Tom Brady Partners with Vegan Meal-Kit Delivery Service Purple Carrot

November 30, 2017

Andrew Levitt, CEO and Founder of plant-based meal-kit company Purple Carrot, discusses the goal of the company, which is to make vegan food for non-vegans. Levitt also weighs in on the struggling Blue Apron IPO and what that means for the future of his company.

Levitt is not a vegan himself but engages in a heavily plant-based vegan diet. He speaks about the environmental and health impacts of the diet, from eliminating depression to reducing the side effects of Crohn's Disease and Cancer.

Levitt talks about Tom Brady's lifestyle brand "TB12" and its partnership with Purple Carrot. The meal-kit company offers a plant-based option that is high in protein for those that lead an active lifestyle.

Levitt also talks about what Amazon's move into the grocery business means for his company. He also weighs in on the unfortunate timing of the Blue Apron IPO and how its struggles have cast a shadow on the meal-kit market as a whole.

FULL TRANSCRIPT

Tim: Consumers are arguably more aware today than ever before, about the positive impact of a plant-based diet having, uh, both on the, uh, health of human beings, and the environment because of the popularity of documentaries like What the Health and Cowspiracy. Our next guest has created a meal-kit with the hope of introducing more individuals to the benefits of a vegan and vegetarian diet. Joining us now is Andy Levitt. He's the founder and CEO of Purple Carrot. Andy, uh, thanks for joining us. Uh, it's good to see you again.

Andy: Yeah. Good morning?

Tim: Morning. So, you recently became more aware of the benefits of veganism. But, you know, last time you and I spoke which was just about a couple of years ago, you weren't actually a vegan. A- are you a vegan now or are you just m- m- more about having more of a plant-based diet?

Andy: Sorry. One of your producers was talking, so I'm not sure. Can you repeat that question for me?

Tim: Oh, yeah, certainly. Uh, I just wanted to say, a couple of years ago when we, when we last spoke, uh, you, uh, you weren't a vegan as when we guys relaunched the company.

Andy: No.

Tim: You weren't a vegan at that point. You were just increasing the amount of plant-based meals you were having in your diet. Are you a vegan now, or are you still eating meat in moderation?

Andy: So, I'm not sure if pepperoni pizza is considered vegan or not. But, uh, [LAUGHTER] yeah, I'll leave that to you to decide. Um. So, no, I'm still what I would call a balancetarion. It's how we describe most of our customers. And I think one of the greatest data points I see in our business is that 82% of our customers are, uh, omnivorous which means they're, that we're not just catering to a vegan population. I'm not vegan myself, I eat a lot of plant-based foods, uh, but at times I still will indulge in, uh, non-vegan meals. And we think that's really where the market is going, we think that's where the trends are. Uh, vegan diets are, I think are generally hard to follow unless you are an ethical vegan and I have so much respect for those people, who do that largely for animal rights reasons. Our focus has been to give sort of vegan food for non-vegans, and help people appreciate the value of plant-based meals. I'm so proud of the quality of the product that we've put out. Uh, I think our culinary team does an amazing job of making our meals taste so great, without someone feeling like they're missing the flavors and the quality of animal protein, or dairy, or eggs, that they might otherwise be used to having. And, uh, it's really, it's a model that's worked well for us since I launched three years ago.

Tim: Yeah, I, I should actually note that I'm a currently a Purple Carrot subscriber. I- I've gone on [OVERLAPPING] and off. But I, I actually of the meal-kits. And I talked about this a lot. It's not just because you're on Andy, but, uh, this is, this is probably right now my favorite meal-kit. But, it raises [OVERLAPPING] a big question because of competition. I've tried Sun Basket, I've tried, tried Green Chef, I've of course tried Blue Apron. Uh, how do you compete with some of those bigger players? Is there a concern at all that they could see what you're doing with the plant-based, and it's, there's not a huge moat around that idea necessarily. What if they just add sort of a plant-based feature to their current meal-kit?

