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[email protected]: Blue Hill co-owner launches $30M food investment fund | Ex-Whole Foods CEO: Amazon acquisition was best way forward

Thinkstock fundraising

Investing in tech for hospitality and food, Almanac investments raises $30M

David Barber, a co-owner of the famed Blue Hill farm and restaurant with his brother Dan, has been an angel investor in sustainable food companies for years, but now he’s scaling those efforts with Almanac Investments. The new $30 million investment fund will target products and services that support the food and hospitality industries, with a focus on CPG products that are intentional about their supply chains, as fast-casual retail technology. Already it’s invested in three companies, including broth and soup brand Nona Lim. Read more at TechCrunch...

 

Walter Robb was Whole Foods’ co-CEO. He thinks the Amazon deal was right.

Walter Robb, who has been investing in food companies since his departure from Whole Foods Market at the end of 2016, says the retail powerhouse he helped build made the right call in selling to Amazon as it faced pressure from investors. “I'm extremely proud of the whole Whole Foods team and .... what we accomplished,” he told the American-Statesman. “The real question is: Where is this all going? I have every confidence in the Whole Foods team to do a stellar job.” Read more at 512tech…

 

Organic industry leaders issue updated guidance on organic dietary supplements

The American Herbal Products Association, the Organic Trade Association and Quality Assurance International Inc. have released a revised guide to formulating and marketing organic supplements. It describes the types of supplements that are eligible for organic certification and provides an overview of regulatory requirements. Read more at AHPA…

 

ADM-Bunge deal would create Cargill-sized agribusiness giant

Is there more ag consolidation in the works? It appears so as rumors spread that ingredient and food processing company Archer-Daniels-Midland Co. is in talks to acquire Bunge. Together, they would create a company with revenue nearing that of Cargill, the largest agricultural company. Read more at Chicago Tribune…

 

Davos 2018: Technology can help transform our food systems—just in time

Technology is changing the way food is both produced and consumed. And while we often talk about a boom in investment in food startups, those innovative companies are still attracting just a fraction of the capital being invested in the health sector, according to a new World Economic Forum report launched this week in Davos. The report highlights 12 technologies with the potential to drive progress in the sustainability, inclusivity and efficiency of food systems, including alternative proteins and personalized nutrition. Read more at Forbes.. 

IdeaXchange

Market heating up for supplement deals

Thinkstock/ijeab mergers and acquisitions

The vitamins, minerals and supplements/nutraceutical industry is supported by strong fundamentals and continues to grow at a healthy rate. The aging of the U.S. population, increasing health consciousness among consumers and a generally strengthening economy all support solid growth in the category. Generally favorable financial conditions, significant “dry powder” in private equity and venture capital funds, and healthy stock multiples for large consumer products companies similarly support a strong environment for deals in the space.

Certain segments are growing faster than others, which is where we see more activity in M&A. Sports nutrition leads the pack, with a 10.2 percent compounded annual growth rate over the last five years, followed by meal replacement at 9.3 percent; herbs and botanicals at 6.9 percent; and specialties, including products containing ingredients such as probiotics and omega-3 oils, at 5.9 percent, according to the Nutrition Business Journal. Some of the most notable deals we have seen over the last 24 months have come out of these areas with Atrium Innovations (approximately $2.3 billion), Omega Protein Corporation (approximately $500 million) and ReNew Life ($290 million) all playing in one or more of these verticals, according to Capital IQ.

Merger and acquisition activity has been solid in the VMS/nutraceutical space in the last two years with 29 announced deals in 2017, versus 27 in 2016 and 19 in 2015, according to Capital IQ. The size of recent deals stands out with six announced deals over $100 million in 2017, versus three in 2016. We also see several deals, including Atrium Innovations, Nature’s Bounty and the Holland and Barrett unit of Nature’s Bounty, transacting at estimated or announced valuations over $1 billion, versus no “mega cap” deals in 2016, 2015 or 2014. Furthermore, it appears that more large deals could be in the offing. Pfizer has announced that it is seeking strategic alternatives for its consumer business, which includes Centrum multivitamins and other products, and rumors swirl around other consumer health names.

Green Circle focuses on the lower-middle markets. Here, too, we see signs of continued strength in the M&A and capital-raising markets. Most importantly, the purchasers of these businesses remain in generally healthy financial condition and we see solid opportunities in the space. Specifically, in our market, private equity and growth capital investors who formerly focused exclusively on food are now interested in nutraceuticals, as multiples remain below what we see in growing food and beverage businesses, and growth rates are compelling.

