Igniting Dairy Innovation — California Milk Advisory Board CEO Bob Carroll

Fred Schonenberg

Hello, everyone, and welcome to the VentureFuel Visionaries podcast. I'm your host, Fred Schonenberg. I am thrilled today to welcome a true trailblazer in dairy innovation, Bob Carroll, who is the newly appointed CEO of the California Milk Advisory Board. For the past seven years, Bob has been the driving force behind the Real California Milk Excelerator, which is one of the most groundbreaking innovation programs in the dairy space. I've had the privilege of collaborating with Bob during this time, exchanging ideas on leadership and marketing, and diving deep into how to supercharge demand for Real California dairy through innovation.

Bob has a dynamic background, brand management, international business development, and he brings this rare blend of strategic insight and creative execution. And his leadership of the accelerator has not only elevated startups, but has reshaped the way we think about many dairy-based products. In this episode, Bob's going to pull back the accelerator's evolution, what's new in this year's program, and some of the macro trends that are transforming dairy.

So whether you're passionate about food innovation or curious about how legacy industries can stay ahead of the curve, you won't want to miss this conversation with Bob. Bob, welcome to the show.

Bob Carroll

Thanks, Fred. Super glad to be here.

Fred Schonenberg

So I am, first, I know we've talked offline about this before, but a huge congratulations on your new role as the CEO of the California Milk Advisory Board.

Bob Carroll

Thank you.

Fred Schonenberg

What would you say is the biggest shift moving from all that you're doing on the business development side internationally and within the U.S. to now stepping into that CEO role?

Bob Carroll

You know, leadership is leadership, Fred, and I've always seen it as people first and providing those right people, as Jim Collins would say the right people on the bus and then in the right seats on the bus and providing purpose, direction, and motivation. And I think the two big changes are really the horizon and culture. So I think in my new role, I have a role as guardian of our organization's culture, and we're shifting focus just a little bit.

We have a wonderful culture, a wonderful group of people, and shifting focus toward our dairy farmers, and they're who fund us. We're all about increasing demand with the end goal of improving the outlook for our California dairy industry and our farmers in particular. And I would say between being guardian of the culture and that longer term horizon, I would say shifting the horizon out a little bit from what our farmers think in generations. So I think it's super important that they can pass their farm on to the next generation, but we also have to be thinking long term, and that's been a shift as well, the horizon. 

Fred Schonenberg

I love that to kind of mirror the sort of thinking in generations and that longer term shift. It's one of the things when we talk about innovation with corporations is a huge challenge, right? Because they have the quarterly results, and everyone's got the short-termism, and new and different takes a minute to get going.

So I would love to maybe, before we get into the future of this, talk a little bit about the past. And John Talbot, who's the outgoing CEO, he's been a guest on the show, and obviously he worked very closely with John. He helped spark the vision of the California Milk Excelerator seven years back, and you and I have been working hand in hand on that, and it's been such a great ride. Can you maybe talk a little bit about the origins of the accelerator, why it came to be, for anybody that maybe has not heard that story, and why it's interesting?

Bob Carroll

Yeah, California has the largest dairy industry, we're the largest dairy producing state in the country, and it's kind of by the nature of how it's developed over the years. A very large-scale production-focused industry, and we started to see a lot of innovation in fluid milk to start, that was our starting point. 

It was actually, as we were showing some concepts of new products at a dairy farmer meeting, one of our dairy farmers said, hey, it is hard to change things quickly, have you thought about doing something like a Shark Tank sort of event? And John had met you just the same week, it was like that wonderful accidental Hershey bar in the peanut butter moment, it was perfect. 

Fred Schonenberg

Yeah, no doubt, no doubt. And I think what's interesting is how successful the California dairy industry is, some of the stats that we've seen, 21 billion annually supporting 180,000 jobs, it is a huge part of not only California, but the US economy. And I'm curious, are there specific gaps or opportunity areas that you see or that you hope this program may uncover?

Bob Carroll

Yeah, I mean, dairy is having a moment for sure within the food industry, within culture. It's a combination of a bunch of factors that provide a lot of opportunities for innovation, and consumers are moving away from ultra-processed food. And there's nothing more real and understandable and wholesome than milk and cream and the ingredients that make all the wonderful dairy products. So they are just sort of naturally moving back towards what's real, and moving away from ingredients they don't understand and can't pronounce. 

