We’re back from Expo West and feeling invigorated. Between catching up with our portfolio companies and co-investors, sampling so many delicious and cutting edge products, and hearing from exceptional industry leaders, the return of Expo West was definitely one for the books. With so much going on it was a real pleasure to be able to host a breakfast where we could reconnect with some of the entrepreneurs we work with as well as other partners and leaders in the natural food community.
The main event of the gathering was a panel discussion on “Covid’s Impact on CPG and What’s Next”. The discussion was moderated by our Managing Director Chuck Templeton, and speakers included John Foraker, CEO of Once Upon a Farm, Katlin Smith, Founder and CEO at Simple Mills, Vineet Mehra, Chief Growth, Product and CX Officer at Good Eggs, and Jason Widener, Director at Erewhon Market. Sitting down with entrepreneurs is always a recipe for thought provoking conversation and we wanted to share some of these insights on the changes that they have seen over the past few years and what they mean for the future of the food retail sector.
What are the biggest lessons you have learned over the past 2 years?
John Foraker: It’s about how you work rather than where you work. After we got past the first phase of the pandemic, which was figuring out how to keep people safe while working in a plant, our response then became about how we cultivate the right culture and facilitate effective communication. It has been an incredible learning journey but there are so many positives that are going to come out of that.
Katlin Smith: The impact that companies have on our planet has become very clear. Food and agriculture supply chains make up 25 percent of our global carbon impact. But as players in the food industry, we have the opportunity not just to do less bad but to do plenty of good. There is a renewed sense of responsibility as a participant in this industry about the impact companies have the potential to make.
Vineet Mehra: We’ve realized the power of vertical integration. We have built a first party model for our labor and supply chains so we own our own inventory. As a result we have largely been in stock despite the larger trends of labor shortages and supply chain disruptions.
Jason Widener: Consumers want in person experiences. While we have done well on digital channels, they have also slowed recently because people want the experience of coming into the store. At Erewhon, our focus is on the relationship to the consumer. People definitely want the digital experience and the cutting edge technology but they also want to interact with people and the products.
How has the consumer changed over the last couple years and how have your products changed in response?
John Foraker: Consumers want more than just taste. People want to know how food is impacting their health, the climate and the world around them. This trend will continue and there is a lot of opportunity to innovate around that. At Once Upon A Farm we’ve been focused on adding functionality, explicitly designing products for next level benefits and communicating clearly about those features. For example, we have created more targeted products such as Smart Blends with ingredients focused on brain health and development.
Katlin Smith: Forming partnerships is critical to drive diversity in crop consumption. Crop diversity is not only important for human health but for the planet. We have made the commitment that 100 percent of our new product launches will advance regenerative agriculture. We have already begun putting this into action by increasing the diversity of what people eat away from the big 4 crops that make up more than half of farmland, forming partnerships with farmers throughout the supply chain, and providing them with incentives, education resources, and financial assistance to implement regenerative practices.
Vineet Mehra: Food companies have to diversify. Consumers want to eat what they want, when they want, and how they want to eat it. In response, food companies have to transition from really narrow areas of focus such as being a meal kit company, restaurant, grocer or food delivery company into much more integrated and consolidated models. The companies that can find a way to blend physical experiences, digital experiences, prepared meals and ingredient options will excel. In response to this shift we’ve doubled down on our Good Eggs Kitchen products so that consumers can purchase prepared food made with the Good Eggs ethos and quality.
Jason Widener: Consumers are setting goals. Over the past couple years, consumers have had time to think, learn and make changes to their lifestyle and the way they eat. Consumers will keep asking questions and it is our job to support them in achieving their goals.
What are your predictions for the next few years?
John Foraker: Innovation will make a comeback. For the last 2 years it has been tough for emerging brands when it comes to innovation. SKU rationalization and the struggle to keep things in stock have resulted in the little guys getting squeezed out. But innovation is really starting to pick up and the next couple of years will be a great time for novel products. Consumers are looking for something new and they will pay for exciting food options and experiences.
Vineet Mehra: Experiences and private labels will be key for retailers. The world is going to be experiential in what I call a “phygital experience”. All brands whether they are CPG or retail have to figure out how to manifest themselves in an integrated way and create not just unique roles for channels but integrated roles. Additionally, the concept of private labels is going to evolve dramatically. It used to be about price point but retailers are moving their private labels up the value chain, creating more competition. Retailers have direct relationships with customers and can cultivate the physical and digital environment and that will really raise the bar on what CPG brands need to offer retail.
At S2G we hope to continue to create opportunities for stimulating discussions and idea sharing between our remarkable community. Next up, our oceans team heads out to the Seafood Expo in Boston and then we are off to World Agri-Tech, Animal AgTech and Future of Food-Tech back in San Francisco. If you are planning to be at any of these events, our team would love to meet you. Drop us a message at firstname.lastname@example.org and we will coordinate a meeting time.