The key factors that high-quality investors seek have not changed markedly through the years, according to our industry sources. In VMS/nutraceuticals, people want defendable, scientifically based products and/or multi-channel distribution with above-average velocity (defined as average units sold per store per week). A company with both of these attributes becomes a highly prized asset, according to these same sources. Indeed, larger scale usually means higher margins and returns and can lead to a truly unique opportunity.

Bakley Smith is a vice president leading the VMS/nutraceuticals vertical at Green Circle Capital, a leading boutique investment bank focused on health and wellness companies. He is a chartered financial analyst (CFA) with over 17 years of experience in covering consumer-facing businesses.

How (and why) to make your brand story memorable

Jay Golden, an entrepreneur who founded Retellable and wrote a book of the same name, says we all receive 100,000 words and 34 GB of information a day. But what do we remember? We remember what we learned from a story.

“Stories are what inform our culture; they inform our business, and they inform our lives,” Golden says. In this quick video, you'll learn why your story is important, how to find that story and how to make it memorable.

[email protected]: More evidence of curcumin’s cognitive benefits | Jicama, dragon fruit and more produce trends for the new year

Thinkstock/subodhsathe benefits of curcumin

Curcumin may reverse memory problems, improve mood

Researchers have long been interested in studying the neurological and psychological effects of curcumin, and the latest study shows that a daily dose of the compound could help prevent memory problems in older adults. For the study, published in The American Journal of Geriatric Psychiatry, 40 participants between the ages of 50 and 90 with mild memory problems took either two 90 mg doses of curcumin or placebo per day for 18 months. Every six months, a team of UCLA researchers tested their memory, cognition and mood and used PET scans to assess the levels of amyloid and tau in their brains. Participants who took the curcumin saw memory function improve by an average of 28 percent over the 18 months. Brain scans also revealed less plaque buildup in two parts of the curcumin group’s brains. Read more at Forbes…

 

Will 2018 be the year of the jicama?

More retailers than ever are offering fresh-cut jicama sticks in their produce department, according to supplier Frieda’s Specialty Produce. It’s a natural prebiotic, and Whole Foods included the crunchy veggie in its roundup of 2018 trends as a vegetable-based alternative to grain-based taco shells. Frieda’s also sees dragon fruit, jackfruit, purple potatoes and fresh turmeric as rising trends at retail. Read more at Fresh Plaza…

 

Should investors snack on packaged-food stocks?

Analysts expect food industry mergers and acquisitions to pick up even more this year. It’s a mature industry that has been more slow-growing, but as competition heats up and companies look for new ways to improve margins and returns, the deal landscape will remain interesting. Keep an especially close eye on the snack and organic categories. Read more at Morningstar…

 

Nature’s Bounty augments nutrition lineup with Best Bar Ever acquisition

Nature’s Bounty already owns sports and nutrition brands including Pure Protein and MET-Rx, and will build on that with the addition of The Best Bar Ever, which uses real food ingredients and no fillers or sugar alcohols. Read more at Drug Store News…

 

Finally, you can buy beer with a biodegradable six-pack ring

SaltWater Brewery is the first beer company to test a new biodegradable and compostable “eco six-pack ring” developed by a startup called E6PR. It’s made from wheat and barley, and the next iteration of the ring will utilize by-product of the beer brewing process. E6PR hopes to make similar rings for other packaged drinks. Read more at Fast Company….

Retailer-led sustainability programs: Do they actually help the environment?

Thinkstock/mythja sustainable farm programs

With the proliferation of label claims and companies on both the manufacturing and the retail sides touting how sustainable they are, it can be tough to know what to believe. Researchers at Stanford wanted to look specifically at whether sustainability programs led by retailers themselves are likely to reduce the environmental footprint of their supply chains, or whether they're closer to being an empty marketing effort with little impact. According to research they cite, while independent or third-party certification systems have been studied extensively, it’s the supply chain standards developed by individual companies that are most commonly used for tackling social and environmental challenges.

To try to answer this question, the research team looked at the Farming for the Future program run by Woolworths, one of the largest supermarket chains in South Africa, and conducted in-depth interviews with fruit, vegetable and flower growers participating in the program. (Several U.S.-based food retailers with company-led sustainability programs refused to grant the researchers access to their data.)

They found that the farmers participating in the FFF program, compared both over time and with a sample of farms certified by the food industry’s global environmental standard for farm management, known as GLOBALG.A.P., were more likely to:

  • recycle their waste and dispose of chemical containers in a responsible way
  • have a formal invasive species management plan
  • use more integrated pest management practices
  • use cover crops
  • measure water use efficiency

Importantly, the researchers also found that while some farmers they spoke with made the changes they did because they felt they were required to as part of the program, a majority (two-thirds) of them had a more partnership-based view of the program. These farmers talked about the program as a “philosophy” and a "collaborative effort" with Woolworths. The study authors wrote: “Rarely did farmers feel that they were being forced to change their practices. Instead, as one farmer explained, ‘I feel like if I can’t do a practice, I’ll just explain why it doesn’t work for me, and they [the auditors] totally understand.’”

