The State of Food Innovation: Food Retail in Boston

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In the old days – meaning 20 years ago – Boston eaters had but a few options for filling their pantries and refrigerators. Some could find the ingredients they needed at a farmer’s market or a co-op, but most likely, we were visiting the local supermarket, with its lines, its crowds, and its fluorescent lighting. For many locals, it was Stop & Shop, which began in Somerville in 1914 as the family-owned Economy Grocery Store before adding dozens of stores throughout New England over the coming decades.

Food retail was an industry dominated by hulking, set-in-their ways supermarkets that had a captive audience for years but were begging for disruption. The Internet would not disappoint.

Home Delivery

Believe it or not, home grocery delivery can be traced back to before the dawn of the Internet. Grocery delivery pioneer Peapod was founded in 1989 as a smart shopping solution for busy families, but it came of age during the dot-com boom — with Boston was an early and profitable launching pad for the service. Then, the dot-com bubble burst, and with it nearly all of the handful of food delivery services. For the better part of a decade, folks went back to the old way of food shopping.

The mobile revolution has inspired a newer crop of companies offering the delivery of food to our front porches. The backdrop against which all grocery delivery solutions will be measured was set last summer when ecommerce giant Amazon acquired traditional organic grocer Whole Foods. The union is expected to bring, at some point, a push by Amazon into the food retail space that could upend the industry. In the meantime, Instacart, though headquartered elsewhere, continues to make inroads with local supermarket chains with its fleet of personal shoppers and checkout-to-porch grocery delivery service.

Several locally owned companies are making their presence known as well. The local veteran in this space, Boston Organics has been providing organic food deliver to homes and offices for more than a decade. Just Add Cooking, which launched out of Dorchester’s Commonwealth Kitchen, has emerged as a local leader in the meal kit delivery space, sourcing its ingredients regionally and partnering with local celebrities and chefs on recipes. Al-FreshCo provides locally sourced vegan meal kits to Boston households, most of the deliveries being made on bicycle.

 Curated and Artisanal

Compared to older shoppers who are more brand-loyal when food shopping, Millennials tend to seek a wider field of smaller brands when picking out what to cook and eat. While many Millennials will still purchase products from larger companies, these days, they are especially drawn to foods with particular stories, ingredients, and other specifics that let them “shop their values.” Food companies are obviously capitalizing on this, but so are curators of these specialty brands.

  Nibble Snack Shop’s Joyce Lee (a Branchfood community member) searches high and low for the perfect mix of snacks from up-and-coming companies for her Cambridge tasting room and occasional pop-ups around the city. Think of Nibble as both brand ambassador and retailer, and Lee has found a niche selling to munchy office-dwellers in Cambridge and Downtown Boston.

Food curators need not be brick and mortar businesses, however. Boston-based Small Batch Daily uses its popular Instagram account to sell one new artisan product per day with enticing photography fitting of the social media site. How does it work? Users follow the SBD account, sign up online, and type “sold” in the comments under products they want to try.

Consulting and Support Services

Several local companies have made it their mission to help food retailers sell more of their products, more efficiently. The Cambridge-based ThirdChannel platform utilizes retail execution to help retailers manage their merchandise and integrate digital platforms into the brick-and-mortar environment. Another technology, Survey.com – headquartered in Boston – harnesses the power of a digital app and fleet of merchandising experts to assist retailers to conduct retail audits, manage merchandising, and conduct mobile market research among consumers. Boston-based Revenue Architects does exactly what its name suggests: convenes experts in marketing, sales, and public relations to assist businesses build models for revenue growth. Finally, Repsly, headquartered in Boston’s financial district, is a mobile app used by field teams to manage sales, track inventory and prices, and collect and organize data to grow brands – including many in the food and beverage space.

 Farm-to-Consumer

We’d be remiss if we didn’t include in our discussion of food retail direct sales by farmers to consumers. More than 167,000 farms now market and sell the food they produce directly to consumers, resulting in $8.7 billion in sales in 2015, according to the United States Department of Agriculture. New England’s farmers, ranchers, and producers do so in a number of ways, including through roadside farm stands, farmer’s markets, and Web-based marketplaces trading in local food.  

The Boston Public Market, an indoor, year-round food hall and marketplace that opened to much fanfare in 2015, features a few dozen regional producers selling diverse products like beer, ice cream, meat, produce, and chocolate. The centrally located BPM has become a centerpiece of the city, attracting both tourists and locals to a space that showcases the region’s rich culinary bounty.

Supermarkets

And finally, supermarkets. Despite all the flux in food retail, that legacy model isn’t dead. Far from it. In some cases, these legacy institutions are, in fact, adapting to changing times. Examples include Albertson’s purchase of New York-based meal kit delivery service Plated, or supermarkets’ expansion to ecommerce.

