t think the two things have to be mutually exclusive.
Ethan Whitehill: What you’re describing sounds a little bit like conscious capitalism to me. In terms of the triple bottom line in doing the right things and that was a conversation before the pandemic. It seems like it’s even more relevant post-pandemic. Maybe talk about that a little bit. Like how has the world changed and why is it ready for, this kind of a brand?
Tim Webster: I’m going to circle back a little bit to the founding of Bomar. Bomar’s a Kansas City-based investment partnership of 10 business owners of varying backgrounds in industries and that group coalesced around the idea of putting our talents together and investing our capital in control investments because we didn’t love buying the Dow at 36,000, which seems like a smart call today, back in 2018.
So, we’re active investors and experienced capital-unlocking opportunities. And we sold a company that I was involved in in 2018 and I dedicated myself to this effort of finding businesses for this group to. And we quickly found that sustainability was a sector that we really liked.
We owned two brands in the insulated drinkware competing with Yeti and Hydro Flask and Swell called Eco Vessels. Eco Vessels acquired a brand called Econ Conserve, and we really loved that business. We found that we were doing the right thing and being able to do it with highly engineered better-quality products was very fruitful.
We then began to think, how else can our sustainability thesis be applied? And I found myself going all the way back to the beginning of my career in grain-based foods, and we’ve looked at several acquisitions. But what we believe is you get the security and safety of value investing when you’re talking about agriculture and feeding people.
Those are not industries that are going away but doing them in a way that is sustainable and friendly and being good stewards of the future for our kids and grandkids can align with good investments. We found ourselves very quickly aligned and excited. We attracted some other folks to the team, Hayley Nelson Eckert, whose grandfather Joe Hale, ran ADM Milling and K-State, so big deep roots in Kansas, wheat farming and milling.
John Stout at Plaza Belmont, who’s made a career investing in these type of food businesses was attracted to this thesis. So, we expanded our group a little bit to bring people that really bring expertise as well as capital. And we’re just really excited about where we’re headed.
Ethan Whitehill: Why is the time right for consumers with this brand?
Tim Webster: I observed my children who are in their twenties and thirties being very attuned, not just to what they’re putting in their body, but how products are created and where they come from, so conscious capitalism. I also think there’s conscious consumerism that is a growing trend and my 2 cents as kind of a grumpy old guy is we all need to wake up a little bit because we’re doing some destructive things.
But as a marketer, I think there’s emerging consumer awareness and conscientiousness about buying products, supporting brands that stand for something, that are doing the right thing, doing things the right way. I think the time’s right here, because people are paying attention to what they’re putting in their body, where it came from, how it was grown.
One of the attributes I think I skipped over at Farmer Direct is we have traceability back to the seed, variety to the farm. It was grown on the growing conditions, and I think over time, that’s going to be something in the original origin of traceability, it was more around proteins and things that could really make you sick.
But I think people really love the comfort and Vital Farms is a brand that I really admire. They can tell you, the chicken coop that your egg came out of. And I think consumers are skeptical of legitimate experiences and they’re hungry for that kind of deep connectivity and trust that brands like ours can convey.
Ethan Whitehill: Thinking about the P&G’s of the world, they have machines to launch brands, small businesses, startups, they don’t have that same machine necessarily. So, what advice do you have for anybody who’s launching a brand?
Tim Webster: Well, I’d love for them to send me their advice. First our team at Heirloom and Farmer Direct are an incredible collection of like-minded enthusiasts who share the passion for what we’re doing, and I think that becomes a sort of magnetic field that is critical.
Part of it is as you start to interface with customers and growers and consumers and the like. So, a big part of that relates to that, but effectively, Farmer Direct Foods has historically been a supplier on an OEM basis to the best flower brand in the business. King Arthur Baking is one of the ways that our brand is getting some awareness now is that King Arthur has announced that their brand will be 100% Regeneratively grown by 2030 and that we’re one of, at this time, I think it’s two of their vendors out of many that they’re highlighting as being on the front edge of regenerative agriculture.
So, in this case, Benefiting from already having a customer that’s making a lot of impact in the market and they’re including us in those [00:10:00] communications. I think probably most important of all is to have a very tightly defined target market and then to have a compelling offering. And one of the dilemmas that I see in every brand I’ve worked on is you start to feel very repetitive, very quickly when you’re repeating the same message repeatedly.
But that drumbeat that you’re playing over and repeatedly is resonating out into a very crowded universe of signals and messages and channels. And so, you must stick to that. And your firm’s done an incredible job of helping us refine that message so that it is clear and compel. And our group is really excited about carrying that out there, and the response we’re getting is positive.
