The Invisible Industry

We’re pleased to bring you this guest post from Kora Lazarski, an organic and natural foods business professional who shares her thoughts with us on the Good Food Festival and on how good food fits into the marketplace:

photo: © Amanda Areias

photo: © Amanda Areias

Something is happening in the world of consumer packaged goods. In the same way that once large, conventional brands noticed growth in a new industry of natural products, the natural products industry (NPI) too, is finding within itself surprising new pockets of growth. Mysterious market share has blossomed for local foods, but sales numbers and exact definition elude all involved. Without clearly defined geographic boundaries and often lacking GS-1-Standard UPC codes, the hum of the local food industry grows steadily under all radars. I had the opportunity to attend the Good Food Festival in March and learn more about this movement and find out what ‘local’ means to me.

In the food categories, product ingredients come from various sources: smaller handcrafted foods are often composed of ingredients grown regionally, while many body care items are purchased through bulk organic herb and oil distributors. The common factor between food and body care though is their deep engagement with the industry of their local communities. Fresh produce comes from family farms; urban and community gardens; and cutting-edge net-zero energy vertical and aquaponic farms, like Chicago’s own The Plant. Popular local brands often work with food hubs like Blue Ridge Produce in Virginia, or the soon-to-open Local Foods hub in Chicago. These hubs collect and distribute family farmed products to retailers, restaurants, schools, farmer’s markets, and on for further value-added processing. The boundaries of their distribution range align quite closely with regional food shed borders, whose perimeters are no less fluid than that of a water shed, but may be the first step in defining just where local is.

Local foods are farmed using sustainable practices and are often not certified organic. The close relationships and transparency that make up a local food system ensure everyone knows whose operations are bona fide. The profits are reinvested into the communities in which they operate by creating new jobs and utilizing innovative local resources. Notable strategies include foraging wild-crafted herbs and greens, employing people with special needs for their operations, donating surplus to composting companies, and growing plants in solar-powered closed-loop aquaponic  farms. This harnessing of progressive technology and processes is also what catches the eye of private equity firms who are rapidly turning their attentions to this market. Their overwhelming representation at the recent Good Food Festival is a testament to that. Angel investors realize the high probability of profitable returns in goods that come with a solution. They seek brands with compelling stories, clear financials, strong management, solid exit strategies, value-alignment, and ideally, an innovative element that belies a larger investment opportunity. This begs the question of how scalable local can be, but it seems that for now, it’s best to let it grow and find out.

photo: © Kaitlyn McQuaid

photo: © Kaitlyn McQuaid

Nearly every local food manufacturer I spoke with at the Good Food Festival found early success testing their products on friends and family. Lines would then be launched at local farmer’s markets, then make their way to food cooperatives and smaller natural retailers. Larger retailers that embrace the trend have found success in both merchandising cross-category products in one devoted local section, or integrated with the rest of their cache. Regardless of approach, they realize these items turn at the shelf as consumers increasingly choose the price premium for the extra dose of delight a product with a story delivers.

The future of this market is being written by the day and will necessarily require the cooperation of all industry entities. Non-profit organizations like FamilyFarmed.org have done wonderful work with the USDA to provide federal support and resources such as creating a database of average price points of US family farmed goods, and driving legislative efforts to prevent the re-selling of commercially-bought products at local farmers markets. The success of this new generation of goods is founded on cooperation and goodwill, and whether a technological breakthrough or new system of measurement will be the first to define what it is, it’s likely that this invisible industry will keep running merely on the love and values that brought it to fruition in the first place.

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Kora Lazarski is a passionate business development and marketing manager for SPINS, a data company specializing in the natural and organic product industry. She also works with Chicago Market – A Community Co-op in launching Chicagoland’s first large-scale and full-service food cooperative. She was raised cross-culturally from a rural fishing village in Poland, a small Midwest farm in Illinois, to downtown Chicago, where conversations of food provenance, agricultural policy, and resource security held over home-cooked meals sparked her lifelong interest in sustainable food systems.

