Former Co-CEO Of Whole Foods Becomes A FoodMaven

Phil Lempert , CONTRIBUTORI cover issues and trends in the food and agriculture sectors.  Opinions expressed by Forbes Contributors are their own.

Walter Robb, Whole Foods’ former co-CEO, has joined up with Patrick Bultema, CEO and co-founder of the Colorado Springs startup FoodMaven, to do something about the growing food waste problem in the U.S.: sell it.

Whole Foods co-CEO Walter Robb speaks during the 2013 Dreamforce conference in San Francisco, California. (Photo by Justin Sullivan/Getty Images)

Robb, needless to say, brings a lot of experience and knowledge about food to the company. He has joined FoodMaven’s board and is what Bultema names as a “major investor.” In addition to his retail experience and investment, Robb also brings decades of foodservice experience from Whole Foods’ prepared foods and Grocerant offerings, which if reported separately by it would make Whole Foods one of the nation’s largest foodservice operators, according to one Whole Foods buyer who participated in a public retailer roundtable at the Fancy Food Show in June of 2017. His expertise will come in handy as FoodMaven wants the industry to reclaim about $200 billion of what they both told me in a phone interview last month is “perfectly good foods that are lost to an inefficient 1950s style food system” and sell it at a 50% discount to restaurants and other foodservice operators. They say that suppliers receive revenue that otherwise would be lost (they receive about 25% of the foods’ normal value) and restaurants can lift their profits; especially important as operators face tighter margins on the way with the January 2018 increases in minimum wage rates in 18 states and 20 cities and counties, including New York, California and Colorado. FoodMaven’s cut is, according to the company, “on a blended average about 50% of the sale” making this venture one with huge potential.

To put the potential revenue opportunity in perspective, today food is a $1.2 trillion market and, according to the Natural Resources Defense Council, up to 40% is wasted; which equates to about $480 billion. FoodMaven says almost half of that is high quality and merely over-supplied – somewhere over $200 billion in high-quality first-rate foods that are being discarded. The examples they cite include retailers and distributors that may have ordered medium sized potatoes and received large ones instead, or chickens that were delivered and found to be lighter in weight. Foods that are just “ugly” that traditional retailers don’t want to put on their shelves. Fresh foods from companies that have a limited shelf life and had orders placed by retailers that were cancelled. Bultema and Robb also point out that smaller local suppliers in particular have a difficult time getting into the mainstream food system, which has attracted those producers to sell their goods directly on FoodMaven and bypass traditional distributors. Any food that is unsold by FoodMaven is donated to food banks and hunger relief groups.

The company’s strategy, they told me, is best described as a three-pronged approach. First, go get the product that is “out” of the system. Then, use applied data to get efficiencies to store and deliver those foods (Bultema has a high tech background recently serving as the Selig Chair of Innovation and Executive Director of the Innovation Institute at The Colorado College, CEO of Ortsbo an internet software start up and as advisor to scores of other software startups). Lastly, they say, work in a conscious manner that relies on good stewardship; and those three principles produces a win-win for all.

Photo by Mark Reis, September 2017

Patrick Bultema, FoodMaven Co-founder & CEO Photo by Mark Reis

Here’s how it works. On their website there are two portals one for sellers and one for buyers. Their portal is able to sort by the quantity on stock as well as by “best by” dates in ten categories which include just about every category in a supermarket from meats and seafood, to oils, to canned foods, beverages and prepared foods.. Each product listing includes ingredients, if it is fresh or frozen and health attributes as well as a photo of the actual product. I found ten one-pound packages of Local Grass Fed Grass Finished Wagyu/Angus Cross Ground Beef for $62.50 that normally sells for $81.25, 20 one-pound packages of frozen Wild Shrimp for $82 (regular price $117.14) 18 Rabbits Organic Cherry, Chia & Vanilla Granola, six 11 ounce packages for $8 (regular price $28.00) and Vitamin Water Zero Go-Go Mixed Berries at $10.56 (regular price $21.12) for a case of 24-20 ounce bottles.

