Month: April 2023

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I’m a naturally curious person, but sometimes life (read: kids) takes me off course. But recently, I seized the opportunity for a quiet weekend…and it was glorious. After a hike on an unseasonably warm February morning, I sat down to think about what to explore for my next D2D post. I grabbed a go-to snack of mine – a peanut butter & chocolate RxBAR – and tore off the wrapper.

But this time, instead of tossing the wrapper to begin chewing at that dense, doughy square, I gingerly pieced the wrapper back together. And there was my lightbulb: the ingredients so clearly and cleverly listed on the front of the package. Where are these ingredients from? How is this product made? And how does it get to my grocery store?

So begins my trek on where some of our favorite foods come from. Bon voyage!

RxBAR Protein Bar: Simple ingredients, complex sourcing

So here’s this beige, homogenized-looking bar, but its four ingredients are anything but. Each of these listed foods – dates, peanuts, egg whites, and chocolate – has a source. And from its source begins a journey to us, often with a few stops along the way.

For instance, the main ingredient in this protein bar is dates, which are commonly cultivated and packaged in the Middle East. The Middle East. Not some fabricated, gooey by-product made within RxBAR’s manufacturing facility. And because fresh dates are perishable, they must be cleaned and packaged close by and shipped directly to the U.S. facility for processing. I’m already feeling more globally connected😊

Next up are peanuts, grown and shelled in the southeastern U.S., followed by egg whites. Despite egg whites’ domestic roots, they have an interesting story to tell. Some food manufacturers, like RxBAR, have just a few product lines – none of which require the whole egg. All they need to make their products is egg white powder – a significantly cheaper, lighter, and less fragile product derived from whole eggs.

Separating and dehydrating eggs into discrete products occurs at an egg processing plant. The egg product then ships to the manufacturing facility for reconstitution and is added as an ingredient in its protein bar formula. If I were that humble egg white in that little egg at the beginning of this process, you better hope I had no idea of that long path ahead.

The last main ingredient, chocolate, requires us to go abroad once again – to the Ivory Coast. There, the cacao beans are picked, fermented, dried, packaged and exported to a U.S. processing facility for roasting and grinding before being sent to the manufacturing facility.

With all ingredients intact, the manufacturer also adds salt and other additives not listed on the wrapper to preserve freshness, modify color, and/or enhance flavor. In the case of RxBAR, the end product goes into a high-barrier film wrapper to withstand the next leg of its journey.

Because RxBAR is owned by Kellogg’s, it can utilize the parent company’s existing distribution network to get its product to grocery stores and other retailers across 15 countries. It’s incredible where this one simple bar has been, right?

Whole wheat bread: a lesson in distribution networks

My curiosity hasn’t even begun to be sated, though. Next? Let’s pick something domestically produced and seemingly straight-forward. How about the U.S.’s most popular wheat bread, Nature’s Own?

The Midwest U.S. is known for its production and global distribution of wheat and its derived products, like flour, wheat germ, gluten, yeast, starch, among others. So it’s no surprise that the wheat products in Nature’s Own 100% whole wheat bread are mostly grown in North Dakota, Kansas, and Colorado and then shipped and processed to at least 20 different states within the country.

Next up by weight is brown sugar. This is typically a mix of refined white sugar and molasses and probably sourced from sugar beets grown in North Dakota and Minnesota. Soybeans, grown and processed in the Midwest, create the next two ingredients via separate processing lines: soybean oil and lecithin.

What I found most interesting about this food product is not necessarily the ingredients, but the journey they take. Because Flowers Foods owns Nature’s Own as well as Wonder Bread, Dave’s Killer Bread, and Tastykake, the company utilizes its network of bakeries across the U.S. to manufacture these products.

If you think switching subway lines is hard, try adding in buses, taxis, rail trains, and bikes all while picking up and delivering Doordash orders within the one-hour limit. Yep, not easy at all. Enter an established nationwide distribution network comprised of rails and roads to make life easier and products fresher.

Cashew milk: Have a little help from…a global conglomerate

When visiting the grocery store, are you as overwhelmed as I am at the dairy aisle? As if there isn’t enough competition among traditional milks – organic, conventional, regional, skim, whole – we must mine through the plant-based options, too. And manufacturing these alternative milks are way more complicated than its traditional, sole-ingredient counterpart.

Why? Turn that carton around and take a look at that ingredient list. Surprisingly extensive, right? For this supermarket trip, I’m going to give Silk vanilla cashew milk a shot. For brevity (not to mention my sanity), I’m looking into its top five ingredients. Here we go…

Cashews. Delicious, creamy…and definitely not from around these parts. Cashew trees need constant heat and sunlight to grow, which is why they are mostly cultivated in India; Africa and Vietnam are also significant exporters to U.S. Next up by ingredient weight are almonds, which are domestically produced. In fact, 80% of the global supply comes from California alone.

