The opening and keynote speakers at the 2019 North Coast Specialty Food and Beverage Industry Conference offered starkly different perspectives on the future of an industry both agreed was thriving but whose future remains an open question.
Rob Steele, managing director at Bank of America Merrill Lynch, and entrepreneur and the University of California Berkley professor William Rosenzweig agreed that the burgeoning market had huge potential for growth.
But Steele focused on the short term financial while Rosenzweig pled his case for an approach to food that minimizes environmental and societal impact.
The specialty food and beverage market — including companies like Healdsburg-based goat cheese purveyors CHEVOO and Hip Chick Farms organic chicken fingers — by some estimates could reach 22 percent of the national overall food market by 2022, Steele said, a trend driven by an increasingly educated consumer base interested in making healthier choices.
“Approximately two-thirds of all households have specialty foods in their cupboards,” Steele said at the Feb. 28 event, noting industry growth is driven by new trends every year like organic, whole, food, vegan, antioxidant and others.
He estimated that there was roughly $10 billion in equity capital invested in the industry but said larger corporate food companies had been slow to adapt to the growing market.
“The public companies…have been very challenged over the last couple of years,” Steele said, adding companies like Kraft Heinz had focused on cost instead of jumping into now familiar markets like organic foods.
Some corporations were beginning to adapt by investing in incubator funds however, with companies like Unilever and Nestle having done so several years ahead of the competition.
“An incubator fund is specifically designed to evaluate and invest as opposed to approaching the market on an ad hoc basis which is the way the corporates did it historically,” Steele said.
While the pace of initial public offerings in the specialty food space had slowed over the last two years, he expected multiple IPOs of familiar brands in 2019.
“Most of them are health and wellness [focused]” he said, adding the companies would be those that focus on the personalization and customization trends driving the industry in recent years.
If Steele’s focus was the next few years in the industry, the professor and entrepreneur Rosenzweig’s perspective was generational and global, challenging his audience to think “not necessarily about today’s market opportunity but perhaps what the world might look like in 20, 25 or 30 years.”
He asked attendees to broaden their perspective beyond interest rates and market opportunities and think about food as a larger system that went beyond a supplier and consumer relationship.
“We are the source of vitality, of nourishment, of energy of culture of connection,” Rosenzweig said of the food and beverage industry, adding the unique and intimate nature of the product offered a transformative vehicle that could even slow climate change.
“The food and agriculture sector is actually the greatest leverage point available to use in addressing climate change as a species, as a society, and as a global culture,” he said.
This transformation required producers and consumers, which he dubbed “eaters,” to identify the external costs and impacts of food, Rosenzweig said, an approach he said would include a “climiatarian” plant-forward diet that diminished the amount of animal-derived protein on the plates of future generations.