Grocery Update #11: Food From Somewhere

Also: Specialty Food Show Highlights and A Worker-Driven USDA Partnership

Discontents: 1. Food From Somewhere: The Promise of Territorial Markets. 2. Specialty Food Show Highlights. 3. Peter Gialantzis of Pod Foods. 4. New Worker-Driven USDA Partnership. 5. Janet Yellen Food Pricing Fail. 6. Lina Khan For President. 7. Tunes.

1. Food From Somewhere: The Promise of Territorial Markets.

Working deep in the guts of the industrial food system, i.e., the grocery and consumer packaged foods sector, it can be hard to see a way out. The scale, the pace, the stakes involved can seem like there is no alternative. And yet, this food system is so vulnerable to disruption and catastrophe. The pandemic deaths and illnesses of hundreds of thousands of workers, along with constant hurricanes, fires, deep freezes, corporate profiteering and fragile “just-in-time” supply chains. There is no such thing as “too big to fail”. In fact, the bigger they are… you know the rest.

Last week I did a deep dive into the sundry ways that specialty foods and commodity foods depend on each other and how we get caught up in that cycle. One thing I have learned from working at all levels of the industry is that you have to sometimes look outside of it to see a way forward.

One of the more interesting and inspirational ideas for how the food system could evolve is the concept of Territorial Markets. This framework was developed by Global South food system advocates, farmers and scholars and is a truly compelling alternative. My colleagues at IPES-Food just released a fantastic report about it.

Why? Huge volumes of fresh foods around the world are supplied outside of corporate chains. In sub-Saharan Africa and Asia, small-scale and family farmers produce 80% of the food supply, while global chains account for only roughly 15-20% of total food consumption. In Mexico, open-air and traditional markets account for half of all fruit and vegetables that are sold for retail.

Contrast this with the $1 Trillion U.S. grocery industry, which has lost 20% of supermarkets in the last 25 years, while the top 5 companies control over 60% of sales. Meanwhile, the U.S. farmer’s market/direct sales sector is still under $5 billion a year. There is huge opportunity to expand public markets for direct, wholesale and retail sales. This dovetails with what I have written about public food systems.

Here is a high-level summary of the Territorial Markets vision:

‘Territorial markets’ are close-to-home food supply chains that feed billions of people every day, based on diverse distribution channels and markets, smaller-scale food producers and vendors, and serving communities.

• They are localized food supply chains and markets that operate within specific regions or communities.

• They involve diverse distribution channels – from public markets and street vendors, to urban agriculture and online direct sales, to food hubs, community kitchens and public distribution systems.

• They are based around small-scale producers, processors and vendors. 

• They provide accessible and healthy food.

• They ensure resilience. Research shows they are highly responsive and adaptable to shocks and they are environmentally resilient by fostering biodiverse small-scale farming. 

• They provide economic and social benefits. They support the livelihoods of millions of small-scale producers – offering stable incomes and more autonomy, while sustaining diverse food cultures and fostering community cooperation. 

My colleagues at the IPES-Food panel are calling for policy shifts to bring supply chains and markets closer to home:

• State purchasing schemes to support small-scale producers,

• Shifting subsidies to invest in infrastructure including public marketplaces, cooperatives, rural development, and city-rural transit links, 

• Protecting local markets from corporate co-optation, including breaking up supply chain monopolies, 

• Promoting sustainable, biodiverse farming practices, and diverse healthy diets. 

So my only question is, when do we get started?

2. Big Fun At The 2024 Specialty Food Show

Almost every June or July for the last 20 years I have had the privilege of attending the Specialty Food Show in New York City’s iconic Jacob Javitz Conventional Center. The Specialty Food Show has a special place in my heart. It was the first grocery trade show I attended many years ago, when I was working for the Southwest Region at the Whole Foods Lamar Flagship store in Austin, Texas. I had a fun little job sourcing international and specialty foods for both the store and the region in order to bring in some incremental margin dollars and new product differentiation. The region paid for me to go New York and walk the show for two days. Career highlight.

Since then, I have attended over 100 grocery trade shows, mostly Natural Products Expos and Specialty Food Shows, but also wholesaler shows, like UNFI, KeHe and Chex Foods, as well as a handful of international shows like Biofach in Germany and Sial in France. Like I mentioned, this has been a huge privilege and a big part of my career.

Trade shows, though, are a bit ridiculous. For 2-3 days, tens of thousands of attendees, exhibitors, convention center staff and logistics workers haul out thousands of pieces of booths, furniture, temporary walls, banners and assorted gear while loading in millions of pieces of samples to be given out. The work involved is mind-boggling, as is the resource and energy usage. The purpose is to provide networking, transactional, educational and inspirational time and space for the industry staff lucky enough to take time away from their stores, offices or manufacturing plants to attend. Trade shows are essential.

This summer’s Specialty Food Show was no different. It was modest sized, at about 30,000 attendees. The show’s selection was split between international exhibits from all over the world, and the burgeoning natural/specialty grocery sector. There were over 5,000 booths and I made sure to walk by every single one of them. My favorite part was the Startup CPG section and all the diverse, enthusiastic young brand founders and workers showing off their creativity. Big shout-out to Startup CPG.

You have to have both resources and boundless optimism to start a food brand these days. The chances of success are very slim, with very few companies surviving more than a few years in high volume categories likes snacks and beverages. Retailers are very aggressive with sales volume and profit margin targets. I have estimated over 50% annual attrition for new products at national chains. And most wholesalers are even more difficult, acting as gatekeepers to retailers while taking a disproportionate cut of revenues. So yes, the folks hawking goods at their booths are a bit nuts, but it’s hard not to root for them and their wonderful offerings.

