Natural Products Expo East is one of the biggest natural foods trade shows in the world. The September 2018 event in Baltimore attracted 1,500 businesses and 30,000 attendees, including us—two Erb students participating as MBArk Fellows, with the support of fantastic people like Joe Dobrow. The insight we gained on industry trends, challenges and products would be of interest to any organic food professional or enthusiast. Here are five main takeaways from a business sustainability perspective.
1. The industry is still dominated by small players.
The usual suspects were all there—Bob’s Red Mill, Eden Foods, General Mills, La Croix, Stonyfield Organics and Sweet Earth. But the number of small companies on the ground was remarkable. Some businesses had only one or two employees, or they had just shipped their first products a week earlier, and this dynamic highlights how fragmented the industry still is, as well as the low barriers to entry, which foster innovation and entrepreneurship.
Although Honest Tea is one of only a handful of companies that grew exponentially and ended up being acquired by a food giant (Coca-Cola, in Honest Tea’s case), this trend is expected to pick up pace, as private-equity firms set their sights on the sector’s untapped potential, making consolidation the norm rather than the exception.
2. Distribution is key and can make or break an organic foods start-up.
Entrepreneurs are concerned about the capillarity of their distribution networks: On how many shelves across the U.S. could their products be found? Were they selling through Amazon? What about direct to customer? If they were in Whole Foods, could they also be in Costco?
Although the companies’ downstream distribution was clear, their upstream operations were less so. Many firms admitted to buying their ingredients from cooperatives but being unable to verify the sustainability of their raw material sources. The bigger and more established the company, the more thought they gave to this issue—or perhaps they were reacting to their larger customer bases’ demand for transparency, also having greater resources to implement sustainable sourcing initiatives.
It’s easy to see how a small entrepreneur could overlook the topic or lack the immediate capital to prioritize it. But we, as consumers and a society at large, must hold businesses accountable for their sourcing strategies and practices—the farmland and farmers will thank us.
3. Alternative protein today, simply protein tomorrow.
Vegetable-based burgers? Check. Plant-based dairy? Check. Cricket protein bars? Check. Entrepreneurs at the trade show seemed to understand the enormous pressure our current diet imposes on the environment, and they are looking for creative solutions. Recognizing businesses’ power to tackle this issue is a crucial step.
Seth Goldman, executive chairman of Beyond Meat, remarked that he “is not interested in creating an alternative vegetarian burger, but rather, a meat competitor that has a smaller environmental footprint.” The executives of Flourish Farms, a cricket farm in Vermont, said they were excited that MBAs attended the event, because they need help from people who “get it” to make alternative protein a reality in this competitive environment.
4. Although the show was huge, it’s still only 5 percent of the food industry.
It’s easy to be dazzled by the trade show proportions – by any metric, it’s big. But organic foods still accounts for only about 5 percent of total food sales, a figure that was pretty much 100 percent before the World Wars and the development of mass-market chemical products. Expo East shows that the organic industry still faces challenges, but it also offers many opportunities to get involved. Companies with good ideas can sustain incredible growth in the medium to long run by focusing on what matters to the customer and to society.
5. Where is that compost bin, again?
While the event focused on what was inside the bottle, box or carton, packaging and material got less attention. It was hard to not notice how much waste the event generated, which was exacerbated by all the (delicious) sample cups, bowls, plates, utensils and napkins. While some vendors offered compostable plates (woohoo!) and each room contained trash, recycling and compost bins, few people were properly diverting their waste.
Was this due to lack of education? If designated volunteers had been waiting at each receptacle to inform participants which bins to use, would that have made a difference? Imagine all the food waste that could have been recovered and composted if all the pieces of the puzzle were in the right place.
If these brands are positioning themselves as reducing their footprint through sustainable food systems, that ethos should permeate the trade show as well. If brands in this industry aren’t held accountable for reducing their waste, how will this ever translate (especially in an educational way) to the consumer level? We have seen brands starting to think more about a product’s early life cycle, but how do we get them to focus on the end use phase as well?
Observing the organic food industry’s dynamics and trends is refreshing, but as sustainability students and future business leaders, it is our responsibility to ensure that we understand and act on these opportunities. We hope that these takeaways can be useful for any aspiring business professional interested in sustainability or natural foods, and we hope we see the field continue to develop and evolve.