Technology company MyWebGrocer – whose web marketing division is located within Branchfood coworking community – provides the support and digital platform for traditional supermarkets to enter the e-commerce space.

Cambridge startup Takeoff is working to disrupt the legacy supermarket model. The eGrocery platform has partnered with Austrian robotics firm Knapp to make grocery fulfillment centers more lean and convenient, allowing consumers to quickly pick up food they’ve ordered online or via mobile apps – virtually sans human interaction.

But it could be that the future of large-scale food retail looks like fewer – but more customer-centric – supermarkets. Taking a page out of the Whole Foods Market playbook (whose North Atlantic regional offices are located in Marlborough), local chain Roche Brothers lays out its new stores with comfort and aesthetics in mind and now offers a number of regional foods. Supermarkets are getting leaner and more nimble as well. Stop & Shop, owned by Dutch food conglomerate Ahold Delhaize, has launched Bfresh, a handful of smaller-format food outlets geared toward a younger, more urban demographic in Greater Boston. Despite consolidating two of its Bfresh stores and announcing a rebranding effort, it’s clear Stop & Shop and its grocery counterparts recognize that change is in the food retail air.

With so many Millennial shoppers and their smart phones out there dictating the food retail trends, one thing’s for certain: we won’t be buying our food the way we’ve always done it.

The State of Food Innovation: Life Sciences in Boston

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One cannot discuss food innovation without discussing food science. Scientific inquiry and innovation undergirds nearly every facet of food, from how and what we grow to the nutritional balance of foods we consume, and to the environmental sustainability of what we eat.

Food science is couched within the life sciences: branches of science involving the study of living organisms like microorganisms, plants, animals, and humans. Boston has long been an outpost of discovery in the life sciences, buoyed by the hundreds of top-tier colleges and universities in the region. Many of the prescription drugs bringing healing and comfort to millions of Americans had their start here, and local companies that make them – like Novartis, Biogen, and Genzyme – are making billions in revenues as a result.

But besides Big Pharma, Boston is rapidly – and, perhaps, quietly – becoming a hub for food science innovation. This includes the development of new biotechnology solutions for farmers, cutting-edge nutritional research, gene and DNA research, and several investors funding this work.

Agriculture Biotechnology

As the world population balloons and extreme climate events become more frequent, farmers around the globe seek solutions to better safeguard their crops and increase community food security. The bioengineering of seeds and plants to resist insects and weeds, delay spoilage, or increase fruit size has been occurring for decades – and, some argue, centuries. One of the most exciting frontiers in this space is CRISPR – a fairly new technology that could transform the food we eat by allowing scientists to edit out undesirable traits in the foods we eat, like bruising or early spoilage. (of local note, MIT-based researcher Feng Zheng harnessed this technology for use in mammals)

The genetic modification of the foods we grow and eat has its skeptics, for sure, including those who argue that GM foods are unsafe to eat, harmful to the environment, or result in corporate consolidation in the food system. These critiques must be weighed and addressed. But even as the important conversation around food bioethics continues, we need to grapple with a few facts about biotechnology:

·      Our earliest ancestors were “engineering” crops and animals to increase the yield and quality of their food;

·      70 percent of processed foods today contain some form of genetically modified organisms; and

·      The more we study genetically engineered foods, the more scientists deem them as safe for human consumption. Tim Griffin, associate professor and director of the Agriculture, Food, and Environment program at the Tufts Friedman School of Nutrition, recently was among a group of scientists who spent two years studying 900 publications on genetically engineered foods for the National Academies of Sciences, Engineering, and Medicine. This committee determined that genetically engineered foods pose no health risk to humans who consume them.

In labs throughout Greater Boston, scientists are developing solutions to increase the safety, abundance, and shelf life of the foods we produce and consume. Of particular note is Indigo, a Charlestown-based life sciences company treating agricultural seeds with combinations of naturally occurring fungi and bacteria commonly found in plants. Farmers growing crops on more than a half million acres across the country say these treated seeds are more tolerant of extreme weather like draught, and investors have responded in kind. In 2017, Indigo’s valuation grew to $1.4 billion, making it one of the largest ag-tech startups ever.

If Indigo is fortifying seeds, Cambridge Crops is fortifying mature fruits and vegetables. The Cambridge company, in partnership with MIT and Tufts, created a natural and edible biopolymer coating that, when applied to perishable food, postpones decay by reducing contact with gases and water vapor. Rabobank and MIT announced last year that the startup was among three recipients of the 2017 Food and Agribusiness Innovation Prize for startups, for which the award was more than $50,000.

