Tom:                            Kentucky native — Lexington native, in fact — Brian Lawless is the business development manager for Alltech in North America. His passion is discovering and delivering solutions for the sustainable nutrition of plants, animals and people. His topic at this year’s ONE17 conference has to do with people in general and what’s been happening to the way we dine in particular. We thank you for joining us, Brian.

Brian:                          Glad to be here.

Tom:                            Let’s begin with a broad question: What’s the role of food in culture?

Brian:                          We ask the question, “How should we think about food? What should we look at in regards to food?” Alltech is an animal health and nutrition company. So, the basic answer is to say, “Oh, it’s nutrition. That’s where it is.” But if you look at the Latin word for “nutrition,” it also means “to nurture.” The question I ask is, “Is the way we produce food actually nurturing society, nurturing culture in such a way that we can grow?” That’s been fun for me to look at.

Tom:                            The shared family meal used to be a given. It was an ideal. Breakfast and lunch have always been a little “iffy” because of daily schedules, but suppertime has, for generations, been a family’s chance to sit down and break bread together while catching up on the day. What happened to that tradition?

Brian:                          It’s not going so well. For the last 20 years, we’ve seen a 33 percent decline in family meals. I have often heard people say, “I have sports to get to,” if they have kids, or, “I have a job.” You may have both parents working. You have all these situations where food then becomes an afterthought. Then we go back to the question of if we’re nurturing. If we’re eating, we may be eating in the car, and that’s probably the culture we see right now. We’ve gone from being a very communal food culture to very much an individual food culture. I think that’s a challenge because that isolates and separates the way we eat. I don’t think that’s the intent — it’s not the way we were supposed to eat.

Tom:                            As we move away from nightly gatherings around the table, what’s been the social impact on kids?

Brian:                          For kids, it’s big. From a timing standpoint, if we dial back 60 years, a meal took 90 minutes. You’d get there. You’d set the table. You’d sit down with your family. Today, the average time spent on meals is about seven to 11 minutes. I think the biggest thing we’re missing is the ability to connect. There are obvious effects, for example — and data supports this — that kids who get a meal with their parents three or more times a week are 40 percent more likely to do well in school. They’re likely to eat more vegetables, drink less soda, have a more balanced diet in terms of sodium and fat, and are less likely to engage in high-risk behaviors like drugs or tobacco. So, all this science is saying that, while eating with your family is not a direct connection to these factors, it has a significant impact overall.

Tom:                            Even when we’re together these days, smart devices have a way of interfering.

Brian:                          They do. I would say you need to be conscious of what’s going on. I’m a millennial. I use technology. I engage with it, but I think we need to make that choice to say, “Hey, not during a meal.” When you’re with a friend getting a meal — whether at home or out at a restaurant — either leave the phone in the car, set the phone face down or do something so technology is not in the way. I really think there’s a power in actually connecting, telling stories and actually engaging with what’s going on. You can’t get that with social media. You can’t get that with a phone or a TV.

Tom:                            I think you just touched on this a couple of minutes ago, but let’s drill down into it. Are we eating alone more frequently, and what are the consequences of that?

Brian:                          We absolutely are. Forty-six percent of all adult meals are eaten alone. I think we’re a part of what I would call a “metanarrative” in our food industry. The food industry is telling us that food needs to be convenient — it needs to be available anywhere, anytime. The way we think about food is in terms of efficiency: How quickly can I go from a state of being hungry to a state of being full? Then, during that time, how can I be entertained? Can I watch TV? Can I look at my phone?

                                    All that because we live “busy lives.” And, frankly, I don’t like that. I think that’s where the narrative is trying to drive us. The thoughts I’ve had lately are about how we engage with that narrative and engage with it in a different way — rewrite that narrative because I believe we have a choice.

                                    This convenience has actually left us with more options. When food is convenient, it means other things are convenient. When things are efficient, it means you can then choose to engage with other things in a different way. I’ve really been trying to process this: Okay, what does that look like? I think there are both unintended consequences and unexpected opportunities that come when you actually engage with food in a way that is nurturing as opposed to just nutritious.

Tom:                            How about the meal-bundling concept? I’m thinking of Blue Apron or HelloFresh, which have brought back the possibility of being able to work a full day and come home tired but make a meal conducive to bringing everybody around the table. Have those options made a big difference?

Brian:                          They have. I think it’s a great step. It’s probably not the ideal compared to the pinnacle of going to the store, picking something and taking it home. But if that’s not a reality, I think something like Blue Apron is a great alternative because it allows you to get home. It uses technology. It uses convenience, now in a way that’s advantageous and allows you to connect with someone.

                                    I think that goes back to that communal language of saying, “Look, I’ve cooked this. I’ve prepared it.” There’s another unexpected opportunity that comes with services like Blue Apron: Say you get this great marinated chicken and you completely burn it. That’s not good. All of a sudden, as you serve it, you have a story to tell. You say, “Hey, sorry, I’m going to learn how to cook this better next time.” I think those are those are human moments. That sometimes gets lost when we isolate ourselves and just get fast food.  

Tom:                            As you also mentioned earlier, we know that the fundamental purpose of food is sustenance, but we have made much more of it. Haven’t we? In light of that, does it appear that we’ve lost the point of food altogether?

Brian:                          How we’re structuring our food culture and the way we’re producing food essentially takes people out of the equation. And what I mean by that is, the way that we’re feeding our animals, we’re applying those same principles to people. I think we spend so much time and care in producing animals. I met a beef producer just over the weekend — Tim White. He’s a producer here in Central Kentucky with his own cow/calf operation. He says, “For a year, I look after these animals and I give them my best care and I ship them off, they go to their feed yards, then get processed and end up in hamburgers.” To me, I was hearing that he takes so much care of the animals and the food that is processed — let’s not just stumble right before the finish line when we eat it. In other words: It gets processed, then packed, then shipped to the grocery store. What do we do from there? There’s a moment in that final phase before eating when I think we need to focus on how we get that right.

Tom:                            That brings to mind a pretty prevalent Native American tradition of honoring the meal that you’re about to consume for that reason.

Brian:                          Yes. That was always a big deal for me because of my family. I’m from Central Kentucky, but my mom’s side of the family is from Rhode Island. When we would visit them — they’re French Canadian — we would eat meat pies. For me, that wasn’t part of my particular food culture in Kentucky. It was my mom’s. It was my family’s. It was our family’s culture and tradition. I learned something: It wasn’t about the food itself, but it was about our culture, our family. It’s what brought us around the table. To me, more than anything, it signified that we’re family when we ate that. Again, when we go from this communal to individual culture, that’s lost.

Tom:                            What would you say is the upside to being honest with ourselves and recognizing current trends, which have taken us away from the family dinner table? Being honest about recognizing it, what shall we do about it?

Brian:                          Someone once told me that when you talk to people, you also learn how to talk to yourself. I think there’s a weird process that happens. When you go to the kitchen table, you can’t hide anymore. You’re sitting down. There’s no leaving. And I think that allows us to learn how to engage with tension, even within the current political structure and current social structure. I think sometimes we pin ourselves in these sides on social media. We hide behind the “walls” of our screens. But when we bring it to a table, all of a sudden, the tension and the ability to connect — all these things that are both difficult and good become opportunities. I think that’s what sometimes gets lost, and I think that’s the opportunity that we can recapture with food and we can bring it together.

Tom:                            If you had to pin it down, what would you say about this work you most enjoy?

Brian:                          When I think about food, I think about kitchen tables. When I think about kitchen tables, I think about the people around kitchen tables. And for me, I’m passionate about people. My grandfather raised beef cattle just outside of Danville and Hustonville, Kentucky. Working with Alltech, being able to say, “Hey, it’s funny — my life took me in a different direction.” I studied business and economics. But I’m still engaging in the world of agriculture. I feel like in some ways I’m back in the family business, and I’m really proud of that.

                                    I love my family and I get to engage in something that my family has done forever. It makes me passionate. It makes me excited about it. It makes me want to do a better job. When I see these technologies and opportunities, I know that we can make changes for the better. I love seeing the ability to use technology in a way that allows better food to be put on the table, that allows people to connect around that table. And for me, that’s amazing.

Tom:                            Brian Lawless is business development manager for Alltech North America. Thank you so much.

Brian:                          Awesome. Thank you.

Tom:                    As a registered dietitian/nutritionist and a nutrition solutions specialist at Alltech, Nikki Putnam helps farmers and producers apply the lens of human nutrition to agricultural practices for the improved nutrition of plants, animals and consumers. We thank you for joining us, Nikki.

Nikki:                   Thanks for having me.

Tom:                    So, what role do you play in the chain of events that happen from farm to table?

Nikki:                   I have a really interesting role within Alltech. I actually came from a larger supermarket chain based out of the Midwest. And what I was doing there was acting as a health and wellness spokesperson, helping consumers to understand a bit more about what was in their food, where their food was coming from and what types of food they should be purchasing for prevention of chronic disease or specific diets like food allergies.

                    So, what I’m doing is bringing that to Alltech now and helping our producers explain to consumers, explain to retailers what they’re doing on-farm and how they’re using feeds to improve the nutrition of their animals to then improve the nutrition of that food product they’re bringing to the consumer and to the retailer.

Tom:                    I think we all watch trends in our respective fields. How about you? What noteworthy trends are you keeping an eye on?

Nikki:                   A few things that I think have been really popular as of late is what I like to call the “free-from” diets — gluten-free, dairy-free, soy-free.

                    Also, paying more attention — consumers are paying more attention to food sensitivities. Are they reacting to certain types of foods? Is it an actual allergy? Is it an intolerance? Or is it maybe just more of a preference?

Tom:                    What about consumer perceptions? Let’s start with “free-from.” Is it recognized on the consumer end, and are sales of “free-from” items on the rise?

