As Consumer Distrust in Probiotic Pills Grows, Fermentation Brands Need to Educate on Benefits of Live Bacteria
Probiotic supplements have been the hype of the health industry for the past few years, but the rage is dissipating. Consumers are starting to distrust probiotic pills, realizing a pill alone doesn’t deliver on promised health benefits.
“The thing is, you can’t just pop in a probiotic and get better health,” said Ashley Koff, a registered dietician and CEO of the Better Nutrition Program. “Consumers are waking up to the fact that our digestive health is more complicated than this. We need to start looking beyond probiotics.”
Good gut health requires more than just a single daily probiotic pill. Fermentation brands need to consider all the nutrients needed for a healthy gut as products are evaluated, marketed and advertised.
“You’re actually not what you eat. You are what you digest and absorb…The demands of our digestive health go so far beyond the probiotics,” said Koff, who spoke at Expo West on “Gut Health Revolution: A Radical New Approach Beyond Probiotics.” “When we walk about gut health, we often think about our stomach or our colon. But what were really talking about here are a bunch of different organs. We have to nourish multiple organs with complementary nutrient demands.”
The digestive system is the core to the entire body system. Koff said: “We cannot get and stay healthy without better digestion.” Most digestive health products isolate nutrients specific to one organ, she added. So while a probiotic may help the small intestine, for example, what feeds the probiotic? What makes the probiotic thrive?
Koff said most probiotic supplements and probiotic-infused products ignore other nutrients. What about magnesium, that helps relax the digestive tract? Probiotic supplements have been marketed as a one-time solution when other critical minerals, antioxidants, amino acids, fatty acids and alkaline are just as critical for gut health.
“We want to make sure we’re getting those nutrients that nourish the microbiome,” Koff said. Live, active bacteria will nourish the good bacteria in the gut, building the immune system. “If we’re getting probiotics, we need to get in prebiotics as well.”
Probiotics made $2 billion in sales in 2018, but their sales are slowing. Prebiotics, however, are doubling sales growth.
Simply put, prebiotics are the foods microbes in the gut like to eat. Mayco Clinic describes prebiotics as “specialized plant fibers (that) act like fertilizers that stimulate the growth of healthy bacteria in the gut.” Probiotics, on the other hand, are living organisms in specific straings of bacteria. Fermented foods are full of live, active cultures, like yogurt, sauerkraut, kimchi and kombucha.
Koff said people shouldn’t be getting all their prebiotics from a supplement. Most prebiotics should come from food.
“It should be deliciously easy for us to get the nutrients that help our gut,” Koff said. “No supplement in the world can override a poor-quality diet. …That’s why it’s so important when you look at a prebiotic that you’re looking at something that’s a whole food, (especially) if a whole food gets fermented.”
Relying on food for all nutrients, though, is hard for the majority of people, Koff revealed. If your probiotic choice is granola, for example, are you going to continue eating that same granola and that same service every day to consistently meet your probiotic needs? And a very small number of people actually eat gut-boosting foods daily. “I find that’s a limiting factor,” Koff said.
Koff specifically touted Country Life’s new line of digestive aids, called Gut Connection. The prebiotics contain EpiCor, a whole food prebiotic. The Gut Connection line contains eight products consumers can take for their needs, like balancing digestive, mood, sleep, stress or weight. Country Life sponsored Koff’s education session.
Brewers may finally get a break on a costly tax levied against them since 1791. Bipartisan lawmakers in both the U.S. House and Senate are backing legislation that would permanently reform taxes on brewers, winemakers, distillers and alcohol importers.
The bill – called the Craft Beverage Modernization and Tax Reform Act (CBMTRA) – reduces the federal excise tax on alcoholic beverages. It lowers tax rates for beer, wine and other fermented spirits, like cider. Small brewers save on average $80 million a year without the extra tax.
“Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined,” writes the Beer Institute, a trade organization. “If all the taxes levied on the production, distribution and retailing of beer are added up, they amount to more than 40 percent of the retail price.”
Alcohol excise taxes were the first tax on a domestic product by the U.S. government, and one of the government’s first revenue sources. First collected in 1791, the taxes led to the infamous Whiskey Rebellion tax protest. The purpose of the tax was to help war debt from the Revolutionary War.
Today, though, the government still taxes goods like alcohol and tobacco as part of the “sin tax” logic. Such goods are considered harmful, as alcohol and tobacco consumption is linked to heavy healthcare costs, some paid by taxpayers. Excessive alcohol consumption causes 88,000 deaths a year, an estimated economic impact of $249 billion.
In 2017, the first version of the CBMTRA was passed, under a two-year provision that will expire at the end of 2019. That legislation amended tax law, including:
- For smaller domestic brewers producing fewer than 2 million barrels a year: Reduce federal excise tax from $7 per barrel to $3.50 per barrel for the first 60,000 barrels.
- For all other brewers and beer imports: Reduce federal excise tax from $18 a barrel to $16 a barrel on the first 6 million barrels
- For large brewers with a barrelage over 6 million: Federal excise tax kept at current $18 a barrel.
Brewers, lobbyists and trade associations are pushing for the tax reduction to remain permanent. They point to the huge economic impact the alcohol industry has on the U.S. economy. The U.S. beer industry alone created more than 2.19 million jobs that paid more than $101 billion in wages and benefits in 2018. And, with the increasing popularity of craft brewing, those numbers are rising.
