Natural Products Expo East and the 2008 Healthy Foods Conference are in the books. Industry’s initial scale foray to Boston, amidst the frenzy of the ALCS, Head of the Charles and Madonna concerts was a tiring yet productive process for the some 26,000 who descended on the city.
The uncertain economic times were certainly a dominant theme. Inevitably, one of the first questions I was asked in any interaction was, “so what’s the feeling”, or “what have you heard”. Over the six days I was in Boston, I tried to let my answers evolve based on new information and new dialogue. I guess my answer at the end was not really so different than at the beginning, though my number of polled increased dramatically along the way.
In any capital market analysis, there will be winners and losers. The current instability and volatility is no exception. If you’re liquid / cash-rich, then not only are you less vulnerable, but there are lots of buying opportunities out there with numerous companies highly leveraged, either through recent acquisitions and investments, or just financial and operational management challenges. With access to capital becoming a bit tighter, these companies may have banked on further capital to expand, to comply, or just do their business. In the middle category, with supplement GMPs now expected to hit a good part of the industry in June 2010, those companies that procrastinated before allocating additional compliance expenses may find themselves with some hard business and regulatory decisions to make – and limited financial wherewithal with which to make them..
So how then to describe the current environment and anxiety level?
Well, judging by the level of interest and awareness, I’d have to say that concern is high. There is no panic though, and several companies I spoke with quickly pointed out that they were experiencing record autumns, despite the volatility. Many of these same individuals also pointed out that this may in fact be due to a last effort at securing inventory, but nonetheless, they were pleasantly surprised at the business climate. A few companies expressed concerns over extended terms, hinting that their own standard operating terms were being squeezed giving clients a bit less flexibility in payments and credit options – all of this not really surprising in a tight market.
The demand equation was another key subject. With so much economic uncertainty, would consumers stop buying our products?
The key to this question lies in the answer to the following: What proportion of natural, organic and supplement purchases are discretionary? If the bulk of these buys are considered non-negotiable needs, then presumably other discretionary purchases will be sooner casualties of the economic environment. At the manufacturer and retailer level, most of those I spoke with appeared relieved that their product purchases were less discretionary than may first appear – perhaps it has something to do with an ‘at least I’ve got control of my own health’ (if I can’t control anything else) attitude that bodes very well for our industry as we weather the current storm. Expect a flurry of consumer data specifically on this subject.
A bit less secure, at least according to those I spoke with, is the attitude towards organic and natural, especially for the non-core consumer of this product type. One might expect therefore to see these categories maintaining current levels but perhaps a deceleration at least might be expected, as mainstream adoption of these products becomes stalled as dollars get tighter.
All in all, I did not see the panic, ultra-conservatism or pessimism one might expect in a financial and market discussion these days. To the contrary, (and maybe it was just the Boston air), my contacts were reservedly optimistic, and determined as ever.
On a side note, in the few moments I had to walk the show floor, I was amazed to see the critical mass of products labeled gluten-free as that category edges towards maturity. In our Healthy Foods Conference ahead of Expo we had a few presentations on the subject and the content and interest confirmed the fact that this is a growing audience and opportunity.
More about Healthy Foods:
At this stage my objectivity in things like this is a bit off as I’ve grown closer to the event., but here goes…..
From the opening presentation by Trend-hunter (www.trendhunter.com) Jeremy Gutsche, stimulating audience innovation and ideation processes, to the concluding keynote by Elizabeth Orsini of Starbucks talking openly about that organization’s challenges and opportunities in pursuing healthy and nutritious alternatives, the 2008 Healthy Foods Conference delivered as advertised and more this past week in Boston. Seth Goldman, founder of Honest Tea detailed his entrepreneurial experiences and learnings in a Business 101 setting that attendees found unique and invaluable, while A. J. Grant presented Big Green Rabbit as a novel way to present health and nutrition learning to kids and Jeff Grogg from Kashi described his experiences as the healthier part of a major CPG company. All of this was presented in an environment designed to maximize participation and connections between attendees and speakers.