In today’s episode, I speak to Nick Fereday, senior analyst of consumer foods at Rabobank, the Dutch food and agribusiness bank. In this role, Fereday tracks startup innovation and is a mentor at Rabobank’s agrifood startup pitch competition FoodBytes!, which last took place in Austin in September.
In this podcast, we talk about how Rabobank’s clients — the large food and agriculture companies — are reacting to this new innovation and working with startups, the acquisition of Whole Foods by Amazon, and consumer trends around natural, simple food as well as alternative meat products.
I hope you enjoy our conversation — there’s an abridged transcription below too.*****Louisa B-T: Tell us a bit about your role at Rabobank and how your work has changed amid this growing amount of innovation that’s taking place in food and agriculture. It must be quite a different world now from when you started at Rabobank six years ago.Nick Fereday: I’m in the research group at Rabo. We’re not a bunch of equity analysts. We’re kind of more big picture, trends, type of guys. I’m in the more consumer-facing part of the food chain, so I’m definitely much more interested in what’s happening at the consumer level and what’s driving at home and how that plays out along the food chain.In terms of changes, I think change is always there it just depends who’s doing the change and who’s doing the innovation. Certainly, when you look back five years or even 10 years, it is a very different landscape to what we were used to seeing. Five years ago, or even longer, it was the larger players that were driving a lot of innovation; there weren’t so many smaller players coming up.I think all that’s really flipped in the last few years. So what you’re seeing now is it’s the small emerging brands that are really driving innovation, either through renovating a tired category or for identifying, what they like to say in the industry, is white space. Gaps in the market and coming up with products that really talk to today’s consumer or the things that today’s consumer is interested in.FoodBytes, for us, is a great platform to have a firsthand insight into what’s going on. We get hundreds of applicants for each event, so by itself, that gives us an idea of what people are interested in, or what they think they can bring to market, or where they think there are opportunities. Then having been able to interact with these companies that we pick to present is certainly fantastic.It’s interesting because in my part of the food chain, talking about what’s new and new companies and what they bring to the table is really like the currency. In the same way that when you interview, folk who are more at the farm level and they talk about the latest USDA forecasts or where they think corn acreage is going to be. That becomes the topic of conversation. In my world, it’s all about what’s new and what are you seeing that’s different. So that really takes you to the small players, the emerging brands, because they are driving a lot of change and disruption. And it’s also of incredible interest to the large food companies because they’re kind of struggling to catch up and understand what’s going on.Louisa B-T: Well, obviously as an analyst for Rabobank, your clients are mostly the big food and ag companies. So how are they coping with this wave of innovation? How are they interacting with it, or not?Nick Fereday: think for the longest time there was a little bit of denial going on around what was happening. So when the larger players were looking at their sales and their sales weren’t going anywhere, in fact, some of them were heading south, It was very much, “oh, this is the result of the lingering recession, or this is the rise of private label and stuff?” And there really wasn’t enough introspection to really look at their own portfolios and come to a rather scary, but brave, conclusion that they needed to change because a lot of what they were producing was less relevant than to previous generations, such as the baby boomers.Louisa B-T: One of the things that we often think about is the CEO of Blockbuster talking about Netflix saying they weren’t at all on their radar as being competitive. Then around two years later, Blockbuster went out of business. Do you think food companies are aware of that threat, or do you think it’s taking them some time?Nick Fereday: I don’t think there’s that level of denial in the food industry anymore. And certainly, when you hear the major CEOs of the big food companies talk, they recognize the pace of change and the fact that consumers have changed.They’re used to change; companies that have been in existence a very long time. So they’re used to change, and fads, and trends, what have you. But, I think it’s the pace of change that’s caught a lot of people by surprise. So they’re going from a model where they were used to ramping up production of their existing brands, or maybe tweaking them, and now they’re in a world where maybe their brands, or their iconic brands, are less relevant and they’re being threatened by all these emerging brands.They’re kind of struggling to adjust their business model to be as flexible and as nimble as some of these smaller companies. It’s a bit like one of those large oil tankers that they know they have to change direction, but it takes a while to do that. Certainly, they’re all making attempts to do that to varying degrees of success.To me, it reminds me of that scene, probably showing my age, in Wizard of Oz, where you meet the magician, the wizard at the end, and he’s got all these levers that he’s pressing. I have this image of these large food companies pressing all the different growth levers, whether it’s mergers and acquisitions, or product renovation, or setting up a VC fund. They’re all desperately pressing these and trying to kick-start their top line growth, which in a lot of cases is not that spectacular....MUCH MORE, including podcast.
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