“The craft brewing industry can be found in nearly every Congressional District in the U.S. and contributes more than 500,000 jobs, including an additional 15,000 directly added at small breweries just last year, showcasing the positive momentum supported by temporary provisions,” said Bob Pease, president and CEO of the Brewers Association. “The industry is responsible for contributing more than $76.2 billion to the U.S. economy and is a success story for American industry.”
The wine industry, meanwhile, supported 1.73 million jobs that paid more than $75.7 billion in wages in 2017. Though the cider industry doesn’t have specific numbers on jobs, the cider market grew faster in 2018 than the beer, wine or spirits industry.
“Many of our members are small producers with direct investment in agriculture here in the United States,” said Paul Vander Heide, president of the United States Association of Cider Makers. “This will provide them additional security for their families and capital to invest in growth opportunities for their business.”
After the CBMTRA enactment in 2017, 99 percent of small brewers saw a 50 percent reduction of their federal excise tax. A survey by the Brewers Association found those savings sparked a variety of economic gains for the craft brewing industry:
- 73% of breweries are purchasing new equipment, upgrading their tasting rooms and breweries, moving to new buildings, etc.
- 53% of breweries are hiring new employees
- 39% are increasing their employee benefits by raising pay, offering insurance and expanding vacation time
- 21% are increasing their charitable contributions
- 58% are doing two or more of the above-mentioned actions
Added Bobby Koch, president and CEO of Wine Institute: “The savings will allow wineries across America – most of which are small, family-owned businesses – to hire new employees, upgrade equipment, and invest in the future growth of their wineries.”
Information and updates on the bill can be found on the Congress website. The bill was introduced by Rep. Ron Kind, D-Wisconsin, Mike Kelly, R-Pennsylvania, Sen. Ron Wyden, D-Oregon and Roy Blunt, R-Missouri.
A salmonella, E. coli or botulism outbreak can destroy a food brand. Entrepreneurs must be vigilante about food safety, understanding their suppliers, copackers and labels.
Linda Harris, the department chair for the Food Science & Technology Department at the University of California, Davis, shared advice for new food producers to safely launch a business. Harris spoke with her UC Davis colleagues during an education session at Natural Products Expo West. Fermented products, which undergo unconventional processing, are not exempt from food safety measures. Harris emphasized putting “raw” on a label doesn’t protect a brand from food regulations.
“What I would caution someone who would be putting raw on their label is, first of all, understand what you mean by the word raw,” Harris said. “Having raw on your label doesn’t eliminate your responsibility to do the hazard analysis for your product. If a pathogen is a significant hazard, you still have to control for it. … It doesn’t get you off the hook by putting ‘raw’ on the label.”
Recalls as Cautionary Examples
Harris jokes she specializes in being a downer. As a food microbiologist, she shares cautionary examples of brands responsible for food poisoning. Food companies ask Harris for advice on how to maneuver food safety regulations, and Harris admits she still has to look up regulations because they are so complicated.
“You must understand how to control your hazards,” Harris said. “For some entrepreneurs, some smaller processors, that’s been a bit of a challenge to do because.”
She shared the example of the mystery green powder. Many food producers use green powders to make their product – but Harris says brands need to understand the ins and outs of their ingredients. Testing alone will not deal with vulnerabilities. Companies need to ask questions, like: Does the supplier label exactly what’s in the ingredient? If it’s labeled, is it accurate? What processes are used to make the ingredients? Does the process enhance safety? What contaminants are in the ingredients? What kind of controls are in place?
The 2016 Garden of Life RAW Meal Organic Shake & Meal outbreak was one such example. Salmonella in the powder infected 33 people in 23 states. The Salmonella was traced back to a supplier’s ingredient. Can food processors trust each one of their ingredient suppliers, Harris questioned?
“A very challenging thing to do by any strength of the imagination,” she said, especially for a small processor. “How do you know when you’re buying your powders that there aren’t things beyond the Salmonella or the bacteria that I’m concerned about or pesticides or other chemicals or heavy metals that might be present?”
As more natural food brands enter the market, processors are sourcing unique ingredients, many from international suppliers.
“(When) youre not able to see that process or interact with that process, I think that’s a real concern,” Harris adds. “That’s where I see small entrepreneurs being especially vulnerable because they don’t have the power to say ‘I am going to buy 50 pounds of your powder, so I’d like to have a full tour of your facility.’ You lose some of that power compared to being a large manufacturer where millions of dollars are at stake.”
Question Every Step
Harris shared tips for avoiding food safety disasters.
- Check with regulators early and often. From USDA and FDA inspectors to state government agencies, Harris said she’s found government regulators are very willing to share feedback on food safety.
- Tour supplier and processor facilities. The SoyNut Butter E. coli outbreak of 2017 was another supplier mistake. After 32 people became infected from SoyNut Butter, the brand recalled the product. During their investigation, they found their contract manufacturer was operating in unsanitary conditions. The facility was dusty, equipment hadn’t been cleaned for 15 months and there was no hot water or soap. Harris noted, if the food company simply walked through the facility, they would have quickly seen issues.
- Use a copacker. Copackers are food safety experts, and a great option for small companies to avoid safety hazards. Copackers will take a recipe, make the food product and package it. They are the food safety experts, so a new food company doesn’t have to master food safety. Still, Harris warned, tour the copacker facility. “If you think just a small processor is vulnerable to issues with copackers… even major companies can I think get into a lull of not making those checks and not following up to make things are going well,” she said.
