by Clark Driftmier
The Natural Products Expo West trade show and conference has cemented its position as the leading food show in America for brands, trends and innovation. This year the show has grown to more than 85,000 attendees and 3,500 booths, including the show’s expansion into the new North Hall at the Anaheim Convention Center.
We recently walked the aisles of Expo West, an exciting (and daunting) enterprise requiring several days due to the huge crowds, jammed aisles and the show’s expansion into new exhibit areas. More than ever, Expo West is the definitive venue for food innovation in America, and the show has become a more than a little crazy as in “crazy exciting.” Below are a few of the trends that we notices as we walked the show:
1. Plant-based milks go artisanal
· The lifecycle of plant-based milks has progressed from the basic (quarts and half-gallons of soy & rice milk) , to the flavorful (almond milk) to the more exotic (hemp and cashew milk). The newest stage has seen a number of new artisanal plant-based milk products, unique packages, smaller sizes and greater variety in flavors. Brands tout their hand-crafted and artisanal qualities.
2. The Beet Generation
· Beets are hot, even when they are cold (as in the beet & goat cheese salad at your favorite café). The surging popularity of beets has led to an expansion of natural foods that feature beets prominently, especially snacks. There are also new varieties of beet-based frozen entrees and drinks.
3. We all scream for ice cream
· An ice cream obsessive with the goal of sampling every brand of frozen dessert at Expo would need to visit more than 100 booths. Natural frozen desserts have surged in popularity and include a wide array of both dairy-based and non-dairy options.
4. Munching on Mochi
· Mochi has always been a favorite in U.S. Asian markets and restaurants and to a certain extent in natural foods. This delicious food has now benefitted from expanded distribution and a more evolved consumer palette, leading mochi to a position closer to the center of the mainstream U.S. diet. Many natural food retailers now feature mochi in frozen coolers with multiple flavors. Mochi is also found at room temperature in the dessert section.
5. Plant-based and Meat-based opportunities both abound, but mission-wise are they in conflict?
· So, which banner should the industry fly? Perhaps it is - “In Plants We Trust!” a motto we saw at the show. Or maybe it is - “Animals Rule!” Wandering the show, there were hundreds of brands with strongly developed messages promoting both sensibilities. We found plant-based products in one aisle with strong messaging regarding the benefits of plant-based foods and the negative burden of animal agriculture on the environment. This was followed by several new meat snacks in the next aisle discussing the benefits of ruminant animals to regenerative agriculture. Around the corner in another aisle we found dairy free cheese companies promoting the benefits of plant-based cheese as a better option v. dairy-based cheese for personal health and the environment. In the next aisle we found several grass-fed dairy and cheese brands that were thriving. Gosh, is there a unified message in all of this!? Perhaps the duality of messaging with plant-based v. animal-based agriculture demonstrates commerce in action and the democracy of consumer choice. Then again, maybe it’s indicative of an industry that has several competing messages and missions without central tenets. Or perhaps it’s just a manifestation of our crazy society and the near-infinite variety of foods, forms and brands.
6. Looking Beyond the Barnyard
· Speaking of meat, we notice that the expansion in variety of products and sku’s has also increased the availability of wild “beyond the barnyard” meats and species such as elk, venison, wild boar and wild (or American) turkey. We predict that the variety of flavors and types of meat will continue to expand as brands look for new ways to bring excitement to the meat snack category. Wild Paraguayan anaconda jerky, anyone?
7. Sales are Sprouting
· Sprouted products have long held a place in the bread category, but we also noticed several brands of cookies and crackers made with sprouted flour. Additionally, we saw sprouted flour itself in 1 to 5-pound bags, ready for a new generation of bakers.
8. Hemped Up
· With the mainstreaming of cannabinoid-based products as rightful members of the natural living industry, sales of these products have skyrocketed, especially for CBD oil. Numerous CBD brands were on display, and there was a day-long CBD business summit at the convention center during the week of Expo. What we did not see were any of the hallucinogenic, THC-based products, such as edibles, due to the significant legal hurdles still threatening the industry at the Federal level and in many states. Indeed, the Justice Department’s hostility to any and all products derived from cannabis keeps the industry’s prognosis and growth trends highly unstable, with brands not exactly sure how open the market will be or how broadly across America the products will be legal and shippable.
9. When Your Brand Name is your Mission
· For a number of years, Starbucks customers have purchased “Ethos” water, which promotes water, sanitation and hygiene initiatives in water-challenged regions. We also note the long success of “Endangered Species Chocolate,” which supports the initiatives of its eponymous name. These have been joined recently with “No Evil” plant-based foods, “This Bar Saves Lives” brand energy bar and “Good Citizens” Mac & Cheese. For these brands, marketing is not just messaging but is intrinsic in the brand’s very identity. Branding your mission as your name also set a high bar for conscientious action, mandating that the brands continually uphold the mission which is their brand as well as their purpose.
10. Coconut Champions and Challenges
· There were several new coconut-based products at the show, especially in the area of snacks. These products champion coconut as a flavorful and healthful signature ingredient. However, there were also challenges in the category, with sales downturns for certain coconut products, especially coconut oil, which has seen a sales decrease in excess of 25% over the past year. Critical reports about coconut oil in medical journals and elsewhere have affected sales negatively, though many consumers still buy and love coconut oil for a variety of recipes and uses.
