How good food companies thrive in the age of Covid-19

There’s been a lot of bad news about the food industry lately. From profit-driven price inflation, to worker deaths due to Covid-19, to widespread supply chain shortages, the past few years have been tough for everyone who needs an efficient and sustainable food supply. But there is good news as well, and there are excellent institutions that are proving that better diets can be developed under the most competitive and chaotic conditions.

Food trade is largely standardized, enabling large chains to raise prices, pay lower wages and reap huge profits without accountability. More than two-thirds of food retail dollars are spent at a handful of these national chains. Many bustling metropolitan areas, including Denver, Austin and South Florida, are dominated by 1 or 2 semi-monopolies. Walmart has more than 50% market share in hundreds of municipalities. However, alternatives continue to emerge.

National Cooperative Grocers (NCG) is a business service cooperative based in the Twin Cities. NCG enables community-owned grocery stores, or food co-ops, to compete with some of the largest retail chains in the country. NCG does this by negotiating competitive pricing and product assortment with brands and wholesalers, as well as by providing operations support services, finance, human resources, and store development to member cooperatives. More than 215 food cooperatives across 38 states cooperate through NCG, generate annual sales of more than $2.5 billion and serve more than 1.3 million member owners.

Food cooperatives have a deep and rich history. According to historian John Curl, co-operatives were key to the development of the labor and populist movements. Cooperatives have also been crucial to developing self-sufficient and sustainable economies in black communities, as scholars such as W.E.B. Du Bois, Monica White, and Jessica Gordon-Nembhard have meticulously documented.

NCG enables food cooperatives to stand out and build on these legacies. Food cooperatives pioneered the Good Food movement from the start. They have helped establish and continue to support organic standards and have been instrumental in building the local foods movement and plant-based food industry. More than 40% of food cooperative sales are organic, well above the industry average of 5-10%, and rivaled only by chains like Natural Grocers and Whole Foods. The average food cooperative exports 26% of its produce locally and works with more than 178 local farms and vendors, helping to recycle millions of dollars into local economies. Many food cooperatives pay live wages, which puts them outside the grocery industry with widespread food insecurity and high employee turnover. Food co-ops also sell higher percentages of ethically produced products than other grocery chains, including Fair Trade certified products.

Some of the densest areas for food cooperatives include Seattle, the Twin Cities, and the Upper Midwest. But they can also be found from coastal Maine, to Austin, Texas to Ocean Beach, California, living and thriving among a multibillion-dollar oligopoly of groceries. Communities across the country continue to plan, open and develop food cooperatives, and are fortunate to have an organization like NCG in their corner.

Wholesale trade is one of the most cohesive and invisible aspects of the food supply. On a good day, wholesalers are like mycelium, connecting producers to retailers and restaurants, allowing greater market access. On a bad day, which is becoming more frequent, wholesaler out-of-stock and SKU rationing are limiting consumers’ choices. The consolidation of wholesalers reduced competition and enabled revenue grabs such as chargebacks and deductions that bankrupted small producers. Wholesalers are literally “the middleman”, and all this is implied.

The common market is an exciting supply chain innovation that is changing the role of wholesalers. A non-profit organization that builds regional and renewable food supply chains across the Mid-Atlantic, Southeast and Texas (and soon the Great Lakes), Common Market partners with farmers to handle the distribution of their crops, ensuring customers receive some of the best, freshest foods. Common Market distributed more than 15 million healthy meals and 450,000 hand-packed lunch boxes to school districts, hospitals, social service institutions and food access NGOs in 2021 alone, and invested more than $11 million in regional food purchases worth $15 million from Total revenue.

Since its founding in 2008, The Common Market has invested more than $100 million in its host communities and is sourced from more than 144 family farms annually. Super local sourcing means that 50% of their suppliers are located within 100 miles of their warehouse and 90% of their suppliers are within 300 miles, saving miles on food and reducing fuel costs and potential hiccups in the supply chain. This enables the common market to grow local economies and create jobs while generalizing and amplifying the flow of revenue within communities. Their procurement criteria are transparent and developed in partnership with some of the country’s leading agricultural scientists and sustainability experts, and focus on four areas: local economies, community health, animal welfare, and environmental sustainability. Common Market also partners with city agencies and organizations registered with the Center for Good Food Buying Good Food Program, a collaborative framework that provides standards and resources for developing ethical supply chains.

