There is no doubt that smaller food and beverage companies are leading the way. Larger companies must make huge investments in developing a national product. Because of this economy of scale issue, larger companies have lagged, but are being pushed by consumers.
“Traditional food and beverage companies are acquiring natural food brands, and a number of them are putting together venture funds (for example, Kellogg’s, Campbell Soup, and General Foods) to invest in natural food companies,” notes Chris Mann, Chief Executive Officer,
Guayakí Sustainable Rainforest Products, Inc. “That way they can quickly enter an established market. They are also bringing in talent that is knowledgeable about water usage and reducing carbon footprints.”
Another reason larger food and beverage companies may lag is that smaller companies are nimble and may be able to more easily focus on more expensive ingredients, passing along that cost to conscious consumers.
“Acquisition is the road to revenue expansion for large companies,” Mann explains. “One reason for that is climate change. There may be big swings in raw materials costs due to climate change, which could really affect a big company.”
He also notes that the world faces major environment challenges like deforestation.
“At Guayakí, we saw that our raw materials grew in the rainforest, and protecting that was going to take us wherever we wanted to go,” Mann says. “We have been at this for 21 years, and we have grown from selling loose tea in bags to a ready-to-drink product.”
Large companies may also take longer to jump into sustainable products due to the cost of developing the necessary supply chain to deliver the right products. There is no doubt that General Mills spent a major amount of time on figuring out how to incorporate whole grains into their cereals.
“The grocery space is changing,” Beyond Meat’s Vice President of Finance Aaron Hicks adds. “Consumers have sustainability demands and are raising their voices via social media. We are listening to what our customers and other consumers are interested in, which is that they care about what they are putting in their mouths. That is a catalyst for continuing innovation at Beyond Meat.”