Nikki:                   I think a lot of consumers are starting to look for these types of products. They’ve been out for quite some time. I mentioned gluten-free, dairy-free, soy-free were available for people who had legitimate allergies to these products. Now, more consumers are looking for these products on supermarket shelves, and, yes, I think that specialty category is continuing to grow. We’re seeing more of that in the supermarkets, and more consumers are looking for it just to feel better. Maybe they don’t have an allergy, but they are looking for new things to help them feel better and improve their well-being.

Tom:                    And what about paying attention to the number of ingredients? Does that seem to have an impact on the consumer end?

Nikki:                   I think those two things tie in together very well. A lot of consumers are perceiving these free-from products as healthier, mainly because they contain fewer ingredients. Many of those products that are included in that specialty format or specialty aisle in the supermarket have fewer ingredients than those that may have included the gluten, the soy, the dairy, etc. 

Tom:                    Would you consider these diets something of a disruptor?

Nikki:                   Absolutely. I think it’s changing the food industry. I think it’s changing the way that producers of food, food companies, the big food industry and retailers are starting to talk to consumers, the way that they’re marketing the products. They’re also changing a lot of product lines to be able to reach these consumers looking for specialty products.

Tom:                    Anything coming along that might disrupt the disruptor?

Nikki:                   Yes, I think so. I think right now the consumers are considered the disruptor, if you will. They’re the ones demanding these different types of food products and asking for things that producers and retailers aren’t offering yet, but we’re seeing producers and retailers really catch up. They’re the ones trying to get ahead of the curve now. We’re seeing a lot of them going out and taking new leaps and forays into different types of products and specialty goods. So, they might be the next disruptor.

Tom:                    So, the potential is definitely there. What are some good ways to get involved?

Nikki:                   A good way to get involved from the producer side is really listening to the consumer. I think this has been something we’ve talked about time and time again over the years at many different events and meetings. I’ve spoken with producers about getting involved or listening to the consumer. What do they want from us? They are out there telling us specifically what they want to buy on supermarket shelves. Whether or not you can meet that exact need that they’re asking for, listen to what’s behind that exact demand. Are they asking for less processed products? Are they asking for more sustainable products? Are they asking for functional foods, maybe added selenium or DHA? They’re telling us what they want.

Tom:                    Are food allergies on the rise? You mentioned sensitivities a few minutes ago, but are we becoming increasingly food sensitive? And if we are, what’s going on?

Nikki:                   I’m not sure that we’re becoming increasingly food sensitive. I think our awareness of food sensitivities, intolerances and allergies is growing. Only about 4 to 6 percent of the population has an actual food allergy. A larger number has intolerances and an even larger number has what we call a “food sensitivity.” So, this is something that an estimated 30 to 40 percent of the population is dealing with. It might be even coming from seemingly healthy foods like whole wheat toast or broccoli.

Tom:                                   Is it often surprising to find out that a rash or some sort of physical response that you might have attributed to any number of other things turns out to be a response to food?

Nikki:                   Yes. I think it’s often very surprising to consumers and patients alike when they find out that something they thought was very healthy like a piece of salmon or an apple is actually causing a negative reaction in their body. Everyone’s bodies are different. So, it’s very difficult for us to give a blanket “these foods are healthy” statement when we don’t know exactly how that person’s body is reacting.

Tom:                    We’ve heard throughout our lives that “we are what we eat.” What’s that implying for human health and for the way the food industry should respond?

Nikki:                   I think we’re going to see some big changes in human health. We’ve been hearing for years about eating for prevention of chronic disease and improving our health and well-being through food. I think we’re going to see this increase even more as we find out more about what foods are specifically good for each individual person. I think we might see some diets evolve into more specific programmed nutrition for each person rather than, like I mentioned before, these blanket healthy food diets.

Tom:                    Would it be a stretch to call food the new medicine?

Nikki:                   Absolutely not. I think food is definitely something we can use for preventative care. You know, Hippocrates said, “Let food be thy medicine.” That’s becoming truer day in and day out.

Tom:                    What are some autoimmune diseases that respond well to nutritional solutions?

Nikki:                   A couple of the autoimmune diseases that we’re finding more of, not necessarily because there are increased incidents, but because, again, our awareness of these diseases is increasing — celiac disease and irritable bowel syndrome are two autoimmune diseases or conditions that are greatly affected by nutrition.

Tom:                    When you think about it, how do free-from diets and attention to food sensitivities, in the end, affect the average consumer’s dinner table?

Nikki:                   I think we’re going to see more changes on the dinner table. We’re seeing more foods that have less processing. People are going back to freshness again. They’re looking for less packaged foods. Or, if they’re eating packaged foods, they’re eating them with the lowest number of ingredients they can find.

Tom:                    Nikki, what about your work do you like the most? What’s the most fun?

Nikki:                   The most fun I have with my job is meeting the farmers and producers. I’m an Iowa girl. I grew up in Iowa. I’m living in Texas now. I’ve always been interested in human nutrition, but I’ve had a soft spot in my heart for agriculture. The best part about my job at Alltech is I get to marry those two things together.

Tom:                    Nikki Putnam is a registered dietitian/nutritionist and a nutrition solution specialist at Alltech. Thank you for being with us.

Nikki:                   Thanks so much.

Nikki Putnam spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech  Idea Lab. For access, click on the button below.

To listen to our entire conversation with Matthew, click on the player.

Tom:                      Where is the world’s most exciting animal nutrition market? Matthew Smith is here to tell us about that. Hint: Matthew is Alltech vice president of Asia-Pacific. Thank you for being with us, Matthew.

Matthew:                It’s a great pleasure.

Tom:                      Let’s go to that question. What country is home to the most exciting nutrition market?

Matthew:                One word: Vietnam.

Tom:                      And why is that?  

Matthew:                I would describe Vietnam as the most dynamic marketplace for agribusiness and agri-food currently within the Southeast Asian region. It’s probably best to put Vietnam in context with the Asian countries: It has the second-highest population density of the Asian countries. Of course, number one is Singapore. Singapore is a completely different model. Food security is the main concern in Singapore. But in Vietnam, we have many hidden treasures that are yet to be discovered globally, which are making a big difference in the industry in Vietnam. They have the potential to change the way in which other countries produce protein by adopting the right technology and the right platforms to get to the consumer.

Tom:                      What are the dynamics in Vietnam? What’s driving this?

Matthew:                The consumer. It’s very much a move toward growth in the middle-income bracket and the desire to westernize. Food is very much about culture in Asia, and culture is about food. The two are inseparable.

                              We do see a significant shift toward well-being and wellness and a more informed choice about food, maybe food with a story.

                                Clearly, the dominant segment of the industry — the highest consumption — is pork. When we look at that as a metric in the feed industry, pork or swine feed would account for about 64 to 65 percent of the 19 million tons of feed consumed annually in Vietnam. The majority of the remainder is poultry feed, so it’s really very conventional.  

                               However, we’re seeing big growth now in the move toward packaged and processed food. And, ironically, the biggest segment of the packaged food market is milk. I would describe milk as probably the real disruptor at the moment within the Vietnamese industry.

Tom:                      Can you elaborate on that?

Matthew:                I say the biggest disruptor because, where is the largest centralized dairy in the world?

Tom:                      Vietnam?

Matthew:                Good answer. That wouldn’t be apparent to most people. When we say centralized dairy, there is a business in the central part of Northern Vietnam that was originally a joint venture with an Israeli conglomerate and the Vietnamese government. They decided that they were going to produce milk in what effectively is a desert. And they now milk 42,000 cows on one farm, with the majority of the feed being produced on the farm in terms of total mixed rations.

                              The business is called TH Milk. It’s a fully integrated operation, a runaway success story in terms of the utilization of technology, whether it be milking technology or feeding technology or technology that they use to purify the water for the cows to drink. Also, the way in which they process all of the effluent and waste from the dairy farm so that you will have an entirely sustainable unit.

                               But, when we talk about disruption, it’s the way in which that milk is sold. Milk is very much seen as a premium drink. Domestically, the dairy industry within Vietnam only produces about 28 percent of demand. So, that creates a huge opportunity. The business, TH Milk, and other businesses that operate in a similar fashion have really made the purchase of milk into a consumer experience. 

Tom:                      Is dairy a relative newcomer to the Vietnamese diet?

Matthew:                No. There would have been a lot of what we would describe, maybe, as backyard farming in terms of dairy production. So, it would have been sustenance. We would have two, three cows, and we would produce for the family and the neighbor. We would share the milk. However, given this huge increase in demand for the consumption of milk, that’s prompted much more cohesive dairy farming and has attracted a huge amount of investment. That sums up Vietnam’s move away in the 1990s from a centralized approach to agriculture and food production and much more toward primary production and integration.

Tom:                      What are the opportunities for emerging technologies, innovation in the Vietnamese market?

Matthew:                One of the biggest trends that we see within the Vietnamese market is the use of technology on the horticulture side. There is a lot of investment from engineering industries, from car manufacturers, from businesses that would not historically have been related to agriculture in terms of them utilizing distribution mechanics.

                               We’re talking about growing vegetables in an enclosed environment: hydroponics, etcetera. And those other industries see a lot of overlap with their technologies in terms of assisting in a huge increase in vegetables, which would be grown very close to the cities, which obviously are the primary markets.

Tom:                      I’ve read that Vietnam’s aquaculture market has nearly doubled in only a few years. If that’s true, what’s driving it?

Matthew:                One of the most recognized brands in the U.S. and Europe would be barramundi. Barramundi would be the Asian sea bass equivalent. The brand is actually called Australis. Most consumers would buy that to fillet. Very nicely packaged and very heavily branded, believing that it’s come from Australia. But it hasn’t. It’s from a very progressive operation, which grows the barramundi offshore in cages, in an extremely isolated environment that has incredible water quality, which is what’s needed for sustainability and to grow the fish and have a good feed conversion rate.

