EAT THINK DRINK: Show Me the Green Keynote Presentation by Lou Cooperhouse

Food Innovation and Disruption An Overview of our Industry, From Farm to Fork Eat Think Drink: Show Me the Green How to Access Capital and Move Your Project from Seed to Shelf August 28, 2017 Lou Cooperhouse Executive Director, Rutgers Food Innovation Center President & CEO, Food Spectrum, LLC

What is Food?

Material consisting essentially of protein, carbohydrate, and fat used in the body of an organism to sustain growth, repair, and vital processes and to furnish energy

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“Food” is so Much More!

Food is the Currency for Life’s Experiences It is directly associated with our everyday Social, Emotional, Cultural, Familial, and Most-Valued Life Experiences!

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Central to our family gatherings, and associated with our memories and special times About social gatherings and “breaking bread” Provides for our cultural identify Supports our personal beliefs Used to maintain our religious beliefs A reward for our self & those we love To initiate and maintain relationships To express love or concern “Let food be thy medicine” (Hippocrates)

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Everyone is Reading Labels

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Consumers Want it All So Many Product Attributes and Niches!

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Plant-based Differentiated Premium Fresh Specialty Indulgent Artisanal Ethnic Experiential Varietal Adventurous Bold Sensory

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Decadent Exotic Convenient Local Authentic Seasonal Traditional Simpler Health Wellness Nutritious Natural Min. Processed

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Preservative-Free Raw Gluten-Free Portion-Controlled Functional Personalized Green Organic Charitable Cause Markets Non-GMO Fair Trade 5

Consumers Want it All Values too!

• Speak to consumers in approachable, broad, and non-judgmental way • Resonate with consumer’s social, emotional, cultural, religious, familial and most-valued life experiences • Celebrate delicious foods, but tell your story!

• Communicate Values that consumers seek with their foods, including: • • • • • •

Trust Transparency Authenticity Sustainability Purpose Social Responsibility

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Inclusivity Ethics Justice Respect Accessibility Community Engagement

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Food News - 2013 2013

What if the next big thing in tech does not arrive on your smartphone or in the cloud? What if it lands on your plate?

That idea is enticing a wide group of venture capitalists in Silicon Valley into making big bets on food. In some cases, the goal is to connect restaurants with food purveyors, or to create ondemand delivery services from local farms, or readyto-cook dinner kits. In others, the goal is to invent new foods, like creating cheese, meat and egg substitutes from plants. Since this is Silicon Valley money, though, the ultimate goal is often nothing short of grand: transforming the food industry.

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Food News - 2017 2017

“It’s Moosewood’s world.

We’re just eating in it”.

“Consider granola: The word used to be a derogatory term. Now it’s a supermarket category worth nearly $2 billion a year.

Kombucha was something your art teacher might have made in her basement… And almond milk? You can add it to your drink at 15,000 Starbucks locations for 60 cents… Just as yoga and meditation have gone mainstream (and let’s not get started on designer Birkenstocks), so have ideas and products surrounding health, wellness and eating that play like a flashback to the early 1970s.”

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US Food Industry Valued at >$1.5 trillion We are now eating more food away from home than at home • In the U.S., consumers spend over 10% of the GDP on food. Over 16.5 million people are employed in the US food industry. • Two-earner households and busier lifestyles have led consumers to spend less time cooking and seek the convenience of food prepared away from home.