“Co-markets offer a rationale—securing markets for family farmers and producers who produce clean, nutritious, locally grown food within institutions responsible for feeding communities,” says Hayley Johnston, co-founder of the Philadelphia-based nonprofit, PA. “The ongoing challenges posed by COVID-19, rising costs, and supply chain issues are placing well-deserved attention on resilient local food systems. These food systems provide access to and traceability of fresh, healthy food, and most importantly: put people first, in and out of crisis. We are proud to help lead the way, to offer our farmer partners fair prices, and to give our communities food they can count on, to bring about major systemic changes in food ecosystems.”

According to one institutional client, Abigail Pearce of Jackson County Public Schools in Alabama, “We are grateful for the relationships that Common Market has created, the delicious products it provides to our students, and the community resilience that it supports.”

Consumer Packaged Goods (CPG) is the most visible segment of the food industry. From your favorite cereal and soda, to whatever pasta and sauce you need to make a quick meal for kids, CPG dominates family pantries and fridge space. However, the retail FMCG sector is pretty tight-knit, with less than 4 companies controlling the majority of the shelving space in more than 75 different categories. Launching a new CPG brand might sound great and fun, but the failure rates of food entrepreneurs are huge and the industry is fiercely competitive for emerging brands.

However, there are still CPG bouncers out there. The company Dr. Bronner’s Magic Soaps is an iconic brand and manufacturer of the grocery industry with annual revenues of more than $200 million. Known for the surreal labels on iconic soap bottles, the company has expanded into organic coconut oil, toothpaste, hand sanitizer, and more recently chocolate bars from renewable organic farms. But the family-owned company, whose catchphrase is we’re all one or nothing, maintains its values ​​by caring for employees, farmers, and their communities in myriad ways, detailed in a recent book by Jero Leeson, longtime head of supply chain for the brand.

The company has sourced more than $23 million in fair trade ingredients and converted more than 1,000 farmers to organic farming, with more than 124,000 organic acres planted. 74% of their raw materials are fair trade and 76% are organic, including historically exploited ingredients such as palm oil, coconut oil and cocoa. Dr. Brunner’s employs more than 260 workers, one-third of whom are under the age of 35. More than two-thirds of the employees are non-white, and more than 54% are Hispanic or Hispanic. Their starting wages are over $20 an hour, which is 60% higher than the California minimum wage, and the company has an upper limit for an executive salary that is 5 times the lowest paid employee. On the context front, the average CEO pay is 320 times that of the average worker; Kroger’s CEO earns nearly 1,000 times the average employee’s wages. Dr. Brunner’s supply chain philosophy ensures that profits and wealth are shared by all, enabling workers and farmers to live well and thrive, but also generate loyalty and commitment.

Dr. Brunner also provides an example in areas that typically do not prioritize consumer packaged brands, including landfill-free manufacturing and the use of post-consumer recycled materials. The company, and particularly CEO David Brunner, has been an outspoken advocate of psychedelic treatment and has supported ballot initiatives to decriminalize and legalize marijuana. The company donated more than $16 million last year to dozens of NGOs working on a variety of causes, including criminal justice reform, fair trade, animal rights, plant-based foods, civil liberties and renewable agriculture. Along with Patagonia and the Rodale Institute, Dr. Brunner co-founded and helped direct the Renewable Organic Alliance, which raises organic production by including stricter animal welfare, social justice, climate change mitigation, and soil health considerations in supply chains and among the fastest growing and most recent food trends. promising.

The food industry remains a hotbed of exploitation and supply chain issues. But as Mariam Kappa writes, “Hope is discipline.” Building organizations that are sustainable, ethical, and loved by customers is not only possible. It is the only real option.

Leave a Reply

%d bloggers like this: