While trying to keep up with increased demand during the pandemic, fermented food brands can’t lose sight of their core values and business strategy.

The COVID-19 outbreak has altered retail sales, with fast-paced, constantly changing sales and production cycles. Customers are going out of their way to find natural and fermented products, believing healthy food will be one of their best defenses against the global virus. But there is also pressure on pricing, with soaring unemployment and large segments of the economy shut down.

Dan Lohman, author of Brand Secrets and Strategies, says brands that sacrifice quality in order to compete on price will suffer. 

“We as a natural (industry), we need to do everything we can to help leverage this storm,” he says “The mainstream retailer’s Achilles Heel is price – and you’ll struggle to compete if you just think about price. … Don’t apologize for quality. Always, always focus on the quality of the product.”

Lohman, an organic and CPG industry strategic adviser, shared business advice in a webinar sponsored by Whole Foods on “How Do You Future Proof Your Store in Uncertain Times.” Here are four of his strategies to help brands survive the pandemic.

1. Focus on Quality

As consumers experience wage loss and unemployment, brands will be tempted to drop their prices and offer a cheaper product. Lohman calls this a tired strategy.

“When you’re thinking about gluten-free, plant-based, some of these other things that we champion that start in our industry, these are the things that are driving sustainable sales across every single channel,” he says. “We should never have to apologize for good quality. Understand it’s our products, our industry, that’s responsible for growth across every category.”

Nielsen Data shows total U.S. food sales are up 1.9%, but natural and organic sales are up 11%.

The modern consumer frames their shopping list by the adage “You are what you eat.” They know eating a healthy, nutritionally dense food will keep them full for longer than a cheap, generic product.

“If I buy the cheap generic bread, I’m hungry almost before I finish eating it. If I eat the best mainstream bread, I may be satiated for a few hours. But if I eat the organic bread and that organic bread provides me the nutrition I need, that might satiate me longer. Even though I’m paying more (for the organic bread), I’m paying less overall. That’s the argument this industry needs to make,” he says. “Unfortunately, this is where we need to rethink how we need to go to market. Its not about price, its about value.”

“Focus on that, focus on how you are delivering that real value to your customer.”

2. Know Your Shopper

The natural shopper stereotype is someone who eats a salad and takes a walk. Defining the shopper in a small scope is limiting. Today’s natural shoppers are diverse and united in a common purpose: craving healthy food.

“Creativity is our single greatest asset. This is how we stand out on a crowded shelf. This is all about having a purpose. Natural is really good at that because were all purpose driven,” Lohman says.

3. Maintain a Score Card

Critical during the pandemic is continuing to track sales measurements. Brands need to tell retailers average turns, anticipated sales, ideal backstock, customer insight and category trends.

“A lot of brands today are reactive. They need to be proactive. It’s your name on the package,” Lohman says. “When a customer sees your product out of stock, they’ll blame the brand, not the retailer.”

Eighty percent of natural food brands fail in the first year of operation. Measurements are key to surviving, Lohman says. They show the retailer “the contribution a brand brings to the store.” Your band may not be the top-selling brand in the category, but it may be bringing the most dollars to the category.

4. Market Intentionally

As grocery store shelves quickly deplete of essential goods and medical supplies, natural brands can market their product as a health alternative.

Shoppers are struggling to find cold medicine. How does your product help alleviate cold symptoms? Grocery stores are selling out of flour. Is your product a healthy alternative to a carbohydrate?

“Help customers understand you’re there to solve their unique problems,” Lohman says.

The grocery market is being disrupted in a way never seen before – and the opportunity for success is great for small- to medium-sized food brands wanting to get in the door.

“I’ve never seen such a time of challenge up and down the value chain from the seed all the way to the table,” says Walter Robb, former CEO of Whole Foods and the founder of investment firm Stonewall Robb. “We’re going to see a whole explosion in the new types of foods that are coming to market.”

A report by Biodiversity International found that three-quarters of the world’s food supply comes from just 12 crops and five livestock species. That jarring lack of diversity in the average diet is changing, Robb said. We’re in a frontier where food “will come back in a way we’ve never imagined.” More than 10,000 new products are introduced to the grocery market every year, and customers Robb said are “clamoring” for something new.