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VC Investment at All Time High

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Significant Industry Activity, from Farm to Fork

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Significant Industry Activity, from Farm to Fork

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Recent Exits and Revenue Multiples CPG Brand

Type

Founded

Sold

Acquirer

Price

Daiya

Full line of plant based foods

2008

2017

Otsuka Pharmaceuticals

Sir Kensington

Plant based mayo and condiments

2010

2017

Unilever

$140M

N/A

Krave

“Jerky” snacks

2009

2015

Hershey

$219M

6.25x

Epic Provisions

Protein snack bars

2013

2016

General Mills

$100M

5x

Frontera Foods

Specialty food products

1995

2016

ConAgra

$108M

N/A

Boathouse

Bottled beverages

2012

2016

AB InBev

N/A

N/A

Enjoy Life

“Free from” snacks

2001

2016

Mondelez

N/A

N/A

Annie’s

Organic Meals

1989

2014

General Mills

$820M

4x

Vega

Plant-based shakes and snacks

2004

2015

White Wave

$550M

5.5x

Bai Brands

Antioxidant beverages

2009

2016

Dr. Pepper Snapple Group

$1.7 B

4x

$325M

Revenue Multiple 4.5x

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Food Innovation and Disruption

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Innovation • Translates an idea into a good or service that creates added value • Replicable at an economical cost and must satisfy a specific need • Requires bold thinking and risk taking • Innovation can be – Evolutionary, brought about by many incremental advances in technology or processes and – Revolutionary, which are often disruptive and new.

• Must be continuous “Innovation is the perpetual process of redefining yourself. The industry is changing so quickly, a company must continually redefine its objectives to adjust to the needs of the marketplace.

We must operate under the ‘no constraints’ guideline; every day we must look at what we want to change”, LC, 2000 15

Disruption Innovation is rational whereas disruption is irrational •

Disruptive innovation displaces an existing market, industry, or technology and produces something new, more efficient and more worthwhile. It often involves exploiting new technologies, or harnessing old technologies in a new way, typically by serving underserved markets. • Disruption is both destructive and creative, subsequently disrupting (and potentially displacing) incumbent companies, businesses and markets.

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Leveraging Technologies, From Farm to Fork 1.

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Agricultural Formulation Processing Packaging Temperature Control Facility Design Operational Best Practices

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Illustration: Sous Vide Technology

Process • Portion/Trim • Marinate/Vacuum Massage • Grill/Sear Exterior • Vacuum Package • Precise Time/Temp Cook • Quick Chill • Reheat, Plate and Serve

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Illustration: High Pressure Processing (HPP) •

HPP is a cold pasteurization technique by which packaged products are introduced into a vessel and subjected to a high level of isostatic pressure (43,500-87,000psi) transmitted by water. These pressures will inactivate the vegetative flora present in food, extending the products shelf life. • Sensory and nutrition attributes are maintained because of the absence of heat treatment

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Illustration: Microwave Technology •

915 Labs, with technology from WSU, has launched Microwave Assisted Thermal Sterilization (MATS™) and Microwave Assisted Pasteurization (MAPS™) • MATS simultaneously immerses packaged food in pressurized hot water and heats with microwave energy at a frequency of 915 megahertz, eliminating pathogens and spoilage microorganisms in a matter of minutes. This patented process preserves the nutrients, color, texture and flavor of foods — while providing a shelf life equivalent to conventionally processed foods.

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Incorporating Certification To Differentiate Your Company or Product, and to Demonstrate Best Practices

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Food Innovation and Disruption An Overview of our Industry, From Farm to Fork 1.

2.

3.

4.

5.

6.

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Agricultural Technology Insects Plant-Based Foods and Alternative Proteins Personalized Nutrition “Last Mile� Delivery Services Home Appliances

1. Agriculture Technology

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Ag-Tech Category Definitions

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$3.23B Investment in AgTech - 2016

• Later stage, private equity investments dominated the Food Marketplace/E-Commerce category in 2016, although 98 seed stage deals, the largest number of any category, also contributed. • Rabobank indicates the ecommerce category will continue to attract entrepreneurs with their ability to disrupt major food retailers with online options for locally sourced fresh produce, meals and artisanal food offerings 25

Bowery “100 times more productive per square foot than commercial field farming�

Uses multiple hydroponic configurations, with a smart system that uses computer vision and artificial intelligence (AI) to sense what the plants need and deliver it automatically.