                              That’s just one example of people using a brand that doesn’t necessarily present itself as coming from Vietnam, but that is utilizing the environmental assets Vietnam has. You do have to contrast that with some of the challenges that Vietnam has in terms of the environment, the recycling of waste, areas the industry is attempting to tackle. That’s another opportunity for technology.

Tom:                      We’ve been focusing on Vietnam, but what about other countries in the region such as Myanmar, Cambodia, Mongolia?

Matthew:                All of those countries represent a huge opportunity for technology for a number of different reasons. Cambodia is wedged between Vietnam and Thailand, two countries that have much greater recognition in terms of the food chain and primary production. But Cambodia itself is a natural resource, a very clean environment where crops can be grown, particularly in the south. As you move up to the north, you start to see the opportunity for fruits and vegetables to be grown. Cambodia is the world’s largest exporter of mangoes, a fact that is not necessarily at the forefront of people’s minds when they consume a mango.

                               We have to embrace the local regulations, which, until recently, has been a challenge for businesses going into those countries to set up operations. But there is a growing industry in Cambodia on the aqua side, a growing industry on the poultry side.

                               Myanmar, for many, many years was a closed market, but now government policy is changing. Myanmar is dominated by the poultry industry. And that poultry industry has the potential to grow with technology, to scale up and be in a stronger position to supply the export markets.

Tom:                      What disruptors do you expect to see in this emerging market?

Matthew:                I guess the implementation of a more cohesive food chain, more cohesive supply chain and retail outlets.

                                Thailand and Vietnam are not well-known for having big supermarkets, but they have an increasing number of smaller retail outlets, which are generally owned as part of integrated operations. So, whilst we still have a big wet market where food is bought on a daily basis and consumed that day, there is a much greater move toward processed and packaged food, and that has big implications. It requires a supply chain. It requires refrigeration. It requires speed. But with growing affluence in that middle class, the opportunity for the consumer to purchase packaged food is a clear opportunity and will be a disruptor moving forward.

Tom:                      How is Alltech fitting into the Vietnamese market? What’s going on there?

Matthew:                We opened our Vietnamese office in 1993. So, we’ve been there for some time now. As with all of the Alltech businesses, we really look to localize our approach in terms of the makeup of the team from a production point of view, from sales, from a marketing perspective. People who really know and understand the industry.

                              Vietnam has been a very successful marketplace for us in the past 24 years, and we just see our business going from strength to strength as we are now in the position to offer more feed solutions to a growing feed industry.

                               Across the Asian countries, we’ve had a presence for a minimum of 20 years. Myanmar is new. Cambodia is new, and Mongolia will be very new for us. A very small market, but it represents the opportunity for us to localize our business and takes us into more of those countries. 

Tom:                      Matthew Smith is Alltech vice president of Asia-Pacific. Thank you so much for joining us.

Matthew Smith spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. 

To listen to our entire conversation with Mary, click on the player.

Luther:                        Mary Shelman is the former director and is currently an advisor to the agribusiness program at Harvard Business School. She is an internationally recognized thought leader on the future of the global agri-food industry. A native of Kentucky, where she still owns a farm, Shelman received her bachelor’s degree in chemical engineering from the University of Kentucky and her master’s degree in business administration from Harvard Business School. Thank you for joining us.

Mary:                          Thank you.

Luther:                        Do millennials really see the supermarket as a daycare center for the elderly?

Mary:                          You know, that’s a great introduction, isn’t it? It really gets people’s attention.

                                    If you stop the millennial walking down the street — and for those who might not know, a millennial is someone born between 1980 and 2000 —that’s not the answer they give to you, but the idea came from my good friend, Aidan Connolly of Alltech. He was running a training program in Lexington with a group of young people from all over the world in their early twenties, and he took them out on this visit to a number of supermarkets here in town. They went to Kroger, and Whole Foods, and I’m sure some others. And he came back and was doing a debrief with them. He said, “Well, what did you think?” “Oh, yeah, those were great. Those were really, really nice.” And then he asked, “Would you shop there?” “Oh, no, we’d never go there.” “Well, why not?” “Well, that’s not the way we would expect to get our food. We’re going to order it online. Somebody is going to bring it to our house, you know.”

                                    So, that led him to the question, “Well, then, there’s no future for supermarkets, right?” And they said, “No, no, we didn’t say that at all.” “Well, what is it then?” “Well, supermarkets are really important because, you know, old people need some place to go, and to get some exercise, and to have some interactions, and be able to get out of the house and move around.”

                                    Aidan just paused and said, “Oh, wow, it’s like a daycare for the elderly.” And that’s where that idea came from. This thing that we’ve been used to all of our lives might not be relevant for this next generation of consumers.

Luther:                        Speaking of consumers, those aged 18–34 are the largest buyers of organics, and they’re the most likely to consider themselves knowledgeable about their food. Is this the newly engaged and empowered food consumer you’re referring to?

Mary:                          Well, they do consider themselves very food aware. They are very interested in cooking and sharing what they eat.

                                    It’s also an incredibly large demographic group. It’s the largest demographic group now in the United States. There are 83 million millennials. There are only 77 million of us baby boomers.

                                    So, when you think about this millennial group, now they’re having families, they’re moving into some portion of their earning power. It’s a very compelling-sized group for the food industry to look at.

                                    However, that’s not the only thing that’s behind this engaged and empowered consumer. I think, overall, the whole country, and perhaps the whole world, is in the midst of this food movement. People want to know more. They care more about their food. They want to know where it comes from. They want to know where it’s produced. And the availability now of information and where they can get that from and how quickly they can get it has really changed their behaviors. I was just looking up the numbers before I came down here to do this with you. There are almost 4 billion internet users in the world now. There are almost 2 billion Facebook users in the world. So, information travels radically (fast).

                                    I was teaching in a program yesterday, and we were having this conversation about this one group that was having a lot of influence, and it sounds like a very rich population, but someone from Honduras was there. He spoke up and said, “No, no, no. In our country (which has very different socio-demographics in terms of economics), people get information very quickly now.” He talked about this idea of engaged eating. So, this consciousness is not just here in this young person group, but that is a group that’s very important because of their purchasing power.

Luther:                        So, we’re talking about millennials and how they’re rejecting the typical grocery store. Can you give us maybe just a summary of why they’re rejecting the grocery store?

Mary:                          I think it’s very simple. It just doesn’t meet their needs, or it doesn’t meet their expectations. I mean, how do they get their food? They order it online. They have it show up to their house. It’s the same way they get their music. It’s the same way you get your taxi now to go to the airport. You call Uber.

                                    They have grown up in a different world, and they don’t understand why they should have to go and wait in line to pay for something, to wade through a store that has aisles and aisles of things that they don’t need.

Luther:                        I think many people view millennials as this enigma, right? “They’re demanding; they’re lazy” are a number of terms. I wonder if that’s your view or more the fact, as you said, the way they grew up is different than the way that you and I grew up. It’s really a generational difference, and the fact is that change is happening faster; it’s just that that change has happened faster than it has in the past.

Mary:                          I think that’s very true. What they have grown up with has been different. Maybe not the way they’ve grown up, but what they’ve grown up with.

                                    The Apple iPhone was introduced in 2007. So, think about how fast that’s changed our behaviors. They’ve just had access to this, a part of this digital economy there.

                                    My son, who is 25, so clearly in this group, is much more vocal in his beliefs, and his friends are as well. But I think what’s interesting is that there are some very good aspects about them. You use the term “kind of lazy,” and I don’t think that’s true at all. I think they just have a different idea about what’s important compared to maybe what you and I grew up with.

                                    Many of them seem to be much more interested in health than other generations. They’re very conscious of their diet and that link between diet and health. They’re much more likely to exercise. So, they’re making food choices based on what they perceive as being healthy, fresh, clean, “free from” these different ingredients. We’d like to go to farmer’s markets where we can see things and engage with farmers.

                                    I think they see food as adventure as well. I grew up in Elizabethtown here in Kentucky and in, basically, a very traditional family. My dad liked beef. So, we’d have beef four or five nights a week and then maybe have a couple of other things. But, you think about the diets now and the diversity that shows up, so one night it’s Chinese, the next night it’s Thai, the next night is sushi. I think these millennials would eat sushi five, six, seven, eight times a week if they could. You know, it’s Italian, it’s Ethiopian, it’s Moroccan. So, that’s just a fundamental change in what they consider as part of their eating habits. They’ve been described as “food thrill seekers.” Maybe you’re at a stage that you can’t travel because of family economics, but you can get some thrill out of your food, and you can share this thrill with your friends.

                                    Seventy percent of this age group takes pictures of their food before they eat it, and many of them put that on Facebook. They share it on Instagram. So, food has become part of their identity, well beyond just fuel for the body and something that’s linked to health. It’s actually part of who they are. And because of that, they want the food they eat to have the values that they have themselves.

                                    They want to be individuals. Think about the craft food movement, the craft beer movement, which was one of the first harbingers of this, how successful that’s been because, hey, if I can have on my iPhone exactly the music that I like, why can’t I have exactly the same kind of curation of food that I like?

                                    The other thing is, they want to buy products that share these values. They believe in the purpose of these companies. So, something like 37 percent of millennials buy products for a cause, so something like Rainforest Alliance. Even if they have to pay more money for that, that’s important to them.

                                    Forty-two percent of this group say that they don’t trust “big food” companies. They feel like those companies, even kind of “big farming” as well, have violated their trust, that they haven’t made good responsible choices, and they push products onto consumers that really have ended up not being good for them. Too much sugar, too much fat, too many unnatural ingredients in there.

Luther:                        So, hitting on that point, it sounds like there are some big implications for the food industry, as you said, that perhaps some of the power is moving to the consumer, where before it was in the producer’s hands.

Mary:                          Right. I’m not sure it’s ever been — So, a producer in the sense of a manufacturer, a big food company.  It’s never been in the farmer’s hands.

