Welcome to Season 10 of the Troubleshooting Innovation podcast. Joanie Spencer, editor-in-chief for Commercial Baking, is spending this season with Julie Miller Jones, a member of the Grain Foods Foundation Scientific Advisory Board, and Charlotte Martin, registered dietitian and consultant for the Grain Foods Foundation. They’re debunking bread myths to help bakers develop delicious, healthy grain-based products — and help them educate consumers on the health benefits of bread. Sponsored by Lallemand Baking.

In the first episode, we get to know our experts and dive into the first myth: carbs vs. calories.

Learn more about this season here, and listen to Troubleshooting Innovation on Apple, Spotify and Google.

Joanie Spencer: Julie and Charlotte, thank you so much for joining me on this podcast.

Julie Miller Jones: You’re so welcome.

Charlotte Martin: Thank you for having us.

Spencer: I am excited to spend these next five weeks with you. I’ve been in the industry for about 15 years, so I’ve had my share of hearing myths and seeing their impact on commercial bakery producers. And I’m just excited to dive into them, dig into what’s true and what can help bakers produce great products that are also good for our bodies.

Let’s just first get to know you better. Julie, I’m going to start with you. You have such a long history with the Grain Foods Foundation and in the baking industry. Can you give me a brief recap on what that background looks like?

Miller Jones: I have a PhD in nutrition and food science. I taught dietitians, and I’m an economist, so I have a little bit of a consumer background. I call myself a mile wide and an inch deep because I taught so many different things. I was at a small university, so I would teach everything from beginning food science to nutritional biochemistry in the chemistry department to intercultural food patterns or experimental foods. Unlike a lot of PhDs, who know the infinite amount of folic acid down to how the reaction occurs, my real talent is the ability to take scientific information and make MDs understand it and make consumers understand it — and all the way in between.

I got into grains because Mississippi is where flour milling in the United States began and thrived. Because I’m from the ‘Mill City,’ early on in my career — back in the 1970s — I joined the American Association of Cereal Chemists, because all of the people from the big companies such as General Mills, Pillsbury and Multifoods, were there.

I did a lot of speeches for them, went to meetings and eventually became the president of the American Association of Cerial Chemists International. I wrote a regular column on what’s new in anything about grains from across the spectrum. I joined GFF the year it began and have been with them since the early 2000s.

Spencer: Charlotte, you bring a very different perspective. That’s one thing I’m excited about in this conversation is that we have two intelligent but very different perspectives on bread, and both who contribute greatly to the Grain Foods Foundation and its efforts.

You’re a registered dietitian and you have a strong digital presence. Can you share your background, how you developed this passion for helping people achieve healthy relationships with food and then how you got involved with DFF?

Martin: My passion for nutrition started with a fascination for the Paleo diet in college — which is funny considering I’m such a huge proponent of carbs and grains now — I did my honors project on the Paleo diet. So, I put professors on the Paleo diet.

Clearly, my nutrition philosophy has changed a lot. At that time, there was a social media presence, but it wasn’t as big as it is today. I realized I was falling into these nutrition myths of ‘carbs are bad.’ And then I realized that a lot of people just don’t know how and what to eat to support their optimal health. So that was when I decided that nutrition was what I wanted to do.

My first job as a dietitian just threw me out there into many different roles. I was working on the product development side, but then I was also working on the consumer side. That’s how I started getting into nutrition education on social media and television. Then I just ran with it. It’s been great because as much as I hate that there are so many myths out there on social media and just so much nutrition misinformation, it keeps me in business. I am constantly debunking nutrition myths and just trying to educate my followers who have been severely misinformed.

And then I got involved with GFF a few years ago; they had reached out about helping provide some quotes for digital magazines. I was doing that with them for a little while, now I’m doing some social media content and other things with them. It’s been a great mutually beneficial partnership.

Spencer: Awesome. Yes, I appreciate what you have brought to the thought leadership behind GFF. So, thank you both so much for joining me and providing these very specific and important perspectives on this.

I’m going to ask a pre question before we dive into this. You both are well versed in nutrition on the consumer side. I’m curious, based on your experience, what would you say are the most important things that commercial bakers need to know about people’s relationship with grain-based foods? What are the obstacles that these producers are working against?

Miller Jones: Throughout my career, it’s gotten worse, and there are more obstacles. If only we could go back to understanding that bread and grains are the staff of life, it’s what we need to do for sustainability and nutrition. Instead, we have good stuff on the web, but I think the fact that we have the web, we also have a lot of, ‘I eat, therefore I know, and I write a blog.’ And the more outrageous it sounds, the better it sells. And the more frightened people are.  

I think we have all these myths about low carb. All of those have been going on since I’ve been teaching, but they always come up with a new gimmick or name. That has always been going on in my career — this bashing of the bread and grain industry — just because they’re carbohydrate-containing. Then we have the anti-gluten thing that various famous people glob onto, and that gets people following these cockamamie diets.

Spencer: Charlotte, what about you?

Miller Jones: To add to what Julie said, I find that thanks to social media, a lot of people these days have become ‘carbophobes.’ They don’t necessarily stop eating carbs, but they’re afraid of them. And oftentimes, they feel guilty after eating carb-rich foods like bread. It’s been very hard to reframe that mindset, especially like Julie mentioned, since the past several decades have just been one low-carb diet after the other and now, we’re facing the carnivore diet and keto, which are just basically no carbs.

So, it has been challenging and consumers have become terrified of bread. A lot of what I see on social media are proponents for low-carb lifestyles and diets that misinterpret the research on grains, so that doesn’t help either. It has been challenging, but I think we have a lot of health professionals and food scientists on social media who have developed a large presence that are combating that misinformation.

Spencer: Okay, so based on that I’m ready to dig in and uncover what bakers can do to overcome these misconceptions. In this first episode, what I want to unpack is the perceptions that inevitably come with carbs and calories.

There’s this myth that bread and carbs lead to weight gain, but the truth is serving sizes are playing more of a role than the actual bread intake. What exactly does that mean?

Martin: I can start on this one. This myth that bread and carbs directly lead to weight gain is an oversimplification. In reality, weight gain is the result of consuming more calories than your body uses. That’s regardless of the source of these calories.

High-carb foods like any other food group only contribute to weight gain when they’re consumed in quantities that exceed our body’s caloric needs. It’s not the bread or carbs themselves that are inherently fattening, but rather that total caloric intake and the serving size that matter. So, when consumed in moderation, and as part of a balanced diet, bread will not automatically lead to weight gain. It’s just important to focus on portion control and overall caloric balance instead of eliminating specific foods or food groups like carbs and bread.

Miller Jones: I wish we could reframe the myth to a truth. The truth is that too many calories cause weight gain. For 50 years of my career, we beat the dead horse about fat. Fat was making us fat because it has 9 calories per gram and carbs don’t. Too many calories or too much protein can make you fat.

We need to reframe that it’s calories, not just carbs. It’s calories. The idea that calories don’t count is preposterous. A lot of the diet books tell you that you do need to count calories or you don’t need to exercise. Well, that’s silly and just stupid. If we could just reframe that myth — that it’s the calories — then we could actually change what’s going on.

Spencer: It makes me think back to when the Atkins diet came on the scene. It promoted that if you cut out carbs you could eat all the bacon and cheese that you want. But that’s not true; if you eat too much bacon and cheese, you’re not going to lose weight just because you’re not eating bread.

Then from a product development standpoint, how do you think bakers can be a part of the solution when you’re thinking about calorie intake rather than carb intake?

Miller Jones: The trouble is that people want to believe some sort of three-word sentence, ‘Don’t eat X’ or ‘Do eat X.’ That’s what they want. But if you continue wanting that, you’ll never reach the goal. The goal is that the dietary guidelines, USDA MyPlate or the Mediterranean diet, have acres of research that show when you balance the food groups, including breads, cereals and fruits, you are healthier. You are more likely to be of normal weight.

The DASH diet has been going on since 1997, and when people ate that, not only did they cut their blood pressure medicine in half and many came off of it, but they also lost weight, and reduced the risk of cancer.

 If only we could say there is no magic talisman in ‘Don’t eat X.’ What you need to concentrate on is using the four food groups in the right way. Balance means that you have to pick things from different groups. Until we do that, we will still be chasing our tails and gaining weight.