Good Food on Every Table

By Jim Slama and Bob Benenson

Building the Good Food movement is the core of FamilyFarmed.org’s daily work. So a discussion on the future of food was, shall we say, organic when FamilyFarmed President Jim Slama convened a group at his home on May 12 to participate in The Chicago Community Trust’s “On The Table 2014.”

The theme was appropriate to the occasion, as the Trust has a proven interest in advancing the Good Food movement. With support of The Searle Funds at The Chicago Community Trust, FamilyFarmed.org is launching the Good Food Business Accelerator, a Fellows program for food and farm entrepreneurs.

The “On the Table” event drew thousands of Chicago-area residents to share meals and discuss a wide range of topics about how to build a stronger community. For the FamilyFarmed group, each attendee provided a dish in which ingredients were sourced primarily from sustainable and local farmers.

It was an apt moment to discuss the organization’s vision: Good Food on Every Table.

Kim Bartko, Charlotte Flinn, Brandon Johnson, Grant Kessler, Holly Haddad, Lloyd Yanis and James Pirovano enjoy Good Food and good conversation at On the Table 2014. Photo by Bob Benenson.

Kim Bartko, Charlotte Flinn, Brandon Johnson, Grant Kessler, Holly Haddad, Lloyd Yanis and James Pirovano enjoy Good Food and good conversation at On the Table 2014. Photo by Bob Benenson.

Around the dining room table, participants explored how each individually can advance the already significant gains made in creating a healthier and economically vibrant food system. Later, seated in the backyard and serenaded by cardinals, the group considered how FamilyFarmed.org could contribute to this cause.

“How do we do it in a way that’s sustainable and with integrity? We need everybody in the supply chain to benefit, especially the farmers!” Slama said. “And how do we do it in a way that everybody has access to Good food,” not just the well-to-do?

The authors of this article were joined in the discussion by FamilyFarmed associates Charlotte Flinn, Holly Haddad, James Pirovano, Lloyd Yanis, Kim Bartko and Grant Kessler, along with Brandon Johnson, who is heading up an effort to increase diversity in urban food systems.

It is clear that the Good Food movement has gained a strong foothold, despite the continued dominance of a conventional food system controlled by large-scale agribusiness interests. FamilyFarmed.org’s Good Food Festival and Conference has become the leading Midwest trade and consumer show advancing the business of Good Food.

The dollar value of organic products sold in the U.S. is 35 times higher than just 20 years ago. The rapid rise of the natural foods retail sector, led by Whole Foods Market,  has prompted change throughout the supermarket industry — as illustrated by Walmart’s recent announcement of a major expansion in its organic products lines. And local is the hottest trend in the foodservice industry, according to the National Restaurant Association.

Good food makes it easy to be in the "clean plate club. Photo by Bob Benenson.

Good food makes it easy to be in the “clean plate club. Photo by Bob Benenson.

The numbers of farmers markets across the nation has grown exponentially, as growing numbers of consumers seek out fresh foods produced by local and regional farmers. Concepts such as “sustainable seafood,” “pasture-raised meats” and “farm-to-table restaurant” have become common coin. And as the demand for Good Food has grown along with the farms and companies supplying it, the sector has become a major employer generating rapid growth in the number of high-quality jobs.

Yet, according to Flinn, FamilyFarmed.org’s Board chairwoman, “The biggest obstacle to continued rapid growth is the need for infrastructure to help build the supply of sustainably produced food and get it to market to satisfy the rising demand.”

This is an integral part of the organization’s future, according to Slama. “We need a whole system of developing sustainable, local supply of sustainable, local food. In all sectors — produce, proteins, and small grains — there are supply chain issues. We need to help build more robust production, processing, and distribution systems to give buyers confidence that local producers can meet their demand.”

Johnson said that adopting a Good Food lifestyle will require some adaptability from consumers, as it substitutes more fresh, whole foods for packaged goods that are highly processed to promote shelf life. “It is a lifestyle change. You’re not going to be going to the grocery store once every two weeks. You have to shop more often, you have to cook more often. Or you have to have the retailer who can provide you with that kind of service,” Johnson said.