- Ask lots of questions. Harris advises, if a food brand is putting ingredient or processing trust in another company, be prepared to double check their facilities and healthy claims.
Harris recently had to practice what she preaches. As the department chair, she had to axe the students plan to make vegan ice cream for the university’s Picnic Day. The powder the students found was sourced from a Midwest company who wouldn’t share details on how they eliminate pathogens. So Harris did not give students permission to buy the powder for vegan ice cream.
“If you’re in this area, I think you do need to be able to understand what you’re doing and why you’re doing it,” she said. “When you go to your supplier to ask them how are you controlling for these things in the ingredient you’re giving me, that you expect transparency.”
Fermented Products Not Exempt
Fermentation often creates a false air of safety, Harris said. Just because fermentation has a global tradition doesn’t mean fermented foods are all created under safe conditions.
In 2013, The Cultured Kitchen had to recall their cashew cheese after 17 people became infected with Salmonella. Testing found the fermented cashews were the source of the outbreak. The copacker had multiple critical equipment malfunctions, like an uncalibrated thermometer and no kill step.
Fermented food, Harris stresses, are extremely safe. Fermented foods have a long history of safety. But new products and ingredients that are fermented which have historically never been fermented before, makes food safety murky.
For more information on food safety, check out the UC Davis Food Safety website.
Kombucha brands biggest competition are not other kombucha brands – it’s soda and functional beverages. Sales continue to hemorrhage in the soda category as consumers shun sugar-filled drinks. And kombucha companies have a great opportunity now to grab that market share.
A panel of leaders in the kombucha and beverage industry shared their insights on the future of kombucha at KombuchaKon, Kombucha Brewers International’s 6th annual conference. They agreed the fermented tea is not a fad, but brands “have to be nimble and creative” to thrive in an increasingly crowded market.
“The future is really, really bright,” said John Peirano, the vice president of marketing at Humm Kombucha. “It’s super exciting – and we’re just getting started.”
Local Brands Will Reign
As more and more kombucha brands enter the industry, the brand’s biggest strengths will be selling to their regional market.
“There are all these local brands retailers are going to want because they care about what’s happening locally,” Peirano said. “Local brands are going to be really, really important.”
John Craven, editor of beverage industry news site BevNET, has covered the beverage world for nearly two decades. He said marketing brands locally works in the kombucha category, but not in any other beverage space.
“Prior to (kombucha), if you said ‘I want to build a regional brand,’ I would have said ‘That’s not a thing,’” Craven said.
Educating Retailer & Consumer
Retailers want to give \consumer’s a variety of product choices, Craven added. They’re more likely to commit to selling kombucha if there are multiple brands and SKUs on their store shelf.
“With (kombucha), it’s OK to like a bunch of different brands,” Craven said. It’s normal for a kombucha consumer to switch between different brands and flavors. “That is one thing this category has going for it that’s really unique. … It definitely has defied traditional beverage logic in that regard.”
Litigation against kombucha brands continues to top headlines, as lawsuits claim alcohol content is misrepresented or sugar levels are understated in different brands. In the next few months, KBI will be releasing their own standards defining kombucha.
Truth in labeling will drive trust with the consumer and the retailer, Peirano said. “It’s important that what’s inside the bottle is on the label,” he added.
“As category leaders, we also have to be category captains. We have to go to the retailers with really strong selling stories. And those selling stories aren’t just about Humm. Those selling stories are about the category and what will drive the most profitability for that retailer category and that shelf set, so they can be successful.”
Refrigerated kombucha and the fermented beverage category has grown 31.4 percent year-over-year, according to data from SPINS market research. And household awareness continues to climb – it increased 20 percent in 2018.
Kombucha is sold in the refrigerated section, some of the most expensive space on a grocery shelf.
“I think it’s all our responsibilities, if we want to continue to grow this category, we’ve got to go out and education and tell people about the magical, beautiful benefits of what kombucha brings to the table from a functional health standpoint,” Peirano said.
Brands Need to Remain Fresh
The kombucha industry is already dominated by a handful of national brands – GT Kombucha, Kevita, Health Ade, Humm Kombucha and Brew Dr. control the majority of market share. The panel agreed smaller brands can still successfully enter the category, but the top sellers are locked.
“There’s not room for a dozen million dollar-plus brands,” Craven said. “But the reality…is that some of these (smaller) brands will be acquired and will probably be absorbed and evolved, ruined, whatever, which makes an opportunity for the next brand to come along.”
“There are a lot of functional products out there…the beverage history lesson is consumers are really fickle,” Craven added. He pointed to Vitamin Water as an example, a brand that rapidly grew popular in the beverage industry but then lost sales. “The consumer keeps moving on to the flavor or the function of the month, so to speak.”
Craven does not think kombucha will be a victim like Vitamin Water because kombucha includes value-added health benefits. The kombucha brands that survive the next decade, though, must be adept to change. They must evolve with new flavors and brewing styles, while maintaining affordability, consistency and health benefits.
Growing Kombucha Enhancement: CBD
One of those kombucha styles keeping the industry fresh: CBD. Conrad Ferrel, founder and CEO of True Büch, said combining the benefits of the cannabis plant with the functional compounds in kombucha makes sense.
“The evolution of cannabis used with kombucha, it’s a natural marriage,” Ferrel said. “If you want to have kombucha for sleep, there will be a specific kombucha for that. If you want it for pain management, it will be there. It will be functional and specific to the certain (medical aid) people want.”
