Our January cover story for years has been an outlook story, a well-researched guess at the trends and other things that could impact the food & beverage industry in the new year. Not this year.
If you're looking for fascinating, trendy things that are fun to read but will never impact your business, then consider Pandan Southeast Asian cuisine, ube (purple yam) and kimchi. Want obvious, mundane ones? Use more protein, especially plant protein. Consider "mindful" consumerism. Look into high-pressure pasteurization.
This year Food Processing wanted to get not only a little more practical but a bit more forceful. There are some issues and pseudo-trends out there that every food and beverage processor should be addressing. So we offer you not just the trends for 2018 but suggestions on what to pursue – and a few things to avoid – in the new year. Including a little tough love. If you'd be disappointed not to see mentions of Amazon-Whole Foods, millennials and President Trump, they're in this story somewhere.
So repeat after us: "I resolve to…".
Become More Transparent
Yes, we know you've heard this one before, ad nauseum, but it had to be listed first. Of course you're doing something about it. But are you really?
It's a fine line that the industry must walk between being open and shocking consumers so much they want to become organic farmers. Food manufacturers – and maybe especially their marketers -- have shot themselves in the feet many times with packaging that has enough headspace for a small family, breakfast cereals being touted as brain food (without any clinical proof) and chocolate-covered goji berries that contain no goji. Shall we go on?
Right now, this whole country is grappling with pros and cons of transparency. The #MeToo movement is uncovering decades of sexual harassment, and police excessive force is now documented – or disproven – by police body cameras or iPhones.
We don't know if those societal trends will die down any time soon, but consumers' desire for knowledge about their food looks like it will be around for a while. How will you feed that craving?
How do you present a story consumers will accept? Are they really ready to accept what's in their food? They love sausage, but do they want to know how it's made? After all, all food is made up of chemicals (so is the human body), and most food is processed to make it more nutritious, safe, convenient, etc. But consumers are happier believing an army of chefs has personally and individually produced a meal for them, even if it retails for only $4.
You've got to start somewhere. If every food & beverage company started somewhere, we'll be having a much different discussion on this subject next year … if at all.
Embrace GMO Labeling
Depending upon how you read the law passed by Congress in 2016, USDA had until this July to either enforce national labeling of foods with genetically engineered ingredients (GMOs) or to publish rules on how food processors should label for GMOs. If the former, it's not happening; the latter is still a possibility.
Nevertheless, GMO labeling already is under way. Forward-looking companies such as Campbell Soup and Nestle USA already have a GMO statement on their products, and we've even seen a few SmartLabels, the QR code that, depending upon your opinion, either legally hides the presence of GMOs or reports them and much more information about the product … if you use your smartphone.
Until USDA provides direction, it's not certain either approach is appropriate. Even so, you should prepare now for GMO labeling. Moreover, you should embrace it.
This fight is over, and the battle has cost you plenty already. Continuing to fight will only make matters worse. It's probably been the main cause for the resignations (technically, non-renewals) of six prominent members of the Grocery Manufacturers Assn. (Campbell Soup, Nestle USA, Dean Foods, Mars, Tyson Foods and Unilever). Maybe they didn't want to have criminal records, as GMA was found guilty in 2016 of violating Washington state’s campaign-finance disclosure laws by shielding the companies that contributed to its campaign to defeat a 2013 ballot initiative to label GMOs.
On the other hand, embracing GMO labeling might win you some points for honesty and transparency (see resolution No. 1). Do you want to do some real good, for consumers, yourself and the entire food industry? If you can't get all the GMOs out of your products, educate consumers on how beneficial and safe GMOs are. No one said you had to remove them, just label them.
There has been no more polarizing issue separating consumers from much of the food industry, especially Big Food. In every state referendum on the subject, the vote was close, usually 51 percent to 49 percent, no matter which side won. That ought to tell you there is a significant number of consumers care about GMO labeling, but not a majority. The swing votes were swayed when they sympathized with the poorly funded, mostly volunteer millennial moms and small farmers on the pro side of labeling rather than the million-dollar lobbyists hiding Big Business – that's you – on the other.
While we're on the subject, stop lobbying for regulatory/labeling (you could insert the word "consumer" there) delays of any kind. The new Nutrition Facts panel. Your role in restaurant menu calorie counts. Give the consumer what she wants. She'll thank you for it.
Prepare for 'Glyphosate-Free' Labeling
So you're non-GMO certified. Maybe you're even gluten-free. But are you certifiably glyphosate-free?
The next testing/certification/labeling issue you have to worry about may be coming in 2018. Two organizations started certifying products as glyphosate-free last year and, while neither can claim a big-name client, they're looking forward to breakthroughs this year.
BioChecked (biochecked.com) of Sarasota, Fla., launched its glyphosate-free certification program one year ago. So did The Detox Project (detoxproject.org), a Bulgaria group with a Los Angeles office that started out testing humans for toxic chemicals and heavy metals. A "soft launch" last year of its program to test products for glyphosate met with "shocking interest in the U.S., and even more in Europe," according to Henry Rowlands, director of the Detox Project.
Each firm is largely a marketing organization that outsources the testing to certified laboratories. Both the EPA and FDA started looking into the issue of glyphosate residue in foods but suspended research.
Generic glyphosate and Monsanto's branded Roundup is the most widely used agricultural chemical in the world. It does a great job of killing weeds; actually, it kills any plant it comes in contact with, which is why so many plants are being genetically modified to resist it (see GMO labeling above). It's precisely that kind of genetic engineering that enables farmers to get a little heavy-handed with glyphosate and other herbicides and pesticides.
