Marking at least a 16% growth rate last year, the natural and specialty food and beverage industry showed how hot the market segment is now. And the light at the end of the shopping aisle will probably not end in 2021 and beyond.
That’s one primary message attendees of the North Bay Business Journal’s 2021 North Coast Specialty Food & Beverage Industry Conference got out of Thursday’s virtual event.
Presenters were Anubhav Goel, president of client growth solutions for industry market-research firm SPINS; Lara Dickinson, co-founder of OSC and the Climate Collaborative; Robert Steele, investment banker at Bank of America; and Carolyn Stark, founder of Naturally North Bay, formerly known as the North Bay Food Industry Group.
One of the biggest factors contributing to an industry that enjoyed a 13% year-over-year total increase in conventional, natural and specialty food products was increased consumption as the COVID-19 crisis grew, Goel explained.
“Everything went up quite a bit,” Goel said.
The growth was “driven by indulgence,” the data research company president noted, singling out spirits, wine and beer as leading the pack.
The pandemic prompted household members to treat themselves and relieve stress.
Yet, in between also stocking up on toilet paper and delving into plant-based diets, many made conscious choices about what they’re opting to consume.
Their choices were studied as waves during the year of dealing with the pandemic. Phase 1 was the spring months, in which lots of people loaded their pantries during shelter-at-home orders. Phase 2 brought about a baking craze in the summer and fall. The third phase was characterized as winter wellness.
Industry sales doubled in one decade, from $60 billion in 2009, and surged in 2020.
“People are literally making more conscientious choices,” Goel said.
And the most successful food and beverage providers filled a niche and continue to innovate.
“Brands have adapted,” he said.
In addition, the evolving retail landscape shows consumers choosing to shop at multiple venues including farmers markets, regional grocers and conventional supermarkets.
Their eating habits have also evolved, adding more plants to their diets. Goel pointed out he expects that trend to continue to grow “even if you’re not vegan.”
Food as medicine will also have a place at the table of American consumers, as people make purchases for products with ingredients to help with a variety of ailments plaguing adults.
“People are struggling with sleep,” he said. Therefore, products with the melatonin hormone may be thrown in the cart, next to an immunity booster.
Banking on the natural and specialty food craze
The prospect of mega profits from this industry isn’t lost on Wall Street, which experienced a coronavirus-spawned recovery from its early economic upheaval as “the shortest in history at 126 days,” Steele told conference attendees.
“Basically, the world bounced back relatively quickly,” Steele said.
Many companies exceeded their earnings expectations, while economists have warned full recovery will be delayed until 2023.
Still, the equity market remained “extremely strong,” with retail trading adding to the active market. With most people gravitating to their sofa, investing found a burgeoning market with an everyday Joe. Retail trading accounted for over 15% of daily market flows.
With a healthy clip of consumer trading, innovator investing and company restructuring, the environmental, social and corporate governance market, aka ESG, found heightened relevance as corporate America discovered appealing to the public’s desire to address climate change, social equity and consumer sustainability was a profitable venture.
“Companies have better returns and fewer employee issues,” Steele said.
One step closer to a better world
The notion of the business community simply doing the right thing has turned a network of CEOs and collaborative projects from a hobby to a force.
Dickinson has linked more than 50 active companies working on eight incubator projects with the idea of making the connection between a company’s profitability and its embrace of “biodiversity.” Through her JEDI consortium, which stands for “justice, equity, diversity and inclusion,” Dickinson insists biodiversity refers to a principle that goes way beyond the climate’s food chain.
“The biodiversity in people is just as important,” she stressed to conference attendees.
She added that racial diversity in the natural foods industry remains “quite light” in representation. Blacks make up 2% of industry workers, compared with their 13% representation in the U.S. population. The Latino community fares slightly better, with 6% in the industry.
Her goal is to transform the culture to coincide with the demand for such products. And consequently, socially conscious companies will find that many consumers will buy with their hearts, not just their wallets. As it stands, she cited McKinsey & Co. data reflecting that being inclusive as an organization has resulted in a tripling of growth in the business world.
“Folks have just started to wake up,” she said.
But further progress is still necessary to find leadership roles for those in marginalized communities in the boardroom.
“This is for those who have not had a seat at the table,” she said.
The conference was sponsored by the Carle Mackie Power & Ross law firm.