There are 140 compounds in the cannabis plant, but so far only two – THC and CP – have been studied, added Ferrel. CP is a value-added compound, known to aid in improving medical ailments. But science is lagging.
“As the world gets used to the science … the struggle is to sell people something that for years was considered a drug, now we’re trying to sell people on the fact that it’s good for you,” Ferrel added.
Hard Kombucha Gaining Traction
Hard kombucha is another brewing style keeping the kombucha category competitive. It’s evidence of how many beverage categories kombucha bleeds into – like alcohol, tea, juice, flavored water and functional beverages.
Kyle Oliver, quality assurance scientist at Boochcraft, said regular kombucha has an ABV of .5 percent to 2 percent. Hard or high alcohol kombucha goes above that level. Boochcraft has 7 percent ABV. The ABV is higher because hard kombucha goes through a secondary fermentation process, where more yeast and sugar are added.
“Our organisms we want in our kombucha are spoilage organisms in other industries (like wine and beer),” Oliver said. “The higher ABV doesn’t kill probiotics, they’re able to still grow in that environment.”
Snacks are a huge $1.2 trillion category, and it’s continuing to grow. Seventy-five percent of the global population snacks every day, while millennials snack four times a day. But consumers are looking for nutritious snacks. They want snacks with functional ingredients, great taste and low sugar.
Fermentation brands looking to grow need to transform their product into snackable sizes. Research by Mondeléz International’s new venture, Snack Futures, found that fruit and vegetables are the most popular snack item, but consumers want more than just a fresh apple. Innovation is key.
“Consumer obsession is driving a new model of snacking,” said Laura Shulman, founder and president of Food Future Strategies, Inc. From beverages to bars and bags to bites, “We’ve become this culture of serial snackers.”
At Natural Products Expo West, Shulman encouraged brands to be “snack innovators,” converting ideas to business.
Snacking’s Staying Power
The snacking surge is attributed to busier lifestyles – commute times are longer, more mothers are working and fewer people eat traditional three meals a day at home.
“Snacking is different than food. Snacking is a behavior. That behavior around the world is growing rapidly, and it’s growing much faster than center store [grocery aisle] food,” said Tim Coffer, chief growth officer at Mondeléz International. “We’re very bullish on snacking, and I think all of you should be, too, as you look for opportunities for growth.”
Snacking is disrupting the food industry, evident on the Expo West show floor where brands are seeing big returns on convenient, healthy food and drink products.
“The movement is more nutrient-dense snacks,” said Rohan Oza, co-founder and managing partner of Cavu Venture Partners. “Every company out there needs to be focused on how they create greater nutritional value on snacks that allow people to feel better about themselves.”
Brands as Health Warriors
Snacking of yesteryear evokes images of bags of potato chips or cans of soda. Those items are a far cry from modern snacking trends. Snacking must be nutritious because consumers are snacking with intention. They want snacks to be natural, simple, authentic and functional.
Brigette Wolf, global head of Snack Futures at Mondeléz International, said brands need to be “health warriors.” She encouraged brands to use medical and scientific studies and consumer research to “actively be the snacks of tomorrow.”
Growing Preference: Prebiotics & Probiotics
Consumers are also focusing on gut health. Research by New Hope Network found that sales of food and beverage with functional ingredients grew 7.5% in 2018 to $68 billion in sales. Probiotics and prebiotics are one of the fastest growing functional ingredients.
Kara Landau, founder of Uplift Food, was an Australian nutrition expert before starting her food company. Known as the world’s first dietitian created functional food, Uplift Food products are gut healthy, prebiotic snacks. The food brand was her dram, as Landau specializes in gut health. The connection between gut health and mood is especially important to her.
“I feel like there was this gaping hole in the market for someone to take that stance,” Landau said.
“Ultimately, I think the science is going to continue to catch up and help in terms of the claims that are being made,” Landau said about food with prebiotics and probiotics. “There’s only going to be benefits to consumer’s diets to getting more of that nutrition into their diet.”
8 Tips to Growing a Snack Product
Food industry leaders stressed that the brands of yesterday will not be the brands of tomorrow. Major food corporations are struggling to maintain sales as modern consumers search for healthier food, sustainable brands and startups with purpose.
Tips from Expo West “How Consumer Obsession is Driving A New Model of Snacking Innovation” panelists:
- Be consumer obsessed. Coffer with Mondeléz declared: “We are very clear who our boss is. … If you take care of the consumer, the rest of the stuff will fall right into place.”
- Reinvent testing. “The old model of how to innovate, how to test with consumers, that’s yesterday’s news,” Coffer continued. “Get with consumers – not in controlled environments.” Prototyping and testing needs to be at a much more rapid pace.
- Build a brand with a mission. Successful brands create a lifestyle around their product. “Build a culture out of it,” said Oza with Cavu Venture Partners.
- Don’t be cheap. Brands that have good ideas but aren’t spending the right budget amount to execute their plans are going to fail, said Oza.
- Remember: taste is king. “It’s America, we will not sacrifice on taste. In Japan, they certainly will. [But in America], you have to make it taste good,” Oza said.
- Experiment with ancient ingredients. From ashwagandha to turmeric, the ingredients of our forefathers are coming back into our food. “I think there’s room particularly in the states for taste buds to expand,” said Janet Planet, head of ideas at Fahrenheit 212.