“We have a disruption up and down the value chain like I have never seen,” Robb said. “Your chance to come and bring a new product to market is there.”

Robb spoke at the NOSH Live event in New York, and shared insights into where the food industry is headed. Here are Robb’s five main points.

  1. Integrated Shopping

“The integrated retail is the table stakes for the future,” Robb said. “We’re going to see the line between digital and physical is going to collapse and it’s really going to be all about the customer and how you’ll serve the customer.”

The food industry will thrive on an “extended experience,” a term Robb came up with in the ‘90s while at Whole Foods. The extended experience extends outside the four walls of the stores. The problem at Whole Foods, Robb pointed out, was the natural grocer didn’t digitize fast enough. So in 2017, Amazon bought Whole Foods in a $13.7 billion deal.

Though customers are making more digital purchases, they are not abandoning physical stores. In five years, 50-60% of business will be done via retail stores.

“The future is one that integrates humanity and technology,” Robb said. “Why? because human beings are human beings and they want connection and community and that’s simply not available online. The most successful brands today and the ones that do more physical and digital.”

He pointed to Target as an excellent integration example for modern shoppers. Shoppers can still go to the store, where Target is remodeling physical locations to enhance the in-store experience, but they can use the Target app to prepopulate a shopping list, check real-time stock and order at home for drive-up pickup.

“Data shows the customers likes to do both (online and in-store shopping),” Robb said. Brands who want a lifetime legacy need to be in both places. “The customer is clearly saying ‘Let me do what I want, when I want.’ And brands that don’t serve them in that way will not see the type of growth that they could if they would. The customer is in charge of the choices now.”

  1. Microbiome is the Future

The microbiome will “completely revolutionize the food industry” as the future of grocery retail is driven by customers who want to see authenticity with the brand they’re supporting.

Robb pointed t a New York Times article on personalized diets, “The A.I. Diet.” As more research publishes on the microbiome, personalized diets will play a huge role in shopping habits. Medicine and technology are converging with food.

  1. Create Purpose-Driven Brand

Brand leaders in the 21st Century must be authentic, vulnerable and humble. They must be purpose-driven to be successful, Robb said.

“The whole reason you’re in business is not to make money, money is a byproduct,” Robb said. “What you’re in business to do is to bring change to the world. That’s what purpose is. Purpose is the why, why do you exist as a company. You damn well better have a good answer to that question as to what you’re doing in business. You better be here for some great reason to make an impact on the world. And if you’re not playing on that level, either w your customer or your team members, you’re going to fall behind because the companies that are going to lead with some sense of purpose are going to be the companies that win in the next number of years.”

He advised brands to get fired-up about principles that support values. The company culture is a result of that principles and values, and culture is dependent on how team members feel working for the brand and customers feel buying from the brand.

“The winning formula today is road runners and roots,” Robb said. Roots ground a brand in purpose, but brands can’t cement themselves in the ground. They must be a road runner and change on a dime as the marketplace shifts.

  1. Solve Customer Confusion

The International Food Council found 80% of customers are confused on their food choices. There are dozens of food tribes dominating grocery shelves, like gluten-free, keto, paleo and Whole 30. With an overload of information, customers don’t know exactly what to buy for their desired health benefits.

Robb said one of the business opportunities for brands today is to figure out how to communicate more clearly with the consumer. Consumers want to make informed choices, but “that last mile of data has not been solved for.”

He pointed to solutions in connected homes devices like Amazon that will now populate a shopping list for the consumer based on past purchases. Consumers don’t even need to pick out what they want, their only roll will be to confirm the purchase.

  1. Natural Reigns

Organic has grown to a $65 billion industry, with a 7-8% growth rate; conventional food, meanwhile, is only growing at 1-2%. Major mainstream retailers are rushing to get into the natural food business today.

Robb said the best way for brands to get on the shelves at Whole Foods is to push the envelope. Whole Foods continues to lead the natural market, and the grocer wants to see edgy, new products with a new take.

Customers expect food brands today to be transparent, accountable and responsible. Robb said there are 2,000 natural flavors approved for use in food by the Food and Drug Administration. But Robb encouraged brands to solve that problem – use less processed ingredients and more natural ingredients, “let’s continue to lead by showing there’s a new edge in the food industry.”