Andy: Yeah. A lot of great questions in there, and I have a ton of respect for all the meal-kit players that you listed. And it's an honor to be a part of a relatively small set of companies that are part of the national conversation around meal-kits. And it's great that Purple Carrot is right there as well. Our focus has always been that we are a 100% plant-based, and that is our big point of differentiation among the other players in the space. And who all have, I would say, a very good product. But I would al- also argue it's somewhat of a me-too product that lacks differentiation in the way a Purple Carrot meal is a 100% plant-based. That is been core to our DNA. We're a mission driven company helping people understand the value of plant-based for both their own health, and the health of our environment. And it's enabled us to achieve really great metrics. Our numbers have been growing beyond our expectations, and we feel like if any of those companies were to offer a plant-based diet, that's great. It would likely only increase the, you know, the expression of rising tide lifts all ships. Um, but I think it's hard for any of those companies to do so because it's going to be inconsistent with their broad offering, where our message has been, uh, you know, absolutely no animal protein, no dairy, no eggs. Uh, so, I, I don't know that it really fits so well into their broader strategy, and I think they are doing well within their space, and we've got our space covered here.

MALE_1: All right. Well, you've got, um, Tim who's a major influencer in the food [LAUGHTER] in the meal-kit delivery.

Tim: I like where this is going.

MALE_1: New plant. But you've got another, uh, major influencer as well. [LAUGHTER] Tom Brady has launched a Purple Carrot, plant-based meal plan as part of that TB 12 lifestyle brand that he's been [OVERLAPPING] running too. A major athlete partnering with a brand like yours, uh, you know, what took so long for scientists to discover the positive impact uh of this plant-based diet for everyone that really has Tom Brady reeling and ready to partner with Purple Carrot?

Andy: So, I th- you know, I think the science has been there for a while. There are, are countless studies now that speaks to the value of plant-based as really the only diet that's been proven to reverse, or minimize the effect of a lot of the chronic health diseases in our country; things like heart disease, and diabetes, and depression, and high blood pressure. And so, the data is there, but it's, it's really hard for people to make change which is why I think Purple Carrot is such a great offering to let people enjoy three great plant-based dinners every week as a way to start shifting the way their diet exists, and how they start to crave different food. Now, a guy like Tom Brady we think it's fantastic we have a partnership with Tom and his team at TB 12 with our TB 12 performance meals, and, you know, it's a really great representation of the way Tom eats himself, uh, he and Gisele get our meals every single week at home, and they love them. And it's a great opportunity for consumers to see how a guy like Tom Brady eats every week, and allows them to do the same at home.

MALE_1: Okay. So, it sounds like you're actually getting two influencers, uh, in that package deal. You get Tom and then you get Gisele who is obviously known for her background in the fashion and modeling, uh, world as well. So, knowing that they're working with Purple Carrot, that's, that's a major opportunity there. Um, you know, in terms of your go to market strategy, knowing that you've got these influencers, do you envision partnerships with some of the larger retailers or do you want to stay direct to consumer?

Andy: So, we, our focus really is on the direct to consumer model. Our e-commerce offering, it works really well. I think that, you know, the folks like Blue Apron and others have, uh, helped teach the American consumer to come to expect that they can order, uh, meal-kits services as a e-commerce subscription service. Uh, there's certainly a lot of interest from the retailers to put meal-kits on the shelves. Uh, I would argue that retailers are gonna need to invest a fair bit of their energy to teach a consumer who's coming to the grocery store, that they can also pick up a meal-kit on their shelves where are otherwise used to just buying their, uh, their groceries, their produce, their prepared meals, um, and not necessarily expecting to see a meal-kit on those shelves. Uh, if and when that happens, then, uh, I'm confident that our brand would be a desirable option to have on those meal-kit she- on those, uh, grocery shelves. And that will see where those conversations take us in 2018.

Tim: Uh, Andy, I have to ask about Blue Apron, one of your competitors here going public [OVERLAPPING] right here on the New York [OVERLAPPING] Stock Exchange, just a few months ago over the summer. The stock having really nothing short of a disastrous performance, uh, down really close to 70% since that IPO which actually was even on the lower range of the IPO. Uh, what do you think is happening to, to Blue Apron as somebody who's in this industry? And what is, what is the public market not understanding about the company?

Andy: Yeah. That's a depressing slide, and, you know, I've, I feel badly for Matt. I, you know, he, he had so much courage to start a company and went through so many, uh, growing pains, and accomplished so much in a five year period. And I think that there was some things that just really worked against their launch. Uh, you know they were seeking a very high valuation, and that got trimmed as they were getting close to their IPO. Amazon's acquisition of Wholefoods didn't help, and it sort of spooked the market, and I think they've unfortunately missed a couple of their initial earnings, uh, in their first two quarters. And so the street has not been very favorable to that, and I think it's unfortunate that it cast a bit of a long shadow over the meal-kit industry as a whole. Uh, I think what Blue Apron accomplished has been nothing short of sensational to even get public. Uh, their performance over the last six months has not been great. And I would like to think that it's not necessarily indicative of what the whole category can do, or what the opportunities are in the meal-kit space for those companies that it can meet and exceed customer expectations and investor expectations.