- Start super small. Wolf of Snack Futures suggested putting a new product in a local yoga studio and see how people react. Give it to family and friends to test for feedback. Start with a small attraction, then go bigger.
- Convenience stores are ready for a disruption. Convenience stores are arguably the worst places today in terms of health food, but they’re still a hot spot for snacks.
Superchef David Chang is transforming his restaurant business into a multimedia empire. The restauranteur, author, publisher, TV celebrity and podcast host announced this month that he’s adding another television gig to his resume: “Family Style.” Chang will co-host the food-centric talk show with celebrity and cookbook author Chrissy Teigen.
“We’re not trying to promote the restaurant; we’re trying to promote our ideals. And I think, to the younger generation, that’s more important to them than ever before,” Chang said at Recode’s Code Conference.
The Korean-American founder of Momofuku restaurant is known for shaking up the restaurant industry with cutting-edge culinary innovations. A major proponent of fermentation, Chang’s innovation in the cooking technique has propelled fermentation’s recent renaissance in America. In his Kaizen Trading Company fermentation lab, Chang develops his own line of fermented products for restaurants.
Chang aims for his media projects to reflect the values of the restaurants he’s created all over the world – authentic and honest. He compared starting a food-based media company, Majordomo Media, to chef Wolfgang Puck’s entrepreneurship. Puck “created a giant business of every kind of thing related to food,” like consumer-packaged goods, cookware and catering.
“If the media takes off, that’s more stuff we can bring back to the restaurants,” Chang said. The media arm feeds his restaurants. “Maybe people will never want to pay that much money for [Momofuku] food, maybe we can subsidize some of the costs with [the media projects] that’s alleviating our bills.”
Changing Kitchen Atmosphere
Majordomo Media produces the Netflix series “Ugly Delicious” and the podcast “The David Chang Show.” Chang won’t discuss viewership numbers. But he says the exposure has made Momofuku busier than ever, and that’s not because the restaurant is featured heavily in the TV show. It’s the message about the food industry and corporate responsibility that sticks with viewers, piquing their interest in Momofuku.
“Everyone has an understanding of food now; the food awareness is higher than ever before,” Chang said. “But no one quite wants to understand how that food gets made. They understand maybe from an environmental perspective, but they don’t understand it from a restaurant perspective.”
Customers should make themselves aware of restaurant ownership, especially in a post #MeToo world when sexual assault accusations have put into light the deplorable behavior of restauranteurs like Mario Batali.
Important, too, are proper working conditions. The culinary industry is historically a “brutish system,” Chang said. The hours are long and tiring. Today’s labor force is changing workplace culture, though. Millennial employees are disrupting the horse race work pace, they are “allergic to the working conditions and the stress that we were creating.”
“You work long hours in the culinary world, and I’ve always believed that the culinary world and those that lead people in the culinary world have maybe one of the hardest jobs because you can’t motivate people with a giant stock option package or a giant bonus that you might get on Wall Street. You have to motivate someone to do physical hard labor and to try and get better at that through sheer integrity and personal will and that’s hard, that’s incredibly hard to motivate people,” Chang said.
He added: “How do you balance out what’s essentially still a blue-collar labor, which is cooking, [that] is now glamourized to a point that it now has white-collar values? That’s a collision that’s hard to mitigate and sort out.”
Chang’s creating that white-collar environment at his restaurants, giving vacation days, mandatory breaks and a shift drink at the end of a service. He wants to professionalize the restaurant industry when, historically, it’s never been professional.
“I’ve been so allergic to a corporate body for so many years, but now I think I’ve convinced myself it’s the only way to go,” Chang said.
Experimental Triumphs & Failures
Lauded as the bad boy in the food world, Chang is a chef willing to take unapologetic risks. His innovation has not come without failures, though. Lucky Peach, the award-winning food magazine he co-founded, shuttered after creative differences. Maple, a New York food service Chang backed that prepared and delivered gourmet food, folded amidst massive debt. Ando, another Chang backed food delivery service, suddenly closed, then was acquired by Uber Eats. Chang closed Má Pêche last year, citing declining foot traffic around New York’s midtown thanks to extra security at Trump Tower. New York Italian restaurant Momofuku Nishi closed too after a touch review, then remodeled and reopened.
That review – by Pete Wells of the New York Times – was Momofuku’s first bad review. It destroyed the restaurant, Chang said. But he added that he’s weirdly thankful for that review because it helped Momofuku reevaluate, “our restaurants around the world are doing better than before because of that review.”
“My fear is that once you become too systemized in the restaurant industry, you’re going to lose any of the coolness, creative parts,” Chang said. “I got into cooking because it wasn’t cool. Everyone thought it was career suicide when I said ‘Hey I’m going to start to cook,’ it was sort of that sense of danger, that sense of recklessness that no longer really exists.”
“It’s completely different than a tech business because scaling a brand in food, yes, it can work in McDonald’s or if you have a beverage,” Chang said. “But the idea of scaling something that’s intimate, some kind of contract between you and a prospective diner, that’s hard because we’re still trying to be best in class in making the most thoughtful, delicious food and it’s hard to scale excellence I think.”
(Photo by Wall Street Journal)
Jared Schwartz was in art school when the quality of the American food culture struck a nerve in him. He worked in restaurant kitchens while studying photography in Boston and was disturbed by the mindlessness of the food industry. No one was paying attention to the food they were eating, from the ingredients they were consuming to the source of the food.
