Shaping Sonoma’s Future?

Story David Bolling
Photos Steven Krause

Jon Sebastiani is busily building an entrepreneurial mountain on a pile of Krave

There isn’t, but maybe there should be a picture of Jon Sebastiani next to the word “entrepreneur” in Merriam-Webster’s Collegiate Dictionary. Because that may be the one word that fully defines him, and because he is on an epic, entrepreneurial roll that is now reverberating through Sonoma and far beyond.

With one improbable snack food—a market-disrupting jerky called “Krave”—and five frenzied years of entrepreneurial brilliance, Sebastiani redirected a multibillion dollar industry, completed a Berkeley-Columbia MBA, became the focus of a graduate business class, and sold his company to an iconic candy conglomerate for close to a quarter of a billion dollars.

It may not be too much of a stretch to semi-seriously suggest that Sebastiani ironically represents the post-wine future of Sonoma. Ironic, because his wine roots run deep, his name is iconic in Wine Country, and it appears on wine labels that now have nothing to do with him.

Semi-serious because, notwithstanding the prohibitionist tendencies of some critics who seem to object to the very idea of “Wine Country,” wine is still who we are, what we do and how we pay the bills.

That said, Sebastiani has charted a different business path, one that has little to do with wine and everything to do with establishing himself and Sonoma as the font of an emerging snack food paradigm focused on health, fitness and fun. It’s called Sonoma Brands.

That in itself may surprise some people who, if they ask themselves what they would do with $240 million, conclude that the answer isn’t work.

“To be totally honest,” says Sebastiani, “before the Hershey deal happened, I actually reflected on what it would be like, emotionally, to have that transaction, to check that box and go, ‘Wow. I actually did something that was bigger and broader than I ever dreamed of.’ And obviously, the money was part of that reflection; how was I going to feel? Would I even have the motivation to work anymore? Would I just want to go fishing? Did I want to explore? I had no idea. But what struck me after the sale was the depth and the power of the conviction to do it again.”

Doing it again meant starting another company, building another business, creating, finding, investing in, new products consistent with the lifestyle image established by Krave.

“So with Sonoma Brands, it was like I wanted to climb two or three rungs higher up the ladder. And I felt like we had the team, meaning this incredible group of salespeople, marketing people, finance people, operations people. We had a playbook. We understood, or at least we thought we did, how to bring a brand to life.”

So Sonoma Brands was born and now occupies much of the second floor above the old Index-Tribune office just off the Plaza on West Napa Street.

“The overarching thinking was, we’re going to both invest in and create new brands. We’re going to leverage our team, and our playbook, and our knowledge, and our relationships to create what we call a lean launch pad—fatal-fast, kind of tech-friendly methodology, to win the best, early-stage investment deals.”

So, in a first round of financing, Sonoma Brands raised about $15 million and deployed the capital into three deals. The first, ZÜPA NOMA, is a superfood fresh chilled soup, created from scratch, each bottle containing four-plus servings of whole organic vegetables through high pressure processing that includes skins, seeds and all. ZUPA NOMA comes in eight flavors and is marketed with the help of celebrity endorsers, including Steph Curry’s celebrity chef wife Ayesha Curry and triathlon champion Meredith Kessler.

This, says Sebastiani, “is the top of the food chain of health and wellness. We are positioning this as a far superior alternative to what consumers perceive fresh juice to be for them. If you buy a fresh juice, you’re going to spend five, six dollars for a premium juice that’ll have 60 grams of sugar. Our bodies just aren’t meant to have seven pieces of fruit jammed into a 12- ounce bottle, which is what a lot of these fresh juices do. We’re a compliant partner to the Whole30 program, which is a 30-day program using the cleanest, most elevated food sources available, by including the skins and the seeds of our vegetables. We’re capturing more fiber, we’re capturing more vitamins and better-for-you ingredients in there.”

The second product, another Sonoma Brands start-up, has been, if you’ll pardon the pun, a smashing success. It’s called SMASHMALLOW, and if you haven’t seen it by now you live in a cave.

Smashmallow—a reinvention of the classic marshmallow with intriguing flavors and a slight crunch to the surface, has exploded. “It’s a rocket ship,” says Sebastiani. “We’re going to do close to six million dollars in our first year of business. It took three years for Krave to get there. And we already have a line extension, a spin-off product, with SMASHCRISPY. We’re launching into every Target store in America in February. Nationwide Whole Foods, Kroger, Safeway. We’ve taken the ordinary marshmallow, a very dusty, tired, stale category at the bottom of the shelf and what we call the center of the store desert, and made it extraordinary by adding flavor, and delicacy, and delightfulness and great packaging.”

