Sanaia: The Applesauce Queen gets her American Dream
There are many of us who believe they don’t have enough time to pursue their ideas and create their own American Dream. These people usually cite work, family, school, bills, and/or a host of other obligations as reasons for never investing in themselves. If you are one of those people, I’d like you to meet Keisha Jeremie.
As the Global Head of PR at News Corp. (at the time of taping), Jeremie invested a great deal of free time and sleepless weekends into Sanaía – a new approach to applesauce designed to give adults a more suitable option outside of brands that target children or the elderly. Jeremie created this organic, vegan-friendly product to attack the applesauce market the same way Chobani took on yogurt; find an underrepresented consumer segment in an existing market and tailor your entire product & marketing campaign around that group.
With poise and confidence, Jeremie initially attracts the Sharks with her plan to attack hot food trends, a tasty and well-branded product, and healthy top-line margins. Being the only player in a potentially large niche market is like blood in the water to these Sharks. Furthermore, having a tasty product that can accommodate various diets helps make Sanaía attractive to many adult consumers.
However, Jeremie runs into trouble when discussing her distribution strategy and future sales. The Sharks are turned off by her idea to sell glass jars of applesauce on Amazon Prime, citing increased shipping costs that could be avoided by her lighter weight grab-n-go style product. Furthermore, she states that she has $35 million in potential sales from many popular companies such as Starbucks, Whole Foods, and Kroger. However, in realty, she only has one Whole Foods store in Harlem, NY that’s committed to testing the grab-n-go product.
Her inability to accurately define real sales interest in her product combined with risk associated with her distribution strategy and a lack of predictable market size causes Herjavec, Greiner, and O'Leary to pass on Sanaía. Also, O’Leary, Corcoran, and Cuban all have questions about her commitment given that she has a full-time job on top of running Sanaía. With all of that in mind, Barbara counters Jeremie’s initial $150k for 15% equity offer with an offer of $150k for a 75% equity stake in the company. Jeremie quickly denies, so Barbara quickly passes.
Jeremie initially cited valid reasons and remained poised when questioned about her decision to not go full-time with Sanaía. However, she becomes emotional when O’Leary and Cuban continue to question and debate over her commitment to the company. When asked about her tears, she whole-heartedly explains how she financially supports multiple family members and that Sanaía is “the first thing she’s done for herself.” That, and the fact that she has invested half of the $500k she set aside to get Sanaía off the ground was enough proof for Cuban to offer $150k for a 25% equity stake. Jeremie immediately accepts, leaving us with a satisfying storybook ending.
Analysis & Performance Score Total: 79/100
To gain the Sharks’ attention in the Tank, you need a focused, well-organized, and engaging presentation to draw them in. Jeremie did just that; she staged a problem, open market opportunity, and solution that gave the Sharks and viewers a vivid image of what the future could look like with Sanaía. Her poise and natural energy captured the Sharks’ attention and respect. However, I don’t believe anyone was truly bought the multi-billion dollar/next Chobani picture that Jeremie drew of Sanaía. And worse, she didn’t include the arguably better variation of her product in the grab-n-go cup until later. Nonetheless, her initial presentation was nothing short of excellent.
The product itself had everything the Sharks were looking for; a tangible market, proven sales, and virtually no direct competitors. From a food perspective, Sanaía is one-of-a-kind (apple wedges inside applesauce), accommodates multiple dietary restrictions, and comes in various tasty flavors. She touts impressive gross margins on both the glass jars and grab-n-go cups of ~75% and ~50% respectively. My only criticism – the grab-n-go cups were not the focal point (see Strategy).
Jeremie’s direct-to-consumer strategy is decent at best. Her initial plan is to sell 4-packs of glass jars on Amazon Prime, which Cuban and O’Leary immediately hate. The shipping costs from shipping heavy glass jars would cut into her margins tremendously. Also, even after hearing from potential buyers that they like grab-n-go cups over the glass jars, her initial strategy of glass jars on Amazon Prime remained unchanged. Key point – listen to your customer.
Also, the grab-n-go cups may be a better option as far as visibility is concerned. Having these cups at every Starbucks register or at eye-level in every refrigerator unit in Whole Foods would grab millions of eyes per day. I believe the dietary accommodations combined with the $2/cup price tag would be enough for many adults to try Sanaía at least once. If consumers like the $2 cup, they may be more inclined to buy a 4-pack later. That versus buying a 4-pack of something no one has ever tasted on Amazon is a much better sell to an investor.
Finally, she confused interest from big buyers for potential sales/orders for her product, which turned off some Sharks. Also, she mentioned that those big buyers referred her to other buyers, which she took as “wow I’m getting Whole Foods AND their friends!”. Personally, I viewed it as “Your product has promise, but try it with these buyers first before Whole Foods gets involved.” If you’re going to mention that you have $35 million in potential sales, it is imperative that you have the orders to back it up. By throwing that number out, she dug herself a deep hole that she almost didn’t recover from.