Spencer: I talked to a person who was at a high level of leadership in a baking company, and they decided to start selling half loaves. The company was very concerned that they were going to lose money if they were selling smaller loaves, but they flew off the shelves. Their profits didn’t change in selling half loaves. I feel like that’s a great part of the solution when we’re talking about calorie intake. If bakers can look at their packaging sizes, especially when consumers are also keeping waste top of mind. Those two can work in tandem.

Martin: That’s a great point, Joanie. I’ve been noticing that in the grocery stores near me, a couple of different brands have been offering those half loaves, which I think is a great idea. Another thing is I don’t know if you’ve seen those ultra-thin slices. They’re smaller, but I do feel like portions in general of many products have increased over the years. It’s nice to have that option, because every time you make a sandwich or have a piece of toast, you don’t have to eat this huge piece. It provides an option to still get that bread fix in but be able to choose a smaller slice, especially if they’re not that hungry. Usually when it’s in front of you, if your only option is a thick, huge slice of bread, you’re going to eat the whole thing. So, offering consumers different sizes, is a great idea.

Miller Jones: We also have many one- or two-person families now. That’s also really helpful because optimal bread is not put in the fridge; it’s left on the counter. The way I deal with that is I cut the loaf in half and then take it out as we need it, so it stays fresh. I think it’s a winner from not having too much around, but it’s also a winner for the budget and the environment. I think that’s a really great solution.

I think other solutions that some bakers have tried are thinner buns and mini bagels. I think most people don’t know that bagels are almost three and a half slices of bread. If you ask some people ‘How much bread did you have?’ they will say, ‘Well, I just had one bagel.’ But they don’t realize that bagels are half-proofed, so when they’re boiled in the water, which has a little bit of lye in it to give it a shiny surface, that is a lot more dough than you’d get if you were eating bread. We have a little bit of education to do there, but just ways to actually encourage smaller sizes, I think, is a really good idea.

Spencer: I agree. For years, there’s also been this rhetoric around white bread, and that it just contains empty calories with no nutritional value. Is that true?

Miller Jones: Well, half the world gets 50% of their calories from grains, and if you’re in a developing country, it’s more than that. If we’re promoting a sustainable and a plant-based diet, that’s where grains need to stay. When we start moving to eating more protein, which is what a lot of people are trying to do right now, that’s the most economically and environmentally expensive way we can eat. We need to dial back and look at how can we use the bread and why is bread there. Bread is there because it provides so many nutrients.

A study with NHANES showed that if we eliminated fortified bread products, we would reduce the number of people who are meeting the niacin requirements. Right now. 50% eat what we call the ‘estimated average requirement,’ which is what we consider the minimum you need. Without fortification over 50% don’t meet the estimated average requirement. With fortification, only 10% don’t meet it. That’s one nutrient; with folate 90% don’t need it, and with folate added to bread under 10% don’t need it. We can do that for iron, folate, niacin. People discount the importance of fortified white bread and grain products to their peril.

Spencer: Where do you think the opportunities are? How can bakers look at their formulas and reformulate to increase nutrients like fiber, in their products? Some people say whole wheat bread is the answer, but do white bread and whole wheat bread need to look at their formulas and increase those nutrients?

Martin: I think one option is experimenting with partial substitution of refined flour with whole grain flour and white bread. I know some bread manufacturers are already doing that, but it can improve the nutritional value in terms of things like fiber without significantly altering the traditional taste and texture of white bread. I think the issue there lies in that sometimes they use misleading wording on the packaging. So, they’ll call the bread multi-grain or say, ‘Made with whole grains,’ which consumers often interpret as the bread being completely 100% whole grain. I find that happens quite frequently.

I think experimenting with different flours … Dave’s Killer Bread has a white bread that uses both refined and whole wheat flours. They have enriched wheat flour and whole wheat flour in addition to, I think it was, barley, spelt, rye and quinoa flours. It adds a tiny little bit of fiber and probably some other micronutrients, but it still looks like white bread and tastes like white bread. I think that’s a good option there.

Miller Jones: The myth is that white bread doesn’t get any fiber, and that couldn’t be further from the truth. In that, 50% of the fiber intake that we get comes from white bread because we eat it so frequently. This idea that white bread is devoid of both nutrients and fiber, is just wrong.

In terms of what bakers can do, I know there’s research at Kansas State and other universities where they’re looking at taking varietals that naturally have higher fiber content and using those. I know that some companies are using resistant starch, which is a source of fiber. It functions like starch in grain; however, if you use too much you get a gritty feeling. But using resistant starch, which can be called modified corn starch, it won’t have a label name that is off-putting to most.

In addition to all the wonderful ways that Charlotte suggested by blending and making those sound alluring, using white whole wheat, which looks more like regular whole wheat in terms of color. It looks like white bread, rather than darkly colored with the ones that are much higher polyphenolics. Those are just some tactics that you can use.

I think it is important to mention that under 5% of people meet the fiber requirement. It is so important for all kinds of health, if we could just make people think calories do count and they aren’t getting enough fiber, I would die happy.

Spencer: I keep thinking about how I have spent the last 13 years trying to get my son to eat what’s good for him and get him to eat his veggies. I feel like that’s what we’re trying to accomplish with Americans — eat what’s good for you. There are tons of little strategies and tricks that, Charlotte, I’m sure you are well versed in, such as tricking our kids into eating their vegetables. What is the key to getting consumers to eat what’s good for them when it comes to bread?

Martin: I think that’s a great question. When it comes to children specifically, I would think that packaging plays a big role here, interactive packaging that features fun characters. Even if it is a whole grain bread, incorporating fun characters, bright colors or interactive elements can make it more attractive to children. I think it’s about making healthy eating a fun and enjoyable experience.

Another thing bakers could do is engage in educational and promotional activities aimed at children. This could involve hosting baking workshops for kids where they learn the benefits of healthy eating and get hands-on experience in the breadmaking process. That’s also another time when they can educate children and parents on the benefits of bread and what goes between bread.

Spencer: I love that. I must put a mental pin in that comment because in a couple of episodes, we’re going to talk about misconceptions around processing. So, I need to remember that in thinking about some transparency around processing is not a bad word.

Miller Jones: I think you could also have games, such as ‘Have You Had Your Fiber Today?’ Classrooms could make it a competition and say, ‘Who got the most fiber today, and what did you get it from?’ This way you know it comes only from plant foods and that grains, fruits and vegetables are important sources by putting together a sandwich that has fruits, vegetables and grains. You could support school programs; that could be a fun idea that would get you publicity and might help improve children’s nutrition.

Spencer: I love it. I have one last question that may be an ethereal question. We’re going to close it out with this discussion. Is it realistic to envision a future where bread correlates with healthy weight? Can we get there, and what will it take to get there?

Martin: I certainly think so, maybe not in the near future. I think what is most important is education. We just need to change this narrative around bread by dispelling the myths and highlighting how certain types of bread can be a healthy part of our diet. I think this involves some transparent labeling and proactive communication about the benefits of these healthier options. A lot of that could easily be done via social media campaigns since so much marketing is done on social media. Then also a cultural shift and how we perceive and consume bread is essential.

Encouraging moderation and understanding that role of bread in a balanced diet. It is really just about educating around making informed choices. It’s not just about the type of bread we eat, but also about the portion sizes and how we incorporate it into our overall diet. What else are we serving the bread with? Because again, it is more about what is between those slices than the bread itself when it comes to weight management.

Miller Jones: I’d like to modify your dream. I think you did a great job, but I would like it to be a future where diet correlates with health, rather than just bread. If we get the bread right, and the other things wrong, it won’t be a healthy weight or a healthy diet. I am a whole diet person. I believe you can have cake on your birthday; I think you should have cake on your birthday. But I don’t think you should eat cake every day.

So, how can we put together the idea that choosing the right things regularly, in the right mix, brings about healthy diets, overall health and healthy weight? Until we do that, we will be chasing myth after myth after myth. I’ve watched people do it with different kinds of myths, and they only got fatter. Until we say, ‘I’m going to take the USDA MyPlate, the Mediterranean diet or the DASH diet,’ which includes all the elements of the diet in the right amounts.

Spencer: Do you think Americans can get to that balance?