Ginkgo Bioworks, headquartered in Boston’s Seaport District, which uses yeasts to develop new flavors and fragrances, announced late last year its partnership with biotech giant Bayer on a startup that could replace synthetic nitrogen fertilizers. Some crops, like beans and peanuts, are hosts for microbes that allow the plants to naturally fertilize themselves. Ginkgo and Bayer are bringing these microbes to crops that don’t naturally feature them – like corn, wheat, and rice, which account for more than half of all synthetic fertilizer use – resulting in even more crops that can fertilize themselves.

The local advances in food biotechnology even pertain to fish. Lowell-based KnipBio is actively developing a suite of powerful bioengineering tools to rapidly advance specific desirable traits that make an ideal single cell protein in fish diets, the idea being that we can lessen the environmental strain on wild fisheries.

Nutrition Science & Testing

Americans care a great deal – and increasingly so – about the nutritional value of the foods and drinks we put into our bodies. Buoyed by the health food boom, companies are taking notice, of course, offering products higher in the kinds of good ingredients consumers seek and lower in the ones we want to avoid. But so are scholars and scientists.

Frank Hu, professor of epidemiology and nutrition and chair of the Department of Nutrition at Harvard’s T.H. Chan School of Public Health, has studied the potential benefits of precision nutrition and, specifically, the use of gene sequencing to create a nutritional roadmap for individuals. For instance, using genetic data, personalized diets could be developed for individuals suffering from Type 1 diabetes, who are obese or overweight, and even those who wonder whether they might benefit from regular coffee consumption. (as an aside, the personalized nutrition space has become so promising, food giant Campbell’s has even gotten into the fray, spinning off the startup Habit)

Speaking of investments by big food companies, Nestlé Health Science made a $42.5 million equity investment in Boston-based startup Pronutria, which was initially formed within VentureLabs, the incubator of Flagship Ventures. Pronutria combines a Systems Biology understanding of the human metabolism, with its own library of the food proteome.

Could a computer chip simulate human organs, allowing scientists to test not-yet-developed drugs and foods more safely and conclusively? That’s the central idea behind Emulate Bio’s “Health Emulation System,” which it says opens a “high-fidelity window into the inner workings of the human body.” Early last year, Emulate’s “Organ on a Chip” was tapped to partner short-term with the Food and Drug Administration to see if the technology can stand up to what’s required to evaluate new products.

Consultants & Investors

Life sciences companies working on food and nutrition have plenty of local partners in the funding and consulting world. Consulting firm Lux Research, headquartered in Boston, helps developers and emerging companies understand just what consumers are seeking in terms of wellness and nutrition and keep them abreast of the next big technology and trend coming down the pike.

Local venture capital firm Anterra Capital focuses heavily on food biotechnology, investing in chemical companies enko chem and agrimetis, as well as CRISPR-Cas9 genome engineering firm Caribou Biosciences, plant breeding software LemnaTec, and protein preservation technology bluwrap. And Flagship Venturing, out of Cambridge, is a main investor in Indigo, helping the biotech startup raise $203 million in Series D funding in late 2017. Boston-based DSM Venturing – an arm of the $12 billion science-based company – has focused its portfolio of investments on startups in solar and personal nutrition.

The Future of Food Life Sciences

So much of the innovation happening in food and agriculture has a foundation in laboratories, and as long as Greater Boston remains home to the world’s top scientists discovering new frontiers in top laboratories, the Boston metropolitan area will continue to make an outsized influence on the space.

The State of Food Innovation: Consumer Packaged Goods in Boston

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Consumer Packaged Goods (CPG) manufacturing is a leading global industry. Over the past ten years, food manufacturers have transformed business practices in response to changing consumer preferences. Campbell Soup, one of the largest CPG companies in the world, saw a decrease in profits of almost 20% in the last fiscal year, and is one of many Big Food companies that are experiencing the shift: since 2009, the top twenty-five food and beverage names in the United States lost the equivalent of $18B in market share to startups and small businesses. The entrepreneurs behind these smaller companies create products that reflect changing public values and build trust between company and consumer. Greater Boston has been an unsuspecting leader in CPG since the dawn of the NECCO wafer and cites companies like Schrafft's, Stacy's Pita Chips, and The Boston Beer Company as more recent success stories. Beyond brand, Boston is a place where innovative food product companies continue to launch and grow. 

RESOURCES

The visionary ethos of Boston perfectly complements its historic roots. Kendall Square in Cambridge has been called the most innovative square mile on the planet, and much of Boston’s creative energy goes toward product development for CPG companies. With an experimental kitchen in Fenway, Chew Labs works with food companies both high and low profile to create tastier, more cost-effective CPGs. CEO Adam Melonas explains, “Everyone here has an equal seat at the table. It’s interesting to see the food scientists start to lean on the chefs to direct and guide the taste. And the chefs start to lean on the food scientists to help guide the conversation on stability, technique, and what’s possible, and where we go next.” The unique combination of food and technology found in Boston means the city incorporates both old-world tradition and new culinary innovation into its rapidly developing food scene.

