There are more than 9 million people living in New Jersey — and everybody’s got to eat.Nowhere was that more evident than at the inaugural NJBIZ FoodBizNJ event Wednesday at The Imperia in Somerset.
“What changes all of the time are the shares we all get of the ‘Belly Dollar,’ ” Doug Fisher, secretary of the New Jersey Department of Agriculture, said. “That ebb and flow is what keeps all sectors of our industry constantly reinventing themselves.”
The daylong event consisted of educational panels, networking sessions and an exhibition hall with more than 40 vendors to help food and beverage business owners and operators in New Jersey learn new ways in which to innovate.
Food and agriculture — New Jersey’s third-largest industry — currently generates more than $105 billion in economic activity. The state also boasts over 9,000 farms that produce more than 100 different varieties of fruits and vegetables.
“Options (for farmers) today range from selling directly to retailers, directly to restaurants, direct marketing to consumers at farmers markets, selling shares of community-supported agriculture and turning what they grow into value-added product right on the farm,” Fisher said.
Not only is New Jersey extremely ripe for agribusiness and tourism — it also is a desirable location for out-of-state businesses in the food and beverage industry to grow or cut costs, Michele Brown, CEO and president of Choose New Jersey, said.
“As New York companies get (priced) out of the market in terms of real estate, they are migrating to the state of New Jersey because they can produce their goods at a lower cost and still reach all of their markets with the same kind of workforce that they were able to access in New York,” she said. “A truck can get from the middle of the New Jersey to 22 million consumers with more than $800 trillion in disposable income within two hours.”
Distribution and logistics was just one of the many topics covered by the four panels and three breakout sessions presented at FoodBizNJ.
Others included: consumer demographic trends; industry challenges; growing the industry in the state; manufacturing local product; financing for entrepreneurs and strategic growth; food education and nutrition; the rise of food allergies and special dietary needs; legislative challenges; the explosion of breweries, wineries and distilleries in the state; workforce and talent shortages; and innovative agricultural programs and research in tandem with higher education institutions.
Here are some of the highlights:
- “One of the strongest, most longstanding trends we have seen is that (New Jersey) residents want a diverse and plugged-in agriculture. We have heard of (community-supported agriculture); we know farm-to-fork; we have farm visits and ‘agritourism’; and we even have farmers who visit our schools to talk to our kids and help to help change dietary habits. … We also have the most information-driven economy we have ever seen in this country. Consumers have more knowledge of what it is they are seeking and the reasons they prefer it that way.” — Doug Fisher, secretary of the New Jersey Department of Agriculture
- “Lulu Hypermarket is one of the largest supermarkets in India and the Middle East. They are moving here to the U.S. and establishing a presence in the state of New Jersey because they will now be buying American product and labeling it for their consumer base before exporting it from the state of New Jersey to their markets around the world. That is really great for us as a state and will give opportunities to New Jersey food companies to sell their products through LuLu Hypermarket to an international consumer base.” — Michele Brown, CEO and president, Choose New Jersey
- “Trying to attract and maintain the millennial shopper is crucial to the growth of our business. … But if 60 percent of all Napa wines today are sold direct to consumer, I don’t have a product to sell. I cannot compete without a product. So that has caused us to look at other international markets, such as Argentina, Spain and Chile. … We also started local delivery within one hour just a few months ago.” — Gary Fisch, founder and CEO of Gary’s Wine and Marketplace, which has four stores in New Jersey and an online presence.
- “Discount supermarket chains such as Aldi, and this next invasion coming from a Germany company called Lidl, are really starting to gain traction and sales. … There used to be a stigma attached to shopping at certain discount stores, but that all disappeared with the recession in 2008. … Millennials like value, but they don’t like to work for it. They want to go into a store and get the price without having to cut coupons or look for deals.” — John T. Derderian, president and chief operating officer, Allegiance Retail Services, which has about 100 stores in the tri-state area, including brands such as Foodtown and Uncle Giuseppe’s
- “Yes, Amazon is impacting us from a retail perspective; however, they have also roughly 4 million square feet of warehouse space in New Jersey — and it’s not only Amazon, but the whole online infrastructure, such as UPS and FedEx — their need for labor in the state is creating a worker shortage for those of us who want to operate warehouses in the state.” — Cheryl Williams, chief information officer, Wakefern, the largest retailers’ co-operative group of supermarkets in the U.S., including brands such as ShopRite and Fresh Grocer
- “We believe in being authentic and relevant to our consumer by providing quality, nutritious products and going direct to the consumer to learn how to speak their language. … We have to make sure that we have the right product in the right place at the right time — so, efficiency is key. Transportation is such a big cost of doing business that if you ship the produce more than once, you won’t make money.” — Robert I. Unanue, president, Goya Foods, which utilizes direct store delivery based on consumer insights and demographics to provide specific orders that are processed, loaded and delivered the next morning to each store.
- “We understand the need for higher paying jobs, but if we can build the knowledge and the volume within our industry, those wages will be there over a longer term. … Cumberland Dairy is a small, automated processing plant — as the farm community goes away to states like Delaware and Pennsylvania, where will I get my raw ingredient from? I have to stretch further out, which becomes a costly problem for us, too. The farms cannot determine the price of raw milk, so a minimum wage hike would have significant effect on them and also the businesses that they serve.” — Frank Catalana, president, New Jersey Food Processors Association and co-owner of Cumberland Dairy in Rosenhayn.
