Moving Beyond Plastic: National Co+op Grocers Program at Expo West Explores Packaging Alternatives
This article originally appeared in Presence Marketing’s April 2022 Industry Newsletter
By Steven Hoffman
What are the pain points, and where have manufacturers, distributors and retailers made progress in finding sustainable alternatives to a world awash in non-biodegradable plastic packaging waste? That was the topic of conversation at a recent panel held on March 10, 2022, at Natural Products Expo West in Anaheim CA, co-hosted by National Co+op Grocers (NCG) and Presence Marketing.
The natural products channel, like most, has embraced plastic over the years for its obvious benefits: it’s durable, lightweight, versatile, cost effective and helps lengthen shelf life and ensure food safety, among other attributes.
However, much plastic packaging is designed for single use, and as such, according to data collected by the Environmental Protection Agency (EPA), 69% of plastic packaging ends up in landfills or the ocean. The rate of recycling of PET bottles and jars was 29% in 2018. Same for HDPE containers – only 29.3% of these containers were recycled. In the U.S., plastic products generation increased by 4.3 million tons from 2010-2018, due in large part to an increase in plastic packaging production. After food, plastics are the second-most-common type of materials to be sent to a landfill, according to the EPA. The issue is of such concern that National Geographic warned that the amount of plastic trash in our oceans is expected to nearly triple to 29 million metric tons by 2040, unless society takes drastic action.
In striving to take the lead and set a positive example, NCG identified a number of advocacy initiatives for the organization and its members, including promoting waste reduction and alternative packaging at the manufacturer and distributor level. In particular, NCG works with industry partners to research and provide the most environmentally friendly options possible in NCG programs and services, including tangible items such as branded packaging, to help reduce plastic packaging in the waste stream, according to the co-op organization’s website.
In this panel, hosted by Heidi Traore, Supplier Relationship Development Manager for NCG, and Milton Zimmerman, EVP of Presence Marketing, and moderated by Steven Hoffman of brand marketing and PR agency Compass Natural, the following industry leaders offered their insights, and highlights of their responses are below.
Alyssa Harding, Packaging Collaborative Director, One Step Closer, and Senior Consultant, Anthesis Group
Blair Kellison, CEO, Traditional Medicinals
Ricardo Perdigao, CFO/COO, Sambazon
Dave Pirazzini, Director of R&D, REBBL
Q: Where do you believe the pain points are for most brands in terms of their packaging?
- Alyssa Harding: “Companies are successfully reducing the amounts used for their product packaging, but rather than reinvesting the saved money on further R&D, many are keeping the money as profit. It is important for longer term profitability and sustainability to take your saved money and reinvest it back into research to find sustainable packaging solutions.”
- Blair Kellison: Everything in life is possible, and we need to focus our resources on sustainable packaging. However, to the extent that ultimately economics is going to be a factor in driving this movement.”
- Ricardo Perdigao: “Reducing waste and solving the current issues in product packaging cannot be corrected with just one solution, but the combination of many solutions across the supply chain. Changing the established manufacturing system and concept is one of the biggest challenges. As business leaders, you believe in something and you go after it. Our beliefs lead us to sustainable packaging.”
- Dave Pirazzini: “Manufacturing lines are full, so it can be difficult to find manufacturers to take the time and work with you on a perfect sustainable solution. Additionally, companies have confusion on the best materials, what is most recyclable, etc. For example, Tetra packaging is a solution, but only 55% of facilities in the U.S. can recycle it.”
Q: How is your company researching and making packaging materials reductions?
- Alyssa Harding: “There are opportunities to use less materials and remove unnecessary parts of your packaging while still being effective and appealing to consumers.”
- Blair Kellison: “Traditional Medicinals has been working on a sustainable packaging overwrap for the past six years. This is still in progress. Once completed, the company will begin using compostable overwrap.”
- Dave Pirazzini: “Control what you can. REBBL reduced the amount of corrugate in its packaging with no negative effects to its product packaging or presentation.”