That sense of having real relationships that allow for personal interaction as well as feedback and flexibility seems to be one key to the program being effective.

“According to one farmer, other auditors will drive into the farm and say, ‘Nice trees you've got there,’” said lead author Tannis Thorlakson, a doctoral student at Stanford, in a press release for the study. “But when the Farming for the Future auditor comes in, they drive up and they say, ‘Tell me about those trees—those are an invasive species and they're probably affecting your water table. Why aren't we working on a management plan to deal with those?’”

Or, as one grower quoted in the study said: “Most retailers care that you deliver beans. Woolworths cares how you grow your beans, what your yields for your beans were and so on… It's much more of a collaboration.”

Similarly, the researchers believe the fact that the farmers are directly involved in the supply chain—as opposed to working with intermediaries—also plays a role in the program’s success.

“The auditors are building relationships and helping farmers improve their practices,” Thorlakson said. “For example, conventional farmers are now using cover crops, which is a really hard practice to get farmers to take up but which creates long-term environmental benefits. We're seeing big shifts in farming practices, which is really exciting.”

The researchers believe their findings, which were published last month in the journal Global Environmental Change, underscore the potential environmental benefits of retailer-led programs. The study, they write, “provides evidence that a company-led approach that goes beyond a traditional audit can be effective in driving the adoption of environmental best management practices at the farm level” — including improved water management, invasive species control and soil protection. 

They also hope it motivates other retailers to be more transparent about their programs in order to ensure they’re working—or improve them if they’re not. “I hope that more companies will see the value of letting researchers evaluate their program and publish the results—if we find that a program is not that effective, we can also identify why and see what's wrong, and how it can be improved and what can be corrected,” said co-author Eric Lambin. “The more of these studies we are able to do, the better the scientific community will become at identifying the reasons for success.”

[email protected]: A first look at Amazon's high-tech Go store | Startup snack brands merge

Stephen Brashear/Getty Images sandwiches at Amazon Go

Inside Amazon Go, a store of the future

Amazon’s first checkout-free Go store opened today in Seattle after a 14-month test period with company employees. It’s an 1,800 square foot market with a mix of products that would typically be found in convenience stores, and others that would be found in Whole Foods. It’s designed with camera systems and AI-infused sensors that work with a smartphone app to track what customers are picking up off the shelf and charge it to their Amazon accounts. One big caveat, as noted by Slate, is that the store doesn’t accept food stamps. Read more at The New York Times…

 

Gorilly Goods to expand production with addition of Supernola

Evolve Brands LLC is a newly created holding firm for health-focused snack brands. Its first two companies are both grain-free snack companies—Gorilly Goods in Jackson, Wisconsin, and Harrisburg, Pennsylvania-based Supernola. Evolve, which is owned by Supernola’s founder Cindy Poiesz and CPG entrepreneur Frank Jimenez, plans to consolidate both companies’ operations in Jackson. Read more at Milwaukee Business News…

 

Puris, Minneapolis-based maker of pea protein, and Cargill form joint venture

Cargill will expand into the pea protein space as part of a new deal with the U.S.’s largest producer of pea protein, Puris, which has plans to build a second plant as a result. Read more at StarTribune…

 

Second lawsuit against poultry giants alleges chicken price-fixing conspiracy

Winn-Dixie Stores and its sister company Bi-Lo Holdings allege that Tyson, Perdue Farms and Koch Foods—which together control about 90 percent of the broiler chicken market—have conspired to fix the price of chickens for nearly a decade. The stores say they’ve paid inflated prices for chickens as a result of coordinated production cuts by the companies. In 2016, a class-action lawsuit led by food distributor Maplevale Farms made similar accusations. Read more at Chicago Tribune…

 

a2 milk expands its product range into the US northeast

The Australian company’s products, which are made with milk that doesn’t include the A1 beta-casein protein, will be stocked in 1,400 stores on the East coast. “We started quietly in California in 2015, began the rollout across the west and in national natural food chains in 2016 and then in 2017 we developed a major presence in the Southeast,” said CEO Blake Waltrip. Read more at FoodBev Media…

IdeaXchange

4 questions to ask when vetting prospective investors

Luke Vernon

While investors spend hours conducting diligence on companies and founders, it’s also important for founders to give due diligence to prospective investors. But how? Ask these four questions to properly conduct investor diligence. 