“I started looking at the most traditional aspects in the food world, the way Japanese, Chinese and Vietnamese people eat. Everything comes back to salt and fermentation,” says Jared. “It creatively made me think what can we do in fermentation that’s not around the standard. We have this standard – but what’s the future of it?”
Jared moved to update New York and began fermenting full-time. Heavily involved in multiple businesses, Jared is growing five local food brands – and adding more. Today, he is the director of operations and innovation at Farm Ferments (a fermentation hub in New York’s Hudson Valley), Hawthorne Valley Ferments (the fermented vegetable line of Hawthorne Valley biodynamic farm), Poor Devil Pepper Co. (the fermented hot sauce company started by Jared and wife Laura Webster) and Sauerkraut Seth’s (a raw sauerkraut). Hawthorne Valley Ferments, Poor Devil Pepper Co. and Sauerkraut Seth’s source almost all ingredients from organic, regenerative farms in New York state and the northeast.
“With Farm Ferments, we’re trying to create that middle ground for fermentation processors instead of becoming a monster powerhouse. We want to include smaller brands in that,” Jared says.
“With Whitethorne, we’re trying to create that middle ground for fermentation processors instead of becoming a monster powerhouse. We want to include smaller brands in that,” Jared says.
Though he began Poor Devil Pepper Co., he loves seeing more fermented sauce and dressing labels join the industry. More brands means more customers learning about fermentation. He adds: “If there’s only one fermented hot sauce or one fermented salad dressing in a case, people are like ‘Why buy it?’ It’s not going to move. There’s strength in community.”
Below Jared, a board member of the Fermentation Association, discusses successfully launching multiple fermented food brands, the importance of collaboration in the fermentation industry and how brands can support the farmers that source their food.
Q: Tell me about Hawthorne Valley Ferments, you’ve helped triple production.
When I started about 7 years ago, I started pushing the envelope in terms of production capabilities and sort of recipe fine-tuning, and we’ve started to grow progressively.
Q: What do you mean by pushing the envelope?
In terms of getting to the nitty-gritty of ferment time, turn overs, the farms were working with and sort of diving into the effective quality of different salt types. We’re finding the sweet spot that kind of creates a smoother cog of the fermentation system because I feel like every company is doing the same thing, but they all kind of have their own twists on it that takes a bit to come into.
Q: What are some of the twists?
Trade secrets. But like their own salt types, their own weight systems, their own ferment times. And a lot of it is environmentally related. Out west, they’re going to do things different than what we’re doing out east because of yeasts in the air. Northern California wine country is going to be battling yeasts off grapes where we’re dealing with different frost times on the east coast.
Q: When did you and your wife start Poor Devil Pepper Company?
A: Poor Devil started in 2014 working after hours at Hawthorne Valley Ferments. I started making sauerkraut and ferments at Hawthorne Valley and, at the same time, started taking the logic of basic sauerkrauts and kimchis and turning it into salad dressings, hot sauces, everything under the sun. We started in 5-gallon buckets and just grew it. We distribute on the east coast and down to about North Carolina currently. We’re mostly with eastern distributors.
Q: Is fermentation a growing industry?
Oh, 10,000 percent. It’s an interesting time because no one has ever really studied the good benefits of bacteria until the last five years. Now, every few months, you start hearing about these scientists all over the world that are actually taking the time to study gut bacteria. I saw something recently about a connection between gut biome and autism. There are all these amazing studies. The more focus that can go to that, the money, the time, that’s what truly keeps probiotics alive. There was never really money behind that before, because that’s really what it comes down to as much as people could do pro bono scientific research on it.
I personally don’t like the idea of taking an extract or like a powderized version of something. But, especially in the organic environment, people are well-informed and know where their food is coming from. The more light that is shed on fermentation, the bigger it can be.
Q: You have a generation coming up that’s caring about GMO and they care about clean eating. Do you see more consumers educating themselves about where their food is coming from?
Oh yeah. The only yang to that is that I fear in some ways every certification under the sun is dumbing down consumers too much. There should never be a need to have a non-GMO seal and an organic seal next to each other. But we take it because it’s all good in the long run. But in some ways, you feel extorted. I’ve gotten so many calls because our labels saw raw so we don’t say unpasteurized and we get calls saying “It says raw – but is it unpasteurized?” You can’t walk both those roads. It’s back to that sort of what people are told to eat. If someone says “Eat unpasteurized sauerkraut,” they say “But it says raw sauerkraut, I don’t know what to eat.” It’s confusing people.
Q: Tell me why Poor Devil is so unique compared to other sauces?
It’s down to that umami flavor. You’re able to take the natural fermentation and unpasteurization and you’re instantly tasting more flavor. In some cases, it brings out more heat because you’re not cooking it. It’s true sauce work. Like making a true gravy. There are layers to it. Fermentation allows you to keep levels of flavor in a sauce and not combine them.
Q: How did Farm Ferments start?
It started at Hawthorne Valley, which a is a nonprofit biodynamic farm. It started out of there. We were looking for a means to grow the fermentation movement and our food access program and looking at the supply chain in a different way. We still source 98 percent of everything we make from New York state, and probably 80 percent from our county. We started look at the supply chain from a different angle. We thought, instead of these farmers growing for a CSA or a farmers market, let’s give them the backdrop of a wholesale producer and work with some other producers in the area. That’s a guaranteed outlet. And so it kind of grew out of that. We were in a 2,500 square foot basement on a farm making krauts and hot sauces, then this past year we moved 10 minutes away to a fully renovated, building that is soon to be a state-of-the-art production facility for all things fermented vegetables.