Any restaurant chef will tell you that their job and skill is to make something fabulous from whatever ingredients they have on hand. One only has to see one episode of Iron Chef to prove the point. And what FoodMaven might just do for the restaurants they serve is to be the tool to bring back the true “blue-plate daily special” where the chef might cook up a limited amount of a certain dish based on what they could find on the portal and actually offer a discount; as was the practice started back in the 1920s. My observation is that these days the “specials” in most restaurants are actually more expensive than what typically is listed on the menu; this might force a refreshing change.

The win-win they describe will only become a reality if they have enough of a supply of the goods that these restaurants want and need. Certainly when it comes to beef, chicken, seafood and other meats and produce they seem to offer great discounts on the staples that restaurants need. In addition to the Vitamin Water already mentioned, I found other products that might be hard for a restaurant to use, like 6-ounce packages of Allouette Cucumber Ranch Cheese Dip, or Pamela’s Oat Up 2 Gluten Free Snack Bars or 6-ounce boxes of Enjoy Life Soft Baked Mini Snickerdoodle cookies.

FoodMaven currently operates only in one market in Colorado, has about $1 million of inventory and has plans to grow regionally throughout the US; their goal is to reach $1 billion in sales over the next 5-10 years.

Study: How Shoppers View the In-Store Experience

By Brian Numainville / January 2018

Insights

The Retail Feedback Group (RFG), a leader in providing actionable stakeholder feedback, recently released the U.S. Supermarket Experience Study, which includes insights from 1,200 shoppers nationwide. The research, now in its tenth year, found that while supermarkets receive the strongest marks in quality and variety, Aldi has a decided advantage in value for the money and a slight edge in the checkout experience. Further, Millennials gave lower ratings than older shoppers in every aspect of the supermarket visit.

Core Experience Factors

Supermarket shoppers rated quality/freshness of the food and groceries (4.45) and cleanliness of the store (4.40) as the two strongest core experience factors. Associate friendliness – the highest-rated service factor – received a more moderate rating of 4.34, followed by associate helpfulness/knowledge (4.24), checkout speed/efficiency (4.23) and associate availability (4.19).

While supermarkets score well on general variety & selection (4.38), a core experience factor, scores register lower when drilling down further to natural & organic items (4.05), ethnic/international products (3.97), allergen-free items (3.97) and locally-sourced items (3.96).

Receiving the lowest score among all core experience factors, value for the money spent on this visit registered at 4.18. Again, drilling down deeper, the results show meat prices (3.98), produce prices (4.03) and everyday prices (4.03) all generated low scores in the supermarket channel, while advertised sales items scored much higher (4.38). Note that 76 percent of shoppers refer to one or more advertising/sales vehicles – traditional, social, mobile and digital – before or during the visit.

Aldi Making Inroads While Walmart Scores Lowest

Shoppers who visited an Aldi in the last 60 days are more likely to recommend the store (4.54 on a five-point scale) than supermarket shoppers, who give an average rating of (3.66). Further, 33 percent of those who shopped at Aldi say they plan to shop there more than now in the next 12 months versus 21 percent for supermarket shoppers and just 10 percent for Walmart. In core experience ratings, Aldi shoppers give value for money the highest marks (4.68), and also score Aldi higher than supermarkets on checkout speed (4.30). Walmart shoppers give lower scores on the all the core experience factors.

Millennials Give Supermarkets Low Marks on All Core Experience Factors

Millennials scored supermarkets the lowest on all core experience factors, as well as overall trip satisfaction. Boomers, on the other hand, rated overall trip experience and nearly all core experience factors highest (and only one area – staff knowledge/helpfulness—was rated equal by both Boomers and Gen X).

Meal Kit Usage and Experience

Just 14 percent of all supermarket shoppers in the study tried a meal kit delivery service in the last year, but Millennials showed stronger trial versus Gen X or Boomers. Blue Apron, Home Chef and Hello Fresh were the three services used most.

Top reasons for meal kit usage were home delivery (46 percent) and to save time (45 percent). Of those who did not use a meal kit, the main reasons were that they were too expensive (48 percent) or there was no interest in meal kits (44 percent). Meal kit users were most satisfied with quality of ingredients (83 percent highly satisfied) and least impressed with value for the money spent (65 percent highly satisfied).

