TerraVia’s incoming CEO gazes into the Future of Food

In the world of consumer adoption, moda means fashion and fashion means change, and TerraVia’s new CEO Apu Mody arrives to warn companies in the food sector that the old days are over.

“The days of companies talking one way to consumers, of the endless debates over ‘how do we educate the consumer?’ are well and truly gone. That game is over. The future of food is savvy shoppers looking for brands that connect with their lifestyle and values.”

Mody should know. Former president of Mars North America. Former Senior VP of Del Monte. These days, thoughtful convert to the ways of the New Nutrition, and an investor in the space. Now, taking the wheel at one of the rock stars of industrial Biotechnology — TerraVia, that has recently focused itself on the nutrition space.

The global issues and challenges

The challenges and opportunities in the food sector are real and numerous. Here are four challenges to think upon, just for starters.

1. Growth. The world population is growing from 7 billion to 9 billion and diets are changing, so there’s a need to double crop production.

2. Waste. At the same time, 25% of food calories and 50% of total food is wasted. And we used to have incredible diversity of diets and crops, but less now.

3. Diabesity. Plus, we have a global obesity epidemic. The Body Mass Index is growing everywhere. 1.4 billion people around the world are obese, and that’s going to cause a national expense, not just a personal outcome.

4. Existential change. Meanwhile, we have climate change threatening crops, fish and livestock, and we have governments more active in regulation — aimed at anything from food to obesity to GMOs.

The Innovation Shift

Why small companies? Why small companies now? Why will big companies simply not pick off trends, as in the old days, and squeeze out innovative brands with big brands that have shelf space, marketing and lower costs?

It’s too much for the big traditional companies, says Mody. What we’re seeing is a fundamental shift in the market that is “driving innovation from the smaller companies not the larger companies.”

Let’s look at how much is shifting. Is it really too much? If so, then what?

US demographic shift

Looking at the US market, the population is growing both older and younger at the same time. That’s a given. As are have chronic health issues on the rise.

But Mody goes further.

“It’s also about growing ethnic diversity, and even the humanization of pets. We have growth in very high and low-income households, we have a kid-centric culture but a large percentage of single parents. All that together is producing an increasingly complex, stress-prone lifestyle.”

The Shifting US consumer

But is a change in demographic also producing a shift in purchasing patterns. We see it here at The Digest. Every day, we track a growing, material preference for authentic products from sustainable sources.

Mody sees it, especially in brand creation.  “Big Food has the cost, distribution and manufacturing advantage, but not the brands. So, there’s lot of acquisition to gain access to the brands. We’ve seen with the major food companies a lot of successful new products and line extensions. But successful new brands have been very difficult.”

He points to a mindset change.

“In the old days,” Mody noted, “there were the USDA food guidelines, and that’s what people looked to. Today’s, there’s more disdain for scientific analysis and science, and what we have is the rising importance of food bloggers, the internet, and peers. Especially around food. Yes, people want information, but it’s also about inspiration and interaction — that’s defining value.  On Instagram, one of the things that gets followed are snapshots of people’s meals.”

Now, here in Digestville, we think of a conversation driven by the new writers as a good thing, accessing information in a new way, and disseminating that information in a more democratic means, via the internet rather than a complex chain of technical journals to food “experts” to television to consumers.

Mody notes the trend but contends that when consumers are engaging, it’s “not always with what we would call trusted sources. It’s a new complex of food and information. Everyone wants to get involved. So, the old definitions are still there. Health, price, taste, convenience. But the consumer is evolving with respect to those definitions.”

The 7 Thens and Nows

Call it Mody’s List of the 7 Thens and Nows

Back then, we had traditional recipes, Now, we see food exploration.

Back then, we had cooks choice, Now, we have eaters choice.

Back  then, we had The Brady Bunch. Now, we have Modern Family.

Back them, we had family recipes. Now, we have a technology explosion.

Back then, we trusted big brands. Now, we celebrate the little guys.

Back then, we ate 3 meals a day. Now, we eat 5-6 times a day.

Back then, it was about health experts. Now, its about information democratization

The New Healthy and the New Choices

Let’s look at some of the emerging brands and the redefinition of healthy. Mody points to five right away as examples of a trend.

“Look at Fairlife, they’ve taken milk and tried to reinvigorate a healthier milk — ulfiltered. There are new wave foods like red algae that tastes and acts like shrimp. And there are Cricket bars and Cricket flour. Consumers now slowly accept things like this. And, there’s Bulletproof Coffee. It’s gained traction with 21-25 year olds. It’s a high-powered coffee with butter, something that we saw in the high-performance athletic world first that crossed over. Look at Thrive, that’s algal flour from TerraVia, which was in the fuels space, but pivoted to healthy fats and proteins.”

The Shopping Shift

Let’s note the buying and shopping change — how we gather information, how we make the transaction. Some of this is driving change because of the new distribution opportunities than new channels offer. More democratic.  Easier to compare using digital tools.

But some of the change might not be for the better. Consider the problem of traditional, physical outlets going away as a transactional medium. So, you chat with the farmer at the farmer’s market, and then buy online to get a better price. Or, you gather information at the supermarket, then buy at a rival such as a SuperTarget or CostCo.

Mody notes the shift. “We see major changes, most notably in convenience. Look at Amazon Fresh, Blue Apron, Instancart, or Nature Box. That’s posing real challenges. Ventures like Blue Apron are totally disintermediating the brand. It’s quite disruptive because we love the convenience.”

And we are in a connected world with changing values and an incredible explosion of devices. One day, when the consumer scans the recipe, the machine will prepare in the way s/he wants and can do it from my smart phone. For now, Chef Jet is developing a 3D printer for food.  Think about that.

And we are not only seeing change  in human food. “We see that 12% of pet food is now sold online,” Mody notes. “And think of this, we now have activity trackers for pets.”

The Food Choices Shift

Then, there’s the role of biotechnology and information technology in driving innovation.

Mody points to Hampton Creek, Kite Hill, Impossible Foods, Real Meat and 640 Labs as examples of “real innnovation in new foods based on biotechnology.”

“But there’s more,” he adds. “There’s Big Data accelerating discovery. Categories are being reimagined.”

The Bottom Line

It’s a time of epic change across the entire spectrum. New choices from technology. An epic shift in Brands and brand introduction. Demographic shift. New devices. Mindset shift from “trust the expert” to food sanctioned through social means. Major changes in health challenges. A broadening of the ingredient palette.

Where’s it going?

Think small.

Epic waves of innovation across so many intersecting lines dictate that big companies, especially those going through traditional M&A cycles and getting bigger rather than smaller, will dabble in innovation but recognize ultimately that the role of the Big Company is to Buy the Winners, after seeing what gets traction in all this innovative soup.

So, it may well be a more exciting time for small companies than ever. But they’ll feel more stressed about managing their way through so much change — so, think epic rise in stress levels, as short cycles of investor patience and changes in devices and consumer preference prove as hard to catch as neutrinos.

We expect to see the companies as excited and confused as consumers are in this radical era of shift. It’s the Decade of Living Dangerously, for sure. But not eating dangerously.