Ethan Whitehill: What are the things that you’re seeing on the horizon that will influence maybe not just your industry, but also just consumers in general that we need to pay attention to?
Tim Webster: I think emerging trends are this level of awareness and desire to understand more about the products, deeper engagement with brands perhaps than just grandma used this, mom used this. I think innovation is a huge part. You are not bringing something interesting and new, that’s a gate. One of the big retailers that we got some positive signaling from this week said the reason we’re serious about bringing you guys in and bringing all four of your products our initial lineup is four of the five into their stores in the short term related to the fact that it was fresh and new and different, and it supports their ESG goals.
ESG is probably one of the things that may or may not yet fully be a consumer trend, but it’s on the minds of the businesses that we’re interfacing with both retailers and baking food service companies. So, helping those companies achieve their ESG goals in terms of environmental social governance, that’s a trend that’s driving what’s being purchased on a B2B basis, and then that’s what consumers are going to get exposed to.
At the same time, consumers are becoming increasingly aware of that sustainability, consumer awareness, 85%. Can they be specific about what that means in ag? Not really. Do they know what regenerative means? Probably only a quarter of them today, but I think that’ll be a very different number in 2, 3, 4, 5 years.
Ethan Whitehill: Thinking about inflation, what’s on your radar? How do you think that’s going to demand and, and what consumers are looking for?
Tim Webster: It’s a great question and above my pay grade on terms of what inflation means. I think there’s going to be some demand destruction, there’s going to be a rotation into cheaper products. Those are the simple answers, but I also, I remember listening to a case study about Ben & Jerry’s and Häagen-Dazs and those types of products. They were doing quite well in the last economic down-turn because people still wanted indulgences. They still wanted special occasions, and if they could get one for four or five bucks as opposed to 40, 50, or 500 bucks, that those brands held up well.
Ethan Whitehill: They essentially trade the big luxuries for the little luxuries.
Tim Webster: That’s what I’m happy to be a little luxury.
Ethan Whitehill: I’m just going to shift gears here. Thinking about the investment side of what you do, you’ve invested in several successful brands throughout the years, and for those looking to get started in investing or for those startups and entrepreneurs who may be looking for investors, what are some of the key metrics that you look for when considering an investment?
Tim Webster: Going back to something I said earlier. A tightly defined target market with a compelling irresistible offering that gives you reason to believe that you can take and gain market share over time. Most simplistically, a high return on invested capital, means the business generates cash more than it requires reinvestment.
That typically relates to either compelling brand or intellectual property or proprietary trade secrets, those kinds of things. That allow the product or the service or the offering to stand out and have a sustaining point of difference. We like our original thesis I got to be thoughtful about the word choice because we have some internal stuff that we giggle about
No people that we find irritating. That’s criteria number one. It must be fun. It must meet a meaningful mission and, and purpose. It has to be relatively easy to understand and, we have some partners that are super sophisticated running some of the most complex and front edge, leading-edge businesses in Kansas City. But our group as a collective like things that are more basic, more easily understood. Good people, good systems, solid internal accounting controls, and scalability, those are the things on our, our criteria list.
My partners tease me. I fall in love very quickly with business opportunities because I start to envision what I think we could do as a team with the business So, we have a collective in our group that I’m sort of the gas and Dr. Yes. And we have the brake pedal and Dr. No and different …
Ethan Whitehill: That’s your inherited entrepreneurial entity.
Tim Webster: Right, put me in coach, you know, put me in. I love to work on businesses, and I love to try to identify opportunities. I fancy myself more as an operator than an investor. But have a group of partners that really complement that and we’re looking for things. We’re not a traditional investment fund. We don’t have a life; we’re not trying to flip it in three to five years. We’re looking for long-term sustainable businesses that generate free cash flow and we have the next generation in our partnership including a bunch of people working in e-commerce and consumer products and different professional services. If we find something that we love and we see long-term opportunity, we’re in no rush to do anything other than try to support it and let it reach its natural full potential.
Ethan Whitehill: I imagine you’re probably fixing a lot of problems too when you get into these companies. What are some of the common obstacles or pitfalls that that young companies could, and should avoid?