- Ricardo Perdigao: “If we can make things from plants, and turn them back into plants, that is a promising solution we are exploring.”
Q: What has been a success in your packaging journey?
- Alyssa Harding: “The opportunity through One Step Closer to offer sustainable packaging expertise and counsel tailored to a number of mission-based natural products companies.”
- Blair Kellison: “Recycling aside, let’s just not produce waste to begin with. Last year in 2021, Traditional Medicinals got zero waste certified.”
- Ricardo Perdigao: “First, set an objective, track progress, and work toward that objective. In its bowl products, Sambazon successfully converted its packaging to paper and plant fiber. The company is ahead of schedule on achieving ‘zero waste’, and 70% of its products are recyclable.”
- Dave Pirazzini: “REBBL changed its practice to shipping flattened empty bottles to our manufacturing plant, therefore reducing having to ship amounts of the larger, empty blown bottles. We started blowing the bottles on our own manufacturing lines; blowing bottles is when the plastic bottle shape is formed to be ready to fill.”
Q: What can retailers do to help?
- Alyssa Harding: “Cut out waste in the deli and bulk section, and reduce/eliminate single-sized plastics available in the store. Run an analysis of your store and locate your largest materials of consumption and begin your project right there. Start with your own footprint, and then move to helping the brands that are carried in your retail store.”
Blair Kellison: “If we have lost the business of our co-ops, we have lost our business model. We must work together to make progress on such a significant issue.” – Blair Kellison
- Ricardo Perdigao: “Consult with your business partners, express your objectives, and work together to succeed with sustainable packaging for your brand.”
- Dave Pirazzini: “If we are all truly mission driven and strive for sustainable packaging to better the industry, we should share our successes and help each other to succeed in this movement.”
Q: Closing comments
- Alyssa Harding: “Your company can be philanthropic, while also being profitable.”
- Blair Kellison: “We don’t just talk the talk; we want to walk the sustainable walk. To be a truly responsible business, we manage and measure our environmental impact and strive to minimize our footprint. The old adage ‘You can’t manage what you don’t measure’ is really true in our experience.”
- Ricardo Perdigao: “The most powerful marketing is your people. Hire a staff with similar values. Have your whole company telling people about the importance of sustainable packaging. Word of mouth is important.
- Dave Pirazzini: “As manufacturers, retailers and industry members, this is an important conversation in which we all must engage. I feel like I got as much out of this panel as the audience. It was great for me to learn about what other companies are doing with their sustainability initiatives.”
Resources: Learn more
One Step Closer to Zero Waste: https://osc2.org/zerowaste/
National Co+op Grocers Advocacy Initiatives: https://www.ncg.coop/advocacy-activities-national-coop-grocers
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Natural Products Industry Prepares for a Post-COVID Future
By Steven Hoffman
This article originally appeared in New Hope Network’s IdeaXchange and Presence Marketing’s May 2020 newsletter edition.
As the nation continued to battle the COVID-19 pandemic in April, with confirmed cases in the U.S. reaching 1 million and deaths from the disease surpassing 55,000 (more than the total number of U.S. casualties in the Vietnam War), the natural products industry, along with the mainstream food industry, found itself firmly on the frontline of the coronavirus crisis. In helping to keep food on America’s table during an unprecedented time of turmoil, sadly, this came not without some illness and casualties of its own among workers in natural foods stores and in mainstream groceries.
The month also saw farmers dumping tons of eggs, milk and fresh produce bound for restaurants, hotels, schools and other food service operations that were shuttered – product that couldn’t be re-routed – while frustratingly, grocers across the country were still struggling to keep product on the shelf as supply chains were further strained. Food banks, too, experienced long lines and shortages of staple products due in part to the demands of a record 26.5 million Americans who have filed for unemployment since mid-March.
Yet, among a bunch of bad news, retailers, distributors, manufacturers and others in the natural foods industry continued to pivot and do everything they could to serve and protect customers, minimize risk to workers, ensure inventory and respond to ever-evolving local, state and federal guidelines and shelter-in-place rules.