Who is enjoying some sauerkraut at their July 4th BBQs? Pacific Sun magazine featured three Northern California sauerkraut makers — Sonoma Brinery, Wildbrine and Wild West Ferments. The article highlights the different fermenting techniques of the three brands and features this fascinating insight from David Ehreth, president and managing partner at Sonoma Brinery:

“If I can go nerd on you for a moment,” Ehreth warns, before diving into a synopsis about the lactobacillus bacteria that exist on the surface of all fresh vegetables. “You can’t remove them by washing.” What’s more, they immediately begin to feed and reproduce — but not in a bad way, unless they’re a bad actor, he insists.

“Those bacteria will really stake out their turf,” says Ehreth. “They’re very territorial. They go to war with each other.” The incredible part of it is that the four horsemen of the food industry — listeria, E. Coli, botulinum, and salmonella—are on lactobacilli’s hit list. None survive. Five bacteria enter — one bacterium leaves.

Quoting the Food and Drug Administration, Ehreth states, “There has been no documented transmission of pathogens by fermented vegetables.”

Read more (Pacific Sun)

Ask Lauren Mones for business advice and the founder of Fermenting Fairy will say “go grassroots.” In less than two years, Mones has grown her home-based business selling bottles of kefir outside a yoga studio to a USDA certified organic brand sold in dozens of Los Angeles health food stores and online.

Success, Mones says, did not come because she implemented scaling tactics or hired a sales manager. Instead, Mones did everything in the beginning – producing, packing, selling, inventory, money management – so she quickly learned how to troubleshoot.

“You as the founder should do everything for the business in the beginning,” She said. “When you start expanding and hiring on people, you know the pitfalls and blackholes. It’s harder. You’re going to put in a lot of work. But the payoff is big.”

In an increasingly corporate world where consumers want to support local brands, staying grassroots has been key to Fermenting Fairy’s success. Forming relationships with customers and retailers has been key for Mones to sell her coconut milk kefir, probiotic lemonade and unpasteurized sauerkraut. She still answers the company email, handles in-store demos and pitches retailers.

“What I see a lot of companies doing is they start hiring out really quickly and then they don’t see where things can go wrong, they don’t know where to create solutions,” she says. “Nowadays, customers want to support the little guys. They want artisans. They want to know who they’re buying from. And my customers know me because I answer their questions, I handle the social media account. And, if you do that, customers will go to bat for you.”

Read below for our Q&A with Mones, whose business tagline is: “A simple solution that works hard for your health.”

Q: You are open about your diagnosis with Crohn’s Disease. Tell me how that first got you interested in fermented foods.

About 5 years ago, I was actually the healthiest I’ve ever been in my life. Then, out of the blue, I was the sickest I had ever been. It was one extreme to the next. I was working full-time as an occupational therapist, racing 3-4 triathlons a year, training 20-30 hours a week plus, I was engaged to a man I loved at the time. Everything was seemingly great.

Then I started showing signs of really bad gut health. I was having bowel movements 20 times a day; I was afraid to leave the house because I never knew when I had to go. Then my bowel movements became super urgent. I was in my mid-30s and pretty much incontinent. I wasn’t absorbing any nutrients, I was losing so much weight, I could barely walk two stairs before felt like my heart was leaping out of my chest.

I finally had a colonoscopy and I was diagnosed with Chron’s. I didn’t even know what that was. The doctors told me food was irrelevant, that it had nothing to do with my disease. They said “Go eat ice cream and bread, gain your weight back.” I knew that wasn’t true. From years and years of taking part in natural, homeopathic medicine, I knew food had a lot to do with how I felt.

I went to Barnes and Noble in the cooking section and came across the book “Paleo approach.” It had a little paragraph that fermented foods might be a good idea for autoimmune diseases. I bought my first jar of good sauerkraut. I had never had good, raw sauerkraut before, just the sauerkraut you’d get at like a New York hot dog stand. I took my first bite, and it was magical. I felt this surge of energy. I felt something shift in me. I knew it was a good sign, so I started adding it 2-3 times a day to my diet. It changed my bowel movements; I was going less and less and finally had formed stools.

That really opened my eyes to fermented foods. I started making my own kefir, making my own kombucha. I was transforming my physical body. I got off all my medications after 4 months. Now fermented foods are my medicine, I don’t go a day without one of them at least.

