Business Insights from Entrepreneurial Companies—Part 1

IN THE WORDS OF ONE INDUSTRY WAG, “If you need to attend a class on innovation, you’re no innovator.” If you agree, not so fast! A panel entitled “Managing Innovation: From Entrepreneurial Startups to Going Mainstream” offered attendees of the 2019 Protein Trends & Technologies Seminar a practical “how to” guide for innovators. It exposed pitfalls and proffered practical solutions to the challenges that plague those struggling at the leading edges of food and beverage development.

Read on for this two-part series on innovation.

Part 1:

Kara Nielsen, Vice President of Trends and Marketing at Emeryville, California-based CCD Innovation, a consulting agency focused on food and beverage innovation, moderated the panel. Her panel participants included five highly credentialed industry innovators, representing five very different entrepreneurial skill sets.

 

The panelists were:
Didier Toubia, CEO of Aleph Farms: This is an Israeli start-up company seeking to revolutionize the animal protein industry by artificially growing animal muscle tissues using a technology Toubia equated to producing “hydroponic meat.” He stat-ed that his company was still four years short of entering the market.

 

Anthony Brahimsha, Founder and CEO of PROMMUS Brands, LLC, harkened to his Syrian roots in describing his company’s origins. He was first exposed to the idea of “food as medicine” as a volunteer within Syrian refugee camps. “That experience allowed me to think differently about the foods that we consume here,” said Brahimsha. Chicago-based PROMMUS Brands, LLC introduced a line of high pressure-processed (HPP) hummus products enriched with protein isolates in 2018. These products, assured Brahimsha, were designed to “blow out the competition” on the nutritional label alone.

Umaima Merchant is the Director of Innovation and Growth at Premier Nutrition, a leading consumer brand company whose brands include Power Bar, SupremeProtein and JointJuice. Premier Nutrition is an affiliate of St. Louis, Missouri-based Post Holdings, a large CPG holding company. Merchant presented a largely CPG-based perspective on the challenges of innovation, leavened by her past experiences working with companies like Deloitte and Clif Bar.

Scott Mandell, Founder and former Chief Executive Officer of Chicago-based Enjoy Life Foods, drew upon Enjoy Life’s success in pioneering the market for gluten- and allergen-free foods. He subsequently transferred his entrepreneurial expertise to Chicago-based Cannibistry Labs, a developer of cannabis-based food and beverage products serving a plethora of start-ups in this still nascent market.

Mark Haas, Founder and CEO of The Helmsman Group, has been helping natural and organic companies grow for more than 20 years. With a background leading high-growth brands as well as founding his own contract manufacturing plant, Mark provides experienced insight and strategies to growing food and beverage companies.

 

When to Innovate…Or Not
Kara Nielsen jump-started the discussion by asking whether innovation was always necessary? Marc Haas noted that innovation came in many forms.

“Innovation,” said Haas, “is simply the application of something novel; it can be a new technology; new ingredients; or new ways of communicating a consumer ‘need-state.’” Or it can consist of a marketing campaign.

The type and degree of innovation undertaken depends largely on a company’s particular circumstances, offered Aleph’s Didier Toubia. “There are two ways to look at innovation; large companies are customer-driven, while start-ups are more vision-driven. Customer-driven innovation is much less risky, because one can afford the consumer research needed to mitigate risk.” Start-ups depend on yet-unproven visions of future opportunities.

This concept brought up another important role for innovation: to attract needed visionaries, risk-takers and capital. “We need continued innovation, in order to keep attracting the right kind of people to participate in our efforts,” explained Toubia.

An interesting question posed by Premier Nutrition’s Merchant discussed the role of innovation when a company’s brand is already growing quickly. Does a company apply its resources to pursuing riskier innovations or toward growing its winning brand? “It is a challenge for me to justify allocating resources to the innovation of new products in a fast-growth environment,” Merchant explained. For Premier Nutrition, new growth has come from market expansion into new consumer sectors. She concluded: “Because of the space we compete in, innovation is an option—but not a requirement.”

 

Carving Out Safe Spaces
One thing is clear, however: The high risk and limited resources that define small-company innovation leave little room for error. Thus, entrepreneurs and innovators need to articulate clearly defined business goals in their quest to meet clearly perceived market needs. For Aleph Farms, it was the recognition that most people who like to eat meat want to continue eating meat, not substitutes there-of. “Our goal is to provide real meat without any of the downsides,” said Toubia. Among the downsides he cited were sustainability, land-use practices, production timelines, widespread antibiotics misuse and animal welfare considerations.

Mandell explained, “At the time of Enjoy Life’s founding, nobody owned the allergen-free space that we set out to fill. We set out to build a true moat around our brand identity that would protect our runway to revolutionary innovation.” From day one, he continued, Enjoy Life invested in its own manufacturing facility, in order to maintain total control over production quality and thereby “keep our promise to create products free of all allergens.”

Mandell’s transition as a market service provider with Cannibistry Labs required a different business model altogether. Cannabis is not approved in the U.S. at the Federal level, so development has had to occur on a state-by-state basis and, for now, is not subject to Federal interstate commerce opportunities. The problem, noted Mandell, is that “while many start-up companies are securing cannabis licenses, they don’t know how to develop and commercialize food and beverage products. Our professionals create best-in-class products; develop brands around those products; and then license them to companies within the states where such products are legal.” An unstated advantage of this model is that it helps keep legal liabilities at arm’s length in confusing Federal and State regulatory climates.

Merchant observed that one successful model driving food and beverage innovation is to draw from global influences. Citing Brahimsha’s success in developing a market for traditional but nutritionally boosted hummus products, she noted that many new market ideas have come to the U.S. from other cultures and countries. “Greek yogurt wasn’t a big deal in the U.S. until the early-2000s, when it was introduced and built into a billion-dollar business by the Kurdish-immigrant Chobani family. The U.S. food and beverage industry boasts many similar success stories of immigrant origin.”

Toubia summed it up: “What is important in innovation is to make sure that innovation brings real value to its customers. It’s not just about our vision as entrepreneurs because, for the customer, it really is ‘all about me.’ Sometimes we forget that.”

This panel on innovation will be continued in Part 2


The “Managing Innovation: From Entrepreneurial Startups to Going Mainstream” panel at 2019 Protein Trends & Technologies Business Strategies program

This presentation was given at the 2019 Protein Trends & Technologies Seminar. To download free presentations and the Post-conference summary of this event, go to https://www.globalfoodforums.com/store/protein-seminars/

See past and future Protein Trends & Technologies Seminars at https://www.globalfoodforums.com/store/protein-seminars/

Posted on:December 4, 2019

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