First, in response to a worrying number of employee illnesses, many grocers are now requiring that all workers wear face masks, though they, too, are having to compete with the federal government, hospitals and others to procure scarce Personal Protective Equipment (PPE). In addition, the United Food and Commercial Workers International Union (UFCW) along with Kroger, Stop & Shop and others, issued a joint statement on April 27 calling on federal and state governments to designate grocery store employees as “extended first responders” or “emergency personnel.”
“We are urgently requesting our nation’s state and federal leaders temporarily designate these workers as first responders or emergency personnel,” the joint statement said. “This critical status would help ensure our essential grocery workers have priority access to testing, emergency childcare, and other protections to keep themselves and their families safe and healthy. For the sake of workers, their families, and our nation’s food supply, this action will provide grocery workers with the vital protections they deserve.”
Responding swiftly to the lack of PPE for natural foods employees, Presence Marketing worked with one of its brand partners to manufacture face masks and other protective gear to provide to industry partners in manufacturing, distribution and in stores, “plus we’re working on a retail pack for consumers,” said Christine Tzumas, COO of Presence Marketing. “Our field team has been on the front lines from the beginning of this crisis working fast and furious to serve our customers in any possible way, from helping unload trucks when they show up at the dock to lending a hand stocking store shelves,” she said.
“The biggest thing for us right now is communication – we’re communicating everything going on as quickly as possible,” Tzumas continued. “Our brand partners have been receiving weekly, fact-driven COVID-19 updates, and the response has been so positive that we want to continue it in some fashion. While we’ve been dealing with this crisis, we still can’t lose sight of what’s on the other side and what the world will look like six months out from now. Hopefully, we will be moving beyond this. Our team has blown me away every day making sure to get food on the shelves – we’re blessed to be with the people and companies we work with. You don’t hear those same stories in other industries,” Tzumas added.
Phases of a Crisis
According to natural products market research firm SPINS, we’ve seen three distinct phases in terms of consumer shopping behavior since the coronavirus crisis hit the U.S. in late February. Also, with restaurants and other out-of-home dining options accountable for roughly half of all food expenditures, with their abrupt closure, demand doubled overnight for the nation’s grocers.
By late February, consumers who had an early read on the coming pandemic were responsible for big upticks in sales of preventive care products in natural foods channels, including vitamins, dietary supplements, probiotics, and herbal and homeopathic products. This was what SPINS refers to as Phase One: Proactive Self Care and Wellbeing, according to Kathryn Peters, EVP of Business Development for SPINS, in an April 21 webinar presented by New Hope Network.
“During the weeks of February 16 and 23, when there was still just a small number of confirmed COVID cases in the U.S. and the problems in China still seemed a bit far away, there was an early band of proactive shoppers beginning to stock up in key immunity-related categories beyond the regular cold and flu season type of products. That was when self-care items also started to pop, such as hand wipes and sanitizer. By late February, people were beginning to have a hard time finding hand sanitizer in stores,” she observed.
To provide some perspective, when Phase One began, “from just the previous week, we saw some extraordinary increases in a number of areas for the week ending February 23,” Peters said, noting a 1,285% increase sales of vitamins and supplements and a 211% increase in herbal and homeopathic products sales.
“We all know what Phase Two looked like – during the weeks of March 15 and March 22 – this was the mass stock up,” Peters continued. “During this ‘Pantry Prep & Loading’ phase, virtually everything sold.” Peters noted that during this period, 15 million additional buyers bought natural products. “That is a substantial number of products being bought by shoppers that are now in pantries. Time will tell if they will become continued shoppers; hopefully, there’s been a lot of trial,” she said.
April began Phase Three: Quarantine, according to SPINS data, with upticks in sales of baking mixes, pastas and spa-related items as Americans hunkered down at home and did their best to cook for their families, and pamper themselves while not being allowed to visit salons, massage therapists or other service providers. “Households seem to be bonding over baking, whether it’s bread or desserts – Instagram is full of proud creations,” Peters said.
