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Crowd at the Good Food Accelerator Application Celebration

Good food is the growth sector in the grocery industry

To kick off the call for its next Good Food Accelerator cohort, FamilyFarmed offered a deep dive into industry trends at a recent gathering.

“Just within the past 10 years, this industry has skyrocketed. Everything around this industry has completely changed. The consumers who shop this industry have changed. It’s no longer just the crunchy hipsters in Boulder.” That is how Anubhav Goel described the fast-rising demand for good food at the start of his data-driven keynote speech at FamilyFarmed’s Good Food Accelerator recent Application Celebration at Chicago's 1871 technology and entrepreneurship center.

Goel is the executive vice president of client growth solutions at SPINS, the Chicago firm that is the leading provider of retail consumer insights, analytics reporting and consulting services for the natural, organic and specialty products industry. He has numbers to back up the statement above, and he had good news for an audience packed with people from across the good food spectrum—including several entrepreneurs considering an application to participate in the Good Food Accelerator’s upcoming fourth cohort.

SPINS’s deep data dive is based on hundreds of attributes that it uses to define products as natural positioned, health and wellness positioned and conventional positioned. And the top takeaways from Goel’s talk showed that the trend arrows in the grocery industry were pointing toward good food:

• Over the past decade, sales in the natural products sector have more than doubled, from $48 billion to 2006 to $114 billion in 2015.

• Natural positioned products are outperforming the rest of the industry with a 9 percent annual growth rate, and health and wellness positioned products are growing at a 5 percent rate. Though conventional positioned products still make up nearly 80 percent of the overall food market, the sector’s growth actually declined slightly.

• Grocery stores defined by SPINS as being in the natural channel grew by 7.2 percent. Stores in the conventional multi-outlet channel grew by 1.1 percent.

• One of the most interesting findings is that natural products are even the growth center within conventional grocery stores, as those stores bring more of these products in to adjust to the changing environment. Natural products make up only 7 percent of the mix at conventional grocery stores, but their sales grew at a nearly 10 percent rate. Conventional products make up 80 percent of what these stores sell—but their growth rate was -0.2 percent.

“That’s an amazing sea change in the industry,” Goel said. “And conventional retailers have woken up and realized this is a big deal. I’ve got to make sure good food is available to everybody.” He added, “Every conventional retailer, every major retailer, is investing heavily in this space. It’s totally transforming at least the supply side … we know the consumer demand is there, but to see retailers shift that assortment is pretty transformative.”

Goel’s presentation also highlighted some of the top grocery trends benefiting good food:

• Dietary lifestyles: “Most people tell me gluten free is the big trend. What stood out to us when we did this analysis was vegan … it’s growing rapidly," he said. "One of the things we’ve learned is there’s a new name for vegan these days, which is plant-based. Vegan has a little bit of political connotation. Plant-based, everybody has a reason … being plant-based doesn’t mean you have to sacrifice taste … innovators are making phenomenal stuff.”  

• Free-from: Goel gave a hat tip to Scott Mandell, founder of Enjoy Life Foods, for creating a market sector with products that are free from known allergens. Goel said grain-free products are on the rise, citing Chicago’s Simple Mills as an example.

• Animal welfare: “Grass-fed is a big, big deal ... we’re bringing that history back of how dairy was produced, of how cows were treated ... this is how this was meant to be. We’re not force feeding cows stuff they shouldn’t be having.”

Goel also urged those entering the food product sector to start with these basic questions: “What do you stand for? What are you trying to do? Why are you doing this? Millennials seek brands based on values. You have to be really clear what you stand for if you want to win with that audience.”

Bob Benenson is the communications manager for FamilyFarmed, the non-profit organization behind the Good Food Accelerator. The program provides mentoring, networking opportunities, access to providers of capital or loans, and more to new or growing Good Food businesses. 

Catch FamilyFarmed CEO Jim Slama at Esca Bona
What: The Fix
Where: Sheraton Austin at the Capitol

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