Luther:                        I think that’s important to clarify.

Mary:                          Exactly. The big food companies: the Nestlés, the Krafts, the General Mills.                                  

                                    This is creating tremendous uncertainty for them, these changes in the consumers. The models they have used in the past — putting it on product shelves, getting distribution in every store, advertising on mass media, big promotions at the supermarket — they just don’t work anymore in order to drive sales. Those old models are broken, and they’re really struggling to find out what the new models are and what the new products are that satisfy this group.

                                    Just to give you some idea of how serious this is, in the last 10 years, big brands have lost share in 42 out of 54 product categories. Between 2005 and 2015, the top 25 firms have lost $18 billion in market share.

                                    It’s extremely difficult now for these firms to find growth. And so, what they typically do, the first thing they say is, “Oh, you know, our products don’t meet consumer expectations anymore, so let’s reformulate. Let’s take out the sugar. Let’s take out the salt. Let’s make them healthier.” Well, that’s great, but it doesn’t increase sales. It might stop a decline, but it’s not increasing sales.

                                    They say, “Well, let’s introduce our own version of organic, or GMO-free, or gluten-free.” But it’s not getting back to sales growth because when you look underneath, it gets back into this distrust of these companies. And so, that’s forcing them to look at who is being able to grow.

                                    The opportunities that these changes have created are actually for the younger and the smaller companies. These big companies are needing to look to them and say, “Well, I can’t do this myself, I’m going to go out and buy somebody.” So, General Mills bought Annie’s, the maker of all-natural mac and cheese. Perdue bought Niman Ranch. Campbell’s bought Bolthouse Farms just in order to get there.

                                    But think about the disruption that’s being created. Go back in your mind to the yogurt category in 2008. You had products like Trix yogurt and Dannon yogurt, and they were basically all of it. It’s either targeted at women on a diet or kids. The products, honestly, they were disgusting. I just thought they were either too sweet, or they had all these artificial sweeteners and artificial things.

                                    We’ve got this Turkish immigrant who comes in. Hamdi Ulukaya bought this old yogurt plant in upstate New York and introduced this product to the market after spending like two years working on packaging and product quality, but introduced Chobani and basically said, “Hey, we want this product. It’s going to be a great product. It’s going to be great-tasting. It’s going to be this Greek yogurt style. And I don’t want to have it as a special product. I want to make it very accessible to the masses.” So, he was on the protein trend. He was on natural even though it wasn’t organic. It wasn’t non-GMO, but it was natural ingredients. He was riding the social side of it, using social media. He didn’t have any money to advertise. And five years later, that company, Chobani, had $1 billion dollars in sales. In 2012, it was a sponsor of the U.S. Olympic team at the London Olympics. Now, Greek yogurt has gone from nothing to 36 percent of the yogurt category. Walk in the store, it’s almost all Greek yogurt. That category has doubled in size because you’ve got this better product quality there.

Luther:                        Well, I think that fits really well into another news item I saw that Whole Foods has had six straight declining quarters of revenue. In response, they created what they’re calling a 2.0 version: 365 by Whole Foods. They’re actually targeting it at younger, budget-conscious consumers. They claim that it provides easier use, a better grocery experience through a blend of design, technology and experience. Do you think there’s going to be some success out of that? 

Mary:                          I haven’t been in a 365. I’m really anxious to. But, just from what I’ve read about it and what I have read of other people assessing it, I don’t think they have the answer yet. I think they’re just reshaping.

                                    I think getting the size down is good. They can put it in more urban settings.

                                    We have young people now, they want to live back in urban areas again, where they can walk. A lot of them don’t even want cars anymore. So, it’s important that it’s some place that they can get to and shop easily and then get back again.

                                    The format that I think is much more interesting to watch is what Amazon is experimenting with out in Seattle. They started it just after the first of this year, a store called Amazon Go. Basically, it’s a store without lines. The worst thing about going to the grocery store is waiting in line to check out. The way that Amazon Go works is, you walk in, and you scan your phone over a reader. Then, you walk around and you put whatever you want into your basket, and you walk out of the store and go home. They send you a receipt afterward showing everything that you purchased. And there’s also a lot more prepared foods there, which is another aspect of what I think everybody is looking for now. It’s like we need help with thinking about what to eat. So, that’s a more evolved concept of 365.

                                    I think that it’s really hard if you’re an established player in an industry to disrupt yourself. When Whole Foods came in, they came in from outside the industry, brought in something new. What they brought in were all these natural, specialty and organic products. Those have all rolled out into Kroger. You can buy almost the same product quality there, but Kroger wasn’t the one to introduce that to start with. So, I think the format’s like that.

Luther:                        So, what about ClickList? Do you think that’s enough to appease the millennial?

Mary:                          I think it’s definitely a piece of it, online shopping, being able to pick it up. I think that’s helpful, but I think that evolves.

                                    With ClickList, I still have to go to the store to get it. If I click AmazonFresh, it shows up at my house.

Luther:                        I probably should have specified. Kroger ClickList allows you to shop online and then go and pick the groceries up. They’re ready for you.

Mary:                          That’s right. So, you order online and then you make the trip there, and they put it in your car. That’s been successful.

                                    Again, that next evolution of it that’s playing out is where it comes to your house. In this case, it could be Kroger making that delivery, even though I think they’ve chosen not to, but in the Northeast, it’s Stop & Shop, and Peapod is part of a division of Stop & Shop that makes the delivery.

                                    Or is it Amazon? I mean, everybody’s very comfortable now with Amazon. So, do you trust Amazon more to bring you fresh produce than you trust Stop & Shop?

                                    If you look overseas, if you look to the U.K., there’s a supermarket company called Ocado that you buy from online. It shows up at your house. It’s the largest online grocery company. They have no stores at all. So, it’s basically the supermarket without the store. And because of that, they can manage their inventory better because the products make one stop.

                                    Think about fresh foods. They come into the Ocado warehouse. Or you think about fresh foods coming to Kroger. Often they come into the Kroger distribution center. They get split again, and they go out to the different Kroger stores. You go in as a consumer and maybe it’s been sitting there for a few days, but you buy it and take it home. It spends another few days in your refrigerator and then maybe the quality is not so great. With Ocado, it comes into their distribution center. You order it. It immediately comes to your house. So, it’s bypassing that trip to the supermarket plus sitting on that supermarket shelf. So, Ocado says we actually have a higher purchase of fresh products even though here we typically think, “Oh, I’ll never buy a fresh product from an online experience because I can’t see it myself.”

Luther:                        So, continuing the theme of convenience, the millennial doesn’t look at food the same way we do where you go to a grocery store, you buy the parts, you go home and then you have these variable parts that you can assemble via a recipe into X, Y or Z. Are the millennials actually also potentially looking at just skipping that part and going straight to, “I just want a meal sent to me and I’ll choose what meal I want and it’s already assembled, or maybe all the ingredients are there and I just put it all together at that point?”

Mary:                          I think there are a couple of different cuts at that that are very interesting right now.

                                    First, we see the rise of these meal kits that you can order online, and it shows up at your door. And, in many cases, it shows up at your doorstep, and what you’re getting in that box is exactly the amount of ingredients that it takes to prepare the meals. So, if you have a recipe that calls for two stalks of celery, you don’t have to buy the bunch of celery and then have the other six stalks rot in your refrigerator until you throw it away because you have no idea what to do with it.

                                    One in four households in the U.S. have tried meal kits now. There’s like 150 companies operating in this space. Unilever just made a $9 million investment into one of these companies earlier this month. So, they’re getting some serious traction. The retention rate is very high once you try because it turns out the product qualities are good.

                                    You think, “Well, wait a minute, this seems all very expensive to have this come to your house,” but the cost of that meal that they’re sending you is $10–$12. It’s not really that much. Maybe if you have a family of six or eight or 10, that’s too high, but certainly there’s a lot of one- and two-person households out there. So, you get the convenience that it shows up at your house.

                                    You get the fact that you’ve really cut down on food waste, both on the ingredient side, but also you don’t have all these leftovers that then you have to throw away.

                                    The other thing it cuts down on is choice. We always think choice is good. But if you’re pressed for time or if you don’t know how to cook and you’re looking maybe to learn, then you want a recipe already there rather than having to look to a cookbook, right? Everybody says, “Oh, we’re offering all these recipe solutions.” Well, I don’t want to have to look through those recipes and decide. Here, it just shows up, and you’re getting your cooking lesson on top of it. So, I think there’s a lot of interest in that space.

                                    Blue Apron, the biggest player, is now delivering 1 million meals a month. It’s a big number, right? At $10 a meal, it’s about a $1 billion-dollar business. Valuation is probably $2 billion. And they work directly with the farmers. So, an interesting piece of their model is how they decide what recipes to offer. Some of it is based on what consumers want, but some of it is based on what’s available. They can find out from their farmers what’s in season right now and what the prices are at different times of the year. They basically come up with what they’re going to offer based on being able to meet their price points.

Luther:                        Very interesting. So, to bring this back home to supermarkets, how do they meet the expectations? How do they have authenticity, and transparency, and traceability from the producers, holding manufacturers accountable, and at the same time maintaining the convenience at a price point and profitability through all of this?

Mary:                          It’s a huge challenge, isn’t it, especially if you already have a big business model and a big footprint that operates in a certain way. It’s just like death by a thousand cuts.

                                    Think about the impact of, you know, certain categories moving online. So now people buy their diapers online. So now your supermarket is too big because you don’t need to have as big of a diaper stock anymore. Well, you have supermarkets that are too big, but yet you can’t lop off a supermarket because it still means that the supermarkets that you have left are still too big. So, how do you repurpose that space? I think it’s a real challenge.