The New Normal
“And then there’s Phase Four – what life is going to look like on the other side,” Peters said, noting that there will be some lasting shifts in consumer behavior in the “new normal” once the health crisis subsides. With consumers homebound, re-connecting with cooking and seeking more prepared food options, grocers are being presented with an opportunity to capitalize on providing mealtime solutions – something they were having difficulty with before.
Organic produce, too, experienced a resurgence, recording a 22% sales jump in March and an 8% increase overall for the first quarter, outperforming conventional produce sales, according to the 2020 Q1 Organic Produce Performance Report published by the Organic Produce Network and Category Partners. Growth may have been even higher, but was tempered by widespread out of stock conditions during the panic buying period in mid-March. “Organic fresh produce sales in the first quarter were strong, and the impact of COVID-19 in March pushed numbers even more,” Matt Seeley, CEO of the Organic Produce Network, said. “We continue to see organic fresh produce sales outpace the dollar and volume growth rate of conventional fresh produce.”
Another lasting trend will be a continued focus on proactive self-care and personal safety – immunity supplements cleaners, wipes, masks and other related household items will continue at a high level. Also, “while comfort foods are important, we are seeing growing recognition of healthy and nutrient dense food, too. This comes with consumers’ increasing recognition that our body’s immune system is the best line of defense. Even with economic pressures, we see this continuing. We believe that this unfortunate health crisis will be a bright spot in continuing to bring health and wellness even more mainstream,” Peters of SPINS said.
“We are very concerned about those negatively economically impacted by the coronavirus crisis. If there’s one major tectonic shift, it is the march toward more and better value product offerings to lower barriers of entry from a pricing standpoint,” said Ben Nauman, Director of Purchasing for National Co+op Grocers (NCG). Nauman noted that sales in March for its retail members were up nearly 30% compared to March 2019 sales.
NCG has been helping its members coordinate distribution and supply chain issues, take advantage of government stimulus programs, and currently, it is reinvigorating a recession playbook created in 2008 to help members manage cash flow and liquidity during economic downturns. “We’re also beginning to explore what it looks like to retail in a more contactless way going forward,” Nauman added.
For Sprouts Farmers Markets, a publicly traded natural foods retailer with nearly 350 stores and 30,000 employees, “due to our brands and distributor partners, we are in good stock level considering how high our sales are, and our customers are recognizing how good we are about being in stock,” noted John Soukup, Senior Category Manager for Sprouts. The company recently expanded curbside pickup and Instacart service to all its stores. “In addition, we have been very proactive in implementing measures to help our employees feel as safe as possible,” he added, noting that all employees are required to wear masks and gloves chainwide, the stores have installed sneeze shields in all checkout lanes, and store hours have been reduced to allow for deep cleaning. In addition, “we’ve offered bonuses to our employees instead of hourly increases. However, our leadership is doing a good job in compensating – we’ve already given out two to three rounds of bonuses to the front line employees in the warehouse and in the stores,” he said.
Soukup also expressed concern about the manufacturing sector as the health crisis wears on. “We are starting to see SKU rationalization – vendors are having to prioritize what items they’re going to make. That’s going to ramp up over the next four to six weeks that could cause other out of stock issues,” he said. To help counter that, “we communicate daily with our distributors and just about weekly with our vendors. In this unprecedented time, our primary distributors, KeHE and UNFI, have done a phenomenal job. The broker community, too, including Presence Marketing, has done a great job for us in terms of serving as a liaison between the brands and what’s going on in the stores.” In times of crisis, “you understand who your partners are pretty quickly,” Soukup added.
Distributors See Fundamental Shift in Demand
At UNFI, one of the nation’s leading distributors of natural products, EVP of Supplier Services John Raiche has noted some big changes as a result of the pandemic. “The big difference between April and March is we’ve seen a fundamental shift in demand as students come home from college, people are staying home, and the food service expenditure is gone. The infrastructure was not designed to handle a sudden shift of that magnitude,” he said. While retailers are no longer placing such massive orders, there was a period of time at the end of March where on some evenings orders coming in were 400% of capacity, Raiche noted. UNFI, which also has placed a large focus on worker safety and incentives, hired more than 1,500 people since the beginning of March.