A profusion of commercial kitchens makes Greater Boston an ideal city for startup CPG companies looking to scale manufacturing out of home kitchens. CommonWealth Kitchen, with locations in Somerville and Medford, is one example of these shared community spaces, offering business assistance to aspiring entrepreneurs and strengthening the regional food economy. Smaller kitchens, such as Caroline Huffstetler’s Local Fare and Food Revolution, are able to provide allergen-free workspaces. Foundation Kitchen and Stock Pot Malden offer even more variety to the mix. Many CPG startups, whether they need storage, guidance, or workspace, use these commercial kitchens as a steppingstone as they build their brand and their consumer base.

EDUCATION

One of Greater Boston’s most notable characteristics is its abundance of colleges and universities. Out of these institutions have grown community resources such as the Harvard University i-lab, where Harvard affiliates can participate in a twelve-week program that provides workshops and mentoring sessions about entrepreneurship. The founders of Six Foods, producer of one of the country’s first-ever cricket-based snack, started at the i-lab when they were undergrads before making a national debut. The startup BevSpot is another Boston education success story: founded by students from the Harvard Business School and MIT, the online tool helps bar and restaurant managers track inventory and spending.

Annual events, such as Harvard's public lecture series on the science of cooking, further contribute to the conversation surrounding innovation and food. MIT's Sustainability Summit explores green technology, and the Harvard Food Better initiative hosts conferences which focus on the empowerment of food service employees. Harvard also hosts the Global Food+ Conference, which features top Boston area scholars in a wide variety of disciplines to highlight research findings related to food and its impact on society and the environment.

At Tufts, the School of Nutrition Science and Policy combines the efforts of nutritionists, economists, policy makers, physicians, and many other experts toward the goal of improving nutritional health everywhere. With its Food Sol Program, Babson College focuses similar efforts on a different socio-economic sector through the Cultivate Small Business initiative, in collaboration with the Initiative for a Competitive Inner City (ICIC) and CommonWealth Kitchen. Through Cultivate Small Business, entrepreneurs from low-income backgrounds receive mentoring sessions, the chance to network, and small capital grants.

FUNDS

Local funds including Beechwood Capital, Centerman Capital, and Sherbrooke Capital, to name a few, are providing capital for entrepreneurs to get their businesses off the ground and disrupt the food and beverage industry. The past five years have seen an increase in funds that invest exclusively in this industry, paving the way for transformative businesses, such as Boston-based Yasso and Spindrift, to realize their full potential. Financing reaches beyond local companies, too -- Fidelity and Bessemer Venture Partners invested in New York meal kit service company Blue Apron when it was in its early stages. Fresh Source Capital, which targets high-tech companies dedicated to sustainable regional economies, counts Just Add Cooking among its investments.

PLAYERS

Broadly considered the birthplace of the American Revolution, Boston offers CPG companies a legacy brand recognition unachievable anywhere else in the country. The craft brewery Samuel Adams exemplifies this position: founder and sixth generation brewer Jim Koch debuted his beer on Patriots’ Day in 1985, depicting the founding father mid-cheers in a pose now iconic across the nation.

Beyond history, Boston’s reputation as an durable, revolutionary city is conducive to establishing legacy brands, and consumers respond with enthusiasm to enduring names -- the “What the Fluff” festival, held annually in Somerville, celebrates Marshmallow Fluff as a historic, even traditional food staple in New England, the nation, and abroad. Further to the west, Big Y Supermarkets have been one of the most recognizable grocery establishments in New England since 1936. Stacy’s Pita Chips got its start in Boston, and Quincy-born Dunkin Donuts (“Dunkin’,” “Dunks”) is another iconic brand, its comforting pink and orange logo glow never far from sight.

THE FUTURE

Boston is a city of Millennials, with the highest concentration of 20- to 34-year olds of any populous American city. Values of that generation have already permeated the CPG industry. Sustainability, nutrition, and transparency in sourcing ingredients are three major movements that will continue to affect consumer preferences. Digital spending will also continue to increase, foreshadowed by the recent acquisition of Whole Foods by Amazon, the online retail giant reportedly soon to sign a lease for a space in Seaport.

Investment in small businesses from big names in food ensures a virtuous cycle of innovation in the industry. In this spirit The Boston Beer Company, partnered with small business lender ACCION, provides financial advice and other business coaching to entrepreneurs through their Brewing the American Dream program. As digital spending continues to rise, a high number of niche markets will emerge, fueled by startups. Innovation in the CPG industry and support for small businesses are instrumental in Boston’s role as a national player.

At Branchfood we aim to raise awareness about Boston as a leading food community. This blog post is the first in a series on innovation in Boston’s food and beverage industry. Written by Chloe Barran.