Supermarket Meal Kits

Overall, 15 percent of shoppers also indicated their primary supermarket has a meal kit offering. Of those who purchased a meal kit from their primary supermarket, the top reasons given were good value (54 percent), quality of ingredients (53 percent) and to save time (51 percent).

Conclusion

These survey findings point to a critical need for grocery retailers with a physical presence to step up their game. When people shop in a supermarket, the overall experience, assortment, and value proposition need to be excellent in order to earn their next visit. There are too many grocery options available online, in hard discount stores, and across other formats, for an average or sub-par supermarket visit to be acceptable.

Further, the fact that overall trip satisfaction and all of the core experience factors register lowest among Millennials should be a call to action for supermarkets. Traditional supermarkets must find ways to make the supermarket more appealing and relevant to younger shoppers or risk becoming endangered as Boomers age and purchase less.

BRIEF

Trucks in record demand amid driver shortage

AUTHOR

Jennifer McKevitt@mckvt

PUBLISHED

Jan. 5, 2018

Dive Brief:

• The ratio of loads requiring movement versus available trucks has exceeded all previous records, the Financial Times reported recently. 
• "Active truck utilization" measures how many trucks are needed versus the number available, Axios reported Wednesday. While the past decade's average has consistently been 93%, in 2017 it rose to 100% — leaving the industry in a tight spot. Prices to hire are therefore surging, with corresponding wage increases for drivers.
• Consumer goods costs could rise as a result. As of November, the cost of freight transport had increased by 3.1% year on year.

Dive Insight:

The truck driver shortage comes with no lack of economic consequences.

Factors contributing to the transport driver shortage include misclassification lawsuits, dissatisfaction with the ELD mandate, and inaccurate or misleading driver record reporting companies such as HireRight, LLC, which collects and dispenses driver safety histories.

Now practices from leaner days are taking a toll. Though wages have increased for many, there remain those deep in debt to employers for the trucks they drive well beyond accepted working hours.

In addition, stringent hiring practices that discourage qualified drivers have yet to be resolved in a practical manner, despite a let-up in CDL crossover allowances.

As a result, the cost of shipping via truck is likely to increase due to rising rates. Shippers could suffer losses if they don't evaluate where to cut costs in their supply chains and find a way to work around high rates and prices.

Robomart is the latest startup to try and unseat the local convenience store

Posted 8 hours ago by Jonathan Shieber (@jshieber)

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The startup assault on the humble neighborhood store continues to intensify.

First came Bodega, the terribly named, and mostly misguidedstartup with its mission to bring the non-perishable necessities available at the corner store to the masses and “disrupt” the corner store.

Now there’s Robomart, which wants to bring the groceries, baked goods and prepared foods of the supermarket aisle to your doorstep with a white-labeled service for wholesalers and big box retailers.

The culmination of a ten-year vision from founder Ali Ahmed, Robomart is an autonomous grocery store department on wheels.

Robomart is the serial entrepreneur’s latest startup. Ahmed, who first conceived of the rolling grocery store concept while an employe at Unilever ten years ago, went on to found LuteBox, which was around the social sharing of media content.

From LuteBox, the London-based entrepreneur moved on to the now-defunct Dispatch, a competitor to the U.S.-based on-demand concierge services like Magic, which pitched a bespoke service where users could — for a fee — get almost anything their hearts desired (but you couldn’t get a tiger).

At its height, Dispatch had 1500 deliverers and the company received the most orders from folks who wanted grocery deliveries (this was in the early days of on-demand before Instacart, etc. had brought grocery delivery to the masses).

After investors bought Ahmed out of Dispatch, the entrepreneur moved to Santa Clara, Calif. to start Robomart.

“I believe we’re creating a new category,” Ahmed says. “We think we’re competing with the sidewalk robots.” In fact, Ahmed seems to be competing with the corner store — which offers the same fractional amount of goods with the argument of proximity and convenience.

Just as sidewalk robots are being met with friction in California, Robomart also expects to face some tough hurdles.Traffic and parking are probably the biggest among them.

And while Ahmed argued that his autonomous delivery vehicles could be purchased by a collective of local stores to compete with big box retailers (or wholesalers who are looking to go direct) — those companies are the more likely customers.