And so that provides a great opportunity. Protein is just on fire, as we know, and dairy is a wonderful source of complete proteins. Probiotics, you think about yogurt and the opportunity for consumers to naturally improve their immune systems and gut health. Reduced sugar is another big area. So lactose-free is kind of how that translates to the dairy world, and that's on fire, it's growing dramatically. So there are a lot of opportunities. It's a big industry for sure. I think that California, being the largest dairy state, we have as much milk for innovation as anyone could possibly use.

Fred Schonenberg

Yeah, and it's amazing too that there are all these... I mean, I love that just the word real is in the name of the Real California Milk Excelerator, because there is that resurgence of going back to things that are real and that you can pronounce in terms of ingredients. And then you have cottage cheese up 16%, yogurt up, right? There's all these different factors that kind of create this renewed excitement for dairy. It's really cool to be a part of it and seeing what's happening. And to your point, having the opportunity to work with this superfood as the base of what innovators are going off to create is a really special part of the whole program.

Bob Carroll

Yeah, it is. If we look back across innovation in the food and beverage industry, I would argue there's no better, more long-term base for innovation than milk. I mean, from thousands of years ago, milk for cheese, for butter, for yogurt, for ice cream. I mean, those baseline innovations are a great story in and of themselves. And now on top of that, to see the innovation around increased protein, using the streams from production of these different products, like whey is a co-product of cheesemaking. And boy, it's a wonderful source of protein, complete protein. And so there's so much opportunity within the dairy space that I think it's a natural fit.

Fred Schonenberg

I think one of the things that you must feel is last week, we did just sort of an update on this year's program and companies that had already applied because we're very early in the window. And we, as a group, the VentureFuel team, the CMAB team, were like, this is so cool. After seven years of doing this, there's still things we haven't seen. There's new ideas, new names, new ways of using waste streams, finding ways to increase the protein, new flavors. I'm curious, are there any startups, ideas, or trends that you're especially hoping to see or excited that might be in this year's program?

Bob Carroll

Yeah, for sure, Fred. I mean, I mentioned a bunch of the trends that are driving dairy growth now, and I think those are natural fits. Protein, probiotics, lactose-free, reduced sugar, clean ingredients that are understandable by consumers. All of those things, I am really excited to see. But there's also this element of nostalgia right now that's coming back. 

I think it is a great time to look at what's been done in the past and to leverage technology to, whether it's enhancing the products, more protein, or whatever it is, to connect those dots of what... I grew up with four to five gallons of milk in my fridge at all times. I had milk at every meal. It was my recovery beverage. And it's becoming a recovery beverage again. Consumers are rediscovering that milk is a wonderful source of hydration and recovery.

The other thing I'd be really excited to see is the connection back to our farmers. I think the stories of these family farms are so amazing and so inspiring that for a new brand to be able to have the depth and richness of a generational family farm story is just powerful. And I think that combination of California dairy plus new, innovative, exciting thinking about connecting with what consumers are looking for, it's a powerful combination.

Fred Schonenberg

Yeah, I couldn't agree more. I think what's interesting is when you said recovery, I remember after basketball practice having a glass of milk and that is becoming on trend at the moment. We actually, last year, piloted an incubator track, which this year we've formally expanded. I would love to talk about that, but the company that kind of blew me away out of that was essentially this idea of creating a recovery beverage with dairy at its core. And it was delicious, right? And it was great for a post-workout. So it was a nice tie there. I'm curious, what made you all formalize this incubator track and how are you hoping to help support earlier stage startups in ways that maybe we haven't been able to in the past?

Bob Carroll

Yeah, the needs of a startup are very different if they're already in the market versus if they're much earlier, even concept idea stage, and they haven't formulated their product yet, or they haven't really found a co-packer. They haven't finalized their manufacturing plan, all of those details that are crucial. And I think one thing we've learned over the years is that one cohort across that entire spectrum, it's a little harder to meet all their needs, and we've done a good job with it.

But I think that having the incubator program for earlier stage innovation allows us to help them even more. It may help around, like I mentioned, formulation. It could be making sure their ingredients and nutritionals are correct and finding co-packers versus those startups that are in the market already. They've already done all that work, and the ways we can help them are closer to the core of what we do, which is around marketing. 

So we can help with marketing support, also distribution growth and providing expertise. We have a big team of folks that have done this. We've launched a lot of new products collectively and learned a lot of hard lessons. So we can share those different lessons across the different stages easier with these two different tracks.