Nuts comprise the bulk of the product, with a lengthy series of additives making up the balance. Many of these are produced, manufactured, and exported to U.S. processing facilities. These ingredients include locust bean gum sourced from carob trees along the Mediterranean; sunflower lecithin, formerly from Ukraine and Russia, but now most likely from Argentina and Romania; and vanilla from Madagascar. Vitamins are also mixed in to deliver a fortified product that can more readily compete with traditional milk’s nutrient density.

All these moving parts make me wonder: how can a company source so many global ingredients to supermarkets worldwide before the product expires? Simple…just get purchased by Danone, a massive international food company with reaches into the furthest parts of the world.

Otherwise, a company may be stuck with just a couple U.S. facilities and then be forced to orchestrate its own distribution system in hopes that its products arrive on time…and not expired.

Coffee: A unique ‘blend’ of hemispheres

Ah, coffee. This is probably nearest and dearest to my heart on this list. And not just because it brings joy to me each and every morning, but also because each heavenly sip truly connects the Southern Hemisphere with the Northern Hemisphere. Every. Single. Granule.

You see, you think coffee would be super simple to envision its journey because it’s just one ingredient, but it couldn’t be farther from the truth.

Let’s take Folgers, one of America’s favorite coffee brands, for a ride. Similar to many other large coffee company brands you see at your supermarket, Folgers uses a mix of robusta and arabica coffee beans in their blend.

Robusta beans provide that caffeine rush but at the cost of a more grainy, harsh taste. Arabica, on the other hand, is smoother, has more depth of flavor, and is harder to cultivate. Specialty coffees are usually 100% arabica, which is one reason why you’ll see them at a higher price point.

To keep its prices down, Folgers is reported to blend their coffees with 60% robusta and 40% arabica beans from all across the “coffee belt”, the equatorial line where coffee grows in abundance. And when I write “blend”, I mean it.

You know how you’ll see labels showing where the beans are from, like “100% Colombian”, “Ugandan”, or “South American blend”? You won’t find such a level of specificity with Folgers Classic Roast. Why? Because they collect the mix of beans from across the coffee belt, roast and grind them in their New Orleans facility, and then package and distribute across the U.S. and Asia via its parent company, Procter & Gamble. Seriously, a global connection in every ground.

Value & connection in our food

Now I can’t help but look at ingredient labels; not just for nutritional and health reasons, but for exploration and continued curiosity. Even with seemingly no end to inflation in sight, it puts prices for these goods in a different perspective. Yes, I need to be more mindful of my wallet when going to the grocery store nowadays, but the value is undeniable.

And although globalization feels less prevalent over the last few years because of Covid, the war in Ukraine, logistical snafus like the Ever Given canal blockage, just to name a few, we depend on one another. It’s a complicated, interwoven relationship with nations across the globe where one small snag weakens the fabric of interconnected networks. And as the war continues and other global situations arise that disrupt our food system, there’s still no denying these key partnerships provide the choices, convenience and prices we’ve all become accustomed to.

So with that, take heart that these suddenly complicated global food products, like cashew milk and white chocolate macadamia nut cookies, will continue to fill our store shelves.

Dean Foods was founded in 1925 by Samuel E. Dean, Sr., who guided the growth and development of a basic dairy milk processing operation into something much bigger and more far-reaching.

Over time, Dean Foods moved to bottling its own brands, invested in research and product development, and alternative products, such as dry milk powder and coffee creamers, juice, teas, and other food offerings. This long-term growth strategy through the development of nutritious and tasty beverages and foods made Dean Foods one of the most recognized and respected names in its industry.

After being acquired by Suiza Foods Corporation in 2001, Dean Foods began to see real change – in its structure, and its approach to the market. Some processing plants were spun off, and an aggressive program of acquisitions and divestitures brought more and more brands and consumer offerings.

Dairy’s growing pains

Their growth was short-lived as in 2020, Dean Foods filed for bankruptcy because they were unable to meet their debt and pension obligations. Dairy Farmers of America ended up purchasing most of their assets.

By comparison, Borden Dairy also produced huge quantities of dairy milk for the retail market – more than 500 million gallons each year, from 12 plants across the country. This household name in dairy dates its origins back to 1857.

In addition to traditional milk, Borden’s family of dairy products includes lactose-free milks, flavored milks, high-protein milk, juices, creams, and dips. Similar to Dean Foods, Borden had a turbulent history of various food products, many of which were divested and sold off.

Yet, they also went bankrupt in 2020 and sold their assets to New Dairy Opco LLC owned by a former CEO of Dean Foods, Gregg Engles, and Kohlberg Kravis Roberts (KKR).  They struggled with the rising cost of milk combined with their debt forced them in filing for bankruptcy.

Is a changing industry to blame?

Analyst reports show that the most commonly cited reason for the plight of Dean Foods rests in the fundamental changes that have been underway in the dairy sector for several decades. To many observers, both companies are simply victims of structural changes in the dairy industry that were just too big to overcome. Here are a few examples that come to mind:

• Fewer family dairy farmers. Dean Foods’ midwestern heritage helped shape a focus on buying milk from smaller dairy producers. However, the company couldn’t source enough whole milk at prices competitive with those offered by larger, more efficient operators.
• Changing milk processing patterns. As larger and more efficient dairy operations emerged, large processing and distribution centers began to change, as well. Many producers faced the cold reality of operating outside these new structural realities, adding to the cost-price disadvantage they faced.
• More competition from retailers. When huge companies such as Walmart and Kroger decided to aggressively market their own dairy labels, Dean Foods and other processors were put in the position of becoming not just suppliers to such companies, but competitors to them as well.