Customers would license the platform, vehicle and all, on a 24 month lease. “It’s significantly cheaper than setting up a new store,” Ahmed said. “And customers can shop for goods without pre-ordering.”

Interiors come equipped with either a refrigeration or heating system, and Ahmed says he’s talked to wholesalers about equipping separate trucks to mimic different sections of a grocery aisle — from dairy, to poultry, to meat, to vegetables.

A final benefit for retailers, Ahmed said, is that grocers and other retailers who license the technology will retain all of the customer information rather than giving it away to Uber, Postmates, Instacart or others.

The company, part of Nvidia’s inception program and a graduate of the Archetype incubator and consulting program, is in the process of building out prototypes through partnerships with Corbin, the once heralded — then humiliated — developer of a prototype electric vehicle in 1996,and Hevo Power. a wireless charging startup for electric vehicles which has yet to deliver a product to market (although Hevo Power has reportedly installed prototypes at Google’s super secret self-driving car headquarters in the California desert).

Those are not the partners that instill the most confidence in an operation’s success, but Ahmed insists that he’s in discussions with food wholesalers and big box retailers on the development of vehicles for the road.

When they’re rolled out, Ahmed claims that they’ll be fully autonomous. The company aims to license the technology to grocery stores — providing them with the Robomart vehicle, a wireless charging device (courtesy of Hevo Power) and an autonomous fleet management and on-demand ordering system designed by Robomart’s team of three engineers (all of whom have been with Ahmed since LuteBox).

 

 

As the Grocery Manufacturers’ Association Era Ends, A Look at What Must Come Next

January 5, 2018By Robyn O'Brien

In 2014, I wrote an article questioning the lack of vision and leadership at the Grocery Manufacturers Association. “Is the Grocery Manufacturers Association a Relic?” I asked.  Some CEOs were shocked by the audacity of that question. To me, it was so obvious that the organization was failing its members by not addressing the changing needs of consumers or the changing needs in the supply chain for its member companies. Itwas stunning to me that no one had asked questioned them.

In July of last year, Campbell’s announced that they are withdrawing from the trade group due to “purpose and principles.” They were no longer aligned.

Then Nestle announced their decision to split with the Grocery Manufacturers Association. Dean Foods and Tyson have since joined, as the GMA finds itself slowly disintegrating – its shelf life far shorter than that of the Twinkies it once represented.

So what comes next?

In the last few years, a growing number of companies in the Grocery Manufacturers Association have announced that they are not only dumping artificial ingredients from their products but also buying into the free-from and organic movements. It is a growing trend in the face of consumer demand.

#dumpthejunk has become the rallying cry, as a growing number of consumers call on companies to remove artificial ingredients, as we find ourselves reading labels because of diabetes, food allergies, ADHD and so much more.

So why is this happening on a one-off basis? Why didn’t the Grocery Manufacturers Association give its members the heads up? Why are these companies slowly peeling off these ingredients one by one in a slow and often reactionary process? It’s death by a thousand cuts.

The Grocery Manufacturers Association is the voice of more than 300 leading food, beverage and consumer product companies, but will it be a relic of the 20th century? With Campbell’s announcement yesterday, the answer is “yes.”

A question that is starting to pop up is: Is the Grocery Manufacturers Association still delivering value to its members? Would members be better served by forming a new organization? What if a new group started? Let’s just hypothetically call it the Food Production Association, and its mission was to meet the needs of companies in the 21st century?

A look back at the history of the Grocery Manufacturers Association suggests this might be a good idea.

Founded in 1908, the Grocery Manufacturers Association is a self-described, active, vocal advocate for its member companies and a trusted source of information about the industry and the products consumers rely on.

But do 21st century consumers actually turn to this organization today or is it a relic of the 20th century? And is it an advocate for its members?

The organization’s website goes on to say:

“A vital role of GMA is to serve as a central resource for our members, providing industry model practices and a means for collaboration between members, retailers and service providers on important challenges and opportunities facing the industry.”

The organization may have done that twenty years ago, but is it still doing that today?