Q: So Hawthorne Valley helps brands find farmers they can work with?
Yeah, that was definitely a big piece to it, creating social impact of more jobs in the area. Part of Hawthorne Valley itself, there’s a biodynamic farm, there’s dairy that’s part of it, there’s a bakery, a farm store and a Waldorf School that are part of the nonprofit. The hope taking Farm Ferments is growing that Hawthorne Valley name to create more education about biodynamic farming and regenerative, sustainable agriculture.
Q: Where are you hoping to expand Farm Ferments? How do you scale?
There’s always growth for it, and I feel that’s where the Fermentation Association is helpful to all brands. How to create a competitive brand in the fermentation industry from my experience is competitive, but it’s also collaborative. The true growth of it as a whole, there’s a place for everybody. To me personally, no one on the west coast should have a predominantly stronghold on the east coast on ferments. At this point, there’s so many people doing it. There’s room for them. You walk into a Whole Foods in New York City, I’d rather see five local brands taking up the shelf than your high performance SKUs from the west coast. But I think there’s room for everybody. The same products are going to be different because of the production process.
Q: So you see the fermentation industry as a community of collaborates rather than competitors.
Yeah. I think that set will only expand. Especially as the research and science behind the industry growth finds new ways to naturally produce probiotics through fermentation or finds a way to extract them. The greatest thing I could see would be larger ferment sets over the board, whether its krauts or kombuchas, yogurts, less in the vitamin set in terms of probiotics.
Q: You’d rather see ferments growing naturally through food than probiotics through a pill?
Q: You recently added Seth’s Sauerkraut to Farm Ferments. Are you actively looking for more brands on the east coast?
Off and on. We’re reaching a point of automation that’s kind of unique to the field. We’re actively looking to be a stepping stone for helping other brands grow in a collaborative effort. We’re not there yet, but it’s a goal in terms of our capacity.
Q: I love how in tune you are to local farmers in your area. How do you think fermentation brands can connect with and support farmers?
The biggest question I’ve learned to ask farmers what are their strengths. Every farmer will always tell you they can grow you everything you need. But to really work with farms and invest in them, let them supply you with what you need and work with them with what they grow best. Not every farmer can grow the best cabbage, but maybe they can grow the best carrots or garlic. Not every farmer has the same equipment either, see if they’re hand cutting or mechanically doing it. See what they’re setup to do. Find a system that works for everybody, work on communication between those farms.
Also, it’s kind of always hard knowing in terms of nature what’s going to happen to the crop. But the biggest thing brands can do is to still support local farmers even if someone has a bad crop one year. Still go back to them. In terms of working with them, get to know them. Get your fingers in the dirt, learn about how they’re growing things.
Q: Tell me more about working on communication between brands and farmers
The food system as a whole, there are too many people at this point all trying to grow 70 varieties of heirloom tomatoes for the same audience. This is a scary thought, but a lot of farmers are dying off or retiring and it’s the younger generation that’s only focusing on heirlooms, focusing on what’s trending. They’ve become these specialty fancy vegetable farmers. We’re seeing it in upstate New York. But who am I going to be buying cabbage from in the next 10 years? People want to be growing those heirloom tomatoes even though there isn’t a full market for it, but at the same time, they don’t want to be a cabbage farmer. That’s the mentality we’re seeing with the newer farmers. How does the next generation of farmers fit into the current and next generation of fermentation folks?
Regardless if you’re a consumer or a producer, looking at the future, there are a lot of good food things that are happening. But there’s got to be this the full circle connection for it to make sense.
Q: If farmers just focus on growing what’s popular right now, where does that leave fermented product producers?
As the fermentation industry grows, it will be interesting to see how that affects the farming industry. As messed up as our food system currently is, where everyone one way or another is going to make something cheaper, the farmers are the ones who are getting the short end of the stick. How that gets solved, I have no clue. But we need to keep doing what we can to support each other, the fermentation folks and farmers.
Q: What changes do you think are needed to propel the fermentation industry.
The industry is going up and up. It’s almost like a defined set. If you go into any grocery store, kombucha is established already, they have a defined section. But every other fermented food product is this whirlwind between fresh produce, cheese, meat. Categories for fermented products need to be outlined. Especially as there’s more exposure for fermented products.
Q: Fermentation is in the news a lot lately as a trend. Do you think its trending or a movement?
It’s a little bit of both. It’s always trending depending on what the crowd is. It’s big with the DIY foodie crowd, fermentation has a type. It’s really big w chefs right now, everyone is starting to pickle their own things, test the water, and I think Rene Redezpi and the folks at NOMA are championing a lot of great stuff, opening their ferment lab. That’s the energy that keeps the trend bubbling. For such a traditional, ancient thing, there are so many unknowns to it. And the more energy behind it is going to keep the next wave of it moving.
The kombucha industry is exploding – sales were up 21 percent to $728.8 million last year. Kombucha and non-alcoholic fermented beverages are now the third largest beverage category, representing 10 percent of total refreshment beverage sales.
Distribution is high at conventional, natural and convenience stores. But velocities (sales) are declining.
“A word of caution – there’s going to be a reckoning,” said Bobbi Leahy, director of sales at SPINS, a natural products market research group. “All these retailers are taking all these lovely kombuchas … they will be evaluating you, probably far soon than you think is warranted. There will be some slashing going on.”