Q: Why did you turn to live, raw fermented foods instead of a probiotic pill?

I was taking probiotic pills way before they were even a pill, starting about 25 years ago. I was getting colonics and taking probiotics before gut health was even something. I was really into natural forms of healing and optimal health. I was still taking probiotics everyday when I was diagnosed, but it occurred to me that they weren’t helping. If they were, I wouldn’t have had such a serious diagnosis. And Chrons is a serious disease.

I stopped taking the probiotic pills and turned to fermented foods because I realized, in food form, the body absorbs it better. I also really appreciated the diversity I was getting in the food, not in the pill. And it was just better for me. I loved the taste of fermented foods. Adding it to everything I ate was way easier than taking a pill. I was done with putting foreign things in my body.

Q: When did you first start Fermenting Fairy? And how?

I started in September 2017, so it’s been about 2 years. I started in this yoga studio in Santa Monica, Calif., Bhakti Yoga Shala. I had never intended to have a food company; it was never on my radar. I have always been in the health field, I’m a certified yoga teacher, but I’ve never been a foodie. When I started fermenting at home and creating these incredible recipes, I was giving food to friends, including the owner of the yoga studio. He would come back to me and say “I feel so good eating your food, why don’t you start a food company?” and I said “No way, I don’t even know how to do that.”

One day, I took a yoga class with him and I had given him this kefir. This was a big class, and he told me at the beginning in front of the class “You have to sell this, it’s so good.” About 50 people came up to me after class and asked where they could buy my food. And I thought “OK, I’ve got to start this company.”

My friend offered to have me setup a stand outside of these yoga classes. Back then, I was selling pickles and my almond kefir. I had really good responses, so I took a shot at getting into a farmers market. It happened to be one of the best farmers market — the Brentwood Farmers Market. It was serendipitous, it’s hard to get in there. And within a month I had a lot of return customers, I was selling out of products. It happened very quickly, we were doing very well off the start.

In December, I decided to fill out the Erewhon intake form online. I knew nothing about selling products in stores, I just thought “Let me try. I knew it took people 1-2 years to get into Erewhon. And then, a couple hours after I sent in the intake form, the buyer said “Wow, these look amazing — can you bring in a sample?” By February, we were in three Erehwhon stores. It was in record breaking time to get in the stores.

Eventually we pulled out of all the farmers markets and focused on wholesale. In September 2018, we started online sales so people could order from our website. And in June 2019, we received our USDA Organic certification

Q: Why do you think your products were so popular, so fast?

Because there was a major hole in the beverage sector that we fulfilled. And I honestly didn’t know that at the time. I was creating these products and these recipes for myself; it was a personal thing to heal my body. I love kefir and was playing around with non-dairy forms. I didn’t realize at the time that there was no vegan milk kefir on the market. Now the dairy industry is collapsing, more people want vegan alternatives. The other thing is our lemonade, it’s a probiotic health drink. It’s something that spans all generations that people love. We made it in a very healthy, healing way with no added sugar. I think that’s why Fermenting Fairy really took off — we fulfilled these holes that were left in the beverage industry.

Q: I love the name and logo. Tell me where the idea came from?

When I was really sick and started fermenting, I realized there was an unseen world that is working really hard in my benefit: the microorganisms, the probiotics. To me, it completely changed my life in a spiritual way. When I was really sick and in pain and constantly going to the bathroom and hating my life, those microorganisms gave me hope. It gave me hope that this reality right in front of me wasn’t it for me. There were these beings working on my behalf that brought safety and goodness to my life — like fairies. Fairies are mystical beings that bring joy and goodness to people’s lives, and I really feel that’s the energy we put into my products.

Q: Tell me about your future, where do you see Fermenting Fairy expanding?

Right now, we’re really local. We’re Los Angeles-based. we want to expand nationally and then internationally. Health stores, and then conventional stores. I would love for the entire world to get a hold of my products.

But my true, honest hope and for me the ultimate goal is to penetrate Western medicine. To get the Western doctors on board, to see my drinks on the food tray of patients at a hospital, that’s when I will really feel like I’ve done my part in shifting the world. I also see my products getting into clinical trials for cancer, autoimmune disease, researching how our products can help healing and preventing those diseases. I see a lot of research into mental health possibilities.