The landscape of health has changed, and it is changing the landscape of food. Today, the rates of diabetes is skyrocketing, 1 in 4 children has a chronic condition, 1 in 13 children has a food allergy, 1 in 10 has asthma and 1 in 68 has autism, with cancer now the leading cause of death by disease in American children. The rates of these conditions are escalating, and parents are reading labels.

Did any of us expect motherhood or fatherhood to look like this? Not at all. No one would choose autism, life threatening food allergies or cancer. No one. But we find ourselves face to face with these conditions every day. It is changing so many things in our lives, and it is changing how we approach the grocery store.

Some companies want to spend millions of dollars debating how we got here. Parents don’t have time. Their hands are tied managing these health conditions. CNN/TIME reported that the additional costs of raising a child with food allergies is $4,200/year. Consumers want transparency and denying them basic information about what is in the food we are feeding our loved ones is out of touch.

Over the last year, more than 60 state laws have been introduced to label genetically engineered ingredients in foods. Consumers know about it, companies know about it. Companies inside the Grocery Manufacturers Association are producing product lines without these ingredients, and those product lines are profitable pieces of their portfolio. One look at the success of Kroger’s Simple Truth, “free-from” line demonstrates what a brand can do when it removes additives, GMOs, high fructose corn syrup and more.

Consumers want “free-from” food. It’s not about debating the “how” or the “why” we got here. It’s about meeting her where she stands in the aisle of the grocery store, holding onto a child with diabetes or food allergies, or shopping for parent with cancer.

Everyone is recognizing the need for food free from artificial ingredients. Panera Bread recently announced that they are pulling these ingredients from their products, Target’s Simply Balanced  committed to removing genetically engineered ingredients by the end of 2014, and Kroger is seeing record earnings growth with its Simple Truth product line, free from artificial ingredients and genetically engineered ingredients. The brand went from $0 to $1 billion in revenue in two years. The CEO of Kroger has repeatedly called it “a bright spot” in the company’s earnings reports.

So if companies that are dumping the junk are being rewarded by both consumers and the stock market, shareholders and stakeholders, what purpose does the Grocery Manufacturers Association serve by getting in the way of that? Is that in the best interest of its members?

As the Association spends record amounts filing lawsuits against the state of Vermont which has just taken a big step towards bringing transparency to its food system for its consumers, you have to wonder if this is money well spent for its members. What if instead, these members decided to leave the organization and start another one, one that truly met their needs in the face of changing consumer demand and the changing health of American consumers. Or what if some got aggressive and filed a “loss of business” lawsuit against it given the decline that companies like Kellogg’s are seeing in sales and the resulting employee layoffs as they entrench on the GMO labeling issue?

21st century families want free-from food. It isn’t complicated, and shareholders and stakeholders are rewarding the companies that understand that and are delivering products that meet that need.

They’re not debating the science, they’re not filing lawsuits, they are simply meeting us where we stand: in the aisles of the grocery store shopping for the 1 in 3 American children that now has allergies, asthma, ADHD or autism. They are building a new food economy, becoming icons for the 21st century consumer, making the Grocery Manufacturers Association look like a relic of the 20th century.

The $2.1 trillion food, beverage and consumer packaged goods industry employs 14 million U.S. workers. As consumers opt out of food loaded with artificial ingredients, demand is growing. From 2013-2018, demand for organic is expected to grow 14%, but in the United States, less than 1% of farmland is under organic farm management which means that we have to turn to countries like China and Romania for non-GMO or organic food. We are literally outsourcing that entire economic opportunity. It is not in the interest of our food companies, our families or our farmers.

If the Grocery Manufacturers Association was true to its mission it would meet the 21st century consumer where she stands, and it would be addressing this supply chain issue for its members. But it’s not.

As it stands, it is quickly becoming a relic of the 20th century, opening the door for another industry organization to form.

Can you imagine if Kroger, Target, Campbell’s, Nature’s Path, Annie’s, Costco and other food companies joined together to form the Food Production Association whose mission was to build out a clean and safe food system and to secure the supply chain for 21st century families? Instead of channeling member dollars into lawsuits, it could grow the base of US farmland under organic management, so that we don’t outsource this economic opportunity for our companies, farmers and country to our trading partners.