Or dairy’s changing consumer tastes?

But structural change was only part of the picture facing Dean Foods and the entire dairy industry. Changing dietary patterns and increasingly complex consumer demands also had to be considered.

Lower consumption of whole milk.

Fewer of us drink a glass of milk at dinner now. Evolving taste and health preferences, and changed lifestyle means U.S. households aren’t consuming as many whole milk products as in the past.

U.S. Department of Agriculture statistics show that per-capita consumption of dairy milk beverages fell by 14% between 2015 and 2021. If you look back at 1975 when everyone drank a glass of milk at breakfast, lunch, and dinner, the consumption in 2021 went to 134 pounds per person from 247 pounds…a precipitous drop of 46%.

 

Rise in demand for alternative dairy-free products.

Lately, consumers are showing a lot of love for a variety of alternative dairy milks: almond, walnut, oat, potato, hazelnut, flax, tiger nut, quinoa, chia seed, macadamia, soy, cashew, rice, pea, coconut, and even hemp.

Despite this growth, consumers only consume about 6 pounds per year. Also, there are other animals that produce milk for human consumption as well: goats, sheep, camel, and buffalo – all eating into the cow’s milk market share.

Environmental sensitivities.

More and more consumers also have indicated a preference for companies that mirror their own desire to be “close to” nature and protective of the environment and its inhabitants. Companies conveying these desired values tend to connect better with consumers. They want to see the cow or the plant or the farm where their product came from.

Or does the company need changing?

For Dean Foods in particular, among the most contentious points raised in any analysis is the issue of “poor management” and “bad decision-making.” Hindsight and second-guessing follow business failure like kids chase ice cream trucks. But many critics point to several factors that may have contributed to the mess facing the company.

• Mistakes in managing the brand portfolio. For example, the company’s willingness to sell off some of its plant-based product alternatives and “healthy foods” units have been widely criticized. Such a strategy made it imperative for the company to maximize the operational efficiency of its traditional dairy businesses, which has proven to be a very daunting task, given the economic pressures facing the production industry.
• Failure to listen. The company has faced charges of not listening to the consumer and failing to recognize the fundamental changes in their expectations. Consumers want more choices that match health concerns and personal values. Reports by environmental groups citing the company’s alleged poor performance in dealing with water quality and other environmental protections can’t be ruled out as a contributing factor to the present situation.

Say ‘cheese’…please??

The FDA recently issued a draft guidance on how to label non-dairy milks. They want to ensure that plant-based milks are sold as alternatives to milk and not to be misconstrued as milk.  The agency’s recommendation is that plant-based beverages with “milk” in its product name show nutritional differences from cow’s milk on the carton’s label.  For instance, does it have more or less Vitamin D, calcium, potassium, and vitamins A and B-12?

Yet when one looks at overall milk demand and dairy cows – the numbers support that consumers still look to the cow for their dairy.

Total Milk Production in the U.S., in million pounds 

Milk production has increased while the number of U.S. dairy cows has remained steady, at just over 9 million head. Milk volume has also increased worldwide by over 9% since 2015. Dairy cows today are much more efficient due to more sophisticated feed and genetics. The average U.S. dairy cow produces 24,262 pounds per year versus ten years ago when it was 21,722 pounds a year.  Cows that eat just grass give about 50 glasses of milk a day. But cows that eat a mixture of corn, vitamins, grass, and hay can double their volume to about 100 glasses of milk a day.

But if consumers are not drinking as much milk, then why did milk production increase?  It is all about the cheese.  Between pizza, charcuterie boards, macaroni and cheese, and everything else about cheese, the milk volume has increased by 12%.

What’s next?

The FDA has just provided a draft guidance in to ensure the consumer is not confused about the nutritional difference between cow’s milk and plant-based milk. The dairy industry fought against the word ‘milk’ when it was linked to a tree, a nut, or grain because it doesn’t have the same levels of calcium, vitamin D, and other nutrients.  While plant-based milks are fortified, those nutrients are not necessarily all absorbed by the body.

The FDA requested that all alternative drinks, if they have the word ‘milk’ on the label, compare to cows milk.  For instance, the label would say, ‘contains lower amounts of Vitamin D and calcium than milk.”

For the average consumer, the take-away from the Deans Food and Borden saga is fairly straight-forward. Despite the continuing difficulties facing the dairy industry, they will see ample supplies of reasonably priced dairy products and dairy alternatives. Consumers can expect to see the number and variety of dairy products continue to grow, and the relentless competitive forces at work across the industry hold prices down.

Potentially the more important lesson may involve other sectors of the food industry. Business strategy, structure and operations must be linked to the realities of the market. That includes adaptation to new market economics, and the structure and way of doing business that accommodates them.