sustainability

Shifts in the Trade Winds: IFT16 and the Opportunity of Conscious Consumption

If you haven’t met me, the basic introduction is that I’m using my time in the Oregon MBA to build a career that impacts sustainable food and agriculture. This path led me to interning with Mercaris, a startup that provides rare and valuable market intelligence to the organic grain industry. Also, nice to meet you, hope you’re having a nice summer, and welcome to the Oregon MBA!

The IFT16 Trade Show Floor

The trade show floor at IFT16

Two weeks ago, I represented Mercaris at IFT16, an international convention of food scientists and industry professionals. The conference promoted professional development through shared research. Meanwhile, an accompanying trade show attracted a cross section of the industry, all vying to show their “on trend” ingredients, equipment, and processes.

Being new to the world of food science, I noticed a unifying trend: the prevalence of informed, discerning, and wary consumers. If you have paid attention to food advertising in the last five years, you’ll recognize terms like “clean ingredients” and “sustainable sourcing.” You might also know a little bit more about technical ideas like probiotics, antioxidants, or minimal processing. You might be attempting a diet that is “free from” ingredients like gluten, sugar, sodium, and even meat. You might even classify yourself as a locavore, a flexitarian, or just a foodie in general. And the most interesting part of this amazing development is how it has taken the food industry by surprise.

A keynote seminar underlined the gap in understanding between the food scientists and the food consumers. A marketing executive presented the findings of C+R Research, which conducted a marketing study on the clean label trend. He stated that clean label claims and minimalist packaging are “a backlash and a challenge to Big Food companies” and they target a mainstream audience. 69% of those surveyed reported consistent label-reading behavior. Consumers are certainly awakened to the idea that some food products have negative health benefits. More importantly, consumers woke up to the idea that some companies have a consistent track record of stakeholder care. 47% of those surveyed reported the use of simple strategies to meet their personal dietary requirements, including trust in certain retail outlets or packaged products.

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Me and a 2,000lb tote, a standard of transportation for food commodities

In another age, health and wellness were confined to certain high-value customer segments. However, the final takeaway from C+R Research pointed to a tectonic shift in consumer behavior: when it comes to food, education and socio-economic status are no longer the reliable barometers they once were. Conscious consumption now cuts across class, with consumer age playing a key role for segmentation purposes. Millennials and Boomers are more receptive to clean label claims than are Gen Xers, but all generations exhibit some level of food literacy which impacts their purchase behavior. As one Gen X member of a live consumer panel remarked, “they put [high fructose corn syrup] in our food and we got fat as a nation… I’m mad at them.”

And so, to what cause do we attribute this disconnect between consumer and industry? Alarmist documentaries like “Cowspiracy,” and “Food, Inc.” paint a grim picture of multinationals that hide their nefarious production practices or actively sacrifice the health of people and planet in the name of profit margins. From my position on the trade floor, however, the disconnect seems to stem from reductionist science. As one executive from the GreenBiz Group noted, the purpose of a food company is to create products with an eye toward cost, safety, and taste. Within this spectrum of values, raw food commodities boil down to fats, sweeteners, and emulsifying agents. They are designed for shelf-stability and are marketed for mass appeal.

Once you add nutrition to this mix, the food scientists begin to scratch their heads. A food product is only the sum of its ingredients, and meeting dietary guidance is a matter of stacking nutritional values. Under this lens, food science looks more like product development, while nutrition separates into another discipline altogether. Food scientists are rapidly trying to address this gap in their education; one of my favorite seminars was amusingly titled “Nutrition and Food: An Obvious but Little Appreciated Partnership.”

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A consumer panel hosted by C+R Research

The trend towards health and wellness has seismic implications for the entire supply chain. Going forward, consumers will reward food companies for their attention to nutritional economics and transparency, rather than for their cost economics and quality control. Furthermore, as the world shifts towards more sustainable diets, food companies will be rewarded for communicating the environmental impact of their ingredients. The IFIC reports that for 41% of consumers, the sustainability of a food product is an order winner. And Big Food is responding with agility. A seminar on sustainable proteins illuminated the development—and the opportunity—of supply chains based around plant, insect, and cultured proteins.

At IFT16, I tasted the future of food. Protein bars made with chia, amaranth, and algae oil. Egg-free chocolate chip cookies made with a chickpea flour. 100% Guatemalan dark roast served on a nitro similar to Guinness, and an Indian spice cold brew made with tamarind. Naan pizza. Spaghetti-and-mealworms. I also had updated versions of trending classics like the mango smoothie and the grilled cheese sandwich. IFT16 stimulated all my senses and sensibilities, and I am fortunate for the experience.

Written by Joey Jaraczewski

Jaraczewski joins the Oregon MBA with a passion for changing the food industry. He grew up in rural Arizona and has spent the past four years exploring the world of food from multiple angles. He’s worked as a server and bartender in Flagstaff and traveled across the country visiting farms, feedlots, food distribution warehouses, and retailers. As an Oregon MBA on the sustainability track, Jaraczewski plans to build on that experience to explore ways to build a more sustainable food system for generations to come. Jaraczewski will graduate as an Oregon MBA with the class of 2017.

Transactive Energy in Oregon?

What on earth is “transactive energy” and is it a good economic development idea for Oregon? Karl Mundorff of Oregon BEST invited us to participate in an initial conversation about it with many others this week. James Mater of QualityLogic, who is also Chair of Smart Grid Oregon, introduced this very technical topic.

What is a smart grid? It is modern electricity delivery that allows two-way energy demand management between customers and electricity generators or utilities. It makes our grid more efficient, more reliable, more able to support distributed renewable energy sources. The smart grid will allow the integration of electric vehicles, electricity storage, and smart appliances, all decentralized conservation systems in a way.

Transactive energy is a phrase that describes the energy system of the future where dynamic pricing, which reflects the supply-demand equation of the moment, will help smooth out peak demand. It is a marriage of high-tech meters and new energy business models, if you will. This will help us avoid the extreme capital expense of constructing mostly idle, and thus wasteful, peaking plants designed to deliver electricity at times of highest demand.

This is almost opposite of our current centralized utility business model, where big companies are independent, yet heavily regulated. Financial transactions for energy in this traditional model are simple: the customer pays the price for a kWh set by the generator or distributor. However, spot wholesale markets do underpin this system, so utilities are not without experience in dynamic pricing.

The Pacific Northwest Smart Grid Demonstration Project can already claim leadership in smart grid/transactive energy research, “contributing technology, utility applications, customer engagement strategies and policy”. For more than a decade, five states (Idaho, Montana, Oregon, Washington, and Wyoming) have worked together to experiment and demonstrate exactly how smart grid infrastructure can actually work, on many levels. Now is the time to put this new technology together with good regulatory policy and good business models. Exciting new work for our sustainable business graduates!

Written by lstrohm@uoregon.edu

Dr. Laura Strohm is the Program Manager and Senior Instructor of the Center for Sustainable Business Practices at the Lundquist College of Business, University of Oregon.