Like Krave jerky, SMASHMALLOW was born out of a problem. Krave solved the problem of Jon needing a healthy, low-fat, slow burning snack as he trained for a marathon. SMASHMALLOW addressed a different problem.

“I have a terrible sweet tooth, and I love cookies, candy, chocolate. And so to stay thin and fit, my little secret go-to was a marshmallow. It always has been. I’d pop a few marshmallows in because there’s very few calories, and zero fat. And it kind of scratches that itch with much, much, less guilt than whatever your candy or confection of choice is.

“And so I’m thinking, just like it was with jerky, this problem is built around running, it’s around my desire to stay fit. And I’m thinking, I can’t be the only person with this problem.”

Jon was in Europe, shortly after selling Krave, when the solution arrived in the blaze of a classic epiphany. “I’m going from bakery to bakery in France, and I start to see a common thread of these marshmallows that are presented in this truly decadent, flavorful fashion next to the macaroons and pastries. And it hit me. I said, “This is it. We are going to re-launch the marshmallow.”

A brash thought, perhaps, but that was just the start of the idea. “The big idea, if you think about it, is we’re going to make it snackable. This is no longer just an ingredient to bake with, or an ingredient for the s’more. We’re going to make it snackable. And then, as you do with any business, you have to identify the ‘SAM,’ the size of addressable market. So back in the U.S., we learn the domestic marshmallow business is about $1 billion. But the U.S. non-chocolate confection space—the Starbursts, and Skittles, and cookies, and Twizzlers, and Red Vines, and Gummy Worms, and Jelly Belly beans—is about $30 billion. And we immediately said, ‘We’re going to fish in that pond.’”

Part of that fishing strategy was to pull the base product out of its conventional context.

“We took a very ordinary item where there was no innovation; it was vanilla marshmallows. That was it. Now, we have all these fun flavors. Of course, we took out high fructose corn syrup and layered in organic products and ingredients. No artificial flavors. And we put a health halo over it, and we launched it. And it was important when you think about strategy, that the brand and the product was merchandised in a location away from the baking set. “It needed to be merchandised next to Brookside, or barkTHINS, or Justin’s Peanut Butter Cups. A premium Snack-Fection. That’s an industry term. It’s the intersection of confection and snacking. And we felt like there’s a tremendous opportunity.”

And they were right.

Next up was a very different move, a “strong minority” investment into an existing company called Dang Foods, Berkeley-based makers of toasted coconut chips, in a variety of flavors, followed by multiflavored sticky rice chips and onion chips. Dang is on a steady, double-digit growth curve, stable, solid, but not in the same performance league as SMASHMALLOW.

Finally, Sebastiani has made one other recent move into another existing, outside-the-box consumable product—Guayaki Yerba Mate, a well-established, Sebastopol-based business, with a beverage that slots well in the product line Sonoma Brands is developing.

Yerba Mate is a South American botanical brewed from the leaves and stems of the rainforest holly tree and consumed widely in Brazil as a healthier alternative to coffee.

Sebastiani made one other investment a year ago that has nothing to do with nutrition or snack foods (other than a place to consume them) when he bought the semi-pro Sonoma Stompers baseball team. That, he says, was an investment in the community, and an expression of his love for the game, which he excelled at in high school.

His investment strategy, meanwhile, is only gathering steam. He has now completed a second investment fund of $60 million, which will begin to shape future business decisions, investments and growth strategies.

And that leads to the issue of his larger impact on the city that has been his home and his home base all his life.

“Sonoma is important to who we, Sonoma Brands, are, for a variety of reasons,” he says, “drawing from the agricultural entrepreneurialism that is so vibrant in this community by building a third leg of the stool. The two other legs being hospitality and wine. I see us bringing a powerful base of food to Sonoma as part of our mission. And bringing talented, young professionals to Sonoma has a secondary benefit to this community.”

To date, Sonoma Brands has hired some 50 employees, and Sebastiani says there are current openings for several more.

“I would like to bring a new wave of young professionals to Sonoma, by creating a career in food and beverage. It’s a very attractive proposition, I think. I feel proud that we’re doing something unique. I feel a sense of indebtedness to this community, and given where I came from, I hope to continue to support entrepreneurs in this community in every capacity.”

If the trajectories of Krave jerky and Smashmallow are any guide, Jon Sebastiani may well be shaping Sonoma’s entrepreneurial future, one company at a time.

 

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