Cancer, autism, food allergies and other conditions we are seeing in the health of our loved ones are not “trends,” neither is the demand for transparency. American consumers have a right to know whether the EPA regulates their corn as a pesticide or not. Sixty percent of the world’s population has been given that right.

Imagine an organization for the food industry that actually focused on securing a non GMO supply chain for American companies, rather than fight this shift in consumer demand and outsource this economic opportunity to China and Romania. Here’s what a logo might look like. It’s food for thought.

Fresh Thyme fine-tunes operations in 2018

Chain still on track for 100-plus stores by 2020: CEO

Mark Hamstra 1 | Jan 03, 2018

Fresh Thyme is shifting its priorities heading into 2018 as the retailer slows its rate of new-store growth to ensure long-term success, CEO Chris Sherrell said.

In an interview with SN, Sherrell said the 68-store chain, based in Downers Grove, Ill., has entered a new phase of growth that will still see it expand rapidly but also take the time to fine-tune its operations. As previously reported, Fresh Thyme is planning to open 10 new stores in 2018, versus 20 new stores that opened in 2017.

The company, which began opening its affordably priced natural and organic stores in 2014 and has quickly ramped up to 68 locations, has evolved past its “start-up” phase, Sherrell said.

“We decided to look at a different set of priorities,” said Sherrell (left). “Opening 10 stores [in 2018] isn't shabby, but we decided to go back and shore up the infrastructure, get the systems in place, get the technology up to speed — we're going to become a billion-dollar company very quickly, and we’ve got to make sure our systems are at par with that volume.”

As previously reported, Fresh Thyme bolstered its executive team with several food retailing veterans in the past year to help ensure that the right systems are in place for ongoing success, Sherrell explained. The new team will bring fresh insights and expertise to the management of the chain, he said.

“I've been probably doing too much for too long,” said Sherrell. “It's kind of at a pressure point where it was time to strengthen the team, and bring in some experienced executives to help us get to that next level.”

Among the priorities that Fresh Thyme plans to focus on in 2018 are delivery and ecommerce, technology, employee training and ensuring that its 320,000-square-foot distribution center in Bolingbrook, Ill., is “100% operational,” he said.

“We want to continue to use [the DC] as a strategic advantage,” he said, noting that the company’s new stores planned for Pennsylvania in 2018 will still be within reach of the warehouse.

“We are creating a logistical company here that will have 125 grocery stores within about 500-600 miles of our DC,” said Sherrell. “There's not a natural or organic grocery chain in the country that has that advantage.”

If the company continues expanding further eastward, it would consider opening another warehouse, he said, but the current facility should be able to support 125-150 stores in the next three to five years.

Fresh Thyme, which is backed by supercenter operator Meijer Inc., is also exploring opportunities to expand its ecommerce capabilities, Sherrell said. Three of the chain’s stores have been offering delivery through Amazon Prime Now, which has been “a great partnership,” he said.

“We've learned a lot from them, and I'm sure they've learned a lot from us, and most likely we'll continue with that partnership into the future,” said Sherrell, although he noted that there were still a lot of “unknowns” related to Amazon’s acquisition of Whole Foods.

Sherrell said Fresh Thyme could increase its new-store opening pace in 2019 with 15 or more new locations, and he said the company still remains on track to hit the 100-store mark in 2020.

In addition to the first two Pennsylvania stores previously announced for 2018, Fresh Thyme is also exploring other locations in the Pittsburgh area for additional sites, he said.

The company also shuttered two locations in 2017 — one in Lexington, Ky., and one in the Cincinnati area.

“We weren't going to open 100-plus stores without closing a couple,” said Sherrell. “You have to prune the bushes every once in a while, and we just came to terms that we were going to focus our energy on new stores and growth, rather than continue to lose money in those stores.”

The company has learned a lot about site selection, demographics, product mix and prototype design from its rapid rollout that will help refine its expansion in the future, he said.

Looking ahead, Sherrell said he has a bullish outlook for 2018 and beyond.

“Organic grocery is here to stay, and we continue to feel that we are well-positioned at a perfect time,” he said. “There's not much competition when it comes to this type of format in the Midwest, like there is in the South and the Southwest, so we remain encouraged, and we're looking forward to one of the most successful years we've had in 2018.