Miller Jones: Can versus will. Two-thirds of the population are overweight. When you ask people if they have a good diet, two-thirds of the people say, ‘Yes.’ So, somebody’s lying. Until we look at ourselves and say, ‘We are the problem. I am not doing this right. It’s not because XYZ company made me eat this food. I chose to eat it. It was an enjoyable choice, but I shouldn’t do it all the time.’ I think we can get there; I’m not sure we have the will.

Charlotte has much more optimism to go forward with it.

Martin: I know, but I also have the pessimism of being on social media all the time and just seeing how confusing nutrition messaging in general is. I have to agree with you; I think we could potentially, but I think it will take a lot. Nutrition messaging in general in the media is just all over the place, and consumers are confused.

They’re so focused on avoiding seed oils that they completely just miss the concept of consuming a balanced diet rich in whole grains, legumes and produce. I don’t know if we can get there anytime soon. I think it is promising that we do have a lot of nutrition experts who are growing a voice and providing sound nutrition information.

Miller Jones: In my career span, I have seen, ‘If everybody would only eat less fat, we would be healthier.’ So that brought on the cookies that said had no fat, and customers ended up eating the whole package. And now we’re going to do it with carbs. I think it’s going to go on for a while longer.

Now, protein is the salvation. But then I think we will see protein has some risks too. But maybe we will get smarter. If we could get somebody famous, but not terribly controversial, to lead the charge, maybe that would be helpful. But we may just need a Pied Piper to bring us out of what our demons are.

Spencer: I do think that the good news is people want to learn about their food, but the bad news is that people want to learn about their food as well. That’s where they’re consuming good information and misinformation. I do think that people like you, Charlotte, who are out there in the social media and in the digital space, communicating good information helps. If we can teach bakers not only how to develop good and healthy products but also communicate that their products are healthy and enjoyable to consume, I think we can get there. But I agree, it’s probably not going to be tomorrow. I think at some point we can get there, we just need to fight the good fight and continue putting out good information.

Miller Jones: I know before social media, there was an article that looked at media in general. It found that one out of five pieces of information was nutritionally accurate. I assume that with the web, which is impossible to monitor, it’s probably one out of every 1,000 now. People will go to where their fears are. They also want to have lost weight yesterday. When someone says, ‘Well, if you just do X, you’ll be thinner.’ People so want to believe that.

But if we can get just a list of communicators, that the baking industry says these people in general, give reliable information that might be helpful. Or somewhere the average baker can go and then have something in their marketing that says today’s tip, so they’re not constantly being bombarded by incorrect information.

Spencer: Yes, that is a good point. Ladies, thank you so much for such a compelling first episode. It was great just getting to know you. We really just skimmed the surface on this discussion around myths. I’m really looking forward to the next four weeks. We’re going to dive into myths around the glycemic index, sodium, intake processing and then we’re going to look at Americans’ relationship with sandwiches, because that’s even getting some myths thrown its way. Then we’re going to close out this season by talking about women’s health. That’s really important and I’m excited to dive into how bread and grain-based foods can support women’s health as well. I’m so looking forward to these next few weeks with you and tapping your brains. Next week we are going to talk about bread’s connection to the glycemic index.

Go on an immersive journey into the American Bakers Association’s (ABA) new five-year strategic plan with this audio story. Click the player below to hear the story, or read the full story here.

Listen time: 11 minutes

Welcome to Season 9 of the Troubleshooting Innovation podcast. Joanie Spencer, editor-in-chief for Commercial Baking, is spending this season with Darlene Nicosia, CEO of Hearthside Food Solutions. They’re talking about operations, culture and innovation … behind the curtain of co-manufacturing. Sponsored by Reading Bakery Systems.

In this final episode, Spencer and Nicosia unpack unique leadership perspectives, using Nicosia’s engineering expertise as a starting point.

Learn more about this season here, and listen to Troubleshooting Innovation on Apple, Spotify and Google.

Joanie Spencer: Hi, Darlene. Thanks for joining me for this last episode.

Darlene Nicosia: Hi, Joanie. Great to see you.

Spencer: I just have to tell you that I thoroughly enjoyed our conversations. I mentioned it off the air, but I think that you have a great combination of deep technical knowledge and expertise, and you are an incredible conversationalist. So, thank you so much for taking this time with me. It has been a joy.

Nicosia: It has been awesome.

Spencer: Many of our conversations inevitably harken back to how you’ve merged the worlds of brands and contract manufacturing. But I want to look at it from a different perspective. This week, I want to talk about how you’ve managed to merge the world of engineering and the world of leadership. How hard is it to reconcile what seems to be two totally different styles of thinking?

Nicosia: It’s interesting. On the one hand, engineering is so focused on process discipline and logic, while great leadership is about demonstrating empathy in creating followership. I think about it that way. But on the other hand, the only successful engineers I know have been amazing at active listening, strong vision, goal setting, communication, learning by trial and error — which obviously requires patience and persistence — and being able to collaborate and use feedback to get better. When I think about all these traits, they’re the same traits that essentially all good leaders have. So, I really feel like they come together very nicely.

Spencer: From my perspective and experience, engineers sometimes have this tendency to really look at things in a very technical way. They’re checking off each list and looking at if it is technically accurate. When I look at leadership trajectories, one of the biggest challenges they say that new leaders face pertains to their ability to let go of task-oriented duties.

Hopefully, you see the path that I’m heading down here. With your experience in engineering, when you look at those technical and task-oriented things, how have you learned to let go of those things as you’ve grown in leadership throughout your career?

Nicosia: It’s hard. Sometimes I have to pull myself out of the weeds, and there are times I don’t, and my team will politely pull me out of the weeds. I have always been extremely analytical. I like to be grounded in the context. If a team brings me a proposal and shows me the journey they went on by talking about the process, the options they considered, sharing the data to support whatever they’re thinking, and then how they reach their conclusions, I have an easy time saying, “You guys got this. I totally support the way that you’re going about your thinking and how you’re reaching a conclusion. I have your back.”

However, as a leader there are times when I’m ultimately accountable for our business and there are important decisions to be made. Then I do want to get grounded in the facts. So sometimes I might get deeper into the weeds  if I have a concern that somebody hasn’t gone through a proper process or they haven’t used data to support the decisions that they’re driving. I do see at times people will take past history as fact, and the world has changed, so in those circumstances, I may ask for more supporting data: “I hear what you’re telling me. Can you show me the data? Help me understand what supports your point of view on this.” So, then I might get a bit closer to it.

But I think all leaders must ask themselves, “Is this something that I should be delegating and having others do, or is this something that uniquely requires my skill set and time?” When I ask myself those questions and decide it requires my skill set and it is an important decision, it’s easy to try and figure out where I need to play and where my team plays.

Spencer: Do you think that’s an innate skill, or do you think that it is something that someone who has a more technical background must learn when to draw on it and when to let it go?

Nicosia: That is a really great question, and I would probably tell you that it is more learned. It is probably more of a challenge around control and how to empower people and give them the ability to make decisions. One of the things that I use in our business today is Agile for teamwork and how to solve problems. I think we might have talked about this in episode one, but what I love about Agile is the fact that it brings diverse thinking together to drive and solve problems, along with getting leadership out of your way. It really empowers a team to make decisions.

If people don’t feel empowered that they’re able to have their own thumbprint on a business, it really does start to impact their long-term ability to excel in their role, the long-term impact that they can have, and you really don’t get the exponential benefit of the people that you have around you.

I think I had to learn early on how to be a good delegator, how to trust my teams, to create an environment that allowed them to feel accountable and have responsibility to make decisions. I think the other thing that’s really important in that process is defining principles so that when people reach a fork in the road, they can use the principles you shared to make those decisions.

Spencer: It’s like you’re reading my mind because I was going to ask you how do you know the difference between technical expertise and a need for control? I love that you mentioned control because I feel like there’s a fine line there.

Nicosia: Again, control and accountability are not the same thing. In my mind, accountability is what is important and what I try to govern by in the business and making sure that if I empower you to go off and solve a problem and make a decision, then I have to hold you accountable for that decision at the same time.

But I do think that people must feel like they can use their skills to their greatest capability. If you control all the decisions they make, then they’re just a task manager. That’s not what most people want to do when they come to work. They want to give their best, make decisions and change the business for the better.

Spencer: I was going to ask you if it gets harder to make that distinction the closer you get to the c-suite. But after hearing you talk, I feel like the answer is knowing how to differentiate is the mark of someone who’s heading for the c-suite. You have to have that understanding to get to that level and if you can’t, you’re probably not suited for that high level of leadership.