Q: Using fermented foods as a healing tool is very common in other countries. Why do you think the U.S. is behind in that science?

Our FDA considers fermented foods risky. Even when California passed the Cottage Food Law, which allows you to start a food company at home, the law still won’t allow you to start a fermented food company at home because they consider fermented foods a dangerous food. Things are not going to shift quickly until we realize eating fermented foods is safer than eating a salad. The U.S. is a ways behind in realizing how safe and healing fermented foods are. Europe is way ahead of us on that.

Q: What myths do you think the public believes about fermented foods?

One, that they’re dangerous. Eating raw vegetables are more dangerous than fermented foods. When done right, fermented foods actually prevent any kind of Listeria or E.coli infection.

Another myth people tell me is “I tried kombucha and didn’t like it, so I don’t like fermented foods.” To people that say that, I ask well do you like yogurt? The biome of the ocean is the same as the biome of the forest. It couldn’t be more different. If one fermented food didn’t work for you, then try some others because they’re all different.

Q: How can we as an industry do a better job educating the public about fermented foods?

Before fermented foods really exploded — because we’re right on that cusp of explosion — there needs to be a ton of education. I think having more organizations like The Fermentation Association is really amazing. You bring light to things that are happening, highlighting great companies where great things are happening.

I don’t see a lot of fermented food companies doing a lot of social media education. I’d like to see more of that, I’m diving into it myself, doing educational videos on Instagram. I’m all about education on social media.

I think it’s important for all these companies creating these ferments to try and talk to the people that are so closed off to it. I’m friends with a lot of doctors because of my job history. They have so much power and influence, but they are the most closed off people to fermented foods that I know. Penetrating that medical community will be huge for us. That education piece will unleash a whole new set of people that we can really help.

Q: Do you think consumer awareness of fermented foods is increasing?

Oh yeah, for sure. It’s definitely on the increase. I think, as gut health becomes more relevant to all health, I think fermented foods will just ride that opening. I think consumers are definitely getting more savvy in that awareness of fermented foods. But there’s still a lot of fear around it. All the time still, when I’m doing in store demos, and I say “Do you want to try a sip of kefir?” still there are people who respond “Oh my god, no.” I get that reaction all the time still and it’s so heartbreaking. Awareness is increasing, but fear is still a major factor.

Q: From your Cardamom Rose Coconut Milk Kefir to Apple Cinnamon Sauerkraut, tell me about your unique flavors. Where do you draw flavor inspiration?

Nowhere special. I love plants, I love flowers, I love herbs, I love studying the synergistic qualities of them. I know about the healing properties of plants. I’ve picked plants and herbs that not only have major healing qualities but they work well together. I don’t really get my inspiration from anyone else. It comes to me and I study what works.

I can’t think too much out of the box because it doesn’t work for people. If it’s too strange for people, it won’t sell. We had a cacao basil kefir and it was delicious, but it didn’t sell. It was an odd combination for people. They have to work together synergistically for people, and spin it so it’s right outside the box but not too far out. On July 4th, we’re launching our newest flavor kefir, a turmeric chai spice.

Q: Where do you see the future of the fermented food industry going?

I think it’s only going to go up from here. I see it really booming in a big way. I see a lot of activity happening in the future with new companies coming up on the horizon. I also am excited for the gut-brain connection, how ferments can really affect mental health disorders, like depression and bipolar and anxiety. I think that’s a field that were not even breaking into at all and it’s coming.

I think we’re pretty far from this but I think fermented foods can be incredibly potent in preventative medicine as well, like preventing certain diseases that are on the rise, like diabetes and cancer. I don’t want to make health claims, but i think that’s where we’re going with the industry.

Q: What challenges do fermented food producers face?

The No. 1 challenge is global warming. It’s harder and harder for farmers to produce the quality and quantity that we as small fermented food companies need because of the extreme weather patterns. So one day in California that’s 115 -120 degrees can completely fry all the fruit trees. Then what happens to us is we try to get this organic produce and either the prices are extremely high because of that heat or there’s no good quality produce anymore. I think it’s only going to get worse if we don’t do something about it. I see that as the No. 1 challenge for small — and even the big ones — fermented food companies in general. We have to be a part of that solution, we can’t let that go.

