CPG Playbook   //   July 9, 2024

How CPG startup Sauz broke into the tomato sauce aisle

Had it not been for mediocre performance on an accounting exam, Troy Bonde might not have become the co-founder of a buzzy CPG startup that’s hitting hundreds of new grocery aisles this summer.

It was the spring of 2021 and Bonde, then a student at the University of Southern California, had received a C+ on an exam. Per class policy, he had to attend office hours. He explained to his professor that he and another student, Winston Alfieri, were attempting to start a jarred sauce company and were running into issues finding manufacturers and suppliers. They’d been turned down by nearly 200 co-manufacturers or commercial kitchens. But Bonde’s confession turned into a stroke of luck — his professor happened to know a former Whole Foods executive, as their daughters had been roommates. This intro turned into a meeting where Bonde got the contact for a co-manufacturer that would take on Sauz. 

“The next week, we had a tour of the facility,” Bonde said. “Then we were kind of first in line to be cooked. So, we got really lucky.”

Fast forward to the summer of 2024 and Sauz, which is headquartered in Los Angeles, can be found at about 500 stores nationwide. It first hit Erewhon shelves in late 2023, then gained distribution in grocers like Central Market in January and Whole Foods in May. It’s now sold in at least half a dozen popular national grocery chains as well as local natural and fine foods markets. But this summer has seen a big growth spurt for Sauz’s distribution, with additions like Mother’s Market, Gelson’s and H.E.B. But its growth strategy hinges on getting in more doors, with hopes to ink deals for around 2,500 more stores by the end of the calendar year.

At a time when many CPG brands are looking to find their way onto store shelves, Sauz’s growth trajectory is an example of what it looks like to scale from the ground up. Part of the reason the company has been able to stand out is the flavor profile of the product itself. Rather than a basic marinara sauce, it comes in three varieties: rosemary, hot honey and lemon. Then there’s the packaging: labels are bright nearly-neon colors, and the fonts are lively scrawls and stamps compared to the Old World cursive or serif fonts on legacy brands. The fine print reads: “not-your-grandma’s pasta sauce.”

But, critically, the Gen Z-founded brand has also voraciously marketed across channels like TikTok, Instagram and retail media networks, helping it build awareness with consumers who may be looking for something different. Some of its TikToks rack up hundreds of thousands of views, including one that shows Bonde wearing a shirt that says “Taking Down Big Tomato” while talking to a Rao’s representative at a trade show. Other merch taglines like “Hot Girls Eat Pasta” have helped instill a cheeky brand identity that Bonde and Alfieri say was a key part of the brand’s founding.

“In the sauce aisle, there are a lot of great brands, but we weren’t, as Gen Z consumers, attracted to the older traditional brands,” Bonde said. “You have to do something very different to kind of catch the consumer’s eyes.” 

The journey to shelves

Before any TikToks were posted or retail media networks tapped, Sauz had to make its product a reality. Bonde and Alfieri started dreaming up the company during the Covid-19 pandemic. But it was harder to break in than they thought. They reached out to roughly 200 manufacturers and commercial kitchens before Bonde’s serendipitous office hours meeting. At this time, many manufacturers were still catching up on the supply chain roller coaster of the early days of the Covid-19 pandemic, meaning it wasn’t necessarily worth the risk to take on a newcomer. 

“Finding a co-manufacturer who was willing to take the risk and give us line time was the most difficult part,” he said. “A lot of them look for volume, and to tell them we’re going to be in 10 stores in Southern California — it was tough.”

Getting tomatoes was also another hurdle, partly because 2022 was a rough year for tomato crops. Most farms wanted to staff their existing contacts before taking on someone new. But Alfieri said that Sauz has been able to develop a relationship with one main supplier since 2022 that’s helped the brand scale. The company has been able to work out contracts for a guaranteed supply of tomatoes based on forecasts into 2025.

“Early on, it’s like they don’t want a one-off order — like, here’s your marinara for the year and then I won’t talk to you until next year or never again,” Alfieri said. “Now it’s the type of thing where they see recurring cadence, and it makes sense. And they know volumes are getting higher.”

It took a few months after landing the co-manufacturer to get the first prototypes. At first, Bonde and Alfieri attempted to launch Sauz via direct-to-consumer channels. But this turned out to be a difficult challenge — not only because of the industry-wide concerns about acquisition but the logistics of shipping. “Probably 60 of 100 orders arrived with broken glass in the boxes,” Bonde said.

Getting into Erewhon was a crucial first step that allowed Sauz to pivot to wholesale. Today, about 95% of the brand’s revenue comes from wholesale. “We were so focused on winning at Erewhon,” Bonde said. The high-end grocer has developed a reputation for giving up-and-coming brands a platform that attracts interest from other retailers, and Sauz intended to get onto its shelves as a marketing strategy.

Its Southern California roots helped Sauz pique the interest of Erewhon, as did its non-GMO ingredients. Ultimately, Bonde said, the selling point was the taste and quality of the product itself. “If a buyer doesn’t like product, they’re not going to bring you in,” he said.

Tapping consumer demand

Eleanor Hayden, founder of the marketing firm Hayden Consultancy, has worked with a number of startup CPG brands like Graza and Olipop that have relied on a wholesale growth strategy. Part of the challenge in getting distribution, she said, is making sure the product is differentiated enough from what else is out there. “Everyone has a beautiful story, everyone has intense love for their product,” she said. “But does the product taste good? That’s what’s going to get people to buy it again. And is it different enough from its competitors? That’s what’s going to get the attention from the buyer.”

At Sauz, Alfieri said that the brand quickly jumped on retail media networks. That includes showing up on retailers’ websites in search and display ads, as well as on Instacart. Alfieri also said that Sauz has been experimenting with advertising in-store offers through services like Aisle. “Every retail pitch that we have, they ask us ‘What’s the differentiator?’ And it’s that we can drive consumers with the retail media and social media and that type of stuff versus our competitors.”

He wouldn’t share what kind of ROAS the company sees from its retail media networks but said that the impact is “massive.“ In addition to experimenting with digital couponing tools and distributions like Instacart, one focus is the retailers’ websites, he said.

Once working with a retailer, Hayden said brands are wise to take advantage of retail media networks. “It is the best bang for your buck if you can manage it,” she said. Advertising with retailers via their sponsored search or in-store opportunities provides brands a chance to provide their relevance to shoppers – and also be cost-effective given that there typically isn’t a minimum spend. From there, Hayden said growing brands can use their retail media leanings to fuel other campaigns.

“It really levels the playing field between a small, emerging brand and [a corporation] like Pepsi,” she said. “It’s all a matter of how strategic you can be.” 

Looking ahead to 2024, Sauz aims to be in 3,000 doors by the end of the year. It’s concentrating on ensuring that it can continue to scale without compromising the quality of its locally sourced ingredients. But it’s also planning to continue to experiment with what marketing channels can do for both customer awareness and impressing buyers at large.

Anecdotal evidence points to it working: Alfieri’s dad was shopping at Whole Foods when he saw a young shopper take a jar of Sauz off the counter. He asked her why she picked that one and her response took him by surprise: “I saw it on TikTok.”

“Data is showing that we can drive a much younger consumer that’s not generally shopping [for jarred sauce] to the category and in turn, we can drive more dollars through our partners’ registers,” Bonde said. “A differentiator is being able to achieve this massively engaged following. Even though it’s not a massive following yet, we hope one day it will be.”