For Raiche, flexibility and communication are key right now. “We are trying to be as flexible and creative as possible with our suppliers on purchase orders, and we are trying to communicate with the industry and reach out to suppliers to share with them what we see, to offer to work with them, and to provide updates in terms of demand and opportunity,” he said.
“For the team here internally, from receivers and collectors to drivers and the supply management team, there’s a real sense of purpose. People are open to working longer hours and doing whatever is needed. We’re spending a tremendous amount of time thinking about what the future holds, Raiche shared. “When it started, many people were thinking it would be like a light switch. Everything I read is that any transition back to normalcy will take place over a good amount of time. For our manufacturers, this demand is not going to go back to the old normal anytime soon.”
At KeHE Distributors, “our first priority is the safety of warehouse associates, professional drivers and in-store sales reps – the ones that are so important, the critical essential workers in this situation, said Scott Weber, EVP of Merchandising. “Our second priority is servicing retailers and suppliers to try to keep up with unprecedented demand. We’ve developed partnerships with food service distributors to align all our capacity to meet the massive demand in our industry. The third priority is giving back. Through our KeHE Cares philanthropic program, we are supporting those most affected by the COVID crisis.”
Weber added that while it may be a difficult time to introduce new products, “our overall category management and merchandising team remains heavily focused on innovation because we know that when those retailers get back to new items and category reviews, we’ve got to have a robust line to offer.” As such, KeHE revamped a “Trend Finder” event, originally scheduled for Natural Products Expo West, into a virtual event in order to meet with new suppliers. “The most important thing right now is working with our suppliers to ensure we have the flow of inbound product to KeHE that enables us to serve our customers,” he said.
Blair Kellison, CEO of Traditional Medicinals, a pioneering manufacturer of natural and organic teas, remarked that sales of tea in grocery was up 41% in the last month – “unheard of!” he exclaimed. Kellison often comes to work at 6:00 am to stand in the parking lot “just so I can say thank you to our workers,” he said. “If the workers are coming here every day, I should be here every day. These 120 workers are keeping our entire company going.”
Customers Name Seven NCG Co-ops as their States’ Top Independent Grocers
Photo: Pexels
Originally Appeared in Presence Marketing News, February 2020
By Steven Hoffman
Using data from Yelp and Google Trends, market research firm 24/7 Tempo recently released a ranking of top supermarkets and grocery stores in each state. In seven U.S. states, customers ranked retail food co-ops, all members of the National Co+op Grocers Association (NCG), as their favorite independent grocery stores, reports the National Cooperative Business Association (NCBA). “Unlike corporate grocery chains, food co-ops are totally independent and owned by the community members who shop there. Instead of focusing on investors, food co-ops focus on providing fresh, healthy food for shoppers, creating sustainable jobs for employees, building a strong regional food system for everyone, and giving back to their community,” said C.E. Pugh, CEO of NCG, told NCBA. “It’s no surprise that so many shoppers appreciate the value of their community-owned food co-op, but few industries are as competitive as the grocery business, so that makes us especially proud of our member co-ops achieving these hard-earned rankings. It’s a true testament to our co-ops working diligently to serve their members and communities, and toward the day when everyone has the fresh, healthy food they deserve,” she added. Customers voted the following seven retail food co-ops as their favorite independent grocery store.
• Alaska: Co-op Market Grocery & Deli, Fairbanks
• Maine: Portland Food Co-op, Portland
• Nevada: Great Basin Community Food Co-op, Reno
• New Mexico: Mountain View Market, Las Cruces
• North Carolina: Tidal Creek Cooperative Food Market, Wilmington
• Tennessee: Three Rivers Market, Knoxville
• Vermont: City Market/Onion River Co-op, Burlington