                                    But, some of the things that I think that really need to be done are — one of them is a mindset shift. We see some of this going on. I think for a number of years, supermarkets really considered themselves as, basically, “Our role is to rent real estate to manufacturers of food products. We just display it. You work on your products and bring it in, and we’ll display it. If it happens to sell, that’s great. And if it doesn’t, we’ll kick you off the shelf. And by the way, you’re going pay us for the right to be on that shelf because we’re taking a risk putting you there because we’ve had to take something else off.” That mind shift has to shift back to, “As a supermarket, my role should be as a gatekeeper to this set of products that my customers really want. And not only am I giving them the products that fit their needs, but I’m also working in that store to create experiences for them,” because this young group now — and many of us, right? — we have too much stuff. So now we’d rather invest in experiences than we would products. So, how do you make food an experience? How do we make sure in that supermarket it is going to have to tell a story of the food product? That’s the important piece of it.

                                    In Milan, a couple of years ago, there was the World Food Expo, and there was a supermarket of the future there. And, basically, you walked around the store and you had augmented reality where every time you looked at a category, you could see visually the product information and where it came from, who grew it, whatever. I don’t think shoppers want to see that every time. To me, I’m not sure that’s the supermarket of the future. I do think people will want the experiences, the authenticity, the stories, the engagement, but at the same time, this convenience piece is really important. So, supermarkets are going to have to be omnichannel. So, you’ve got a store that has some elements of this, but it also has to come to the house. And analytics. Data analytics. You know, being able to really dig in and understand what sells, what doesn’t sell, what price points.

Luther:                        Mary Shelman is former director and is currently an adviser to the agribusiness program at Harvard Business School. Thank you for joining us.

Mary:                          Thank you.

Mary Shelman spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. For access, click on the button below.

Wait. In China they can do what?

Where on the planet can you try out a new beer, share photos of the brew on social media, buy a six-pack through that same social media channel and have it delivered to your doorstep?

In the world’s biggest beer-drinking market: China.

Chinese consumers — as a group, the world’s largest — spent $5.5 trillion on all sorts of purchases made through mobile payment platforms last year. That’s about 50 times the amount spent in this manner in the U.S., according to the Financial Times.

And well-positioned to accommodate a rapidly changing consumer landscape across China is Alltech Brewing.

“They can go on our WeChat channel,” said Dr. Mark Lyons, global vice president and head of the company’s Greater China division. “They can say ‘I just had a Kentucky Ale^®’ and they can actually order it directly through that app.”

That’s a far cry from the China of not all that long ago. Most Chinese over age 55 readily recall the austere conditions of the Cultural Revolution of the ‘60s and ‘70s. If in those days you had suggested that private consumption would someday be a significant force in the Chinese economy, no one would have believed it.

But over time, the nation’s industrialization has steadily increased mainstream affluence. Frugality is giving way to consumerism made affordable by discretionary income. Younger generations, driven by digital technologies and social media, are entering the market relatively free of the influences of the past.

“The pace of change in China is very, very fast, and a mere couple of weeks can change the entire dynamic, which means that strategies must be adapted,” said Mark Lyons. “The Western model of quarterly plans or even annual plans does not fit well where competitors can be operating in a much more real-time pace.”

In a report entitled “Meet the Chinese Consumer of 2020,” the McKinsey Quarterly notes that an outcome of this noticeable trend in consumer spending “is a propensity to trade up, driven increasingly by consumers aspiring to improve themselves, the way they live and their perceived social standing. Many Chinese, like their Western counterparts, judge themselves and others by what they buy.”

In its own analysis, the Economist Intelligence Unit (EIU) forecasts nearly 35 percent of the population, or around 480 million consumers, will meet its definitions of upper middle-income and high-income by 2030. That’s larger than the entire U.S. population of 321 million.

The EIU predicts that the portion of the Chinese population defined as low-income will shrink from 36.9 percent in 2015 to just 11 percent in 2030.

“There will be a corresponding bulge in the middle-income bracket, with a growing portion of the population falling within its upper reaches,” stated the EIU in a recent report. “The share of high-income consumers, with annual disposable income of above RMB 200,000 (US $32,100), will rise from just 2.6 percent in 2015 to 14.5 percent in 2030. China will look and feel like a more middle-class society.”

The trend is altering the consumer landscape in the world’s most populous nation as this rapidly emerging middle class expresses changes in preferences and tastes, upgrading consumption habits and switching to more expensive and premium brands — including the libations selected for personal consumption and entertaining.

A key to the success of Alltech’s beverages in China has been savvy pricing, according to Patrick Lin, Asia manager of Alltech Brewing.

“In the past, the highest-selling alcohol products were either on the lowest end of the price scale — mass-produced beer and spirits — or in the highest range — cognacs, high-end wine, etcetera,” said Lin. “Now, the new middle-class consumer is demanding something that’s in-between. 

“They no longer want the lower-priced beer their parents drank, and at the same time, they don’t want to spend the massive amounts that previously were spent on luxury alcohol products that were consumed as gifts and at banquets,” he explained. “The middle class wants to go out to restaurants and bars that are offering unique products and environments that are affordable, but not cheap.”

The China beyond Shanghai and Beijing

China is an immense nation of 31 provinces, its regions so diverse that the whole resembles a collection of separate countries.

“I often see companies coming in and seeing Shanghai, maybe Beijing, and assuming that they understand the country,” observed Mark Lyons.

And that, he says, can be a fatal mistake.

“Many subregions are very different in not only their levels of development, but personal, cultural preferences, in terms of the types of products consumers are looking for, but also business practices,” he explained. “This is where it is crucial to have local people in each market. We have representatives in virtually every province of China, and our regional representative offices help us considerably to be able to be more in touch with these local changes.”

Alltech founder and president Dr. Pearse Lyons has long been preparing his company to capitalize on the transitions now occurring in China. Alltech has 250 employees in the country, spread among offices in Chengdu, Guangzhou and Qingdao, with a factory in Tianjin and another expected to open in southern China.

“We have been in China for over 25 years,” he said. “We know the marketplace, and they know us. Therefore, to bring the beer in was almost like a logical extension. We decided to go to the market, so we reached out to our connections. We already had the resources there. They were well-educated, could speak the language and were Kentuckians. We needed to give them something that fit, like Kentucky Bourbon Barrel Ale^®.”

With the launch of Kentucky Bourbon Barrel Ale in China five years ago, Alltech became the first independently owned American craft brewery to produce beer in China for national distribution. The division now sells 10 different brews made by Alltech, including Kentucky White Ale^® , a citrus wheat beer that recently joined the beverage line. 

Sales expanded to Taiwan in 2015, then on to Hong Kong and Japan. Today, Alltech Brewing is the largest independently owned American craft brewery operating in China.

Alltech’s spirits were introduced to the market three years ago, including Town Branch^® Bourbon, Town Branch^® Rye, Pearse Lyons Reserve^® and Bluegrass Sundown^®. The Foxes Rock^™ brand appeared two years ago, and 2017 has seen the addition of Ha’penny Pot Still Gin^®.

The brands are stocked in stores and restaurants in more than 400 locations across Greater China, including nearly all of the largest cities, such as Beijing, Shanghai, Chengdu, Shenzhen, Chongqing and Tianjin, as well as in Hong Kong and Taipei.

The current sales focus, according to Mark Lyons, is on cities where palettes have long been accustomed to big Chinese beer brands such as Tsingtao, Yanjing and Snow.

“We’re offering something to them that looks completely different,” he said. “It’s probably three times higher in alcohol, has a very different flavor and is presented in different ways. Just getting them to try a beer is one thing. Once they do that, we see the same thing that’s happened all around the world: that conversion happens rapidly.”

And he believes the beverages’ appeal extends far beyond the city limits of China’s sprawling urban centers.

“It’s not even just second- or third-tier cities,” explained Mark Lyons. “It’s already down to communicating directly with our customers on the agricultural side who are in really small places where these sorts of products are not accessible.”

Quite a different picture in Japan

Alltech’s 2017 arrival in Japan required a recognition of dynamics that are in stark contrast with those in China.

Due to the steady aging of the population and low national birthrate, the Japanese drinking population is relatively small. But the Japanese, observed Mark Lyons, make up for it with attention to quality.

“You already have this very high level of affluence,” said Mark Lyons. “The focus on quality is extraordinary. There is such attention to every single detail. It’s a super-premium market, and I think that’s where our products can fit very nicely.”

With 290 craft breweries, according to a 2017 global craft beer survey released by The Brewers Journal and Alltech, Japan leads China (170 breweries) and Taiwan (22 breweries) among Asia-Pacific craft brewers. Australia holds the regional lead with 410. The Asia-Pacific region, however, accounts for a mere 7 percent of global craft brewery production.

Raising a pint to opportunity and partnership in China

When asked to consider Alltech Beverage’s most important achievement, Mark Lyons cites its presence and stature as the largest American craft brewer in China.

“That provides us with a platform for growth, which we’re very, very excited about,” he said.

And that growth works to the benefit of others.

“We’re beginning to sell other people’s beers,” he said. “We’re in discussions with several large American craft brewers (about) helping them come into the market.”

He notes that many craft brewers cast a wary eye in the direction of the brewing giant AB InBev and its self-titled “Disruptive Growth Organization.” The company is investing in craft breweries and craft beer bars in the Asian market.

“Many independent craft brewers are worried about this,” said Mark Lyons. “They’re concerned about middlemen and ‘gray channels,’ and they’re hesitant to get in. But when they see a company doing the types of things that we’re doing, it gives them a lot of confidence. So, we’re getting a lot of people knocking on our door. We’re seeing it as a great opportunity to provide customers with a truly independent and unique product.”

By 2020, predicts the McKinsey Quarterly, “companies (operating in China) that have focused on maximizing their brands’ scale will have to adopt a model based on a portfolio of more targeted brands or sub-brands to connect with different consumer segments.”

“Our more recent strategy on the beverage side to expand our product portfolio, including other companies’ brands, and also to diversify our own portfolio, is a response to this type of feedback from the market,” said Mark Lyons.