Fred Schonenberg

It's funny, every year, one of the things that I don't think we still have captured the depth of is the experience of the CMAB team and VentureFuel team together in terms of understanding how to launch a product, how to accelerate it, how to distribute it. And just the value that the founders get by sitting and talking to your team about, hey, watch out, this is the pothole you might face here, or you know who you should talk to is this person, whether that's connecting them to the co-packer or opening the door to a retailer or just saying, hey, before you go so fast, you might want to get these two things in order, because it's truly, I mean, it's a game changer for the startups, whether they're at the acceleration stage or the incubation stage. Obviously, different values there of things, but it's truly your team that is a delight to work with, but the value is so intense for founders.

Bob Carroll

Yeah, and that's been one of the most fun things, Fred, across the years with working with VentureFuel. It's just a partnership that we have. I think that the power of you and your team combined with the power of our team, we do have a lot to offer. We have a lot to offer to the startups across the spectrum of where they are in the process. And also the mentors that collectively, and VentureFuel has done a fantastic work bringing world-class mentors into the program to really help in specific areas. 

So whether that be earlier stage commercialization or later stage marketing and across the whole spectrum from compliance and co-packing to logistics, sales, distributors, marketing, and earlier stage product funding a new company. There's just been a wonderful cadre of experts that we've been able to bring to the table to help in addition to our two teams.

Fred Schonenberg

Yeah, it's been so fun, and even we were kind of previewing where we are in the planning for this year, and for any founders listening, we do this kickoff where we do retailer visits. We go to different processors. We go to dairy farms. We kind of do this immersion into real California dairy. We're going to the headquarters of Instacart to get a tour of what it's like to be a new brand. How do you get that distribution channel? The investors that are coming in, the list is pretty amazing. And so it's that which is maybe more on the external side, and then your guys' internal knowledge, and how do you get this through to distribution? It's just a really cool partnership.

And for a founder, you can go to the website and look at the testimonials from the startups that have gone through this, and the value they get from that is really spectacular. One of the things I want to ask you about is that this year's program has a multi-category sort of vibe to it, not just about cheese and ice cream, though of course we want to see that. But there's everything from skin care to textiles to cottage cheese, all sorts of interesting innovations. What I would love to understand is how are you thinking about it as the CEO of CMAB? There are all these different categories. How do you think that they combine to create a more powerful future for dairy?

Bob Carroll

We talked a little bit about it earlier, Fred, but the amount of innovation, just the breadth and depth of innovation across all these categories, starting with milk, which is I would call it nature's perfect food. There's so much opportunity, and it is hard to envision that there's untapped opportunity after hundreds and hundreds of years of innovation, but there is. I think the other piece of it is the co-product streams. 

We think the greatest example is whey coming off of the cheese making process. But there are so many others, and we're learning about just the amazing opportunities to bring more value through all of those streams of products. In some cases, I think that there's an opportunity for even more value than the original product. Whey is such a great example, but we're learning about the milk fat globule membrane, which is a big term, but it's what holds the wonderful, wholesome, natural fats in milk together. 

We're learning that this is wonderful for brain health and for memory, and there's just so much opportunity. We're looking at making plastic type silverware. Who would have thought of that? Again, a stream that was previously viewed as a waste stream has an opportunity to add more value, and there are untapped opportunities almost everywhere you look in the dairy industry.

Fred Schonenberg

A hundred percent. I will say what you said earlier in the episode about connecting innovation to nostalgia is such an interesting part of all of this. Because it is the superfood and this perfect building block that can be innovated on and get into plastics and get into other things. But there's also something that is so wholesome and warm about dairy. I have a five-year-old. We went and shot hoops this weekend for 30 minutes outside, and then we went and got ice cream. It was just this beautiful moment of connection.

What was cool was it was vanilla ice cream, but they put sea salt in it. It was just crazy delicious, but there was innovation there, but there was nostalgia. There's this generational thing that I just think is so special, and I think that's why so many founders are attracted to using it as their jumping-off point.

What's neat about this program, at this point, we've had 60 startups go through the accelerator. The alumni are on every notable retail shelf I can think of. Petit Pot, who won the grand prize, I just saw a note that they're in over 6,000 stores, generating millions in new revenue. How does this program help startups reach that kind of scale? Why is commercialization part of the core of how you think about this program?

Bob Carroll

At the very core, our mission at the California Milk Advisory Board is to increase demand for dairy products that use California milk. We have a lot of tools in our toolbox, a lot of resources to help brands, even aside from the accelerator, both commercialize and have early success in the market. I think that it ranges from the relationships we have with retailers, the scale that we can bring to a platform like Instacart with the Real California Milk seal as a unifying element across multiple dairy products. We can market at a scale that a startup never could.