Tim Webster: Yeah, it’s really a great question. There’s just so many distractions in consumer products at. The world has shifted to be less advantageous for entrepreneurial startups. In the old days, the retailers knew that part of their job was to bring new products to market, and they veered away from that. You have to compete with Procter and Gamble head-to-head. There’s no longer a specialty distributor section in every section of the grocery store where there are little seedlings being grown up because consumers want to see new things. That’s really changed, and Amazon and other forces have created more level playing fields, but you also got to compete. If you don’t, you’re not going to be there. I think in food, there are some amazing RXBars, Sir Kensington’s. There are some amazing multi hundred-million-dollar success stories, but there are a thousand fatalities out there that at least I’d say be careful and try to make sure you surround yourself with resources that can help so that you can stay focused on the things that you do that are truly unique
Ethan Whitehill: Focus. Good word. You’re doing a lot of things. We’ve discussed at least four or five companies that you’re involved with. As a business leader, you’re wearing multiple hats. What’s your secret to managing everything you’re doing? All those spinning plates.
Tim Webster: The number one thing is the people that you associate yourself with and our team at Heirloom, they would be self-sufficient if I just disappeared tomorrow. They’re highly capable people,
Ethan Whitehill: Let’s hope that doesn’t happen.
Tim Webster: Amen but my point is that to be involved in multiple things, they can’t be such that my involvement on a day-to-day basis is required for the basics to happen.
I have a great group of people that I work around. I love to work, I work a lot, but I don’t want to imply that I have any magical system. It’s more instinctive going where I sense the opportunities are, overlaid against a very disciplined calendar of weekly management meetings that are subject matter, and functionally focused. Then empowering Hayley and Ben and Hayley and Jacob and Julie and Keaton and the team there to get done what they need to get done and they know they can call me twenty-four seven if they think they have a problem, or they’ve identified a new opportunity. And then just having the desire to move in and out of multiple environments, which I find very stimulating. But must be able to pack up my lunchbox and leave it there after the board meeting and go back to my focus, which is Heirloom and Farmer Direct.
I love the variety, frankly. It’s easy to get in ruts. The origins of Bomar Holdings are investment partnership is the Kansas City chapter of the Young President’s organization. That organization was built because it’s lonely at the top, and it’s great to be able to get together with other people that are running businesses and share your challenges, your fears, the things you don’t want to tell your team that you’re worried about, but you want to make sure you understand what other leaders are doing.
I have built over the last 40 years a network here that I’m incredibly grateful for, and that network funded Bomar and encouraged me to seek to build another couple of businesses or two during my career. That network is incredibly important so that when problems arise, you don’t feel alone, and have the ability to handle multiple things. I think we’re fast in problem-solving and fast in getting our team in front of the right people because we’ve got this incredible network around us.
Ethan Whitehill: Because I know you, you’re adaptive and you adjust very quickly. I’m going to throw a random question. This is something we do as part of the podcast, 20 questions that I have, I have a 20-sided dice. I’m going to roll this and whatever question comes up is what we’re going to have your answer.
So, what is the best concert you’ve ever been to?
Tim Webster: That’s an easy one, Fleetwood Mac was playing at the unit dome in Cedar Falls, Iowa. We were at the front door ga and ended up on the floor with our hands on the stage mesmerized by Stevie Nicks, Lindsey Buckingham, and the gang there.
So, I’ve seen the Stones, many times, Springsteen a couple of times. Seen some great concerts. I’m an old-school rock and roller, but that Fleetwood Mac concert was unlike anything else.
Ethan Whitehill: Awesome. Well, Tim, thank you.
Tim Webster: Thank you. This was fun!
For sharing all of this with us today. If our listeners want to learn more about Heirloom brands, Farmer Direct Foods, Bomar Holdings or Growth Consulting, where do they go?
I’d encourage them to follow Heirloom Brands and Farmer Direct Foods on LinkedIn, Facebook, Instagram, and social media platforms and Bomar and Growth Consulting are the back-office investment partnerships. So not that interesting, but interesting people involved. But I’d encourage ’em to follow us at Farmer Direct Foods and if you like what you see, spread the word.
Ethan Whitehill: Awesome. Thank you so much.
Tim Webster: Thank you.
Ethan Whitehill: Thanks for getting to the point with us. For more information about Crux, you can find us @cruxkc.com and on social @FindYourCrux.
Hosted by Ethan Whitehill
Ethan has made a career out of building agencies and growing brands. He founded the firm Two West in 1997, running it as an independent shop for nearly 20 years before combining his firm with an AdAge Top 100 Agency, where he served as CMO. As an agency founder and entrepreneur, Ethan brings a business owner’s mindset to marketing, working on a host of diverse brands, from packaged goods and professional services to hospitality and healthcare.