Glyphosate is suspected – not conclusively proven – to be linked to everything from allergies to autism. The World Health Organization has labeled it a probable cause of cancer, and the state of California has classified glyphosate as a carcinogen. The EPA and FDA have not ruled on it yet.
To be certified "glyphosate residue free," ingredients or food products must not contain glyphosate or AMPA residues exceeding the limits of laboratory detection -- between 0.1 parts per billion (ppb) and 20 ppb, depending on the product – those are the standards set by the EPA.
How widespread is the problem? The University of California at San Francisco tested people last year and found the chemical showed up in 93 percent of urine samples. And a handful of high-profile products, including Ben & Jerry's ice cream, were raked over the coals last year after random testing found traces of glyphosate, although always below the EPA's maximum residue limits.
While you'd think non-GMO certification would be enough assurance that the raw ingredients won't contain the herbicide, it's been showing up in unexpected places and products, presumably carried by the wind or ground water from fields that are GMO and therefore using glyphosate.
Some 50 consumer brands are using BioChecked's Non-Glyphosate Certified symbol. The Detox Project claims 10 brands already certified and 20 more going through the process currently.
Not Invest in Home Delivery Meal Kits
Don't bother, unless you're Amazon. Or you get bought by Amazon. Leave this one to your grocer-customer.
The latest Holy Grail (or is it a Hail Mary?) for ecommerce growth last year produced a great deal of conversation and investment but no return on that investment.
The earliest food industry buy-in we can lay our hands on was Campbell Soup's 2016 investment of $32 million in Habit. Maybe Campbell felt it had to invest, since it had already bought Habit CEO Neil Grimmer's other company, Plum Organics.
Campbell followed that up with a $10 million stake in Chef'd – which earlier had a non-financial relationship with Quaker Oats to develop breakfast meal kits. Nestle bought into Freshly. Unilever put $9 million into Sunbasket.
Tyson's trying to do it organically (in the business definition), launching its own Tastemaker's line, which has its own button on the AmazonFresh site (just below "Martha [Stewart] & Marley Spoon Fresh Meal Kits).
Albertsons Cos., the U.S. grocery titan, late last year bought Plated for $175-200 million, according to one report.
With sales of $800 million, Blue Apron is the apparent leader in the category. It went public last summer, with pre-IPO optimism suggesting an opening price of $14 a share.
Instead, trading began at $10. As we write this, the stock was struggling to stay above $4.
Sprig, a San Francisco-based meal delivery company, closed down last spring.
The 800-lb. gorilla in this room clearly is Amazon, especially after its $13.7 billion purchase of Whole Foods Market. The Chicago Tribune reported the company wants to trademark the slogan "We do the prep. You be the chef" for a line of meal kits, according to the U.S. Patent and Trademark Office. Game over.
If there's any money to be made in this segment – and that's far from a certainty – it will wind up in Jeff Bezos' bank account, not yours.
The prospect of nuclear war with North Korea or Russian meddling in elections has been grabbing all the headlines. What about a cyber war with either foe? And what better American target than the food & beverage industry?
Actually, it looks like we've already had a couple of skirmishes with North Korea. The WannaCry ransomware attack last May – which infected some 75,000 computers in 99 countries and demanded ransom payments in 20 languages – allegedly was launched by agents in North Korea, the Trump administration announced late in 2017. The cyber attack crippled hospitals, banks and other companies across the globe – but no food or beverage companies, at least none that publicly admitted it.
The same cannot be said about a malware attack one month later, which cost Mondelez about $100 million. Whether it was a variant of Petya, a known ransomware, or one different enough to get dubbed NotPetya by one antivirus software company, it may have begun – not created – in Ukraine. Its origins are uncertain, but many believe it originated in Russia, part of the ongoing conflict between those two countries.
The ransomware infected computer systems of multinationals with outposts in Ukraine, including shipping firm Maersk and pharmaceutical giant Merck, as well as Mondelez. At the time of the cyber attack, Mondelez reported a computer outage across its global operations.
“Given the timing of this significant global attack, despite our best efforts, we experienced disruption in our ability to ship and invoice during the last four days of our second quarter," the company acknowledged in a financial filing. "There are a few markets where we have permanently lost some of that revenue due to holiday feature timing, but we expect we will be able to recognize the majority of these delayed shipments in our third quarter results.
In another report, Mondelez noted: “The malware affected a significant portion of the company’s global sales, distribution and financial networks... the company executed business continuity and contingency plans to contain the impact and minimize the damages and restore its systems environment.”
With U.S. relations souring with North Korea and Russia and no effective repercussions in sight, one can only surmise that such cyber attacks will continue. To stay safe in 2018, beef up corporate computer defenses, keep backups up to date and rethink your policies allowing personal devices to access your systems. Warn employees not to click on unknown attachments and to use strong and unique passwords.
Go Grocery Shopping
This is aimed at you CEOs and other C-suite execs. You probably exhort your underlings to do this. But are you doing it?
This is where the rubber that is your product meets the road. How does your brand look on the shelf? Do you have enough facings? Or too many? Where are your competitors, and how do they look? Are you priced appropriately, whether you want to be the premium brand, the low-price leader or comfortably in the middle?
Is the product still relevant? Is demand for it, or at least its category, growing, stable or lessening? If the latter two, and especially the last one, what are you going to do about it?
What about your packaging, your branding, your trade dress? Is it time for a makeover? One reason all those weird upstarts are stealing market share from you is they look different. They look … millennial. Not red label cans of soup. Not white, perfect-cube gallons of milk. Is that what it takes to succeed? Or will it chase a demographic that some other brand already has locked up, while in the process alienating your loyal base?
Oh, and one more:
Not Get Involved in Cannabis Edibles
At least not yet. Maybe in 2019.