Nicosia: I think that I had the benefit of being surrounded by a number of good coaches and mentors. I do remember somebody was talking to me about time management, and I just felt like I never had time to do all the things that I had to do. And they said, “Well, do you have to do all those things?” It’s a very logical question. And they took me on this talk track of I have to think about what really warrants my time. What are the things that others can make decisions on? Once you start to go through that logic, you realize you get time back, because you trust and empower the teams that you have. That’s something that does come with time.

Spencer: I think there are benefits to having that technical expertise. So, from an operational leadership standpoint, what are those benefits and how has your technical experience positively impacted your leadership style?

Nicosia: I would tell you, it goes back to that idea of being very process-disciplined, just this whole idea of having data and information to make decisions. There are certainly times when my intuition will come into play, and you’ll have maybe not all the information that you want, but you have to make a decision.

There are certainly times that I have to go on experience and that intuition. But more so than ever, I go back to this point I made earlier of making sure that you have a disciplined process that’s grounded in fact, that makes sure that you’re weighing your options, supporting a conclusion or a recommendation for how you proceed, and making sure that you have taken input from others or that you’ve collaborated with them along the way. I highly value this idea of collaborative thinking because people who can build upon a single idea and make it even better over time is really the way to get the best solutions possible. Part of my leadership style is a highly collaborative leadership style.

I ultimately will call the ball when I need to, but I do try to bring my leaders in to make sure that I’m getting a diverse point of view, and then drive a decision forward. I think a lot of that does come from that engineering process discipline background that I had both through formal training and informal experience working in technical areas.

Spencer: People are like, “They’re an engineer. Engineers don’t lead companies; they get in the trenches and do the work.” But do you think that this engineer’s mindset is like a secret weapon in the boardroom?

Nicosia: Well, boardrooms are interesting places. I would probably say, the biggest skill set that I’ve got to use in a boardroom is really this whole idea of active listening. There are so many voices going on, there are different points of view and perspectives from the different board members. They’re incredibly successful leaders, they have all kinds of insight and industry experience, both in our industry and outside of our industry, and harnessing their points of view is incredibly important in the time that I get with them.

I would say more than anything, that engineering mindset probably helps more with our customers and trying to define our value proposition by making sure that they understand that we bring in incredible technical expertise to what we do. We are passionate about their brands, but more passionate about quality and process, and making sure that we care for their business the way as if it was our own.

Spencer: That makes sense and that expertise becomes almost a selling point.

I’m going to shift gears. We’ve talked about bringing your experience from Coca-Cola into the world of co-manufacturing. We’ve talked about bringing an engineering background into the world of leadership. But one thing that we haven’t touched on that I’m curious about is engineering and manufacturing are two very male-dominated disciplines. You are incredibly approachable. You’ve got this athleticism mindset that you bring to everything you do. What is it like to achieve the success that you have, dare I say perhaps, despite your gender?

Nicosia: It’s interesting you talk about sports because that is such a huge part of my background. I still remember the first formal team that I played on was the Glenn Ellyn boys baseball team. My friend Suzy and I were the first two girls to go and sign up; they didn’t have softball back then. I had always played with my neighbors. When you’re a kid, you’re not going, “They’re boys” and “They’re girls.” I just was always playing sports. I was a tag along with my older brother as well.

It was the environment that I was in, and I didn’t know any better than to pick up a ball and shoot it or throw it. I just played with everybody that was around doing the things that I enjoyed. I will tell you, there’s a part of me that doesn’t have this gender lens. I found myself always around those environments and never giving it a second thought, quite frankly. When I got into work, I was the first female supervisor in the plant that I worked at Frito-Lay, and everybody around me was so supportive. They were great mentors and coaches, and they were all men because I was the first female supervisor out there.

I felt like it was such a welcoming environment for me. And that takes a tremendous amount of courage from the employees, the managers and everybody around. Maybe then I was a bit naïve, but as I progressed in my career it wasn’t always that way. There were certainly times in my career when I was the only female in the room. I was Coca-Cola’s first female chief procurement officer in an environment where there were times when I was left out of stuff, probably because of my gender, and it was tough. I can remember a situation that happened after an international meeting that I went to, and I was excluded from the dinner.

I had just been promoted to a big role. I was leading the meeting, the meeting concluded, and the men that I was with decided to go to dinner and they didn’t include me. I called my coach/mentor who was also the predecessor of this team and I said, “I’m really crushed by this.” He said, “Don’t have a crisis of confidence. You represent change and you represent a threat to the men that have biases. And just remember, at the same time, most men will be your strongest advocates.” He was right. My strongest advocates are always men in my career.

There are pockets in this world that still have the opportunity to drive change. But I do feel like the business world has matured and has changed so much. There are so many programs to accelerate the pipeline of diverse talent. I’m certainly spending quite a bit of my time trying to do that myself as I coach and mentor so many diverse individuals in the workplace. It’s important because everybody needs a great strong coach and advocate just like I did at that moment. I certainly feel like I’m stronger because of it and I maintain my confidence in a really tough situation.

Spencer: I’m going to throw you a curveball because you said something that triggered a thought for me. I have seen a lot of panels and discussions that asked the question, can a man be a good mentor to a woman? And the answer is, of course, yes. I’m curious when you say that you’re mentoring and coaching others, are women good mentors to men? Do men look up to women as a coach and a mentor?

Nicosia: I’m going to have to answer it from where I sit; it’s probably best to ask a man who has been mentored by a woman. What I can tell you is, the ability to demonstrate empathy, because probably the most challenging coaching events occur around some crisis or setback in someone’s career or in a situation. The ability to say, “I hear you. I understand. Your emotions and how you feel is valid. And how to see a way forward to get back up and to keep going so incredibly important.” Because just as that mentor did for me, confidence can be destroyed in a moment. Sometimes it takes a career to build. Being able to feel that empathy and that support in someone who believes in you goes a long way to helping you quickly get back on your feet and get up and take another swing at the plate.

Spencer: That is such a good point. Because nobody comes to a mentor and says, “Things are going great. What should I do?”

Nicosia: Well, like I said, sometimes it does happen and we’re happy for folks. But again, if you’re really trying to accelerate learning and really help, it typically does come in those moments of crisis.

Spencer: That’s a good point. So still reflecting on your career and those moments of good and bad when you have seen success and overcome challenges, how have you seen gender roles evolve in food and beverage manufacturing? Have you seen a change over the course of your career?

Nicosia: I absolutely have. Some of it we have had to do through really focusing on creating opportunity. To give an example, earlier in my career, we were opening a plant in Costa Rica, and we had to go through a process of creating a program that was in the community to teach people how to drive forklifts so that we could have a gender-balanced manufacturing environment. We were really struggling to get material handlers and people into the facility that had the skills we needed. They were predominantly filled by men, and we really wanted to achieve this goal of having a gender parity environment in our manufacturing.

We took the effort to go into the community and train people and sometimes it takes efforts like that to really create change. I think there has been a huge change in how people view their careers in the manufacturing environment. I think we must re-engage post-COVID, whether it’s the gig economy or whatever else, there are reasons that people walked away from great American manufacturing jobs. We have to find a way to reengage them back into the workforce. I think part of it is re-engaging in the community.

Part of it is our own responsibility to create career pathing, so that people can come into their roles and see a way to build their skill sets, grow in their roles and have a lifelong engagement in this type of setting. And if they choose to exit, we’ve built upon their skill set so that they can go and do other things. There is a huge opportunity for us to think about how we re-engage in the communities and attract both male and female talent. I think there’s more flexibility that still needs to be built into manufacturing.

 Many plants today have fixed shifts that people have to work. I aspire to see the day that Hearthside can offer more dynamic shift building, where people can nominate the hours they want to work and we have a way and a path to give them those hours and provide more flexibility. That way they can care for their own children or the elderly or do whatever they have to.

It’s more typical that it’s the female that must care for the children and with the inflexibility of the way we handle our manufacturing shift operations, it makes it really hard. There’s more to be done here. I’d love to be a leader of change in that space. Hopefully, over time, we’ll get there. But there’s more that can be done to offer flexibility for quite frankly, everyone so that American manufacturing jobs are more attractive.