1. Is the investor’s vision aligned with yours?

This is the single-most important aspect of jumping into a relationship with an investor. If you’re not fully aligned on the vision for the company and for how the relationship between you and the investor will be managed, it’s unlikely to work out well.  

That doesn’t mean you won’t have diverging views at various points in time, but from the onset, find out if you are aligned with the new product roadmap, channel strategy, brand strategy, how fast (or slow) you want to grow the business, what resources will be required, how you plan on communicating with investors and what their involvement level will be.

One of the best ways to evaluate this alignment is to see how the investor reacts to your strategy and ask a question such as: “If you were to offer two or three suggestions of things we should consider doing differently or consider in the future, what would those be?” 

It’s also important to outline how often you plan on communicating with investors and on what topics. Then see if that matches with their expectations. A lack of communication by a founder can strain the relationship with an investor and by talking this through upfront, you’ll have a better understanding of their desired involvement level. 

2. Does their experience and knowledge match what you need?

The first step is to determine what areas you could use help with. Then determine if it would be most helpful to have that knowledge and experience internally from a team member or externally with an investor or advisor. It’s important to not expect help or knowledge that should actually be internal to your company to come from an outside investor. 

Investors with industry experience will be able to demonstrate their knowledge through the questions they’re asking. Are their questions sound, reasonable and demonstrate a grasp of the market and your business model? 

That said, don’t focus entirely on industry-specific knowledge. In my experience as a former operator, I found that regardless of if an investor had industry experience, if that investor could help me become a better leader and had been around fast-growing companies, I could derive tremendous value from him or her. An important role of every investor is to ask really good questions, push founders to discover answers on their own and to help those founders become better leaders. 

3. Do they have a credible network?

One of the most valuable assets of a venture capitalist is his or her network. As a founder, you want an investor who can help you source and attract talent, make contact with strategic partners and surround you with valuable advisors. 

You can test an investor’s network by asking for help with recruiting senior level candidates, by asking him or her to put you in touch with a subject matter expert on a certain topic and by probing around other valuable relationships they may have with potential partners. I wouldn’t expect that an investor can get you into new distribution—that’s the job of your vice president of sales—but they should be able to help you connect with other brands or founders who have gained distribution in your target accounts.

4. How are their relationships with their current portfolio companies?

You don’t hire someone without checking references. Why would you accept an investment from someone without doing the same? You can fire an employee, but you can’t fire an investor which makes it all that more important to check references. 

The best way to do that is to speak with CEOs of their current and past portfolio companies. While not every one of their CEOs will be in love with their venture capitalist at all times, you want to know if there is a high degree of respect and integrity as well as to understand how the investor engages in the strategy of the company. 

Don’t overlook the importance of conducting diligence on prospective investors. Your relationship with them will last years.

Brands reinvigorate product packaging at Winter Fancy Food Show 2018

Bob's Red Mill new packaging 2018

Amid the piles of gourmet cheese and fine chocolates, the Winter Fancy Food Show this week features numerous natural brands that are debuting new, attractive product packaging. From small tweaks to huge design overhauls, here are a few companies whose new digs caught our eye.

Because Cookie Dough

Candy-shop colors encase these pints of coconut sugar-sweetened cookie dough, suitable for baking cookies or eating straight from the container.

Start Right Original Waffles

Who knew that waffles could be so attractive? We love the perfectly messy image on the front of this high-protein waffle brand's box, and the punchy colors will shine right through the frozen case.

Ohi Superfood Bar Coconut Macadamia

The bright packaging on this refrigerated superfood bar gives a nod to the brand's Hawaiian roots. We dig the special diet attributes called out on the front of the package (plant-based, gluten-free, grain-free, non-GMO) and the illustrated cluster of ingredients above the logo.

Pasta Bow Tie Minis Mac & Cheese

This one's not so much a packaging update as a new partnership with Disney! This collaborative food brand scored a deal with Disney to print classic characters on the front of its bags in order to inspire little ones to nosh on these puffed wheat snacks.

Mike's Organic Curry Love Tikka Masala

We're seriously in love with this new packaging by Mike's Organic Curry Love. Previously encased in a glass jar, the sauce is now packaged in a stand-up cardboard triangular box.

Fawen Ready-To-Drink Soup Beet & Cabbage

This drinkable soup company tweaked its packaging to better communicate that the product is ready-to-drink right now, so there's no need to heat it up (check the small seal that reads "Drink On The Go"). Fawen also made the nozzle wider to encourage better organic soup drinkability. It's a slight change, but the brand moved the medley of veggies inside the beverage to the perimeter of the package, which seems to better highlight the company name, Fawen. This packaging update is testament that small changes can make a difference.