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AeroFarms “130 times more productive per square foot than commercial field farming” • Roots hang suspended in air, while nutrient solution is delivered in form of mist, using 95% less water than field farming and 40% less than hydroponics, and 0 pesticides • Smart LED lights with specific light recipe for each plant

Total fundraising efforts are over $130 million since 2014.

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Plenty “530 times more productive per square foot than commercial field farming

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Grows crops vertically with the plants growing outward instead of up. By shifting to the vertical plane, the company claims it is 46 times more efficient spatiality than a stacked system Company founded in 2013, with a $1.5 million seed round, followed by a $24.5 million Series A round

July 2017 Series B investment by Japanese media giant SoftBank, Alphabet’s Eric Schmidt, and Amazon’s Jeff Bezos.

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2. Insects

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Chirps •

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Uses crickets milled into a flour to make tortilla chips. Company’s goal is to substitute animal protein with insect protein, thus converting livestock farming to insect farming. By doing so, they will reduce land & water usage, and greenhouse gas emissions.

Goal is to normalize eating of edible insects.

“We started Chirps because we want people to know that bugs are delicious, nutritious, and sustainable. What’s cool about bugs like crickets is that they can be raised in cities, unlike most farm animals. That way, we can use less land and reduce the distance from farm to table. Plus, crickets can be fed on excess produce would normally be thrown out, helping us reduce some of the 60M tons of food waste produced in the US each year.”

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Chapul •

“We work with cricket farmers in North America to raise our crickets in a controlled environment, raised on an organic, non-gmo feed…We make gourmet energy bars and add a protein powder that we make from crickets. Our crickets are oven roasted and stone ground into a fine protein powder that is a complete protein (contains all the essential amino acids) and is high in calcium, iron, B12 and Omega3’s.”

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There are roughly 20-30 crickets/bar.

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Flying Spark •

Nutritional – protein rich, high essential amino acid profile, cholesterol and gluten free, optimal omega 3/6 ratio • Sustainable – negligible land use, utilizes almost no water, free of greenhouse gas pollution, no waste • Economic – short life span of only 1 week, body mass growth by 15 times, self harvesting insect • Safe - eat fruits only, no hormones, antibiotics, and pesticides

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3. Plant-Based Foods and Alternative Proteins

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Plant-Based Foods Experiencing Rapid Growth

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Beyond Meat

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Impossible Foods

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Memphis Meats Memphis Meats has been developing real meat grown directly from animal cells as a way to bypass the various complications associated with traditional animal agriculture. With their lab grown clean meat, they aim to minimize meat's environmental impact, preserve animal welfare and produce meat that is safer to eat than traditionally farmed meat.

The round included a number of notable investors including Richard Branson, Bill Gates and Suzy and Jack Welch. The round was also supported by food industry leaders including Kimbal Musk and agriculture company Cargill Inc., the largest privately held corporation in the United States

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Hampton Creek

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Perfect Day

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Daiya

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Violife

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Ocean Hugger •

According to a study published in Nature, 90% of all large predatory fish (like tuna) are already gone, and the rate of fishing isn't slowing down.

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Ocean Hugger Foods designed a product that could make a difference to the world’s oceans. Their first product – Ahimi™ is a plant-based alternative to raw tuna, for use in dishes including sashimi, nigiri, poke, tartare and ceviche

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4. Personalized Nutrition

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Habit

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Testing –Samples collected at home and sent to lab Results- Lab results and body metrics result in a personalized nutrition plan Coaching- Nutrition coaches provide one-on-one support Meal delivery – Personalized meals are delivered fresh to your door

Day Two • •

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Testing –Customer provides a stool sample Results- Company sequences the DNA of gut microbiome, and provides a unique personalized nutrition profiled based on patent pending algorithm technology Report – Personalized nutrition report identifies specific food recommendations for normalizing blood sugar levels Recommend- food recommendations specific to your gut makeup

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InsideTracker

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Testing –Select a plan and get blood tested Personal Preferences- Input your exercise habits and food choices Report – Get a personalized action plan with recommendations tailored to your body Tracking- Retest your blood to see what is working and what’s not 46

5. “Last Mile” Delivery Services

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Fresh Direct

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Purple Carrot

Previously, $3.8 million in seed capital raised from New Crop Capital, Stray Dog Capital, Mario Batali and others.