Spencer: This is just more of an observation than anything. As a working mother, schedules are one thing, but there are so many other external factors that are working against it. Childcare is hard to access, even for upper-middle-class working women. Then it’s exponentially harder for the ones who are living paycheck to paycheck. I’m really thinking out loud based on what you said. Wouldn’t it be great if manufacturing could be the centrifuge of change? If it starts with flexible scheduling, maybe other things can fall into place.

Nicosia: I love your idea, but I also think of technology as a huge enabler. Technology is being used in ways that are even related to more physical jobs, where there are devices that allow you to lift three times your normal strength. And you think about how to engage all these different factors, whether it’s people with disabilities or women in the workplace that have all kinds of other demands on their time, I think technology could be a big unlock to create change.

Spencer: You’re right. I try to use my position as media to project that technology and automation aren’t designed to eliminate jobs, but it’s designed to help people do jobs that they wouldn’t otherwise be able to do, as well as accommodate for a dwindling headcount.

Nicosia: Absolutely.

Spencer: All right. So, you pretty much answered my last question before I had a chance to ask it. Because we talked last week about runway and thinking about it from your perspective and how you’ve grown in your career. What does the runway look like for contract manufacturing or for food manufacturing in general, for people to come into this industry, rise up in their careers and create a trajectory for themselves?

Nicosia: I think the very first thing is recruiting. We have to be more aggressive in trying to recruit more women into the industry. I think if they had the awareness of the great career opportunities within contract manufacturing, we would absolutely just simply change the numbers and bring more women in. But having said that, I also think as the industry has evolved, there are certainly more women coming in at entry levels.

Obviously, with the training and development that we’ve been doing, we’re looking forward to this pipeline of female talent that’s coming through at our supervisory level. We’d love to see more and more women in our manufacturing leadership positions. Today, one of our key platforms is led by a female. We have two COOs in our company and one of them is a female, she’s a fantastic talent. I would say Hearthside is very fortunate to have a stacked team as it relates to our female leadership across the company.

Spencer: Yes, absolutely. I’m hoping that I’m going to be able to spotlight that for the company in the coming months, that Hearthside is stacked, and I love that. Again, with such a traditional industry and engineering and manufacturing being male-dominated, and co-manufacturing being so behind the scenes for so long, it’s really exciting to see what Hearthside is doing to just really boldly forge ahead and make a change and be successful at it.

Nicosia: Well, I know the women that you’re going to be talking with. I think you’re going to find them fascinating with tremendous careers of their own.

Spencer: I love it. Darlene, that really wraps up this episode and this season. I just again want to extend my most sincere thanks for taking time over these five weeks to share your thought leadership and so many aspects of contract manufacturing. We talked a lot about some really important topics, and I just appreciate your time and insight.

Nicosia: Thank you so much, Joanie. It has been great getting a chance to talk to you these past five weeks, take care.

Welcome to Season 9 of the Troubleshooting Innovation podcast. Joanie Spencer, editor-in-chief for Commercial Baking, is spending this season with Darlene Nicosia, CEO of Hearthside Food Solutions. They’re talking about operations, culture and innovation … behind the curtain of co-manufacturing. Sponsored by Reading Bakery Systems.

In the fourth episode, Spencer and Nicosia take a look at what it means to be a modern contract manufacturer.

Learn more about this season here, and listen to Troubleshooting Innovation on Apple, Spotify and Google.

Joanie Spencer: Hi, Darlene. Nice to see you again. 

Darlene Nicosia: Great to see you, Joanie. How are you? 

Spencer: I am great. Thank you again for such a lively conversation last week around R&D. I’m excited for this week, and just looking at a lot of issues when it comes to what it means to be a modern co-manufacturer.  

I’m going to kick this off with one simple question: Is it just me or has the demand for contract manufacturing drastically increased over the past few years?  

Nicosia: There’s no doubt. There’s an acceleration of contract manufacturing taking place. There are a lot of reasons for it; I’ll focus on the three big reasons that I think there’s been a rise in contract manufacturing. There’s incredible demand that was created during COVID. I would tell you that what happened is that people changed their eating behaviors away from home. Everybody was locked down and at home spending more time with their families, and there was a huge demand for food at home.  

If you think about a business like ours, where we’re predominantly in the snacking side of business, we saw incredible demand for products out in the marketplace. Many of our customers called on us not only to ramp up the things that we are already manufacturing for them, but there were certain places where customers were outstripped of capacity and they asked us for help. We became a massive overflow point for them as well.  

I think you first saw this huge surge coming from COVID. But I think there are other reasons for it. You’ve never seen a marketplace like it is today. There are so many insurgent brands out there with great ideas, new ingredients, healthy, better-for-you ingredients and all types of sustainability coming into play as it relates to packaging, so many insurgent brands have come forward.  

Typically, those insurgent brands can’t afford or don’t have the expertise to have their own manufacturing infrastructures. They need to wait till they scale or perhaps they prefer to really focus on brand building. So they never really build an infrastructure from a supply chain standpoint, and they call on contract manufacturers to truly be their partners.  

Within that, you look at the cost of capital and there are choices are being made. Many of our customers would say they’d rather invest in media, advertising and consumer-facing investments versus spending it on the capital side and infrastructure. And I just think the most important piece in all of this is the expertise that really gets accelerated and brought forward by contract manufacturing. If you think about it, strong capable organizations with end-to-end capabilities from R&D through commercialization, manufacturing, safety, quality and all the things that you would want in your own internal manufacturing, but it’s external.  

That expertise is somebody else who’s invested to bring those products and skills to market. I think that capability externally has really accelerated the maturity of organizations, and the sophistication of contract manufacturing has really grown over the last several years. Our customers now have a choice, and they’re turning to contract manufacturing more and more frequently.  

Spencer: You mentioned emerging brands, and that has really been on my radar a lot lately. It just seems like there is this huge influx. Probably five to 10 years ago, most the time the story was often that my child had a food allergy that I couldn’t find a suitable substitute food for, so I developed my own and everybody liked it. Then they figured out how to scale it.  

But now, the creativity and identifying gaps in the marketplace combined with this new idea of what health and wellness looks like, consumers’ reluctance to make sacrifices for their health and wellness, and indulging in the foods that they like, and it’s all come together for the surge of these emerging brands. How is that impacting the contract manufacturing industry and is this a trend that has staying power? Is it going to have a lasting impact on contract manufacturing? 

Nicosia: You see this incredible amount of innovation coming forward from these insurgent brands. They bring to bear all kinds of great ideas; they’re tapping into ideas that may emerge at a dinner table and then they turn around and can find contract manufacturing and in weeks have product to market. 

So, they bring this entrepreneurialism and speed to the market. They call on contract manufacturers because of that speed and that capability that we can often offer to them. I mentioned that the maturity of contract manufacturing has accelerated and evolved.  

There are fewer and fewer barriers for a new brand to get to market. First, they can do direct-to-consumer very easily through digital. Just about anybody can sell what they want through a digital channel that’s easy to create. Accessibility to the consumer has been incredibly changed by technology. 

I think that the ability to manufacture in a high-quality way through contract manufacturing brings a tremendous amount of excitement into the space that we operate in. Many of these emerging brands start to grow and get the attention of the big guys, and  then they are acquired by a company that can scale them, the ability to get them distribution, shelf space and things like that. 

 So, for the winners out there, it is an exciting time. I think contract manufacturing has definitely enabled both the ability to execute and innovate in that space, but also the accessibility to grow quickly. 

Spencer: When you talk about the ones that are ultimately getting acquired, I’ve always had this theory that when you think about some authors, certain authors out there write books intentionally to be adapted to a screenplay. And I have a theory that there are entrepreneurs who develop brands to be acquirable. 

Nicosia: There’s absolutely no doubt. You can see it in the marketplace. Many of them are famous now. They have their own “recipe book”; they know how to do this and they’re great people to partner with. Certainly, they’re very innovative and they’ve got a network, which is so critically important to get brand visibility, awareness and trial. 

Spencer: So, your scope of customers is broad. You work with smaller nimble ones, and you work with the big brands. So, this rise in need for co-manufacturers and this influx of these insurgent brands, when it all comes together, what does that mean in terms of the competitive landscape for a co-manufacturer, especially when you have no brand to market? 