“It is clear that, without a great number of price points and brands that appeal to different demographics, it is difficult to really scale a business in a sustainable way,” he continued. “We have to be thinking about a market for us, in terms of craft beer, that within a little bit over a decade will have three to four times more accessible consumers.”

There are challenges to navigate, warns the EIU analysis: “China’s economic trajectory has become more uncertain, and firms will need to monitor risks accordingly in order to stay ahead of the curve.”

Pearse Lyons sees opportunity. His vision for the company’s beer and spirits interests in Asia is broad and has yet to be fully realized.

“We are actively looking at producing in other areas,” he said. “Keep in mind that we have Alltech Vietnam, Alltech Philippines, Alltech Malaysia, etcetera. Some of these offices are older than Alltech China. 

“We can use Kentucky Bourbon Barrel Ale as a major differentiator for us,” Pearse Lyons continued. “The strategy has been: use the beer, use the Kentucky name. We have a unique product to promote Alltech and our home state. It will slowly but surely build up the brand image.” 

To listen to our entire conversation with Paul, click on the player.

From fish to humans: Algae's impact throughout the food chain 

Luther:                        Paul Groenewegen is the director of innovation and nutrition at Masterfeeds, an Alltech company. He’s here to talk with us about how algae might transform the way people and animals obtain essential nutrients. What are the benefits of algae?

Paul:                            Well, it’s a great question, Luther. The main benefits of algae are to provide a very sustainable, renewable source of the essential omega-3 fatty acids we hear a lot about in the industry, in consumer press. The main essential fatty acid that we’re going after with algae is DHA. So, we hear about the omega-3 fatty acids that we need to increase our omega-3 fatty acid intake, but the true fatty acid we need to consume is DHA, traditionally consumed through fatty fish, marine fish.

                                      So, how marine fish get this DHA-enriched meat is by eating as they go further up the food chain, starting with algae, the DHA. The algae go into the tissues of one species of fish that’s consumed by another, all the way up to, for instance, having pieces of marine salmon that are high in DHA.

                                      We always say that, you know, our mothers always told us that it was good to have fish once a week. And I believe on our food guides — I know the Canadian food guide indicates — that we have to have a meal of fatty fish at least once a week, and that’s to get the DHA. That’s where we’re coming from, from an algae perspective. So now, we have a sustainable source of nutritionally enhanced food that provides DHA from algae.

Luther:                        What are some important ways algae production can disrupt the status quo?

Paul:                            The main way we’ve traditionally received or utilized DHA in the food chain is through fish oil and fish meal that were harvested from the ocean. Utilizing algae that are produced in a very controlled, sustainable fashion, we now have a renewable source of DHA to enhance food products through meat, milk and eggs that is not depleting world stocks of fish.

                                      That’s the true disruptor: How do we maintain world stocks of fish while producing these larger quantities of a very sustainable, very digestible, very good source of food that once fed to animals enhances the DHA content of meat, milk and eggs?

Luther:                        So, what you’re saying is, instead of going from further down the food chain, we’re going up to a source, and we can either consume that or —through feeding to other animals — consume it when we consume those animals.

Paul:                            Absolutely. As I mentioned earlier, fatty fish, marine fish that we consume to get DHA in our diets, they have to consume the algae. So, we’re just circumventing that, and now we can put DHA into terrestrial animals — layers, pigs, chickens, etc. — that we can then consume and have a DHA-enriched source of terrestrial food (i.e., meat, milk and eggs) that we traditionally haven’t had before.

 Beyond nutrition: Algae in energy and baby formula

Luther:                        Algae has been a buzzword in the biofuel industry. Can you give me some ways in which it is disrupting that industry?

Paul:                            Yeah. The key component is algae. There are thousands of species of algae that you can grow under specific conditions to harvest carbon dioxide, which the algae then convert into fats, which then can be harvested and used in biofuel. By utilizing algae, it does give us a renewable source of energy. Whether it’s economical or not at this stage of the game is a whole other discussion, but it does allow for sequestering carbon into a fuel source.

Luther:                        Fascinating. What are some other product applications for algae?

Paul:                            Oh, the product applications for algae are widespread, from food sources (that) different parts of the algae can be used and extracted for, from cosmetics to all different kinds of food sources.

                                      If we think about human infant formulas, algae have been grown for years to produce DHA that then goes into human infant formulas. And for those listeners out there who have young infants, if you do have some infant formula in your house, take a look at the label. You’re going to see DHA on the label. In most cases, that will come from algae.

Luther:                        What items out there can algae replace?

Paul:                            The main items that they can replace from a food perspective are fish oil, fish meal and some different types of oils.

                                    Obviously, algae can produce different types of oils at different levels depending on how they’re grown. And you can replace oils for cosmetic reasons. You can replace oils for biofuel reasons. You can replace protein sources if you grow algae to produce protein.

                                      Obviously, from a nutritional perspective, we can utilize algae to produce a number of different products that can then displace typical products that we use to extend the overall lifespan of our more traditional products: from an oil perspective, for instance, or from a cosmetic perspective. And we can continue to grow algae very quickly, very economically. And it’s very sustainable. And it’s a renewable resource. 

Growing algae 

Luther:                        Can you bring us up to date on the status of Alltech’s algae research?

Paul:                            Our algae research has allowed us to register the technology across the globe in a number of countries, allowing us to make very specific claims on the enhancement of meat, milk and eggs with DHA. Regulatory bodies around the world stipulate that we have to have efficacy trials. And all the research that we have done globally has pointed directly to the fact that when you feed All-G Rich® to chickens, pigs, dairy cows and a number of other species that we’re doing research on now that we do enhance the DHA content of the meat, milk and eggs that they produce.    

                                      We are also looking at positive attributes to animal health from a welfare perspective and just an overall health perspective in the animals.

Luther:                        What of the future challenges of growing algae commercially?

Paul:                            How we grow it is extremely important.

                                      People think of algae and see pond scum and layers of algae, or we hear about algal blooms in the Gulf of Mexico, for instance. That’s not the type of algae that we’re talking about.

                                      The big focus that we have now is growing very specific strains of algae under very controlled conditions to give us the very specific product we need.

                                      Algae are incredibly good at cleaning up the environment, and it just concentrates whatever contaminants you’re trying to clean up, and that’s one thing we’re not trying to do. We’re trying to grow algae very specifically to give us a very specific end product to enhance human food and animal feeds.

Luther:                        Are there challenges with the rising billions who are moving into the middle class (China, India, other parts of Asia, Africa) with the demand that’s going to be placed and meeting that demand in terms of production?

Paul:                            Oh, absolutely. And as the middle class continues to grow and as our world population continues to grow, we have to produce more food that’s very nutritious. And traditional global stocks of DHA through fish and fish oil are not only decreasing, but they’re not going to be able to meet the demands that are coming down the pipe.

                                      By utilizing fermentation technologies that allow us to grow algae in large quantities of very specific strains that produce very high-quality human food and animal feed technologies, that’s going to fill that gap as we grow up through the global population of the 6 to 7 billion; people are going to reach the 9 billion mark and are going to have that good sustainable food source as well.

Luther:                        What are the new markets (you’ve addressed some of those) for algae that it’s either disrupting or it’s starting from scratch or are new markets that it might be emerging into?

Paul:                            What we see is, we can utilize these technologies through algae. The biggest one I would say is functional foods and enhanced foods.

                                       At Alltech, we’re about enhancing food to better people’s lifestyles down the road and utilizing algae to produce functional foods for infants and the elderly.

                                      There are also some applications from a DHA perspective looking at different health conditions that, as we improve our human health, it’s going to have a positive impact on the health care system so we can utilize these technologies to have an overall benefit to society.

The health benefits to algae 

Luther:                        You’ve touched a lot upon DHA and its definite health benefits. Are there any specifics that DHA actually addresses in terms of our health, that it promotes health, or it may be a condition that it helps to treat or to improve?

Paul:                            We know that DHA is required in infants for brain development.

                                    If we think about our brain, it’s a very fatty substance, and we require a lot of DHA fat in our brain for membrane integrity. So, as young children are developing, they require DHA in their diet to develop the brain. There are cardiovascular issues in adults, there are eye issues, and DHA has a positive impact.

                                      I think from a sports perspective, concussions are a big concern in football and hockey. Being a Canadian, yes, hockey — we follow it very closely. And knowing that a lot of sports players run into concussion issues, I truly believe that utilizing DHA for sports injury repair is something that’s coming down the road as well.

                                      Just think about it: You get a concussion, your brain is damaged. You need to replace and rejuvenate the membranes of your brain. Some of the research is showing that this is going to have a huge impact.

                                      So, it’s brain development in human infants. I believe there are impacts on brain repair through sports injuries or automobile accidents or whatever injury. People fall, and they hit their head sometimes. So, there’s an application there, as well as cardiovascular disease. That’s all part of the omega-3 concept and increasing our omega-3s and overall improving human health.

Luther:                        What opportunities are there on the horizon? What do you see either today or tomorrow or maybe an interesting fact we haven’t touched upon when it comes to algae?

Paul:                            The biggest impact we’re going to have is: How do we produce large enough quantities at economical rates and then have those technologies registered to be used for animal and human food products?

                                      Our regulatory bodies have to look at these conditions extremely closely so that we can move fast enough so that these technologies can replace depleting stocks of the traditional feed stocks or food stocks that we have to meet the demands of the growing population in the world. So, that’s going to be the biggest roadblock: How do we scale up production fast enough and get acceptance through the industry to utilize new technologies? We have to adopt these technologies not only from a regulatory perspective, but from an application perspective as well.                  

Luther:                        And, finally, bringing this back home, how do algae affect the average consumer’s kitchen table? You’ve talked a lot about DHA. Other than just DHA, are there other ways that it’ll affect the average consumer, their kitchen table, their health, the food they eat?

