1. The Foundation of a Successful Food Business

2. Your Product is Great, but… It takes a great product and a compelling business opportunity to survive and thrive. Data helps you do this.

3. Data Requirements for Your Business Macro trends in food Target customers Target geographic markets and channels of distribution Customer feedback on your specific product, packaging, labeling, positioning Competitor products Business benchmarking and financial metrics

4. Trends, Conventional Wisdom,& Business Opportunities Local food is better for the environment – 2015 USDA ERS Report on Trends in Local Food http://www.ers.usda.gov/media/17 63057/ap068.pdf Local food is better for the economy – Freakonomics – The Hidden Side of Everything - http://freakonomics.com/2011/11/ 14/the-inefficiency-of-local-food/ Environmentally sustainable farming always lowers food production - https://www.fieldtomarket.org/fiel dprint-calculator/ https://www.fieldtomarket.org/fiel dprint-calculator/ Millennials are the key to food company success

5. The Lifecycle of Brands is Accelerating

6. Local / Artisan Saturation

7. The 100,000-Foot Opportunity in Food May not be Local # 2014# 2013CompanyHQ CountryDairy Sales (Billion USD) 11NestleSwitzerland$28.3 22DanoneFrance$20.2 33LactalisFrance$19.4 44FonterraNew Zealand$15.3 55FrieslandCampinaNetherlands$14.9 66DFAUSA$14.8 77Arla FoodsDenmark/Sweden$12.5 89SaputoCanada$8.8 98Dean FoodsUSA8.6 1012YiliChina$7.6 Rabobank, “Global Dairy Top 20”, 9 July 2014.

8. Why Consolidation? The Industry Dairy markets in developed world are mature – 3% annual growth Higher growth rate only possible through acquisition Industry still fragmented below top 20 Rise of the Chinese/Asian dairy consumer The Financial Climate 124 dairy acquisitions in 2014 – historic high Food investments performed comparatively well in recession Money for acquisitions is cheap Expect slowdown as the number of targets is shrinking and multiples are rising More joint ventures The data are similar in all food sectors. What does this mean for your business?

9. Trend Data Sources - Trade Association Reports Organic Trade Association (OTA) Industry Reports https://www.ota.com/resources/market- analysis https://www.ota.com/resources/market- analysis International Dairy Deli and Bakery Association (IDDBA) “What’s in Store” and Industry Reports http://iddba.org/store/Product.aspx?Produc tId=101 http://iddba.org/store/Product.aspx?Produc tId=101 National Restaurant Association Industry Reports http://www.restaurant.org/News- Researchhttp://www.restaurant.org/News- Research Specialty Food Association Knowledge Center https://www.specialtyfood.com/knowledge- center/ https://www.specialtyfood.com/knowledge- center/ The Progressive Grocer - http://www.wholefoodsmarket.com/compa ny-info/investor-relations/interactive-data

10. “To a worm in living in horseradish, the world is horseradish”

11. Where to go to find ideas for your “perfect Pepsi's” The biggest industry trade shows are still the most efficient way to do this Natural Category – Natural Products Expo West http://www.expowest.com/ew16 /public/enter.aspx Gourmet/Specialty Category – Fancy Food New York https://www.specialtyfood.com/s hows-events/summer-fancy-food- show/ Mainstream Retail – IDDBA http://www.iddba.org Food Service – National Restaurant Association, Chicago- http://show.restaurant.org

12. Defining Your Target Customer http://www.lohas.com http://www.experian.com/marketing-services/eating-habits-segmentation.html http://adage.com/article/news/psychographics-taste-beer/140106/ https://segmentationsolutions.nielsen.com/consumeractivation/Default.jsp?ID=quic k-market-solutions&menuOption=learnmore You can’t sell expensive products or products that are inconvenient to use to people who aren’t motivated enough to buy them. Focus on segments that are already motivated.

13. The Locavore’s Dilemma Take grass-fed beef… 568,593 - 2010 Madison Metro Region Population 240,343 - 2010 City of Madison Population 58.4 lbs/yr per capital consumption of beef 14,036,031 lbs/yr market in Madison 3% of beef consumption US = grass-fed 421,081 Lbs/yr; 7210 people = Madison grass-fed beef market 580 lbs/animal average yield 726 animals/yr – 29 local herds of 25 animals 60% of beef consumed is ground that can come from dairy culls so number of beef herds significantly less 15 animals/day – rate small scale slaughter 48 days of slaughter/yr A market the size of Madison is not large enough to sustain many economically viable local food businesses.

14. Your Target Consumer - Geography Where do your target customers live? How do they buy your product? Who distributes products like yours in your target markets? How can you get to enough of them to build a viable business? Your best target markets may not be local or even regional. The largest markets for high quality, high priced foods are on the coasts. The best markets for nutritional supplements are on the west coast.

15. Positioning Versus Competition – Features and Benefits Strong brand recognition, higher quality, certifications, & higher promotional spend support higher prices. Different target markets value different product attributes differently. To compete, local food companies have to have premium products.

16. Getting Direct Feedback Consumers Sell at farmer’s market Do product demos in stores Use student focus group opportunities Buyers Talk to store buyers Talk to category buyers at distributors Talk to brokers from target market Give samples to chefs and get their feedback

17. Keys to Effective Customer Feedback Do this in your target market NOT in your home market Enlist impartial help to conduct interviews and/or focus groups– local College, University, Tech school students taking business school classes, local marketing firms Ask a few open ended questions and LISTEN Get feedback on your product, packaging, label, and competitor products Give people options to try, best case in a venue where you can sell your product to them Always include pricing as part of the testing of your value proposition

18. Buy Brand-Level Data It’s THE BEST business investment you’ll ever make: SPINS http://www.spins.com/applications/reporting- analytics/ - Specialty, natural, organic brand level data by category, geography, distribution channelhttp://www.spins.com/applications/reporting- analytics/ Food Marketing Institute – Industry wide data http://www.fmi.org/research-resources/fmi-research- resources http://www.fmi.org/research-resources/fmi-research- resources MINTEL – Worldwide market research data - http://www.mintel.com/food-market-research http://www.mintel.com/food-market-research Whole Foods http://www.wholefoodsmarket.com/company- info/investor-relations/interactive-data http://www.wholefoodsmarket.com/company- info/investor-relations/interactive-data

19. How to Leverage Your Data into a Compelling Business Opportunity Quantify your business plan – who you are going to sell what to, how much, where, and at what price. Use competitor matrix to hone your value proposition and your pricing. Set quantitative goals for how big you need to be to become profitable and to reach positive cash flow. Manage your business to quantitatively exceed these goals. Numbers are the language of business. Using data enables you to speak persuasively to lenders and investors, while driving you toward building a profitable business.

20. Questions?