CHICAGO — Entrepreneurs focused on disrupting the food and beverage space should consider developing concepts that solve problems. Specific categories ripe for such innovation include sustainable packaging and functional foods, according to a panel of food industry executives and entrepreneurs at the inaugural Trends and Innovations Seminar, sponsored by Sosland Publishing Company and presented by Food Business News.
Dan Kurzrock, co-founder and chief executive officer of ReGrained, San Francisco, said his company, which manufactures snack bars and chips from upcycled ingredients sourced from the beer brewing industry, has been searching for a viable form of sustainable packaging with little success.
“Our business is all about designing a food system in line with the planet we love,” he said during the March 27 panel discussion. “And we felt the packaging we used was an important reflection of that. We tried to take a stand, but what we learned is our packaging decision was actually creating food waste.”
ReGrained initially launched using compostable packaging, and management did so knowing it would complicate the supply chain by creating longer lead times, compromised shelf-life and additional cost.
“We went to a nine-month shelf-life from 12 to 18 months,” Mr. Kurzrock said. “Then, as our distribution became more complicated, we learned our material was causing our product to prematurely stale, in some cases, before it reached the grocery store.”
The company eventually was forced to switch to conventional film.
“There is a ‘P’ in C.P.G., and that is packaging,” Mr. Kurzrock said. “I think it has been horrifically overlooked by major companies. We are in the future trash business, and no one likes to talk about that. We tried to do something about it but weren’t able.”
Peter Rahal, founder of RXBAR and head of innovation and strategy for Insurgent Brands, Chicago, said he sees consumer interest in sustainable products accelerating.
“In 2007, 2008, there was a lot of momentum (for sustainability),” he said. “But then the economic crisis hit, and it became less of a priority.
“But when you look at what people are searching (for on the internet) you can see the demand is there again. Once the technology catches up and inefficiencies are removed, the delta between a better-for-you product that is good for the environment and one that isn’t as good for the environment will get closer, and that will be a game changer.”
Mr. Rahal added that the consumer trends he sees emerging show promise for the future of functional foods.
“People younger than us are very intentional with what they eat,” he said. “Everything needs to have a purpose.”
But he emphasized innovation in the functional food category must solve a real problem.
“You see a lot of (nutrition) bars that have caffeine,” he said. “It’s a cup of coffee in a bar. I think that solves a problem that doesn’t exist, because who doesn’t enjoy a cup of coffee? No one is looking to replace it.”
To be an entrepreneur in the food and beverage industry requires more than an idea, said Natalie Shmulik, c.e.o. of The Hatchery Chicago, a food and beverage incubator.
“Alongside all of the trends that seem to be emerging in the industry, being an entrepreneur is a trend in and of itself,” she said. “Yes, the food industry is very interesting, important, sexy and trendy, but it’s also a business. We look at what problem are you really solving or are you just creating a problem to solve? We think that is a first indication of whether something is truly a trend or a fad.”
The number of start-ups trying to break into the food and beverage category has grown significantly during the past decade. The panelists offered their thoughts on how long the trend may last and what the next five years may look like.
“I think as long as big food company portfolios don’t match where demand is they (entrepreneurs) are going to keep doing it,” Mr. Rahal said.
Ms. Shmulik added, “It’s going to continue. For every 10 that may drop out there are going to be another 10 that will come into the business. Every day someone wakes up with a new idea.”