Tim: Uh, Gary Vaynerchuk came on the show over the summer and said, uh, everybody should be worried about Amazon, even the Bible should be worried [LAUGHTER] about Amazon. Are you worried about Amazon?

Andy: You know, Amazon is, uh, should make everybody stop in their tracks, and think twice. Uh, we have a ton of respect for what Amazon has built, and created, and established. And they have the ability to spook a lot of markets, and they have incredible market power. So, um, we see them as as an absolute ally. Uh, as they grow the market, they teach more and more people to order groceries and perishable items online. Uh, there's certainly opportunities for us to work with Amazon through their Amazon Fresh offering, and, um, you know, we think that they are a market force to, uh, be respected. Um, I'm not really afraid of them per se, but just,uh, very much admiring what they do, and what they bring to the market.

MALE_1: Okay. And so, you mentioned a few critical things there. But coming back to Tim's earlier question about Blue Apron's performance, do you think as you get into the stages when you're going out to investors, and perhaps you're on the roadshow ramping up for an IPO or even well prior to that, you know, taking on more rounds of investing. Do you think they've become a little bit more skeptical about the overall market? What's, what's your approach to those conversations?

Andy: It's a great question. And quite frankly, if their data helps make our data look even better. And I say that with all due respect to Blue Apron, but, you know, my point about how there's so many me-too products in the category, it creates a very promiscuous user base. And it forces a lot of those me-too brands to give incredibly deep discounts, and early um trials to people just to get a first customer. I just saw for Black Friday, there was up to 80% off, and you know, that discounting strategy is not one that we've done. And in e- in exchange what we've seen is, we have a really loyal customer based are, um, we focus on what's called the LTV to CAC which is lifetime value over customer acquisition cost. And what we've been told our numbers are, uh, the best in the industry. And I think it is because we have a very differentiated shaded mission driven offering that people feel like they can be a part of something larger themselves by being a Purple Carrot customer. And that has, uh, played very well among the investor community who sees the value of our different shade offering. And, you know, I have a tremendous amount of respect for Matt and Blue Apron because they helped pave the way for consumers and investors to understand the opportunity. And now it's incumbent upon me and my team to help differentiate in the way we have, and appeal to an investor audience that is excited about what we're bringing to the table. No pun intended.

MALE_1: Yeah. Just very quickly, uh, we only have a little bit of time left. Um, in terms of the lifetime value to customer acquisition costs that you just mentioned a moment ago, what does a good ratio look like?

Andy: We've always used a good ratio being three to one, and ours is higher than that. And we think that most of the meal-kit companies out there are closer to one to one as I've been told, uh, that, you know, they're just willing to spend whatever they can to get the customer even if it comes at a breakeven or almost a loss. And so we've approached it in a very different way, and we think that it's, uh, helped us achieve the levels of success that we're experiencing today.

Tim: Andy, real quick, I have to go back to Tom Brady because [OVERLAPPING] I, I, I'm from California, I went to college in Maine and quickly learned how polarizing a figure Tom Brady is. You guys a- are based in Boston, so, you know, a, a, a safe zone, uh, for Tom Brady. [LAUGHTER] Was there any concern when you did sign on Tom Brady as a spokesperson? You made a deal with him. Was there any concern that he as a figure would be alienating at all to some of those subscribers?

Andy: You know, it's a fair question. I, we, I never ever had that concern. Uh, I think what we were thinking would be people that would sign up just because it was Tom Brady, and that we would expect even more people on the East Coast to sign up because of, uh, his prominence here in New England. What we found instead is that the majority of people that signed up for the TB 12 performance meals do so because they recognize the health benefits that come with that product line. It certainly reflects well that it has Tom Brady's name attached to it, and that it is exactly the food that Tom is eating every week. Um, it's also an, uh, very equal split consistent with the rest of our Purple Carrot call line where about 70% of our customers come from the East Coast, and 30% come from the West Coast. That model uh applies exactly the same to the TB 12 performance meals. So, he's been really universally, uh, welcomed across the country.

Tim: Well, I look forward to trying that one. We're right now at the, at the base plan, the $72 plan. We're gonna, we're gonna go up to the, uh, to the high protein one though soon. Uh, all right. Andy, thanks so much for joining us. That's Andy Levitt founder and CEO of Purple Carrot.

Andy: Thanks guys.

Tim: Thank you.