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North Bay Business Journal

Monday, November 26, 2012, 7:05 am

Specialty foods at heart of what defines the North Bay

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    Special foods CEO panel John Foraker of Annie’s, Blair Kellison of Traditional Medicinals, Marcus Benedetti of Clover Stornetta and moderator Brad Bollinger of the Business Journal.

    NORTH BAY – When Annie’s Homegrown CEO John Foraker saw his company’s mascot displayed at the New York Stock Exchange this March, he paused. The company’s initial public offering was a watershed moment, but seeing the natural food mascot above the busy trading floor held a greater significance.

    “That was when I started thinking, ‘Wow, organic is really mainstream,” said Mr. Foraker.

    Recounting the story at the North Bay Business Journal’s first-ever conference, “Our Food, Our Bounty, Our Future,” Mr. Foraker said that it was only the most recent milestone for the fast-growing organic food and products producer that had its roots in a packaging experiment between an entrepreneurial husband-and-wife team in Massachusetts. The company grew in scale after moving to Napa, thriving amid a North Bay culture that supported natural and local products.

    However, the fertile ground of the North Bay was not enough to attract sufficient talent in the company’s meteoric rise. Annie’s moved its corporate office to Berkeley over two years ago, employing 110 people while leveraging the city’s options in public transit and proximity to the urban nexus of San Francisco.

    “We were growing so fast and needed talent,” he said.

    While Annie’s found a home for further growth in Berkeley, many other food and beverage producers have continued to expand in the North Bay. The region has outperformed the state in terms of sector employment and growth — California saw jobs in the sector decreased by more than 5 percent in the 10-year period between 2001 and 2011, while jobs in the North Bay increased by approximately 20 percent, according to an industry report by Dr. Robert Eyler, chair of the economics department at Sonoma State University and director of the school’s Center for Regional Economic Analysis. The findings were presented during the conference, showing the North Bay as a destination for those manufacturers.

    Industry leaders at the event questioned if co-branding or other consolidated efforts could help producers to further leverage a North Bay brand image and strengthen their share of markets and top talent.

    One of the best attractors for that talent “is the opportunity to live in Sonoma County,” said Marcus Benedetti, president of Petaluma-based dairy producer Clover Stornetta Farms.

    Joining Mr. Foraker on a panel that also included Blair Kellison, CEO of Sebastopol-based tea producer Traditional Medicinals, Mr. Benedetti said that his company’s efforts to assist in relocating new hires have helped in recruitment.

    After years of keeping operations consolidated in Sebastopol, Traditional Medicinals chose to move some of its corporate functions to a new office in Petaluma. The company calculated that the new location created a net reduction in commute times for its employees, and Traditional Medicinals has since added $3 million in new employee payroll to its roster.

    Many of those new employees are attracted to the idea of living in the North Bay. Yet Mr. Kellison and others cautioned that the region’s merits should not be the only draw for employers and that compensation and perks should also be competitive.

    “Sonoma County is a great place,” he said. “But the employment piece is challenging.”

    Despite that challenge, Traditional Medicinals and others have emphasized a kind of synergistic branding that occurs by having a number of specialty food and beverage manufacturers in the region. While costs could fall by relocating elsewhere, the clustering of manufacturers allows high-quality producers to point to one another as representing a collective adherence to high standards for production and raw materials.

    “If you have a food manufacturing company in this area, you will not be the low-cost provider. You have to be premium, and capitalize on that opportunity,” Mr. Foraker said.

    Demand for capital has increased along with the industry’s growth, helping to finance large mergers and acquisitions, land purchases and spearhead export to foreign markets, according to participants of a finance panel at the conference.

    “We have access to the fastest growing market in the world — the Pacific Rim,” said Casey Garten, senior vice president at Bank of the West.

    Mr. Garten was joined on the panel by Brian Mulvaney, senior senior vice president in Bank of America’s global commercial bank, with a focus in the beverage sector, and Clay Stephens, president and CEO of Warren Capital Corporation.

    “We’re seeing more and more strategic buyers coming up and nosing around Sonoma County,” said Mr. Stephens, outlining a number of recent acquisitions that his firm has helped advise.

    Mr. Mulvaney outlined some of the challenges facing premium food and beverage manufacturers, noting a current market where consumers buy either at the extreme low or extreme high end of the product spectrum.

    “That middle is starting to lose share. The question is — can you sell something at Whole Foods, but also at the dollar store?”

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