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Blue Apron

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Amazon

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6. Home Appliances

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Urban Cultivator

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Flatev

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Opportunities in Hawai`i

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Hawai`i Agri-Food Industry Challenges • • • • • • • • •

Significant import competition Urban development pressures and loss of agricultural land Aging agricultural workforce Nation’s highest fuel prices High inter-island transportation costs High labor costs High costs of inputs including animal feed High costs and limited availability of water Small farm sizes and lack of critical mass

• No comprehensive food incubation program, and statewide mentoring network, to support entrepreneurs 56

Hawai`i Food Entrepreneurial Challenges •

Need for food industry information on product trends, business planning, market research, capital access, corporate governance, regulatory and permitting requirements, legal matters, quality assurance and food safety, product and process development, marketing and sales strategy, etc.

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Need for marketing and product/process development expertise, in order to develop value-added differentiated products, and to compete in an increasingly complex retail and foodservice environment which is undergoing significant industry consolidation and innovation/disruption

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Need for access to FDA and USDA inspected facilities to safely and legally produce products in facilities approved by the local and federal regulatory agencies

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Need for access to capital in order to prove viability of business and expand

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Need for access to management team that will provide professional expertise and mentoring, and critically-needed business connections

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Food Industry Hui Linking all Participants in Food Industry Value Chain Farmers & Agribusiness

Domestic & International Food Companies

Startup and SME Food Entrepreneurs

Retail & Foodservice Markets

Food Industry Hui Linking all Participants and Service Providers in Food Industry Value Chain

Farmers & Agribusiness Domestic & International Food Companies

Startup/SME Food Entrepreneurs

Ingredient, Packaging & Equipment Providers

Distributors, Logistics & Supply Chain Service Providers

Retail & Foodservice Markets

Food Industry Hui A statewide business incubation program, that aggregates the food Industry and provides physical infrastructure and mentoring that are needed for success University of Hawaii All campuses

Farmers & Agribusiness Domestic & International Food Companies

Startup/SME Food Entrepreneurs

Food Industry Trade Assocs.

Venture Capital and Investor Groups

Federal, State and Community Agencies

Distributors, Logistics & Supply Chain Ingredient, Packaging & Equipment Providers

Economic Develop.

Partners

Service Providers Retail & Foodservice Markets

Business Mentor and Consultant Network

Five Skills of Innovators and Disruptors •

Question – question the status quo, and figure out how to improve it, and potentially disrupt it. Why? Why not? What if?

• Associate – Connect the unconnected. New ideas blossom at the intersection of related and unrelated industries. Create cross-functional teams with different experiences and perspectives to facilitate business/product differentiation • Network – Interact, communicate and connect with a diversity of people as a way to gain inspiration. Be open!

• Observe – carefully, intentionally, and consistently look for small behavioral details—in the activities of customers, suppliers, and other companies—in order to gain insights about new ways of doing things. Use information from real-life situations to support your plan • Experiment – validate your hypothesis.

Fail fast. Fail cheap. Fail often. Try again… and again.

Figure it out and determine your optimal business model.

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Creating Your USP A “Unique Selling Position” is the factor or consideration presented by a seller as the reason that one product or service is different from and better than that of the competition What is your product concept?

How is it unique?

What problem does it solve?

What are the benefits that separate your product(s) from the rest? ü How do you innovate, and make your idea potentially disruptive?

ü ü ü ü

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Mahalo!

For more information, please contact: Lou Cooperhouse President & CEO Food Spectrum, LLC lcooperhouse@foodspectrum.com

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