By having the seal, the Real California Milk seal, it really brings credibility, it brings scale quickly when you wouldn't otherwise have it. And it's the relationships as well, and the guidance along the way. It's sometimes an easy path to go down to expand too quickly. We can provide counsel and guidance on who we think are the right retailers, the right pace, if you will, of expansion based on the startup, the company, and their funding.

It's a combination of all those factors, but at the core of it, I would say it's marketing support, really, Fred. We can provide a wonderful program built around the Real California Milk seal that works for larger brands and certainly brings scale for smaller. 

Fred Schonenberg

One of the things I was thinking about was this idea of a halo effect, that this program. And we've talked, you and I, before about how the press loves to write about this, the media loves to connect the dots and talk about this story. I'm curious if you see innovation and this program, does it create a halo effect? Does it get retailers or others to think about California dairy in a different way and help drive that category growth you all look for?

Bob Carroll

It does. Every retailer, every category manager at a retailer is looking for what's new and what's next. They often want to be first. They see a lot of new products though. I think having this behind them, if you will, the power of the accelerator, the power of the Real California Milk seal provides credibility. It shows that, hey, it's not just a founder or a couple of folks on the founder's team that have done all this work. There's been consumer research behind it. There's insight. This is an insight-driven idea. There's the marketing support that comes with the Real California Milk seal. It's all of those things together that I think provide some scale. 

As far as the excitement side, the founder stories are naturally pressworthy. People want to learn and read about it. I think there's a little bit of an entrepreneur in each of us. We love to see the small guy making it big. It's part of the fabric of our economy, our country, that there are opportunities if you work hard, if you have a good idea, and you're diligent. I think that combination, plus I mentioned the stories of the dairy farmers, these multi-generation farms and the wonderful stewards they are of the land and their resources. It provides a combination that people want to read about. They want to learn about or watch videos about.

Fred Schonenberg

No doubt. It resonates with everyone from the press to the retailers to the entrepreneur within each of us. It's really powerful. One of the things you spoke to briefly that I would love to maybe go into more detail. This year, one of the things we doubled down on is focusing on the Real California Milk seal. To be eligible for the grand prize, the startups need to have this. 

To me, you just answered why it is so valuable. I've witnessed it, this sort of checkmark in both retailers' mindsets as well as consumers that this is the real deal. This is milk from California. The cows are happier. It meets all these standards. Can you talk about the power of the seal and how it helps build credibility and consumer trust?

Bob Carroll

Absolutely. In consumers' minds, the seal stands for quality, for trust. I think that element of trust is absolutely crucial. It does provide like, hey, this might be a new brand I haven't heard of, but I know that Real California Milk seal. It's on the dairy products I love out here in California, from milk to ice cream, as you mentioned, butter and yogurts. It provides credibility and trust for consumers for a brand that might be new to them, probably is new to them, and they're more willing to give it a try. I think that is some of the value that's inherent for a new product. 

I would say more broadly, this idea that California does lead the nation in sustainable dairy. Our farmers, and farmers across the country, as I mentioned earlier, do think in generational terms. They're stewards of the land. They're stewards of the cows. They take care of their cows. They take care of the land for the next generation. 

California has a bunch of extra regulatory requirements that really have propelled us to the lead in the area of sustainability. The seal also stands for that in consumers' minds. They know that we're, as an industry, doing an awful lot to make sure that this is generationally sustainable on-farm and off-farm, that these farms are going to be around, that we're working very diligently on both emissions and energy and water usage. Really being great stewards of all those precious resources. 

Fred Schonenberg

There's so many things about this program that have been an honor to be a part of. One of the great joys that I was not exposed to before the program is that kickoff where we would do dairy tours, where we would go and actually get on the farm and meet with the farmers and see the cows and tour the land. The degree to which they are thinking generationally, that they are obsessed is probably too strong a word, but obsessed with the animal's well-being, how the land is taken care of, sustainability. 

It is so authentic and real and lovely. It's something that made a huge impact on me seven years ago and continues to be there. I think one of the things about the seal is that it is a symbol of that, at least when I look at it, that I know that this is the real deal. I would love to end on this. For anyone listening, whether there's a startup founder, potential partner for the program, a mentor, we've had over 100 mentors in this program over the years, or even a buyer maybe that's listening to this and interested in dairy innovation, where should they go to either apply for this year's program or learn more about the program? 

Bob, thank you for all that you're doing to spark change for the industry. This is one of the most exciting programs. I always love it because I get to eat some delicious dairy. Thank you for your partnership over the years. I can't wait for this year's program.

Bob Carroll

Thank you as well, Fred. We love our partnership. We're grateful to VentureFuel and to all the founders who really are willing to take a step in this direction. We encourage you to sign up.