While the Good Food movement seeks reductions in chemical inputs in food production, Bartko noted that it is important for its advocates not to be seen as anti-science and anti-technology.

“We would be foolish to not take advantage of the technology that’s available to us, the science that’s available to us. But you have to make use of the tools, and they are tools, in a way that works lightly on the earth,” Bartko said.

She added, “So there has to be a new system that evolves to feed a growing population that will work to reverse some of the effects of climate change, and will return to the soil what’s been depleted over decades of chemically intensive farming. People are beginning to change their all-or-nothing thinking.”

And, coming full circle, the conversation returned to the efforts in this area by The Chicago Community Trust, who in partnership with Kinship Foundation, recently launched  Food:Land:Opportunity—Localizing the Chicago Foodshed,an initiative funded by The Searle Funds at the Chicago Community Trust.  The prospects for the Good Food Accelerator (the first project funded by the initiative) to advance the movement…came up for discussion.

Under the Accelerator project, selected Fellows will undergo an intensive six-month program. They will receive customized support that includes a curriculum, mentorship, staff counsel, workshops and events. They will also be connected to trade buyers including two key partners in the project Whole Foods Market, the leading natural and organic food retailer, and UNFI, the largest natural and organic distributor in the US. The Accelerator will be affiliated with 1871, Chicago’s Innovation Hub and home to over 250 start-ups.

The Good Food Business Accelerator was announced at the Good Food Financing and Innovation Conference. Attendees and speakers included: FamilyFarmed.org board member, Mari Gallagher: FamilyFarmed.org president Jim Slama; FamilyFarmed.org board member Lauren Rosenthal; Chicago Mayor Rahm Emmanuel, 1871 CEO Howard Tullman; Crain's Chicago Business Publisher David Snyder; Whole Foods Market Regional President Michael Bashaw; and Whole Food Market co-CEO, Walter Robb. Photo by Barry Brecheisen.

The Good Food Business Accelerator was announced at the Good Food Financing and Innovation Conference. Attendees and speakers included: FamilyFarmed.org board member, Mari Gallagher: FamilyFarmed.org president Jim Slama; FamilyFarmed.org board member Lauren Rosenthal; Chicago Mayor Rahm Emmanuel, 1871 CEO Howard Tullman; Crain’s Chicago Business Publisher David Snyder; Whole Foods Market Regional President Michael Bashaw; and Whole Food Market co-CEO, Walter Robb. Photo by Barry Brecheisen.

By the end of the program, Fellows will be better equipped to run their businesses, and those in need of funding will be ready to meet with investors to receive initial or follow-on investments. This strategic, operating and financial mentoring will enable Fellows to launch or scale their businesses more soundly and more rapidly, and will spur the development of Good Food clusters that will create even more jobs and economic development.

It is a fair guess that if there is an “On the Table 2015,”  members of the first class of Good Food Business Accelerator Fellows will be on hand at the FamilyFarmed.org event to share their experiences… and to raise a toast to Chicago Community Trust for advancing the conversation. .  . and the business of Good Food!

For more information about Chicago Community Trust’s “On The Table 2014” project, visit OnTheTable.com.

Jim Slama is president of FamilyFarmed.org. Bob Benenson is a veteran journalist who spent 30 years at Congressional Quarterly including 10 years as its Political Editor.

 

 

Good Food Financing & Innovation Conference Grows the Movement

Innovation, inspiration, and impact (the economic kind) are themes that sparked the dynamic program at the 2014 Good Food Financing & Innovation Conference held on March 13, 2014. Local and national business leaders convened at UIC Forum to discuss the burgeoning demand for Good Food—local, sustainable, responsibly raised food—and the economic opportunities and potential for growth in this rapidly expanding food business sector

FamilyFarmed.org board member Mari Gallagher, Mari Gallagher Research and Consulting Group, introduced organization president Jim Slama, who framed the day’s program within the context of Chicago’s business climate, citing the growth of regional companies like Whole Foods, Enjoy Life Foods, Organic Valley, and others as positive indicators of the economic opportunities in the Good Food niche. Crain’s Chicago Business publisher Dave Snyder affirmed Slama’s assessment, noting that organic food sales grew from $1 billion in 1990 to an impressive $35 billion in 2013. He also referenced a recent National Restaurant Association report that found 6 of the 10 top trends tracked revolve around sourcing local, sustainable food. Most important, Snyder sees an increase in the number of investors interested in the Good Food sector, observing that Chicago now boasts two sizable angel investment groups representing more than 40 individual investors expressly interested in food businesses.