Paul:                            Yeah. By enhancing the food that consumers eat, we know we have a very safe supply of ingredients, low in contaminants. Global regulatory agencies and governments around the world are watching the food we eat more and more to make sure there are no contaminants in there.

                                Utilizing a technology like algae that’s grown under very specific conditions allows us to produce a much more consistent and much safer human food product.

                                As well, there are potential attributes not only looking at the fatty acid component of algae, but maybe some of the other structural components that are coming down the pipe that we can say, by utilizing the structural components of algae, the carbohydrates in algae, the protein in algae, we can enhance our overall diet, broaden our spectrum of nutrients and ingredients that we consume to give us a healthier population.

Luther:                        Paul Groenewegen, director of innovation and nutrition at Masterfeeds , an Alltech company. Thank you for your time.

Paul:                            Thank you.

Paul Groenewegen spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. For access, click on the button below.

The 20-somethings were from all over the world: the U.S., England, Ireland, Turkey, Brazil, Kazakhstan and Peru. And if they had one thing in common, it was their view of the supermarket.

“Do you think grocery stores are important?” they were asked by Alltech Chief Innovation Officer Aidan Connolly.

“Yes, they’re very important,” replied one young woman, “for old people.”

Leading Alltech’s Corporate Career Development Program, Connolly was hearing in this next generation of consumers a receptiveness for the sweeping, fundamental changes in the production, distribution, purchase and consumption of food heralded by the $13.4 billion Amazon acquisition of Whole Foods.

“When we buy our groceries, we mostly buy online,” one student told him.

The huge e-commerce company had already been dipping its toe in the food delivery market when it turned its eye toward Whole Foods.  AmazonFresh, a subsidiary of Amazon.com, is a grocery delivery service currently available in some U.S. states, London, Tokyo and Berlin.

The announced intentions of this mega consumer product distributor to take a step further into the brick-and-mortar premium grocery business has made waves all along the food chain, from retail to agriculture.

“I think it's an extraordinary moment,” said Mary Shelman, former director of Harvard Business School's Agribusiness Program. “This could truly be a disruption rather than a change."

“Disruption means you do something in a completely different way rather than just making some incremental changes to it,” Shelman continued. “Amazon, which had historically envisioned a world without brick-and-mortar stores, is now, in one fell swoop, making a significant run into that brick-and-mortar world.”

The deal, providing Amazon access to Whole Foods’ 466 stores in the United States and the United Kingdom, hasn’t yet closed, and there is plenty of speculation that competitive bids could materialize. But Amazon has its reasons to pursue the acquisition with determination.

“Food is the least penetrated category from the online shopping standpoint,” explained Shelman. “Amazon clearly wants to bring that into the fold. I think the realization is that it takes some different skills and infrastructure in food than perhaps they are set up to deal with, so this gives them a tremendous opportunity to learn from that, and to run with that.”

Addressing widely held consumer perceptions may also play an important role in this odd-couple marriage.

As Shelman sees it, “For Amazon, the biggest challenge in delivering fresh products to your home is what everybody always says: ‘Oh, I don't trust them. I want to go pick out my fruits and veggies and my meats myself.’ Whole Foods brings in that brand name that has value, so it’s: ‘I trust Whole Foods, so now I trust Amazon bringing me Whole Foods quality. Do I trust Whole Foods to deliver for me? I don't think they're very efficient. But Amazon delivering Whole Foods is like, wow!’ So both sides win from the opposite brand name.”

What might this mean at some key points along the food supply chain?

Producers and growers in an Amazon/Whole Foods world

The biggest obstacle for producers trying to access markets through the food retail industry today is the enormous power held by the supermarket and big box chains as gatekeepers to the consumer.

Control of in-store product positioning provides an enormous source of revenue for traditional supermarkets. So-called “slotting fees” must be paid to win premium space in order for a product to appear on the shelves of Krogers, Safeways and other major chain stores.

“Only big companies can afford to do that,” said Shelman. “Even if you are a small company and can find the money to pay a slotting fee to get on the shelf, the ongoing costs of the promotion and support that it takes to actually get your sales up to a level that is acceptable to that retailer is a staggering number — something like $100 million, $10 million to introduce a new brand today.”

A major casualty of this, she notes, is creativity.

“We see that in the big packet food industries: They just bring out yet another flavor, another line, another variation in that brand, and they keep blocking up that shelf,” she explained. “You really don't get any true innovation there.”

Shelman believes the evolution of the “Amazon marketplace” is providing new opportunities for smaller producers to bypass those costs and directly reach the consumer.

But Connolly believes “Big Ag” and smaller farmers alike have some concern.

“It's part of seismic changes taking place in the food chain,” he said. “The top 10 food companies have seen a decline in their sales, profits and share prices as consumers reject traditional famous food brands built around processed foods.”

Every day these shifts are reflected in the news: Nestlé being a $3.5 billion target by an activist investor; Kraft’s attempted takeover of Unilever; Amazon gobbling up Whole Foods; and Wal-Mart’s purchase of Jet.com 

So, if traditional “Big Food” players are in trouble, how should agribusiness respond?

“It must adapt to the new reality,” says Connolly, listing the top three strategies food businesses must take to thrive in the changing landscape:

1. Become lean: Big Food that is merging or being acquired will seek to drive costs out of the system.
2. Deliver prosumer values to address the prosumer and millennial agenda of traceability, transparency, sustainability, welfare and removing unwanted additives.
3. Go direct and to build your own brands again.  

Connolly notes that “this is a new era with the food business re-fragmenting, and smaller brands will be faster to build and sell direct. Consumer sales over the internet offer an opportunity for ‘Big Ag’ that was not available 20 years ago.”

In this new coupling, who will take the lead? Shelman expects that Amazon will pull Whole Foods toward its brand promise and mass appeal: convenience and reasonably priced items across quality levels.

“I don't believe Amazon will broadly adopt the same positioning and values as Whole Foods across their broader food portfolio,” she said. “I can't imagine them not selling Cheerios or Kraft Mac & Cheese online. They may initially adopt a higher quality approach in fresh products — meats and produce, since those seem to require a stronger brand to sell.” 

Consumers in an Amazon/Whole Foods world

Photo Credit: Whole Foods

Today’s consumer is swimming in a sea of options and information. The innovation of the “food kit” has given rise to the home-delivered packages offered by Blue Apron, HelloFresh, Plated, Purple Carrot and Home Chef. Nestlé has invested in the prepared meal delivery service Freshly, and Sun Basket has attracted Unilever capital.

It takes time to complete a merger with all the complexities brought to the table by Amazon and Whole Foods. So what's going to happen to the rest of the food industry while t’s are crossed and i’s are dotted? Views differ about the extent to which the merger will cause change.

Speaking to analysts and investors at a conference in Boston, Kroger CFO Mike Schlotman said he doesn’t envision a major shift to people ordering groceries online for delivery to their homes.

“Part of me refuses to believe that everybody is just going to sit at home and everything is going to be brought to their doorstep and nobody is ever going to leave home to do anything again,” said Schlotman.

But, according to Connolly, “the United States has been slower to the party than other parts of the world,” and there is plenty of evidence that significant change is already well underway.

“Maybe there are some of us that take joy in walking up and down the grocery aisle and doing that as our chore, but what consumers are saying is that they're voting with their feet,” Connolly said. “They're saying, ‘If you give me a better alternative, I won’t go to the store.’"

Connolly recalls the observations of a friend who is involved in the food industry in the U.K., working with Marks & Spencer, Sainsbury’s and Tesco, who forecasts that we're in the last five to eight years of the big box model of the supermarket.

“What we're going to see in the future, according to him, is much more of a Starbucks version of a grocery store,where you can buy the small produce, organic, the pieces that you want to have hands on, but for the most part, you're going to pick it on your cell phone, ordering it directly, and it will arrive today by delivery in a half-an-hour increment,” he explained. “So if you say 4:00 p.m., it'll be between 4:00 p.m. and 4:30 p.m. In the future, that will be delivered by robots, which is already happening in England, and eventually it'll happen by drone.”

One of the world’s largest pork producers, Smithfield Shuanghui of China, has a strategic cooperation agreement to sell packaged Smithfield meats through JD.com, a Chinese version of Amazon.

“They’re creating a cold chain system from the warehouse to the customer, selling fresh chilled foods, including packaged meats,” says Michael Woolsey, senior strategic manager for Alltech China. “If a customer in the morning decides they want to have hotdogs from Smithfield for dinner that night, they take out their cell phone, dial up JD.com, order the hotdogs and the truck shows up later that afternoon. Chilled distribution the entire way to the consumer’s door. So, it’s a superior product. It’s what consumers want. It’s an exciting development.”

Shelman says today’s marketplace “is just fundamentally different” as consumers are being conditioned to a whole different set of solutions.

“I think for everybody now, the fun of thinking about these different scenarios and letting go of the old retail model is leading us all to be very challenged to think about what that future is going to be like,” she said. “How are we going to get our food 10 years from now?”

Connolly sees profound change arriving even sooner.

“If we think of machine vision, where you use a camera with artificial intelligence, you can teach your camera to recognize what you want in your meat, what you want in your produce,” he said. “It can learn to smell the produce. It can learn to recognize the color that you want. It can probably even, using these internet of things-type devices, give you all of the origins of and the pesticides used in the products, all of the things that might cause allergies.

“So, your drone, equipped with the right camera and the right artificial intelligence, can do these things,” continued Connolly. “And we are not talking about something that is going to happen in the next 30 years. This can happen within the next 12 months.”

And 20-somethings from Brazil to Kazakhstan can hardly wait.

On long, hot summer days, at family celebrations and on national holidays, there’s nothing better than finishing off the day with fresh-from-the-cow, homemade ice cream.