I had a few highlights worth sharing:

My favorite product was this Nam Prik Pao, a spicy Thai chili jam from Pink Salt that I can’t stop thinking about, like Thai food distilled to its essence. Really good stuff. My second fave was the Kola Goodies Masala Chai. Total comfort drink, gave me nostalgia for the chai I used to drink commuting to Queens College.

My favorite sign was this cheeky banner by hot sauce purveyor Secret Aardvark.

I love the new crackers and cookies from Every Body Eats, a truly top notch company founded by two awesome women. They are manufacturing these products on the South Side of Chicago using an open hiring model to give living wage jobs to folks no matter what mistakes they have made earlier in life. So cool.

There was a tempeh from worker-owned cooperative Tootie’s Tempeh that was the best I have had. Tempeh is usually kind of odd-tasting. Tootie’s was quite tasty.

The ready to eat curries from Brooklyn Delhi tasted like takeout Indian food and didn’t have the pasty, dense mouth feel that most ready to eat entrées have.

And I really dug the new packaged rices from the team at Jasberry. This company is responsibly sourcing rice from Southeast Asia. They even won one of the coveted SOFI-awards. Congrats Neil and team!

Overall, I had a great time at the show. On to the next one.

3. Wholesale Innovation: Pod Foods, The Checkout Podcast #183

Peter Gialatzis is a fellow grocery lifer, with stints at Whole Foods, Lucky’s and KeHe. In his latest gig at logistics startup Pod Foods, Peter is helping disrupt the ever more consolidated wholesale sector. Peter spoke with The Checkout Podcast about the need for a more diverse and decentralized wholesale sector.

4. Worker-Driven Success At The USDA

The United States Department of Agriculture just announced the launch of an historic collaboration to protect farmworkers. The program includes millions of dollars in grants to farms that commit to joining the Fair Food Program (FFP) to protect workers in the H2-A, or “guestworker” program.  The H-2A, or “guestworker” program has undergone a massive expansion in recent years, and there has also been a surge in forced labor rings targeting H-2A workers.  

The USDA recently recognized the Fair Food Program as the highest level (“Platinum”) of human rights protection in agriculture. The USDA grants are financial incentives for farms to be part of the solution to the abuses that have always been a part of food production in the U.S.

The Fair Food Program is successful because of the two pillars of the Worker-Driven Social Responsibility model: 1) farmworkers are best situated to be the frontline monitors of their own rights and 2) they are protected from retaliation by legally binding contracts and the market power of the retail brands.

These contracts require buyers to source from farms in compliance with the FFP, and to stop purchasing from farms suspended from the program. Growers have a market incentive to resolve violations to maintain their good standing with these buyers. This is the power of the purchase order.

This USDA program is the latest instance of workers themselves shaping best practices and official policy in the agricultural industry. Onward!

5. Secretary Yellen Doesn’t Think Food Prices Are A Problem

Treasury Secretary Janet Yellen apparently doesn’t think that food price inflation matters anymore. Someone email Yellen a pile of my Forbes articles on this very subject. Please.

While she claims to do her own grocery shopping, she doesn’t feel the “sticker shock” like most working families do. Must be nice.

Yellen has also bought into the P.R. of grocery mass marketers that their recent price drops are adequate to tamp down on pricing concerns.

Meanwhile, a super PAC supporting the Trump Campaign launched a “Biden-Mart” calculator to show how much more expensive groceries now are. It would be quite entertaining if wasn’t so sad. While Biden sat on his hands instead of enforcing and updating anti-trust and anti-price gouging laws, food companies raised retail prices over 30% since 2019. Their profits skyrocketed. The “Biden-Mart” math is accurate, but adeptly deflects from how these companies raised prices and how they made bank off of it and off of us. Robin Hood In reverse. Otherwise, welcome to Election 2024: Clueless and Indifferent Vs. Straight Up Evil. Yay.

6. Lina Khan For President

Lina Khan is the Chair of the Federal Trade Commission (FTC) and is probably the most courageous and compelling member of the Biden Administration. Khan has been consistent in her criticism of monopoly power for the last decade. She has shown that trade policy can support consumers, workers, small businesses and family farmers. Her FTC is suing to stop the Kroger-Albertson merger, has gone after Amazon, Google and other monopolists and she recently said this in a speech to The American Economic Liberties Project:

We’re fighting hard to stop monopolists from using coercive tactics to crush competition. We’re protecting Americans from hidden junk fees that cheat them out of tens of billions of dollars a year. We’re holding individual executives accountable when they break or conspire to break the law. And we’re blocking mergers that would raise prices, depress wages, and kill innovation.

We’re showing the American people what it looks like to have a government that’s not afraid to fight for them.

This is the vision that animates our work at the FTC: an economy where consumers can exercise real choice, without fear of getting ripped off or misled; where entrepreneurs and small businesses can compete on the merits of their skills and ideas, without fear of upsetting one of the existing giants; and where workers have the freedom to switch jobs, bargain for a better deal, and exercise basic rights, without fear of ruin or retaliation.

In short, we are fighting for an economy where people enjoy the opportunity and liberty that free, fair, and honest competition provides.

Mic Drop. Lina Khan For President.

7. Tunes

MF DOOM (R.I.P) was an MC and Producer that recorded some of the most catchy and creative hip-hop of the 21st century. He even has a whole album about food called MM, FOOD. His team up with DJ Madlib resulted in the Madvillain album, which is 100% unfuckwithable.

Just remember all caps when you spell the man’s name.

peace.