- “When you look at profit and loss across our members, labor is our greatest expense. The New York and California minimum wage increases to $15, I think, are social experiments. We are asking our legislators to slow it down — we understand that the legislature is raring to come back right now to put the $15 minimum wage increase back on the ballot in 2017 — so, in preparation for this, we hired an economist to look at the numbers. In a supermarket, on average, we pay about $12 an hour. We also offer benefits — so it’s really about $21 an hour. … I just don’t think a $15 minimum wage is sustainable within our industry. Grocery costs alone are going to increase by $280 million and there will be a loss of 17 million working hours.” — Linda M. Doherty, CEO and president, New Jersey Food Council, which boasts a diverse membership of agribusiness, food processors, wineries, retailers, supermarkets, manufacturers and more.
- “Farmers are price takers — we are not price makers. We cannot go out and establish a market price on peppers, for example. We have to take the price that is offered to us — so, we are at a serious disadvantage. … Minimum wage is not something that the New Jersey farmer can add to the price of their products. We are looking for some relief through legislation to offset these expenses because farmers also often provide benefits such as housing and transportation — those aren’t getting computed into the minimum wage.” — Ryck Suydam, president of New Jersey Farm Bureau and a twelfth-generation farmer at Suydam Farms in Franklin Township
- “When you go from $8.38 to a $15 minimum wage, now the prep cook is going to want $20, and the line cook is going to want $24. … We are not opposed to raising the minimum wage, and we have been collaborative — but we have questions and concerns. Do minors need to be paid $15? Is there an opportunity for New Jersey to look at this and have a comprehensive discussion about it? We are indeed an industry of opportunity so, yes, we want to give second chances and first states — but you cannot raise the minimum wage (to) $15 across the board without significant fallout. It is not a black or white issue — there is so much gray there.” — Marilou Halvorsen, president, New Jersey Restaurant and Hospitality Association, which represents 18,000 members in New Jersey from fast food chains to high-end restaurants in casinos and hotels
- “The food industry has changed dramatically within the last five to 10 years. It has gone from an industry about products to being about the experience and the attributes that each product communicates; the social benefits; the story that represents the founders and owner; and whether that product is gluten-free, all-natural, preservative-free, non-GMO, local, sustainable or whatever the buzz words are. … Food has very much now become a social phenomenon and is therefore gaining more value — last year, for example, through 2016 was the highest amount of venture capital put into the food industry in history, up about 30 percent from the prior year.” — Lou Cooperhouse, director, Rutgers Food Innovation Center
- “The global population is expected to grow to over 9 billion people by 2050 — we need to do more with less resources. We have a mission to help cities source food more efficiently and bring the farm to the city at a scale that doesn’t exist currently in the market today.” — Sam Schatz, director of corporate development at AeroFarms in Newark, which builds, owns and operates indoor vertical farms that use 95 percent less water than field-farmed food to grow 75 times the amount of safe, nutritious food without sunlight, soil or pesticides
- “We were able to change an industry that at one point was very small to be one of the forefront industries with exponential growth. … So, if you have been part of a Grow NJ program and it has helped you, tell people. Broadcast it — and if you see (issues) coming down the pipeline and they will be impacting your industry, let people know.” — Tom Kean Jr., New Jersey Senate Republican Leader
- “We recognize that we need to be more proactive — we don’t want to just fill job openings — we need to partner with educational institutions and community organizations and the business community to make sure we are building that pipeline of skilled workers. … Some of our core programs in workforce development are our skills partnerships and customized training grants — since 2010, we have given about 120 grants to companies involved in food manufacturing. We are giving state funds to companies to help them invest in their workers; and there is a one-to-one match requirement. If we provide a grant, the company is expected to provide at least that much money to help contribute to the training of their workers. That’s been an investment of about $10 million of state funds to help make sure that companies have a workforce that are learning the new skills that are necessary to keep you all competitive.” — Aaron Fichtner, acting commissioner, New Jersey Department of Labor and Workforce Development.
- “You will have a recurring need to go back to the well for different kinds of capital. If you can have the discipline and the patience to raise the capital as the business crosses certain key milestones, your ability will be easier and you will be much happier with the terms and conditions. However, you will also be spending much more time raising capital, which may not be the most fun or best use of your time.” — David Reed, director, Fairmount Partners
- “Because we invest so early on, we have to take into account that we are very-high-risk investors. We have to feel that the return will be very high. We want to look at a company and know that will ideally be at least a $100 million business — we have to know that value could be there, even if they are a startup. … So our expectation for companies that are high growth is that they are raising capital every six to 18 months.” — Lauren Jupiter, managing partner and co-founder, AccelFoods
- “There are plenty of investors out there — your business plan just has to be succinct; you have to know what attributes consumers are looking for such as natural, organic, non-GMO; and you have to know which grocery chains you will be successful in. … When they see that you are with certain retailers, other retailers will gravitate to you. You just need an anchor retailer.” — Michael J. O’Donnell, COO, Verisoda
- “If they are not ready for capital, we may stick with them over the years to help them along the way achieve smaller funds or connect with other groups of investors. We started an accelerator program where we have two classes with three businesses in every class — and every year, our service providers work on a pro bono basis to help them grow their businesses. … Our goal is not to invest our money in every business that comes across our desk, but to help find the proper solutions if we are not the right source.” — Andy Unanue, managing partner, AUA Private Equity Partners
For more on the food and beverage industry in New Jersey, be sure to read NJBIZ’s new blog, Garden State Grub!