Mayor Rahm Emanuelphoto © Barry Brecheisen

Mayor Rahm Emanuel
photo © Barry Brecheisen

FamilyFarmed.org was honored to have Mayor Rahm Emanuel speak at the Conference. The Mayor acknowledged Good Food as a key driver of economic and social change, particularly in the city’s disadvantaged neighborhoods, describing how he worked closely with Whole Foods Market co-CEO Walter Robb to open a new store in Chicago’s Englewood neighborhood. Mayor Emanuel spoke with conviction about the importance of educating the city’s children about healthy eating and how this moved him to make funds available for an innovative school garden program in Chicago Public Schools.

Inspiration and innovation were dispensed in equal measures as Whole Foods Market co-CEO Walter Robb and Jim Slama reflected on Whole Foods’ 10-year relationship with FamilyFarmed.org. Robb noted that local procurement, food hub development, farmer training, and the network of farmers, producers, and processors FamilyFarmed.org cultivated were critical to Whole Foods’ ability to scale its operations. Robb says his company’s success is rooted in its strong value proposition with shareholders, vendors, and customers. This includes leading the market with innovative product standards for transparency, sustainability, and labeling as well as the responsible use of food as a tool for social change, bringing stores to urban food deserts in Detroit, New Orleans, and the Englewood neighborhood. It also includes fostering the growth of small farms and food businesses through the company’s Local Producer Loan Program.

Walter Robbphoto © Kaitlyn McQuaid

Walter Robb
photo © Kaitlyn McQuaid

Jim Slama emphasized that support for small farm and food businesses like the Whole Foods loan program is critical to building a network of local food businesses but acknowledged more help is needed. To that end, Slama announced the launch of the Good Food Business Accelerator, a six-month program of intensive mentoring and technical assistance for farm and food businesses that will begin in the Fall of 2014. Funded by a $125,000 grant from the Chicago Community Trust and $75,000 from Whole Foods’ Midwest Regional offices, in affiliation with Chicago business incubator 1871, the Good Food Business Accelerator is the first and only food business accelerator focused on local, sustainable, responsibly produced food. FamilyFarmed.org will begin accepting applications for the first cohort of eight Fellows in September with a program start slated for October. A network of experienced food business professionals from every part of the food business system will provide customized technical assistance in areas such as business plan analysis and refinement, marketing, procurement, distribution, accounting, legal and finance, as well as one-on-one mentoring for Fellows. Upon completion of the program, Fellows will have access to a network of funders committed to helping them secure financing for their businesses. Each Fellow will also publicly pitch their businesses at the 2015 Good Food Financing & Innovation Conference.

Howard Tullman, Erika Allen, Michael Bashawphoto © Barry Brecheisen

Howard Tullman, Erika Allen, Michael Bashaw
photo © Barry Brecheisen

Following this announcement, Jim Slama led a spirited panel discussion with Whole Foods co-CEO Walter Robb; Michael Bashaw, Whole Foods Midwest Regional Vice President; Erika Allen, Growing Power; and Howard Tullman, CEO, 1871. With the discussion ranging from how to increase local food production in Illinois, to ways of fostering a culture of innovation in the Good Food sector, to what types of investment are needed to create a fair, diverse, inclusive food system, and to advice for budding food entrepreneurs, panelists affirmed their optimism that a robust network of profitable, thriving local food businesses will drive economic growth in the Midwest.