11. Dear Acai, we had such a wonderful time together, but . . .
· Amid our updates on booming categories and emerging product trends, we should also acknowledge troubled categories such as acai, which has suffered a precipitous decline over the past several years. Once a star category at the show, acai now has a much smaller footprint and very little new product activity. A small number of the leading acai brands are still present, with a few sku’s here, a few flavors there, but nothing like the surging, buzz-worthy product category of the early 2000’s. And don’t even get us started on Goji berries!
12. Food v. Natural Living – Who’s got the mojo?
· Historically, the Natural Living portion of the Natural Products Expo has always had the highest excitement or ‘mojo’ factor. Bigger booths, brighter lights, longer lines at the book signings, custom-built stages in the booths with pulsing music, multi-story cantilevered meeting spaces, and the like. However, we observe that the food side is currently capturing a lot of the buzz. There is a huge burst of innovation, investment and growth in natural & organic foods. Entrepreneurial ventures and incubators abound. Financial and strategic investors are driving growth and innovation. Silicon Valley leaders are joining the boards of disruptive start-ups such as the plant-based meat developers. As Phil Lempert the “Supermarket Guru” states, “For the first time in my career, Food is now Cool.” This is not to “shade” the Natural Living side, which is also very exciting with many new products, but we would conclude that now is the most exciting time ever to be in natural & organic foods. Looking at the industry overall, many of us think that the natural products community is a swell place to spend the first few decades of the 21st century.
13. Celebrating the Food Itself v. the Apps Around the Food
· Meal kits. Door Dash. Self-serve grocery stores. App-based ordering. Amazon lockers. Much of the current buzz in the food and business media is about the apps and technology that surround food and serve as enablers between consumers and their food choices. That being said, Expo is all about the food itself. How it tastes. The textures and flavors and colors and forms. What it’s made of. How it nourishes the body (or not). How it sustains the Earth (or not). How it upholds cultures and culture. A walk through the Expo halls is a food sensory experience, not an app-centric experience. During the Expo. Whole Foods Market ex-CEO Walter Robb gave a keynote address at the Disruptive Retail seminar. In his talk, Walter reminded attendees that whatever the changes in retail, the most important part of grocery retailing will always be the food itself and the qualities of excellence in food and flavor which will delight consumers and bring them back to the store.
14. Private Equity and Strategic Investment – The Jet Fuel of our Industry
· Walking among the “Big Natural Food” booths of the natural food leaders, especially in Expo Halls A and B, and comparing how they look today v. those same companies in former years, one must simply say “WOW.” The overall look is dramatically brighter, bigger, fresher, newer and more exciting than ever before. So many new booths, enlarged booths, enhanced booths. One can almost feel the investment, the money, the commitment of new owners, the talent and enthusiasm. Capital from financial and strategic (food company) investors has definitely added jet fuel to our industry. Additionally, the criteria for investment are changing. For example, the threshold in brand size and development to attract investor interest has gotten progressively smaller and earlier in the brand lifecycle, due in part to investor interest to get into “the game” closer to the beginning. This earlier investment window allows newer brands with young, formative business plans to attract investor interest which in general was not previously seen. As a result, younger brands today near the incubator stage are garnering investment that facilitates growth from the earliest stage of the company lifecycle. This too is adding fuel to the natural foods “flame” of innovation and growth.
The growth and leadership of the Natural Products Expo and the brands it represents have become worthy participants in the larger food economy. Natural Products comprise only about 10% of the food industry, but they currently seem to be getting about 90% of the positive buzz. We might call this the “90 / 10 ratio” of buzz to revenue. Of course, natural & organic products have historically “punched above their weight” in terms of capturing the hearts & minds of consumers and the media, even with much lower sales than conventional food counterparts. The way that Natural products are developed and taken to market, the way they tap into the contemporary direction of society, are serving as a model for entrepreneurship.
And yet, as we chart our future course, there is so much more to do. Sustainability programs are admirable but are just scratching the surface. Organic farming systems have demonstrated important tangible benefits but still comprise only a small portion of US agriculture. Natural products have greatly increased distribution but have not dented the problem of food deserts or unhealthy diets among so many citizens. Initiatives in our industry have launched to fight climate change, but we still use the same greenhouses-gas-producing trucks and warehouses and freezers (and Expo airline flights) as any other sector of the economy.
The natural foods industry has many of the elements in place to make even further progress towards a sustainable future, and the Natural Products Expo is an invaluable platform to facilitate change and growth. True change requires a motivated group who is unafraid to mix things up and do it a different way. Building a sustainable future requires thought leadership, rigor and hard work. Creating better products requires a willingness to throw certain methods and ingredients out the window and replace them with more innovative alternatives. Rallying the industry to action requires bringing our community together to speak, listen, learn, share, debate, brainstorm, enhance, revise, and ultimately to craft a new narrative for the future of the greater food industry.
Looking at all the above, we think that a fine way to make progress is to gather together on a certain morning in March, at a certain location in Anaheim CA, with 85,000 of our closest friends.
CLARK DRIFTMIER is Managing Director of Strobus Consulting (www.strobusconsulting.com) which provides clients with new product development and go-to-market business development strategies. He has been a food entrepreneur and start-up specialist for nearly 3 decades. Clark’s new product and management initiatives include hundreds of new products in several dozen food categories. A published author of articles on natural and organic foods, Clark has also spoken at numerous conferences and has served on several national and regional not-for-profit boards. He and his family live in Northern California.