Saffron Road Crunchy Chickpeas Dark Chocolate Chai

Saffron Road is slowly rolling out new packaging across its brand portfolio with brightly colored backgrounds, such as this burnt-orange color. Check out the sweet new product, too: dark chocolate coated chickpeas that resemble candy.

Arctic Zero Light Ice Cream

Arctic Zero took the opportunity to radically overhaul its package design with the launch of a new line of products, Light Ice Cream, which unlike the original SKUs, contain dairy. The brand plans to extend this modern packaging to its other products, too. 

Stash Organics

Here, new flavors pair with new packaging to reinvigorate Stash's core consumers and attract new ones. Check out the artsy photography of the main ingredients—is that a bonsai tree we see on the Asian Pear Harmony flavor?

Copper Cow Coffee + Sweetened Condensed Milk

It's hard to see in this photo, but Copper Cow's new packaging is aptly laced with copper-colored metallic details. We particularly love how the company includes "women owned" on the front of the box—usually this important attribute is hidden on the back of the package.

Bob's Red Mill

Lilac colors and bold product descriptions are rolling out across Bob's Red Mill's products, starting with this trio of baking-specific items. It's a solid way to garner continued excitement for this wildly popular legacy brand.

Stay tuned for more new product coverage from the Winter Fancy Food Show on newhope.com, and follow @NewHopeNetwork on Instagram for real-time show coverage!

Unfinished Biz podcast promotes entrepreneurship with relatable stories

Unfinished Biz podcast

There are the highs, and then there are the lows. Fortunately, there is support available to navigate the roller-coaster that is entrepreneurship (including what we offer here at New Hope). Industry experts are also stepping up to utilize new and trendy media forms to accommodate the ubiquitous craziness of the startup life.

One such resource is a new podcast by VMG Partners, a firm that invests solely in branded consumable products and continues to add natural and organic products to its portfolio. The podcast’s content takes a look at the trials that happen before a company makes it big—catching them mid-stream. Co-creators Robin Tsai and Wayne Wu say "Unfinished Biz" is built to highlight stories of people in the midst of building their businesses, and broadcasting that to the universe of founders who are in the thick of it.

As managing directors at VMG, Wu’s and Tsai’s days are filled with talking to founders from the time they start their businesses, and those conversations were the genesis for the project. “What makes the people at VMG excited to do what we do is we really want to work with great founders to help them build iconic brands. So, what we talk about is: What can we do to actually improve our founders’ lives?” says Tsai.

“There’s a good amount of publicity for folks who’ve gone and already been ‘successful’ with their brands,” Tsai adds. “Folks are really excited to interview those founders and they’re able to tell these beautiful stories of how it all came together and how it was amazing and how it all worked out well.” As he sees it, those stories are certainly inspirational, but not entirely relatable.

It's not all rainbows and unicorns, as Tsai puts it. He thinks hearing these honest stories can make the journey less lonely for founders by hearing that others are going through the same thing. The stories are meant to balance to what reasonable success the show’s guests have already had with the hiccups they’ve had to battle, and provide inspiration to keep fighting. “It gives a realistic look at what even successful entrepreneurship looks like,” says Wu.

But don’t think the project is just an opportunity to promote VMG brands. They say only a small percentage of the guests on Unfinished Biz will be former or current VMG portfolio companies, and they plan to keep the focus on a diverse group of entrepreneurs across categories. “This is a forum to promote the reality of entrepreneurship,” says Wu.

The unpolished hosts bring a unique perspective and authenticity as they talk about the individual journeys of the guests. Through their investor lenses they will occasionally share their opinions on how they’d look at a business and whether they would have considered investing in it.

Guests so far include natural industry heavyweights Koel Thomae, founder of Noosa Yoghurt, and Bill Keith, founder of Perfect Bar. The next episode will drop next week with an honest chat with Neil Grimmer, mastermind behind Habit and co-founder of Plum Organics.

The four ad-free episodes available are a digestible 30 to 45 minutes long and can be accessed from your favorite podcast app or at unfinishedbiz.com.

Where in the world are supplement sales growing?

Thinkstock global supplement sales Asia

In Nutrition Business Journal's 2017 Global Supplement Report, various factors that affect the landscape are evaluated—regulations, traditions, global trade agreements and more. Bureaucracies and trade law are different everywhere, adding another layer of challenge to a market that grew more than 5 percent in 2016. We illustrated the growth of each region highlighted in the report in the infographic below. Fill out the form for the charts used to create this, and purchase the report in its entirety here.

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