Ep. 67 – The SkinnyPop Trap of Sales-Driven Growth

APRIL 1, 2022

SkinnyPop’s ultra-fast exponential growth ride is by now quite famous. I even added to its fame by highlighting it in my book as the single fastest- velocity-driven ride to $100M ever witness in the premium food space.  A crack CPG sales team led the charge up the ramp. Velocities grew organically as the accounts turned on and on. 

But one of the problems that Amplify Snacks inherited was that the growth really decelerated fast during the brief IPO phase right above $100M in trailing sales. In fact, it was a material reason they ended up acquiring additional snack brands as a public company.

Why the deceleration? Well, it wasn’t because they had reached too many households. But they had reached almost 60% ACV and over 25,000 stores. The brand’s velocities decelerated in 2016, which yielded only $8M in revenue growth. 

How is that so many brands can Ride the Ramp to $100M and then fizzle out? If the brand had strong, product experience-led fundamentals, what went wrong? Was it tactical or something else?

The two big suspects in these nine-figure stall-out situations are: 1) lack of addressable market for the attribute-outcome signal in the base category and 2) lack of funding toward out-of-store awareness building, reminding, etc. 

A lot of folks riding the ramp pay little attention to whether or not their velocity growth is happening via growing buyer counts or via same-hh consumption increase of the original cohorts of buyers. 

Oopsie. Yes, this is measurable without a $200K 84.51 contract from Kroger. WTF is with their fees at 84.51? No startup rates? Really? Come on people…you don’t need to drive a Porsche in Cinncinati anyways…

Anyways, my point is that there is no excuse for suddenly running out of households if you’re a Skate Ramp brand that just topped $100MM…you should have seen this problem coming your way months in advance. Back then, you could have make some bold decisions.

In Skinnypop’s case, I doubt that the serviceable market for low-calorie RTE popcorn, one of America’s oldest snack foods, is the reason. Really? 

Instead, I believe it was that the early Amplify leadership during the IPO simply didn’t believe in out-of-store tactics, had little experience making them work and focused instead of turning Amplify into a holding company rather than focusing attention on midmarket growth fundamentals.

Since, most early-stage growth brand velocities grow primarily on the basis of word-of-mouth from rabid fans, it can be amazingly easy to take this for granted as you focus more and more on adding distribution. 

WIth Skinnypop it didn’t seem to matter how much ACV they added each year from 2010-2015. In fact, the velocities kept growing even when ACV doubled from 2013-2014. That’s a killer product line, folks. 

Ultimately, Skinnypop as a brand didn’t get built as much out of the store as in the store. Yes, there was amazing word-of-mouth based on the product experience alone. But, this is often NOT enough to sustain growth once you hit the nine-figures. 

You need to phase-in awareness-building and ground game tactics out of the store to reach newer households who may be less motivated, initially, to try. 

The brands that I see who grow continually in the double-digits to $500M or beyond, especially in oversupplied categories like food, in most cases were building ground-level enthusiasm with consumers from the very beginning.

They had large internal marketing execution teams, even virtual agencies cranking out nonstop content, like my friends at Dr. Squatch.  

These true 4P brands didn’t scale the brand, see velocities decline and then decide to focus on the consumer.

Facepalm. Groan.

Overlooking consumer interaction is a unique problem for experienced, sales-only teams with an admittedly perfectly timed product design. But, it’s just a big version of what might happen to most founders when they hit $20M or so and see the same problem in their topline numbers.