June 2, 2018 — This is the second of two posts on findings gathered from a successful food entrepreneurs panel convened by Global Food Forums. In this post, topics related to authenticity and transparency as well as exit strategies are delved into. Click here to return to the Innovative Challenger Brands Panel Part I.
Kara Nielsen, Vice President of Trends and Marketing, CCD Innovation, moderated the event. Panel participants included Miyoko Schinner, CEO and Founder, Miyoko’s Kitchen, a manufacturer of vegan dairy cheese alternatives. Also Dariush Ajami, Ph.D., Vice President, Research & Development, Beyond Meat, a manufacturer of vegetarian meat alternatives. Thirdly Kurt Seidensticker, CEO and Founder of Vital Proteins, a manufacturer of hydrolyzed collagen products for joint health. And last, but not least, Natalie Shmulik, M.L.A., CEO, The Hatchery Chicago, a business incubator focused on food and beverage start-ups.
Authenticity and Transparency
Authenticity is the key to resonating with consumers, said Seidensticker. “When we first got into this space, there were collagen tablets in the market, but nobody knew what collagen was…it was perceived to be some type of pharmaceutical or chemical material. We had to explain that it was made from the remnants of already dead animals and that we only obtained our collagen from humanely raised animals. People could connect with that.” Vital Proteins’ website prominently features a video explanation of its collagen’s sustainable origins.
For Miyoko’s Kitchen, “whole foods” is the key. “We have an easy job, because all of our ingredients are organic-certified, clean label ingredients; the fermentation used for aging is a traditional process well-understood by consumers,” said Schinner. “Natural, whole foods are what we believe to be healthier, and they are also in line with consumer trends,” agreed Seidensticker.
Ajami concurred. “Our strategy is to be very transparent with consumers. Currently, we use a variety of proteins to ensure our products can not only meet, but in some circumstances exceed, the nutritional profile of their animal counterpart. We recognize that consumers are looking for cleaner labels, so we are constantly trying to come up with technical solutions to reduce the complexity of our ingredient lists. Focusing on simple, plant-based ingredients and building products without gluten, soy or GMOs, as we know consumers are increasingly uncomfortable with those ingredients, is a key guardrail that guides our innovation team and helps ensure a simpler label.”
Exit Strategies from the Successful Food Entrepreneurs Panel
Nielsen asked panelists how they viewed the role of large consumer packaged goods companies (CPGs) in food and beverage innovation, particularly with respect to mergers and acquisitions (M&A).
“Gone are the days when consumers perceive big-brand acquisitions of start-ups as a problem,” maintained Shmulik. “When we speak with entrepreneurs, 99% have an exit strategy that envisions acquisition by a larger company, and we now see more entrepreneurs and CPGs embracing the concept of partnering.” Meanwhile, CPGs have been learning to let entrepreneurs keep doing what they do best without meddling in the process. “Such partnerships become especially beneficial if entrepreneurs can access the legal and regulatory resources of larger firms and learn what it takes to build and maintain a brand,” continued Shmulik. Many CPGs also offer access to venture capital.
Miyoko’s Kitchen’s Schinner noted, “You need to build a brand that you believe will attract investors whose values are aligned with your company’s mission.” This point prompted Seidensticker to add: “But you don’t build a brand to sell it; you build a brand about which you are passionate.”
Ajami noted that Tyson Foods, a leading American CPG company, has been a major investor in Beyond Meat. “It’s nice to know that Tyson recognizes that the protein aisle is changing,” he said.
The People Factor
Growth brings challenges, especially with regard to people.
“As we get bigger, we want to make sure that we keep our start-up culture,” added Ajami. Three years ago, the company’s employee count rose from 20 to 200, he noted. “We have to be very careful about our hires, as we want to make sure that they are passionate about the company’s mission.” To which, Seidensticker added, “The danger is that the larger we get, the more we start behaving like a big CPG company.”
“Human resources (HR) becomes a huge challenge as we navigate companies from point A to B,” agreed Shmulik. “We offer HR services to our companies; getting the right talent for them is extreme- ly challenging. Companies need to strike the right balances between hiring people straight out of school that are agile and enthusiastic, and hiring experienced people that know how to take a company to the next level.”
Keep it Simple
An audience member asked about the challenges of having to deal with people, whether customers or investors, that don’t share the same vision as the entrepreneur.
Schinner replied that the underlying issue is the difficulty of explaining an entrepreneurial vision. “Ultimately, what you want is a self-explanatory product,” she noted. Shmulik agreed: “Sometimes success eludes innovators, because they spend too much time and resources trying to explain their vision or product to others…because it’s their baby!” That can make it difficult for them to listen to the advice or feedback of others. Thus, Shmulik said she often found it necessary to find ways to convince entrepreneurs that any changes made were “their idea.”
“Our company’s decision to call itself ‘Beyond Meat’ was actually quite clever,” noted Ajami, “because it is easy for consumers to understand.” It is also not a challenge to meat-eaters. “Our major target is carnivores, and our products are developed for that group.”
“Ultimately, it is the entrepreneur’s responsibility to educate the market on their product’s benefits,” concluded Seidensticker.
Keep it simple, in other words.
⇐ This post on successful food entrepreneurs panel is Part II from an Innovative Challenger Brands Panel. Click here to go to Part I: Innovative Challenger Brands Panel Part I