Leahy spoke at KombuchaKon, the Kombucha Brewers International (KBI) annual trade conference in Long Beach. The year’s KombuchaKon was the industry’s largest since the first conference six years ago, with 424 attendees from 17 countries.
“I applaud you all on the growth. I think that’s wonderful,” Leahy said. But “I would be ready with some materials to go in and defend your spaces.”
In her presentation on the kombucha market analysis and future trends, Leahy emphasized that refrigerated beverage shelves are expensive retail space. She shared advice with kombucha brands on how to survive the current high distribution wave. The SPINS analysis is based off 52 weeks of sales ending in February 2019. Her tips:
- Prepare with Sales Materials. If kombucha sales can’t keep up with distribution, retailers will have to answer to their higher-ups. Why is there so much kombucha on the shelf that isn’t selling? Leahy warned brands to be the ones educating retailers, advising brands to share data points and score cards. She added: “I encourage you to go and get ahead of that, be the one talking that message. You tell them what the right set is, you tell them what they should do, you know this industry. If they’re overstocked on something, then let them know. They’re looking to you to be the experts.”
- Conventional supermarkets reign. The bulk of kombucha and fermented beverage sales are coming from conventional supermarkets. “If you succeed in the conventional channel, you’ll have success overall because they represent 70 percent of sales,” Leahy said.
- Don’t ignore convenience stores. Convenience store (like 7-11 and gas stations) sales of kombucha and fermented beverage sales are growing 55 percent. “You have to make it a task to go after convenience,” Leahy noted. “You probably wouldn’t have said ‘That’s my low-hanging fruit, I’m going to go in there.’ But they’re certainly getting the message now … It’s certainly worth having a plan to go after convenience.”
- Craft different sales messages for each channel. Don’t go in to retailers with the same message. Between conventional, convenience, natural and specialty stores, each channel will care about different things.
- Know region’s sales trends. The west coast – especially California – has high kombucha sales. The south central, mid-south and Great Lakes regions are under-indexing in kombucha sales. Leahy pointed out that the west is a ready audience and a great spot to experiment with new flavors. The south and Great Lakes regions, though, need an education focus. Demos are a great idea in the area.
- Highlight brand’s best attributes. Boast about characteristics beyond the label. Features like: clean label, sustainability, brand mission, wellness goals, social impact and great ingredient sources.
- Top selling flavors are solid. Ginger and berry are the two top flavors across all channels. The “fruit – other” is also a top selling flavor and growing (135 percent), which is defined as unique fruit flavors like watermelon, guava and melon. The past year, there has been the strongest growth in flavors: apple (172 percent), grapefruit (155 percent), pomegranate (104 percent) and orange (98 percent).
- Tread lightly with unique flavors. Leahy pointed out, if a unique flavor only appeals to a small audience, a conventional retailer will notice only a small number of customers are buying it. “That small and that low is going to be kind of a perfect storm,” she said. “You really want to be careful.”
- Smaller size bottles sell best. The 14- to 17-ounce size kombucha make up the majority of sales.
- Start sales promotions. Coupons, mailers and sales are great options to get products off shelves.
- Use your social network. Let people know which stores you’re at.
- Maintain a good store locator. Brand’s websites should feature a good store locator detailing which stores carry which flavors of kombucha.
- Top kombucha brands dominate the market. GT Kombucha, Kevita, Health Ade, Humm Kombucha and Brew Dr. account for 88 percent of kombucha sales at conventional retailers and 89 percent of kombucha sales at convenience stores. GT Kombucha, Kevita, Health Ade and Brew Dr. account for 77 percent of kombucha sales at natural stores and 82 percent of kombucha sales at specialty gourmet stores. Those same top brands likely will not change, Leahy noted.
- Know beverage trends. “The trends you are seeing in kombucha are special and unique,” Leahy said. “…as you’re sitting across a buyer or a category manager or retailer, you want to be well-versed in what other beverages are on the shelf and which ones they’re probably going to protect.”
- Natural beverages are contributing more to the growth of the refreshment beverage category than non-natural. The conventional, shelf-stable beverages (like Coke and Pepsi products) account for 63 percent of the refreshment beverage industry, but only 53 percent of growth. Diet soda is especially losing favor among consumers. Specialty and wellness beverages (like energy drinks and Gatorade) make up 29 percent of sales and 35 percent of growth, especially driven by energy drinks. Natural drinks (like kombucha and La Croix) make up 8 percent of sales, but natural is driving 13 percent of growth.
- Of the natural beverage subcategories, shelf-stable performance beverages (like Body Armor) are experiencing the biggest growth at 87 percent. Declining categories include shelf-stable coconut water (-12 percent) and juices (-3 percent).
- Emphasize growth of natural products industry. Natural products are no longer a niche market. The natural products industry is estimated to reach $140 billion in sales in 2019. In 2003, natural products were a $52 billion industry.
When SPINS began tracking kombucha sales years ago, Leahy noted kombucha was “barely a blip on the map.” Current Kombucha sales numbers are also likely higher than noted – major retailers Costco and Whole Foods do not share sales data with SPINS.
“In a way, it’s a good problem to have – you can’t sell if you’re not on the shelf,” Leahy said. “ou’re on the shelf – now it’s time to sell.”
Icelandic skyr yogurt sales are up 24% to $173.9 million in 2018 while Greek and traditional styles dropped 3.4%