BOULDER — The way retail is done is fundamentally changing, and as the natural-product industry continues to grow its market share, Boulder Valley CEOs shared how they are innovating their way through the new landscape at BizWest’s CEO Roundtable on Tuesday.
For long-time members of the industry, they’ve seen it grow from a niche, alternative market to continuously mainstream. And within the last few years, everyone in the natural-products space has seen retail shift from brick-and-mortar stores to e-commerce, just like it shifted from local markets to chain groceries in the last few decades.
“I’ve been in the industry for 50 years,” said Mark Retzloff, co-founder of Alfalfa’s, Horizon Organic Dairy and Aurora Organic Dairy. “There have been numerous changes. It went from being unavailable anywhere to ubiquitous. But it’s important to double down on the consumer and what they really want.”
As Wall Street and Amazon, through its purchase of Whole Foods, continue to get into the natural-products sphere, Retzloff said that the reality of doing good business doesn’t change as much as it might seem.
“Go and speak to the customer about how they want to get product,” he said. Companies that are doing that are looking at where the consumer is at and where and how they want to be reached. Whole Foods got saved by Amazon, but it doesn’t mean Amazon is steering the boat. The consumer still steers the boat. You have to listen to them and understand how they get their products.”
Although listening the the consumer has remained a consistent necessity, it doesn’t mean that the purchase of Whole Foods by Amazon hasn’t had its impacts. For many natural-product startups, getting into the regional Whole Foods market and then expanding nationally was the foothold into growing the business.
“If you’re flying to Austin to get into Whole Foods, you’re disadvantaged today compared to a few years ago,” said T.J. McIntyre, CEO of Bobo’s Oat Bars. “You’re limited to regional plays.”
However, with the large adoption of natural and organic foods by consumers, it’s also easier to get into large national grocers.
“But the opportunity to build a startup is favorable now because natural foods are accepted,” McIntyre said. “It’s not just Silk and Horizon breaking into [groceries], it’s startups breaking into them.”
What is more, not only are major companies such as Amazon purchasing brands such as Whole Foods, but other major food companies are looking to acquire natural and organic startups and small businesses.
“It’s part of their strategy,” said Susan Graf, vice president and regional development manager for New Resource Bank. “It’s a line item. Everyone is spending money on it.”
And the involvement of big food companies means the potential for the natural and organic scene to lose its culture and why businesses got into the industry in the first place.
“As the entrepreneur environment grows exponentially, you lose company culture,” said BJ Howard, an executive at Made in Nature LLC. “It gets so big that you’re not able to keep up; you hire people to fix the problems that don’t have the connection to your culture. And one day you wake up and see that your culture and mission have been diluted.”
Because of changes such as the involvement of Wall Street and the move to online sales, CEOs are preparing for the future of retail to look increasingly different.
“The total number of physical stores is not going to be what it is today,” said Doug Brent, CEO of Made in Nature.
But for many, Boulder continues to be a stronghold for the natural-products industry.
“It still has some of the highest amount of companies and people come here to learn,” said Chris Algea, CEO of Keen One Foods. “Other cities want to take that flame.”
On getting startup capital: “You need to raise more money than you expect. The idea is you can grow a company in five years. But to do that, it takes a tremendous amount of capital or it doesn’t take five years, it takes twice that.” — Todd Woloson, managing director of Greenmont Capital Partners
On the gap in funding: “In Silicon Valley, every Tuesday there’s another billion dollar company. You don’t see that in food. There’s a big gap. I don’t know if it’s a community-driven solution and maybe Naturally Boulder can fill that gap. There are only so many angel investors out there.” — Tom Spier, founder and managing partner of Boulder Food Group
On the difficulties of finding talent:
“We’ve taken some young people and groomed them.” — Alex Cioth, CEO, Claremont Foods
“As a manufacturer in Boulder County, housing is skyrocketing. What is the rate you can pay them? Labor wages are an issue.” — Sam Hunziker, CEO of WishGarden Herbal Remedies
On retail: “As a retailer, I’m thinking about how I can get my value proposition across in a crowded marketplace.” — Mike Demko, CEO of Door to Door Organics
On trying to be a supplement company in grocery stores: “How groceries work is you put something on the shelf, and they sell themselves off the shelf. But when vitamin departments started, it was unusual in that you had staff there to guide people to solutions. Staff has gone away, and we find ourselves in the position where our products have to sell themselves. We’re lucky in that we’re one of the few supplement companies known by name that people ask for.” — Catherine Hunziker, chair, WishGarden Herbal Remedies
On the intersection of the natural and organic space and the outdoor industry:
“The outdoor industry is full of my consumers. There are lots of opportunities for partnerships. There’s an overlapping consumer base.” — Justin Perkins, president and founder, Olomomo Nut Co.
“We’re crossing into the food space the way they’re [Olomomo] crossing into the outdoor space. We’re seeing a lot of adoption of reusable products. I think shops are looking to be an all-in-one stop. They’re focusing on outdoor, natural food and energy.” — Jon Fox, president of Eco Vessel LLC
Participants in the roundtable were: Mark Retzloff, co-founder of Alfalfa’s, Horizon Organic Dairy and Aurora Organic Dairy; T.J. McIntyre, CEO of Bobo’s Oat Bars; Susan Graf, VP and regional development manager for New Resource Bank; BJ Howard, Made in Nature LLC; Doug Brent, CEO of Made in Nature LLC; Chris Algea, CEO of Keen One Foods; Todd Woloson, managing director of Greenmont Capital Partners; Tom Spier, founder and managing partner of Boulder Food Group; Alex Cioth, CEO of Claremont Foods; Sam Hunziker, CEO of WishGarden Herbal Remedies; Catherine Hunziker, chair of WishGarden Herbal Remedies; Mike Demko, CEO of Door to Door Organics; Justin Perkins, president and founder of Olomomo Nut Co.; Jon Fox, president of Eco Vessel LLC. Moderated by Chris Wood, editor and publisher of BizWest Media. Sponsored by EKS&H and Berg Hill Greenleaf & Ruscitti.