Alltech territory sales manager Scott Holloway, who grew up in Bowie, Texas, has fond memories of his great-grandmother Ineta Wood’s ice cream, made fresh with milk from their family dairy. Scott’s family continues to use Grandmother Wood’s recipe for every summer holiday celebration, from Memorial Day to the Fourth of July to Labor Day, and especially for family birthdays. Even friends of the family expect it to be at every gathering!

“I remember, growing up, my mother making it, and the sound of the electric freezer running in the kitchen,” said Scott. “The best part is licking the paddle after the ice cream is frozen. Now my kids enjoy doing that, just as I did.”

Today, the Holloways have an old White Mountain hand-crank freezer that makes the magic happen. He says it’s fun to use, even though it’s hard work, and the end result of  rich, creamy ice cream is worth the effort. Over the years, the family has experimented with delicious changes on the basic recipe. Scott’s favorite flavor is chocolate, although his grandmother, Grandma Kay, makes an excellent Butterfinger recipe that is a family favorite.

Scott says that the best part about the ice cream was always the fresh milk used from their own family dairy herd. His grandfather started the dairy in 1971, when they milked about 150 Brown Swiss and Holstein cows. Scott’s father and Scott himself both came back and worked at the dairy, too, until they sold in 2014. Now they enjoy the family’s ice cream recipe using store-bought milk, but they cherish the special memories of when the milk came from their own cows.

Grandmother Wood’s Homemade Ice Cream

You’ll need an ice cream freezer with a 1-gallon freezer can for this recipe.

4 eggs

2 cups sugar

3 tablespoons flour

Dash of salt

1 quart whipping cream

1 tablespoon vanilla extract

Milk (about 2/3 gallon)

Mix 1 cup of sugar, flour and salt in a microwave-safe bowl. Whisk about 1 quart of milk into sugar mixture. Microwave for 3 minutes, then whisk. Microwave again for about 2 minutes.

While cooking sugar mixture, beat eggs in a separate bowl. Beat ½ cup of hot mixture into eggs and then quickly beat eggs into the rest of the hot mixture. Microwave 3–4 minutes.

Chill in refrigerator.

Once chilled, place in a large mixing bowl. Mix in the remaining cup of sugar and vanilla extract, then add whipping cream. Stir in milk to fill bowl. Pour ice cream mixture into freezer can and add more milk until can is filled. Freeze according to freezer instructions.

Have a question or comment?

Long summer days, grills sizzling, friends laughing.

Fall colors, crisp leaves, fans cheering on their favorite football teams.

Winter chill, comfort food, families coming together for the holidays.

Spring flowers, rain showers, graduation parties.

No matter the season, this easy-to-prepare hamburger cheese dip is a fan favorite. For Randi Walden, an Alltech assistant marketing specialist in Georgia, this is her go-to potluck recipe when she wants to be the party hero!

Made of two kinds of cheese combined with ground beef, this dip showcases the delicious products of both the dairy and beef industries, and the short ingredient list and quick preparation time make the dish perfect for any pop-up party.

Randi’s Hamburger Cheese Dip

1 package Velveeta (16 ounces)

1 package cream cheese (8 ounces)

1 pound hamburger meat, browned and drained (if greasy)

While the hamburger meat is browning, cube all the cheese and place it into a microwave-safe mixing bowl. Microwave until cheese is melted, stirring as needed to combine. Once the cheese is melted and mixed, stir in the browned hamburger meat. Serve with chips of your choice.

This may also be made in a slow cooker, to help keep it warm for serving.

Have a question or comment?

To listen to our entire conversation with Aidan, click on the player.

Tom:                As Alltech's chief innovation officer, Aidan Connolly is responsible for the commercialization of Alltech's global research efforts. And as a company vice president, he oversees corporate account strategy. He led the implementation of The Pearse Lyons Accelerator, a late-stage agri-tech accelerator, and he joins us to talk about it. Thanks for being with us.

Aidan:              Thank you.

Behind the scenes of the first Pearse Lyons Accelerator program

Tom:                First, who originated the idea of establishing this accelerator program?

Aidan:              I think it's actually hard to remember exactly where it starts. I know the genesis, as always, came from Dr. Lyons himself. He has tasked us with trying to make the ONE conference the biggest, the greatest, the reason to come to Lexington in May, and obviously 4,000 people have responded to that. But this accelerator was to help people like himself, back 20, 35 years ago, starting their own businesses to have the help that they need to be successful.

Tom:                Okay. And we'll get into what you're looking for in just a minute. First of all, Alltech has partnered for this program with Dogpatch Labs of Dublin. What does each company bring to the project?

Aidan:              Well, Alltech, for those not familiar, is headquartered here in Lexington, Kentucky. We employ (approx.) 5,500 people, and we're in (approx.) 130 countries. So, clearly, from an agricultural perspective, from a food production perspective, we've got a very big footprint.

                        Conversely, Dogpatch is all about startups. It's all about people with ideas. Usually, they start on their own. Maybe a couple of people decide they're going to form a company, and they have been very good about helping those companies get started. We felt they would help us with the companies we selected, typically who are a little bit further down the process, but would provide some of that mentoring and help that we were looking for.

Tom:                So you put out this call for accelerator applications, and you got quite a response. What did it look like?

Aidan:              To put it in context, we got 183 applicants from 38 countries. In the agricultural technology field, that would already make it the number one program in the world. So just overnight, it became the number one program. And Dogpatch has connections with Google, and they have connections with many of the top organizations in the world as well. So, clearly, they brought something to the table. But I think there's a lot of attraction for these startups and partnering with Alltech and seeing that as part of their successful future.

Tom:                183 applicants and you had to pare this down to 10. It must have been quite challenging.

Aidan:              We did. It was a big task, and I think some dropped off fairly quickly, as can be the case. But I still think we had about 150 really good applications, which is remarkable. And when you're looking at them, you are looking to think, “Is this the next Alltech?” It was very exciting to be part of that, and I know that's a big thing to think about, but I think from their side as well. They were very happy to be evaluated on that basis. They were very excited about what they are doing.

Tom:                And we have potential investors coming to town to listen to their pitches. Any estimate of how many?

Aidan:              Well, the part of the conference that's specific to investors will be attended by almost 200 people who are uniquely coming to the investor part. Of course, there's a further 3,500, close to 4,000 people, who are coming to the conference for the overall conference. But, yeah, those 200 people would represent some of the bigger investors in agriculture and indeed in startups. They're not just coming from overseas, not just coming from California, of course, but even from Louisville and Cincinnati and Nashville. There are quite a lot of these startup hubs and investors who are both angel investors and venture capitalists really excited about the idea of being here.

Tom:                And does Dr. Lyons himself get involved while they're here?

Aidan:              He does indeed. In fact, he got involved with the program at every stage of it. Of course, he remembers starting Alltech in 1980 with $10,000. When you have somebody, a live person who actually built their own business, who has created something the size of Alltech, it's exciting, I think, if you're an entrepreneur, to imagine yourself being that person in the future.

Tom:                You touched on this earlier, but maybe you could expand on the benefits of this accelerator program?

Aidan:              Everybody sees things through their own eyes. But what I could say is, the 10 companies came back and said they had all raised an excess of $3 million each already, from finance rounds. So $30 million over 10 companies; they didn't really need more money. What they did need was help with sales and marketing strategy to find customers. So this was a very big deliverable for them. Frankly, being in front of 4,000 people in Lexington is a very big deal for them. What's better than when you have a great idea to get that level of exposure?

                        At Alltech's global footprint…that is something that if you're starting out with two people, 10 people, or 15 people, you just don't readily get access to. I'd say those are the three deliverables that they highlighted primarily that they saw coming from the program.

Finding a home for agri-tech and food innovation

Tom:                Dr. Lyons has suggested that Lexington should become a hub of agricultural technology innovation. Do you agree with that? Tell us what you envision.

Aidan:              I think Kentucky can sometimes underplay Kentucky's role in terms of agriculture. It obviously has a tradition of tobacco. It has a tradition of beef cattle. It recently has become a pretty big producer of chickens, soybeans, corn. From that aspect, there's a lot going on in Kentucky with some of the larger farms. But Kentucky is also very much focused, or has a tradition of small farms as well. And I think you see consumers looking increasingly for local, fresh, to know the name of the producer, the farmer, to be able to go and visit them. So I think opportunities for cheeses, et cetera.

                        What we're looking at in farming is basically 12,000 years of doing the same thing. And this digital disruption, this explosion in using sensors and using robots and using drones. It's changing every aspect of our life. But it's changing agriculture even more than it does the rest of life.

                        Lexington, and Kentucky in particular, has an opportunity to be front and center in this, as it wants to be. Alltech is doing its best to make sure that that happens. We would love for more people to join us. We're hoping to see people there at the conference. And if they come up and say, "How are we going to help make this happen together?” we're all ears; that's our goal.

Tom:                From what I gather talking to various folks from Alltech, there's a great deal of enthusiasm about the work at hand. And I'm asking everybody, "What is it about what you do that you enjoy most?"

Aidan:              Well, if you didn't have fun, then you weren't enjoying it, you shouldn't work for whoever you're working for, but you will find that Alltech people have a disproportionate level of enjoyment in their company.

                        Clearly, we as locals will know here, we do make our beer, our own whiskey and bourbon, and that does help of course, as well. But the food business has become a very exciting business to be in. Some people call it a sexy business, which it traditionally was not. For the last whatever number of years, certainly in my career, it never seemed as though my mom was proud of what I did. Now, when you ask her, she's very proud that I don't work for the traditional industries of banking or real estate or whatever else, because food is critical. And people understand, and have a relationship with what they're consuming. They want to understand more about it. They want to be healthy. They want to be natural. And they want to do good for their body and for the bodies of their children. So yeah, it seems to be really the right time to be in this business.

Tom:                Alltech chief innovation officer, Aidan Connolly. Thank you so much for joining us.

Aidan:              Thank you.

Aidan Connolly spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. For access, click on the button below.