The Financing Fair, an important part of the Good Financing & Innovation Conference, provides entrepreneurs with an opportunity to exhibit their businesses and connect with investors and other strategic partners. More than 40 businesses applied to participate in this juried Fair. A committee of food and business professionals selected 24 farm and food companies from the pool of applicants to participate in the 2014 Financing Fair. Six of the most promising businesses selected to participate in the Financing Fair were invited to live-pitch at the conference.

Palpable energy filled UIC Forum as Andy Whitman, 2X Consumer Products Growth Partners, took the stage to moderate the live pitches. The entrepreneurs included Lee Greene, Scrumptious Pantry, a company producing a line of packaged heirloom foods; Raj Karmani, Zero Percent, a tech start-up that developed a software platform to manage the charitable donation of surplus restaurant food, reducing food waste; Mark Schneider, Living Water Farms, producer of locally grown greens for Midwest restaurants, distributors, and retailers; Cathy Scratch, Feed Earth Now, inventor of a microbial soil amendment produced from food waste; Jessica Smith, This Old Farm, an Indiana farmer seeking funding to start a food hub for processing, marketing, and distribution of Midwestern meat, produce, and value added food; and Jenny Yang, Phoenix Bean, an artisan tofu producer. Each entrepreneur had seven minutes to make their pitch, followed by two minutes of follow up Q&A with the audience.

Some were nervous, some excited, but all recognized the value of this opportunity and each made the most of it, spending weeks preparing, refining, and practicing their pitches with a little mentoring from FamilyFarmed.org’s Financing Fair Advisory Committee members.

Raj Karmaniphoto © Kaitlyn McQuaid

Raj Karmani
photo © Kaitlyn McQuaid

Raj Karmani, Zero Percent said of his experience, “We enjoyed the presentation and the ensuing conversations. Put simply, we could not have picked a better-fit audience. We already have 4-5 good leads from both potential investors and customers.” Cathy Scratch, Feed Earth Now, said, “I certainly was in the right space. It was a great experience and I did make some contacts. Being the only “farm input” company there, I got a lot of attention.”

The morning’s energy carried over into the hour-long Financing Fair, the room draped with banners and set with exhibit tables full of product samples and information, the floor buzzed with networking, a flurried exchange of business cards, animated conversations, and enthusiastic pitches.

Following the Financing Fair, Marc Lane, Marc J. Lane Wealth Group presented an update on the crowd funding landscape, with a brief overview of recent changes to SEC rules. The afternoon program included a panel on “Good Food Business Success Stories, “with 15-minutes presentations from some of the region’s most innovative and successful entrepreneurs. Introduced by FamilyFarmed.org board member Jennifer Worstel, Polsinelli, the panel includied David Miller, CEO, Iroquois Valley Farms/Working Farms Capital; Scott Mandell, Enjoy Life Foods; Tera Johnson, Founder, Tera’s Whey; John Peterson, Farmer, Angelic Organics. Moderated by Marc Schulman, CEO, Eli’s Cheesecake, each panelist related the compelling story of their company’s growth trajectory and shared the lessons on the path to success.

The day’s last panel featured a powerhouse line-up of angel investors, bankers, and other funders who recognize the investment opportunities available in the Good Food sector. “Good Food Is a Good Investment” was introduced by Colleen Callahan, Illinois Rural Development, USDA, who detailed some of the exciting programs funded under the new Farm Bill that USDA will now make available to farmers and food businesses. Impact Engine founder Chuck Templeton skillfully moderated a discussion valuable to both investors and Good Food entrepreneurs seeking investment. Panelists Mark Fick, Chicago Community Loan Fund; Kim Hack, SLoFIG; Barbara Stille, 1st Farm Credit Services; Brian Smith, Angel Food Investment Group; and Trinita Logue, IFF Founder and President shared insights into how they evaluate an investment opportunity, described their respective lending criteria, and outlined what an entrepreneur could expect from an investor relationship.

photo © Kaitlyn McQuaid

photo © Kaitlyn McQuaid

The exhilarating day adjourned with attendees committed to moving Good Food business forward to greater success.