SHRINKAGE ALERT! WHY SO MANY CGP STARTUPS ARE SUDDENLY SLIPPING

Gone are the days of blank checks for hot new consumer packaged goods. Founders now face a gauntlet of challenges, from the boardroom to the grocery aisle to the shopping cart.

- Tom Foster

FOR YEARS, THE BUZZ AROUND Me & the Bees lemonade just kept growing. The Austin-based company charmed its way into recent startup lore with its young founder, Mikaila Ulmer, getting stung by a bee at the tender age of 4 and then deciding to sell family-recipe lemonade with honey in it to bring attention to the issue of plunging honeybee populations. What started as a family project in 2009 made it from a few local youth-entrepreneurship fairs all the way to a deal with Daymond John on Shark Tank in 2015. It was a business fairy tale, with nationwide distribution in the largest grocery chains, international press attention for Mikaila, and a spot in the 2022 Inc. Regionals as the 36th-fastest-growing company in the Southwest.

But right about the same time Me & the Bees landed on the list, Mikaila and her family noticed some big changes in their business. Perhaps most alarmingly, the powerful Texas grocery chain H-E-B suddenly skipped a regular purchase order-and then another, and another. Among other things, the unexpected drop in sales to H-E-B left the company in a tight financial bind, not only reducing its revenue but also tying up much of its available capital in a glut of unsold inventory.

Now 20 years old with the poise of a natural CEO, Mikaila points out that H-E-B has a reputation for lifting up local suppliers-so she and her parents, D'Andra and Theo, were rattled. The Ulmers take turns telling the story around the kitchen table in their bright yellow South Austin home, handing the narrative back and forth and finishing one another's thoughts as if they shared a brain. "We love H-E-B," says D'Andra. "We shop there, and I wanted to continue to feel good about it." So began an all-hands-ondeck effort to understand what was happening and to turn the relationship around.