Nicosia: I think that we market ourselves as a trusted, reliable partner. Our reputation is determined by the quality, service and reliability that we bring. I also think value-added capabilities are what differentiates a company like Hearthside. I know in an earlier episode, we talked about our R&D capability and certainly unmatched in our size relative to some of our big customers. But if you can get the right audience and you can have the right conversation, we can bring some of that capability to complement what our big customers are doing.  

We do transactional work, but I think we do even better work when we’re working in partnership with our customers. When we get the opportunity to build those lasting relationships, we can bring more of our capabilities to bear, whether it’s related to how we do our work, the commercialization support that we bring or how we service our customers. But there’s no greater joy than seeing one of our customers truly scale a product, be hugely successful and feel like certainly we were part of that success. 

Spencer: As a mother, I feel like it is like watching your child do something great and just being in the back behind the scenes and knowing, “That is my kid, and I helped him get there.” 

Nicosia: There’s no doubt. Our employees feel like they’re an extension of the brands they manufacture every day. Whether or not their shirt says Hearthside or not, there is a tremendous amount of pride they take in what they do. 

Spencer: I love that you have a workforce that has pride in the brands that they produce; that’s really cool. 

We talked about this and we got into it a couple of weeks ago … your experience from the brand side of things … does it impact your view as a co-manufacturer and how you go to market? I know you have a philosophy that speed wins. How does that work in the context of today’s conversation? 

Nicosia: It’s funny because in my leadership team meetings, we always talk about the importance of supporting the brands that we work for and understanding what a brand stands for. Consumer expectations today are so high. They want to know that they can trust and that they are eating a quality product; those are paramount. 

We have the responsibility to ensure that all those things take place as we manufacture for our customers. They entrust us with billion-dollar brands, and we have to be the network that supports those brands in a way that maintains that trust at the point of consumption with the consumer. It’s really important for us; we talk about it a lot. When I’m with other CEOs, and talk with them about their businesses, there’s no doubt I understand the trust they’re placing in us when they ask us to manufacture their brands. 

Spencer: That’s a good segue into the next thing that I wanted to talk about. Contract manufacturing is on the radar more than it has been. One specific example is that Hearthside was identified in a New York Times article earlier this year, which led to a bit of a crisis.  

It brought contract manufacturing to the forefront in a way that was maybe unexpected, but that’s putting it lightly. I’m interested to hear your perspective on how a PR situation like that comes to light and how you learn from it and move forward from it.  

Nicosia: At the end of the day, we are in a manufacturing industry. Customers come to us for our asset infrastructure. I want to say the word “asset” infrastructure because people are assets. When I think about it, this asset infrastructure, which includes our people and, as many people know, the labor market has been tight for the last couple of years, and American manufacturing jobs are harder to fill today than they were even three years ago.  

We have a lot to do to attract more people into wanting these types of roles and give them training and help them develop so they can continue to grow in their careers. When I think about that, we’ve relied more recently on temporary workers to staff our plants, while in parallel, we’ve been aggressively hiring full-time employees.  

So, when this came to us, my first reaction was shock and disbelief. But we quickly pivoted to engaging with our temporary agencies, really to confirm they were abiding by our policy of requiring any of their temporary workers that entered our facilities to be 18 and over. We asked them to go out and validate their employment practices and confirm back to us that they were taking the proper steps, and they had the steps in place to confirm all their temporary workers were 18 and over.  

They all came back, and they did certify that to us. We also then required all of our temporary agencies that we worked with to utilize e-Verify. Some did and some didn’t; we made it mandatory moving forward. 

But also, on the customer side of this, we go to great lengths to protect the confidentiality of what we do and who we do it for. We also immediately placed calls to our customers to tell them our stance, our policies, our practices and the changes that we were making. While unfortunate, the best of relationships, I believe, are forged in the toughest of times.  

For us, I would say that was even true. The situation allowed us to get even closer to our customers and to talk with them about our practices. Many of them have known us for many years. They knew the type of customer relationship that we had had with them and they believed in us. I think that we learned a lot. We’ve made the proper adjustments to our system, and we continue to be a trusted partner.  

Spencer: From a leadership standpoint, what would you say to sum up what you learned in your first year on the job and how to move forward from such a devastating situation? How do you move forward from that and maintain those high standards that you do have in taking care of your workforce? 

Nicosia: I think the very first thing is communication. Whether it is talking to customers, employees or the values that we stand for, there is nothing that takes the place of communication. We turned to our teams and partners and talked with them about our business and what we believed in, what we were doing and had done.  

I think being able to maintain an open line of communication and knowing that you have values and processes in place are probably the biggest things that a business has to have as its foundation. But I think for me, my greatest learning was just continuing to talk to people, continuing to engage in dialogue and make sure there’s open conversation. 

Spencer: I really like what you said about your relationships becoming stronger in times of adversity. That is when you really discover the strength of the relationship when the times are bad. So one, I appreciate your candor and two, I appreciate what you’ve taken away from it and how you’re moving forward and just carrying those strong relationships through, because it’s not easy. 

Nicosia: Thank you. I appreciate that. 

Spencer: Having this conversation about contract manufacturing having a much thinner veil than it ever did, how do you see this evolution impacting things like culture within the organization or really contract manufacturing in general? 

Nicosia: I think this idea of thinning of the veil is becoming really important to my team as we talk through our ambition to be our customer’s best partner. I’m sincere in that I feel like as I came in, the business and too many of our relationships felt more tactical than they were strategic. As I’ve gotten to know so many of our customers, I’m constantly talking to them about the opportunity for us to work much more closely together, but I’m constantly also sharing my point of view on how our relationship could be different, and they would benefit from it.  

So, talking about the value equation and trying to share with them this idea of a relationship that goes far beyond CPG and contract manufacturer. It’s one of great transparency, especially in the commitments to each other for support and planning. But it’s this opportunity to also become extremely efficient, faster to market and bringing the opportunity to essentially affect their growth agenda at a faster rate. The only way that we can do that is by working more closely together and trying to really eliminate some of that tactical behavior that I think is prevalent in this industry. 

Spencer:  This thought just occurred to me: We’ve talked a lot this season about your experience leading a well-known brand. But the truth is, it doesn’t matter what brand came from or where you came from, you came into contract manufacturing not having been in contract manufacturing, and you came in at a time of upheaval.  

You have an incredibly unique perspective that is completely fresh from anything that anybody has seen on the co-manufacturing side. Usually, a contract manufacturer gets a problem and then you have to solve it and clean up the mess. But it sounds like you’re coming into this and looking forward to the industry with how we can proactively avoid those problems and streamline things so that we can be a better partner, a help us help you type of thing. Is that fair to say? 

Nicosia: It absolutely is. I do think at the heart of it, it is about helping our customers be successful. But it also is partially selfish because I see the frustration from my internal teams, and they wish they had known about something earlier because they could have helped. They saw a problem coming, and they didn’t have an outlet to communicate with our customer base, and the person that they would share it with wasn’t able to escalate it to get it to the right person in the right department. This idea of being able to be better partners creates a tremendous amount of value in everything that we do, so it really does resonate with me. 

Spencer: Talk about being a disrupter. I think that you can change the game for modern co-manufacturing. 

Nicosia: You are so kind, Joanie. We’re doing our best one step at a time here at Hearthside. 

Spencer: I think that’s a good note to end this week on. 

Nicosia: Thank you. I look forward to our time again next week.  

Spencer: Next week will be our last episode. I’m so excited because we are going to unpack your unique leadership perspective as a CEO with a very interesting background, so I can’t wait for next week to wrap up the season. 

Nicosia: Awesome. Thanks, Joanie.  

Welcome to Season 9 of the Troubleshooting Innovation podcast. Joanie Spencer, editor-in-chief for Commercial Baking, is spending this season with Darlene Nicosia, CEO of Hearthside Food Solutions. They’re talking about operations, culture and innovation … behind the curtain of co-manufacturing. Sponsored by Reading Bakery Systems.

In the third episode, Spencer and Nicosia explore how product innovation is playing a new role in contract manufacturing.

Learn more about this season here, and listen to Troubleshooting Innovation on Apple, Spotify and Google.

Joanie Spencer: Hi, Darlene. Thanks for joining me again this week.

Darlene Nicosia: Great to see you, Joanie. How are you?

