Cooking up new business
Changing food trends lead to winners and losers.
Jeff Grogg, a Battle Creek consultant to the food industry across the U.S., sees potential trouble ahead for the sugar industry but lots of new opportunities for the growers and processors of fruits and vegetables.
When the focus is on food innovation, “It helps if you can position your company to take advantage of some of these trends — or at the very least, not be going counter to some of the key trends,” said Grogg, whose business is called JPG Resources.
Grogg was invited to speak last week on product innovation and consumer trends at the second annual Michigan Food Processing & Agribusiness Summit, started in Grand Rapids by The Right Place economic development agency.
He works mainly in the organic and natural foods sectors, which is why he worked with the founders of Simply Eight, a new processed foods business that started in Kalamazoo earlier this year. (See “Food startup gets shelf space at Meijer and Kroger,” April 15, Grand Rapids Business Journal.)
Simply Eight was launched by former Kellogg employees, and Kellogg itself, like most of the big food corporations, has jumped on the bandwagon, developing specialty products for the new wave of consumers. One of Kellogg’s most popular alternative brands is MorningStar Farms meatless burgers for grilling.
Companies of all sizes, including many old line food giants, are trying to rebrand themselves as proponents of “simple” foods, said Grogg.
“We’re seeing companies working hard to shrink their ingredients list and clean up their ingredients list” as far as additives are concerned, he said.
The big companies, he said, “aren’t going to revamp their whole product portfolio,” but “they certainly will develop new innovations that fit these trends.”
“For example, you’ve seen a lot of big companies pull out the high-fructose corn syrup and you see big companies who are working on incorporating veggies into more of their products.”
Haagen Dazs came out with Haagen Dazs Five a few years ago, and Pillsbury’s Simply brand of dough for cookies, bread and biscuits is another example.
Grogg cited food writer Michael Pollan, author of “The Omnivore’s Dilemma,” as one of many influential advocates for the growing trend of “eating simple foods, like your grandparents made.”
“In some ways, he’s sort of an anti-processed-food guy,” Grogg said of Pollan, but added that much of his dietary advice “is really about simplicity and familiarity and avoiding chemicals and additives.”
And spin. In an interview with CBS in 2010, Pollan made some sharp comments on brand marketing that is more into selling spin than selling food that is actually different. The Haagen-Dazs Five brand, he said, was mainly spin, plus slightly less fat content.
West Michigan isn’t the only big food production area in Michigan. Grogg noted that the Detroit region has a lot of famous food businesses, producing potato chips, Vernors, pizza — to name a few. However, West Michigan does have a great strength in its agriculture base that is heavy on fruit and vegetable production. “A lot of people are looking to add fruits and veggies to their diets, and companies are responding,” he said.
“I think there is opportunity for growers to look at adding a secondary process,” said Grogg, such as making juice, or drying their crops. He has spent much time in the Northwest where he has seen those secondary processes in action — secondary because they come after the primary process of raising and harvesting the crop. Some dried vegetables, for example, can become a concentrated powder that is easily added to other food preparations, he noted.
On the growers’ end of the food chain, Grogg sees an opportunity to “plus up the value of these Michigan products.”
But managing that innovation requires a key element: brand development and marketing.
A memorable brand is one that forms an “emotional connection,” said Grogg, one that reminds the consumer of all the potential benefits related to health and fitness. “Brands that develop a higher level of meaning have a higher chance of success,” he said.
The health aspect is big, he said. “And health is also confusing to people, so if you can create that simplistic communication to the consumer about what your brand does for them — that you can say in 10 words or less — that creates a lot of brand value.”
Gluten-free was once just a trend that some predicted would fade away like many other fads, according to Grogg. In 2006, gluten-free was just becoming known to many consumers across the country. In 2010, its annual market value was pegged at $2.5 billion. Today, it’s estimated at more than $4 billion.
“It transitioned from a purely medical need in diet to a way of eating that’s a little broader than that,” he said.
Another trend is vegetable proteins — “particularly, alternatives to dairy and soy. There’s a lot going on in that market.”
Also, there is “a lot more heat on sugar and salt, and there is a lot of potential for enhanced (government) regulations across the food industry in many, many ways.”
Over the past five years, according to Grogg, the amount of regulation and oversight “has dramatically increased, and I think it will continue to do so. “The bigger pressure is going to be on sugar,” he said — “all manner of regulations.”
Another trend is the movement away from GMO: agricultural products that have been genetically modified in the laboratory to produce plants that maximize certain characteristics. GMO is very prevalent in global commodity crops such as wheat and corn.
The anti-GMO trend may also pinch the sugar beet growers, because most sugar beets raised in Michigan’s eastern beet fields are genetically modified, according to Grogg. “If you are in the sugar beet industry, you are in a little bit of a tough spot.”
West Michigan often has to deal with crop damage from late frost, or too much or not enough rain, but all in all, agriculture, and the food processors, are key elements in the economy here.
“Grand Rapids really has a lot going for it in the food and beverage space,” he said, stretching from Amway’s nutritional supplements to Gerber’s baby food. And Grand Rapids is known for its large processed food plants, including ConAgra, Hearthside, Butterball Farms, Michigan Turkey …
“Cheese Kurls is another company up there,” he said.
Cheese Kurls Inc., in Walker, has a lot of fans who probably don’t know that most Cheese Kurl production is packed under store brand names and shipped coast to coast throughout the U.S., and into Mexico and Canada, too.
“Hudsonville Ice Cream is pretty good size now,” too, Grogg added. “Then there are the craft breweries, with Founders now holding national recognition.”