I am adamant about getting certified organic. And if you’re not getting organic, at least using it. A lot of fermented food companies are getting the cheap ingredients and they’re adding to the problem of global warming and poor soil health. I highly disagree with it. It’s only going to make it worse for them in the future. We’re part of the solution, if you’re not doing it for the life of your company, at least do it for the life of yourself and your customers.

Q: What unique strengths do fermented producers bring to the food industry?

I think most of us are probably nature-loving people. I think we see a connection between nature and human health, so we can be really passionate about that and passionate about elevating the quality of food that’s out there. Because now it’s poor quality food that’s out there, but artisanal, handcrafted fermented food companies can change that. Here’s really high-quality, fermented foods. The more people that catch on to that, the more people that will move away from the cheap food and to more boutique food that provide health benefits.

The strengths are loving and respecting nature, respecting the tie between human health and nature and also being super passionate about creating more quality in the food world.

Should a fermented food process need a patent? PepsiCo has filed a patent to ferment oat flour and dairy milk together. PepsiCo-owned Quaker Oats is creating a “spoonable or drinkable” clean-label product comparable to yogurt. The process involves co-fermenting a grain, dairy and a set of metabolites. This patent is unique because, while there are existing food products that combine unfermented and fermented dairy and grains, none co-ferment grain and dairy at the same time. In their application, PepsiCo notes that consumers are increasingly consuming fermented food products for health benefits.

Read more (World Intellectual Property Organization)

Oregon Public Broadcasting featured Southern Oregon’s fermented food pioneers in their latest segment. Kristen and Christopher Shockey moved to Applegate Valley years ago with hopes of getting their 40-acre homestead to pay for itself. They began selling sauerkraut “before it was cool.” OPB said: “They saw the process that makes sauerkraut, called fermentation, as a way to literally bottle and beauty and the landscape around them.” The Shockey’s started fermenting any and every vegetable their neighbors were growing in surplus. They wrote the book “Fermented Vegetables” in 2014, “helping to propel the fermentation wave that swept things like kimchi, kombucha and kefir into mass culinary consciousness,” OPB added. Today the Shockey’s are teaching fermentation classes and releasing another book.

Read more (Oregon Public Broadcasting)

Craft brewers are catering to a new beer drinker: healthy, active lifestyle drinkers. Though craft brewers are thriving, it’s a smart adaption to add low calorie beers to their products. A study found 52 percent of beer drinkers want to reduce their alcohol consumption this year, the top reason being: “opting for healthier lifestyle.” Beer brands have often ignored the development of watery, light beers. But as millennials – who drove craft brewery growth – enter their 30s and focus on health and wellness, lower calorie beers are becoming an important part of breweries flavor lineup.

Read more (New York Times)

Fermentation-based Impossible Foods — which makes a meat alternative with its own heme from yeast fermentation — is now a $2 billion company. The company behind the Impossible Burger raised an additional $300 million in funding, reflecting investor demand for meat alternatives. The meat-free burger cooks and tastes like meat — many consumers say they can’t tell the difference between Impossible Burger and ground beef. Impossible Foods partnered with Burger Kind earlier this year for the launch of the Impossible Whopper, a meatless burger that received rave reviews.

Read more (Vox)

Korean ingredients like kimchi now appear on 5.5% of menus in the U.S., a jump of 59% in the past five years. – Datassential

Craft cheese sales lag behind craft beer sales, despite the similarities in the two industries. Craft beer sales in America totaled $27.6 billion in 2018, while craft cheese sales totaled $4 billion. Experts tell VinePair why cheese doesn’t keep up with beer’s growth: cheese’s short lifespan (less than two months), greater risk of cheese mishandling by a distributor during the supply chain and the high price of artisan cheese. What can a cheese brand do? Experts advise increasing social media promotion. Craft beer has thrived on social media because people love seeing the hops being picked, brewers experimenting near the fermentation tank and the beer displayed in glassware. Craft cheese brands don’t self promote the same creation process, like a goat that made the milk or a family that runs the dairy farm. Cheese brands could also benefit from better merchandising, experts say. Beer labels are constantly and creatively changed and updated, but cheese labels remain the same for years.

Read more (VinePair)