Spencer: I am great. I’m super excited about the topic this week because I feel like it’s something that has changed in the world of contract manufacturing over the past five to 10 years, thanks to Hearthside.

Nicosia: Well, thank you for that endorsement. I think there are a ton of changes going on in our industry. If you look at the changes that have taken place over the last five to 10 years, I think the most important thing is that our customers have changed. An important part of our strategy is to meet our customers where they are. The majority of our customers come to Hearthside for long-term strategic partnerships. In fact, of our top 10 customers, we average 23 years of experience with them. So, these are long-term, long-standing partnerships, but how we interact with them has really evolved. The biggest thing that I would call on is the fact that, now more than ever, our strategic partnerships are truly that, they are partnerships.

If I look back 10 years ago, business was much more transactional. The role of a contract manufacturer was much more for overflow. It was when there was a surge in demand, or there was a unique need. Maybe there was some innovation where a branded company may not have the infrastructure to produce in-house, and they were waiting to make that investment to see if that innovation took off. But I think the role today really is much broader than that. There’s certainly the opportunity for us and our competitors to be overflow, but there are other situations where there’s a promotion so there’s an episodic demand. Maybe somebody’s going into a new club store or something like that, and they need a surge in production capacity, and they’ll call on contract manufacturing. Or say they need flexible packaging capabilities for displays or something like that; they’ll come to contract manufacturing. But more importantly, I think there has been this big change in partnership in this ongoing, long-term relationship, where contract manufacturing really is an extension of our customer’s supply chain.

Spencer: I have really seen that evolve. But you’re right, like overflow is always going to exist. I was just talking to someone at PMMI about changes in packaging with overflow. It’s easy to just send that over to the co-man. But R&D is really coming into play, and I think Hearthside is leading that charge. How have the increased R&D capabilities of Hearthside? And I should backtrack to build some context, Hearthside had some strategic acquisitions that enabled a really strong R&D capability, right?

Nicosia: I think we’ve probably had a number of bolt-on acquisitions that have brought some of this R&D capability to us. I think we talked in an earlier podcast, we’ve had 10 acquisitions over the last 13 years. With each of those, we’ve been able to take the best of what was offered in those businesses and build upon them.

We certainly do R&D work across a pretty broad breadth of our business. I think what is important is that we offer this incredible optionality for customers because we have pilot lines, so we can do testing at small scale for trials in target markets for customers. But if those are successful, and they immediately want to expand that success, we have the massive capability to then go in and produce at scale across all of North America without a blink.

We have the ability to learn with them to understand what’s working well, both in getting the consumer feedback, making tweaks to recipes, looking at packaging options, and how to make some tweaks as you go into bigger and broader distribution across the landscape. I think that is something that sets Hearthside apart from a lot of our competitors, but we don’t necessarily have to run big lines. We can run small quantities on small lines and big quantities on big lines.

It allows our ops teams the opportunity to think through different stages of a product lifecycle, which is really important. The last thing you want to do is grow out of your contract manufacturer and then have to go to a new one and start all over and re-commercialize those products, and then — boom — you’re out of capacity again. Being able to start with a contract manufacturer that can help you throughout different levels of a product lifecycle, I think is really important.

Spencer: I was sitting here thinking, I guess the easy answer is, of course, you have those capabilities. You have 39 facilities, so bandwidth isn’t an issue. But it’s more than that, operationally. And I’m asking you as the puzzle solver, how do you do that strategically? Because there has to be a lot to that puzzle. And I’m thinking the quintessential operations and R&D don’t always play nicely together, so do you have to be the referee?

Nicosia: There are natural tensions in our business, small to medium-sized production runs or customers may have four to six flavors of an SKU of a particular brand. It requires a lot of changeovers. There is lost production time in that, there’s certainly more scheduling and there’s more complexity in it. But we try to focus our speed and efficiency on all these aspects to be the best in the industry at doing that work.

You talk about these different capabilities, and many of our lines are completely sold out. So, scheduling often is a challenge, and you want to satisfy all your customers all the time. I can only think of one occasion in my career where I had to essentially make a call on running a startup launch for a customer and had to really collaborate with another customer to make the time work for everyone.

But there are times when you have to do those things. It’s not common and again, we have a tremendous amount of focus on trying to satisfy all our customers at once. But there are times when something may not go right as you’re starting up or commercializing a new product and you have to be able to be flexible in those moments.

Spencer: This is an insight that really anybody can use if you apply it in the right way. For our publication, I’m thinking, when we have a bandwidth issue, we can’t just add more lines or acquire a new facility. We have to really get strategic. It’s the classic, “work smarter, not harder” for you on a much grander scale, but I’m hearing what you’re saying and thinking I can see where we could apply that and make different shifts to have some give and take with customers in order to get to the same end result in a more efficient way.

Nicosia: It’s interesting. Bringing a new product to life is truly both art and science. It takes a tremendous amount of collaboration because different machines, processes and atmospheric conditions can all have an impact on a product. You have to have a lot of collaboration in the process.

Lucky for us, we have incredible R&D, commercialization and engineering teams. They are constantly finding ways to use a combination of ingredients, processes and equipment to bring new flavors, tastes, textures or whatever it is, to products. So, the best relationships are the relationships where I think our customers are open to exchanging ideas, hearing our thoughts and bringing us in early. Even if we don’t develop the product and they develop it, we get the opportunity to co-create. Executing is different from ideation. Right?

Spencer: Absolutely. That was going to be my next question — what’s trending for you right now? Are you innovating with your customers or innovating for them? In other words, do you typically troubleshoot on a customer spec, or do you find yourselves bringing product development ideas to the table and helping them come up with new ideas?

Nicosia: I hate to say this, it’s both. Our biggest customers have huge R&D organizations. It’s amazing in my mind because earlier this year we went to one of our largest customers, and we brought them 10 concepts. We said, “This is just for ideation and creative thinking. Maybe you can think about some flavors.” We all like to eat around the table, so we brought in some samples. The feedback was incredible. They were like, “Wow. We love the ideas that you brought to us. Our R&D team is backed up for 18 months, and it would take us so long to get this product to market.” They came back to us two weeks later and said, “We want to run with three of your recipes and ideas.” We were out in the marketplace in six months. So even when somebody has a really established world-class R&D organization, sometimes there are competing priorities.

Many of our customers are in multiple categories. They’re trialing things with new ingredients or things that may have new sweeteners coming into the market, whatever the case might be. R&D is so broad for them, that to actually get to commercialization takes a long time. What we can do is sometimes accelerate that process, especially if it’s something small, such as flavor changes. In these examples, we just took some on-trend flavors and ingredients and added them to an existing product line, and it’s been a huge success for us.

Spencer: This gives me two thoughts. One, this puts an entirely different view on what overflow means. So, 10, 15, 20 years ago, you went to a co-manufacturer for the operational overflow. But now, brands can come to a co-manufacturer for their R&D overflow and product ideation overflow and say, “We don’t have time to come up with something new, because we’re cranking out snacks for Super Bowl season. Can you come up with something so that we can focus on this?” And that is a little mind-blowing.

Nicosia: It is. When I talk about the duration of our customer relationships, I think our biggest customers have tried to harness the best of what we can offer and what they offer, and found a way to really create this true engagement, where we’re like an extension of their business.

I often talk about wanting our manufacturing plants to be an extension of our customers’ supply chains, to make it feel like it’s such a clear handshake in the process that knowledge and product and ingredients flow so seamlessly between us so that you would never know that it was made in a contract manufacturing environment. But there are some customers still who predominantly interact with us transactionally, maybe the relationship is just for a single product, and they’re not ready to engage the full portfolio of what we could offer.

Spencer: So, the second thing that came to my mind was when you said that you had a customer meeting that was typically transactional and you said, “Hey, we just thought that we’d bring some products for you to snack on while we meet and see what you think?” How do you prioritize making time and space to just get creative and come up with new things  that maybe you can throw out there as “food for thought.” How do you work that into such an intricate operation?

Nicosia: I think it starts with being customer centric at the start and thinking that every one of our customers is focused on growth. They want to have growth in the categories they operate in today, they’re trying to find new adjacencies or whatever the case may be. Everybody’s focused maniacally on how they can continue growth in the marketplace. I think our role is to continue to stimulate ideas, to be a thought partner, to have the capability behind us to go and make it happen and execute it. A lot of people can come up with ideas. There are very few that can be strategic, bring ideas and then be able to execute them, and I think that’s what Hearthside offers.

