Manufacturing  November 11, 2014

Suppliers can’t match natural-product industry’s growth

BOULDER – The good news for Boulder’s natural and organic foods companies is that their industry is booming. The bad news is the industry is growing faster than the supply of many of those companies’ key ingredients can.

“All of our growth is going to be constrained by access to supply,” Made in Nature president and chief executive Doug Brent said.

Brent was one of several area executives participating in BizWest’s CEO Roundtable on natural and organic foods Tuesday morning at accounting firm EKS&H’s office in downtown Boulder.

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Access to commodities was one of the major hurdles discussed that is facing an industry that is otherwise enjoying loads of growth and success.

Made in Nature, an organic dried fruit brand based in Boulder, is being impacted specifically by the availability of apricots and figs.

“So one of the challenges we have is how do you create more farmers to grow those crops?” Made in Nature’s chief innovation officer Brian Ross asked.

The question is a difficult one to answer for a variety of reasons and affects more than just fruit. Scott Roy, president of Boulder Ice Cream maker Boulder Homemade Inc., said a shortage of wholesale organic milk is being driven in part by Chinese demand for regular American milk powder. That is in turn causing American farmers to pull organic cows from production to produce more standard milk. All the while, the demand for organic milk in this country keeps growing.

Roy said his cream supply from Boulder Homemade’s current supplier will be down by 20 percent next year.

One way to weather such volatile swings in supply and demand is to contract in advance for supply, said Todd Beckman, co-founder of Good Belly probiotics maker NextFoods and a former WhiteWave Foods executive.

Beckman said NextFoods has contracted with a processer that will over the next few years contract with farmers for a certain number of acres of production specifically to supply NextFoods. NextFoods will be locked into buying that supply, but the alternative is uncertainty.

“Otherwise, you’re on the market buying what’s available versus creating the demand,” Beckman said.

Climate change is also having an affect on supplies, some in the group said. Roy said almonds and pistachios have been tough to come by because of California’s drought, and Ross said there are years where cherries or other fruits are affected badly by drought or other major weather events.

“I think we’re all going to be experiencing this with lots of different ingredients all the time now,” Ross said.

A wide range of other topics were covered in Tuesday’s discussion, including:

— The natural and organics industry is facing an issue of complicated messaging to consumers, from distinguishing natural products from organic products, to all of the various certifications like gluten-free and non-GMO, to clearly and concisely conveying to customers what some of the functional products like probiotics do.

“I think it’s always an uphill battle to educate the consumer on why the category you’re in is an important one,” JJ’s Sweets founder JJ Rademaekers said.

— On the growth of the industry in Boulder, Ross said, “It’s not just happening here, but I think it’s reflective of the overall organics industry.”

— While the natural and organics industry as a whole was broadly in favor of Colorado’s GMO food-labeling initiative that was voted down earlier this month, Best Organics Inc.’s CEO Seleyn DeYarus said some of the Proposition 105 opponents’ ads actually helped shed light on the natural and organics industry in their assertion that GMO labeling was unnecessary because of the presence of organic certification.

“If that’s what you’re choosing (your food) for, there you go,” DeYarus said the ads professed. “That was good for all of us.”

— On greater access to early-stage capital in the natural and organics industry, Olomomo Nut Co.’s CEO Mark Owens said, “You’re seeing these people who have had success or have seen the growth in the sector and realize there’s a lot of opportunity early on.”

Participants in Tuesday’s roundtable, which was sponsored by EKS&H and the law firm of Berg Hill Greenleaf & Ruscitti LLP, included: Todd Beckman, co-founder, NextFoods; Doug Brent, president/CEO, Made in Nature; Seleyn DeYarus, CEO, Best Organics Inc.; Matt LaCasse, co-founder/CEO, Birch Benders; Jody Nagel, founder/CEO, Boulder Granola; Mark Owens, CEO, Olomomo Nut Co.; Justin Perkins, founder/president, Olomomo Nut Co.; JJ Rademaekers, chief candyman, JJ’s Sweets; Brian Ross, chief innovation officer, Made in Nature; Scott Roy, president, Boulder Homemade Inc.; Sylvia Tawse, owner/founder, Fresh Ideas Group.

BOULDER – The good news for Boulder’s natural and organic foods companies is that their industry is booming. The bad news is the industry is growing faster than the supply of many of those companies’ key ingredients can.

“All of our growth is going to be constrained by access to supply,” Made in Nature president and chief executive Doug Brent said.

Brent was one of several area executives participating in BizWest’s CEO Roundtable on natural and organic foods Tuesday morning at accounting firm EKS&H’s office in downtown Boulder.

Access to commodities was one of the major hurdles discussed that is facing an industry…

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