Tag Archives: RXBar

Chicago’s Food Industry

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Chicago’s food industry is busting at the seams as it were.  It is “quickly becoming a hotbed of investment for startups in the food industry, befitting the city’s legacy of being the world’s hog butcher and stacker of wheat.”

Some recent trends include the merge between Kellogg and Conagra Brands, resulting in the provision of $34 million to set up the Hatchery – a food business incubator – due to open in November.  Kraft Heinz recently established the Evolv Ventures Fund, which is the world’s “fifth-largest packaged food and beverage company.”  According to investor and fund leader Bill Pescatello, the fund is: “about how can we be smarter, connect with startups and get a first look at emerging technologies. The distribution channels are being absolutely disrupted, with Amazon selling direct to consumers and doing delivery, along with Instacart. We’ll be heavily involved in investing in those areas.”

According to Pritzker Group VC Partner Matt McCall:

“The Midwest has the deepest bench strength in the world in food and ag. Fragmentation is the No. 1 enemy of an ecosystem. So if you can create clusters of resources and players focused on the same sector, you get a compounding flywheel.”

However, there is one question that leads to cause for concern:  can the current economic (aging) demographic utilize the burgeoning food industry?  According to the NPD’s study, Eating Patterns in America, while it is true the US economy is on an upswing, due to its “aging population and corresponding changes in life stage,” this will likely lead to a drop in “total eating occasions on a per capital basis.”  The growth of the population is not likely to be huge and that will lead to a “less than one percent annual increase in total food and beverage demand, which isn’t significant enough to stop the decline in consumption occasions per capita.”  As NPD food industry advisor David Portalatin noted:

Still, vis-à-vis Chicago, the food industry seems not to have taken a hit with an increase in industry startups including: Farmer’s Fridge, Fooda, RxBar, Home Chef, Simple Mills and Tovala.

 

Chicago’s K.I.S.S Approach to the Business of Food

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A food trend is happening nationwide and now businesses in Chicago are part of it.  Starting as a small basement project in Chicago back in the summer of 2013, a few best friends who were broke and “couldn’t believe there wasn’t a better protein bar out there” got together.  It was simple and it was honest.

They were told their packaging wouldn’t work:  not appetizing, just boring facts.  But that’s what they did and today they just list the four ingredients on their packages:

  • 3 Egg Whites
  • 14 Peanuts
  • 2 Dates
  • No B.S.

Or:

  • 3 Egg Whites
  • 6 Almonds
  • 4 Cashews
  • 2 Dates
  • No B.S.

And now, it has been purchased by Kellogg’s.  For $600m.

According to a recent Forbes article by contributor Peter Wilkins, this transaction is indicative of “a growth signal for one of  Chicago’s booming new industries: simple food and beverage. Simple food and beverage companies are ones that focus on producing and distributing foods with whole, pronounceable ingredients that are transparently presented and are meant to be nutritionally good for you.”

And it seems to be what consumers want.  They want to be able to pronounce and recognize each ingredient on a label and are seeking out “less is more.”  The businesses that are providing this seem to be increasing their revenue around three times faster, while encountering a market share increase by 1.7% with their counterparts’ share simultaneously declining 0.7%.

Other Chicagoan examples include: SkinnyPop, Mike’s Hard, Peapod, Protein Bar and GrubHub.