Spencer: You came from a world that was intrinsically connected to consumer trends and consumer demands. Now that you’ve been in the co-manufacturing world for a year, I’m going to assume that even without a brand, co-manufacturers are not immune to these really rapidly evolving consumer demands.

Nicosia: You have to know what’s happening with the consumer to run a successful strategic contract manufacturing company. First, we have to be able to talk with our customers about the trends and growth rates for us to align on what infrastructure will be needed in the future. We need to know better than they do in some circumstances because some of our lead times on equipment and infrastructure could be 18 months or longer.

But if you look at things like better-for-you snacking, you have to understand how would that trend of better-for-you snacking impacts ingredients? How do those ingredients behave differently in processes? Do they introduce moisture? Do they impact shelf life? You have to look at the trends right now with consumer behavior and really understand a lot of that.

Right now, you can look at inflation. Everybody’s looking at inflation prices have gone up, many consumers are having to make different choices about their spending. How can we help? I think we have a huge role to play. We can provide insights about revenue growth management. We can talk about pack sizes and pack size changes, and what it takes for us to do that again to get to the market faster.

Again, we enable speed to market. We have insights on how to maintain magic price points; we can offer club packs. We can do all kinds of things at a discounted price-per-unit in a club pack so that maybe we help bring solutions forward to the customers that we manufacture for and provide solutions that they’re trying to solve without necessarily having to have it impact their margins. So, whether it’s ingredient optimization or thinking of substitutions, there are all kinds of ways for us to also think about it on the cost side and the product side without impacting quality.

Maybe from my long time at a branded company, I’m always thinking about how to grow the top line. But I think there’s also a lot that we do to try and control costs, maybe take costs down and find product substitutions. All those things also add up to take pressure off of our customers, and those are kind of critical elements of a strategic relationship.

Spencer: It’s funny because I’m sitting here thinking about your experience with a big brand. I’ll tell you that I grew up in the era of New Coke and the New Coke experiment. I remember Coca-Cola consumers are fiercely loyal. Do you feel like having that insight of coming from a brand with such fierce loyalty that you have this frame of reference and know what loyal customers are and are not willing to put up with in terms of how far outside of the scope of change they want to go?

Nicosia: It certainly helps. It’s an experience like no other. I think some of the spaces that it helps me in is really understanding when people are looking to drive innovation within an existing portfolio. Billion-dollar brands are supported by innovation, and I think maybe one of the examples I draw upon is my time at Coca-Cola with Coca-Cola Creations.

Coca-Cola Creations created a ton of buzz and a lot of excitement but it also buoyed and reignited passion around the brand Coca-Cola. I think just being able to talk about that, whether it’s customers making their own LTO’s or holiday packs, there’s a huge need for innovation on the fringe, to bring consumers back to that core that they know and they love within that portfolio. So, we do a ton of brand extensions. It’s a really important element of an overall strategic plan for any one of our customers.

Spencer: That’s interesting. On that note, the next question is just about food and beverage manufacturing. When you look back on your history and professional experience, and you think about the change that manufacturing has been through over the course of your career, how far ahead is the industry from where you imagined it would be by now?

Nicosia: I love the optimism in your question. I actually think we’re probably more at the other end of the spectrum today, but I see endless opportunities. So perhaps I’m always looking out that way in an optimistic point of view.

But I’d probably say the starting point is on the low end of the spectrum. I think there are places where, for the tremendous amount of flexibility contract manufacturing offers to its customers, you have to be agile and offer some level of uniqueness that each one of our customers wants, yet do it with somewhat common infrastructure.

Because of that, I feel like we have less automation. There’s probably a lot more hand-touching of packaging and processing then you may find a more advanced manufacturing environment with a ton of automation. Now, I have to say, where we have long-term strategic partnerships, say a seven-year contract or something like that, where we have high demand for a product, we’ll put in tremendous automation — digital sensors, monitoring, quality technology and things like that. I’d say that in  that particular circumstance and situation, we are more on the far end of manufacturing in terms of manufacturing innovation. It is a bit of a mixed bag, but I think there’s a bigger opportunity for our industry.

It’s about this ability to have longer-term partnerships with our customers so that we can make the necessary investments to be world-class extensions of their supply chains. It’s not just in the manufacturing process; it’s in how we forecast, plan and share inventory levels. Just the ability to give transparency across the supply chain would be a huge step in the right direction. I see very limited circumstances of this being used.

When you think about the ability to have a consumer buy a product that scans across your register, and it sends back fulfillment signals, not just to the customer, but all the way through the supply chain to a contract manufacturer. That’d be incredible.

And if you could think about going back into the ingredient suppliers, it would be even more incredible. We could probably take a lot of cost out because of the reliability we could offer. In my opinion, co-mans are still treated somewhat as dispensable relationship partners. Some of that is in the short contract durations.

I could have a crystal ball and get a wish, I would really encourage our customer side to do less spot buying and really think about engaging in longer-term relationships. I think it could be much healthier for both of us and give us the ability to use technology information and other things.

Spencer: When you talk about the idea of tracking that purchasing data, like sending that information all the way back through the supply chain, I think it would really help with forecasting and your equipment needs as well, if you could gauge here’s where the purchasing growth is in this area and these are areas where we could automate more. We need to really put the focus on how we’re investing in automated equipment in this area, versus the growth that is happening in areas where we need more flexibility because there are a lot of line extensions and different varieties that are becoming more popular. I think it would just really streamline a lot throughout the supply chain.

I’m going to circle back. We kind of got far ahead, so I’m going to take it back in to talk about product innovation. We’ve touched on a lot of things. How do you think this evolution has impacted your own personal philosophies for co-manufacturing?

Nicosia: I would say I learned a lot in my time at Frito-Lay and Coca-Cola. I learned a lot about product innovation, and so, whether it was about recipe formulation or the opportunities to bring new ingredient blends forward, to improve a taste profile, reduce calories, or take out cost or create redundancy of supply, when you think about the innovation at shelf, how to win displays and how to take on more space in a retail location, we talked about the whole idea of this halo effect of innovating around a core brand and the excitement that it brings.

Behind every innovation, you have to have end-to-end visibility, collaboration and execution capabilities by all partners. And so, when I think about customer relationships at Hearthside, I would love to have these customer relationships where they would bring us in, give us visibility into whatever they’re innovating, welcome our collaboration, d let us advance the possible success through the ability to partner with them because at the end of the day, they’re going to turn to us and ask us to execute.

Oftentimes when we get brought in, everything is already decided and the recipe is solidified. They know what they want to do; the packaging is decided. And far too often, I think, we’re brought into the process late. Then we tactically end up executing on very accelerated timelines. So we give our best but leave, I think, an opportunity on the table where we probably could collectively do better. It certainly has changed how I think about manufacturing, and I’m constantly trying to escalate conversations with our customer base to bring our teams in earlier.

Spencer: Do you think we’re heading into a new world where marketing, R&D, operations, and co-manufacturers can peacefully coexist?

Nicosia: I’m a former chief procurement officer. I think in so many ways, we have a right to say we would love to be engaged with all the winners in the innovation process. But I would also say, it’s tough because oftentimes, my teams are engaged with procurement when we really need to be engaged with R&D. We need to be engaged with others that are involved in the supply chain, sometimes even engaging with brand managers.

It’s this constant push to have us be a more integral partner than to be a transactional partner. I think that happens over time. It happens as trust is built. I love my procurement partners out there, but sometimes they’re a barrier, because they don’t necessarily want to give us access to what we need to really give our best and be the best collaborative partner that we can be.

But again, I think our story is only in the middle chapters, and I think there’s so much more for us to do in terms of building a profile and elevating the role that contract manufacturing can play with our customers. I’ll leave it at that.

Spencer: Okay, there’s a runway.

Nicosia: I love it. There is an absolute runway.

Spencer: All right, Darlene. Those are all my questions for this episode. What a great conversation this was. I enjoyed talking about the new world of R&D and contract manufacturing. So, thank you so much.

Nicosia: Thank you, Joanie. Great talking to you again. I’ll see you next week.

Spencer: Next week, we’re going to look through your eyes at where we are in general and the evolution of contract manufacturing, so I can’t wait.

Nicosia: Awesome, take care.