How Millennial Tastes Shape A New Generation Of Food Startups

The craft movement has moved beyond beer. Today’s new food and beverage products are likely to be handmade, creative and adventuresome.

The eats and drinks are local, fresh and healthy too — often organic. And it doesn’t hurt to be a friend of the planet.

The front door is the new drive-through. Food arrives at the home or office with tech-enabled efficiency powering all aspects of the food supply chain.

According to entrepreneurship nonprofit Endeavor, South Florida is ripe for food-and-beverage startups building on these national trends because the critical ingredients are already here: a strong food service sector, culinary culture and an appreciation for green eating.

That last element is key to the nation’s $5.7 billion food-startup investment scene, which is driven by millennials, now the largest U.S. generation.

Millennials’ preference for healthier, “real food” married with convenience is the recipe for success, a 2015 Goldman Sachs report found. They are more likely than any other age group to buy all-natural and organic products, for instance, and are 45 percent more likely to buy these types of products than others. Millennials also are more likely than Boomers or GenXers to favor ethnic and artisanal food and beverage products –.for indulgences, craft doughnuts are the new cupcakes.

“We expect millennials to account for more than 75 percent of growth within the food vertical over the next decade,” the Goldman analysts said. And while the world’s biggest food brands are beginning to embrace the trends, it is the small nimble companies that are most likely to drive innovation, the report said.

South Florida has plenty of those. Wynwood-born Panther Coffee is opening up cafes around South Florida and sells its artisan coffee worldwide. Tio Foods, maker of organic gazpacho-style soups in bottles, recently attracted General Mills as an investor.

Homegrown meal delivery companies have proliferated, with the likes of DeliverLean, Fit2Go, The Fresh Diet and Fresh Meal Plan delivering health- and calorie-conscious meals to homes and businesses, making eating better as easy as ordering up an Uber.

Also sprouting up is an entire vertical of alcohol-related startups, including craft brewers and spirits makers, distributors and consumer apps — such as SpeedETab, Klink, Drizly and Minibar — that make it easier to order or bring the party to you.

As for comestible products, the common denominator, once again: artisan and adventurous. The family-run Filthy Food seeks to raise the bar on cocktail garnishes, creating a new craft category. “It’s the details that make a great drink experience, and bars that care about those details serve Filthy,” said Daniel Singer, one of the co-founders.

Investment is heating up. While food-related businesses are lagging other startup sectors, funding interest is perking up, particularly for food-tech businesses.

Nationally, food-related startup investments totaled $5.7 billion in 2015, up 152 percent from 2014, according to data research firm CB Insights, and large corporations are getting into the action. Kellogg, for instance, recently announced a $100 million venture fund to invest in new companies.

At the same time, incubators, accelerators, food boot camps, culinary programs, shared kitchens, pop-up eateries, farmers markets and the like have been proliferating around the country.

Still, while interest is up, the row to becoming one of the 20,000 new food products introduced each year isn’t an easy one to hoe. Becoming a successful food entrepreneur takes time, financial sacrifice and a determined, passionate mind-set.

Newly opened Grown, an all-organic fast-food eatery in South Miami, is on trend in every way, said Jesus Vazquez, program coordinator at the Miami Culinary Institute at Miami Dade College. The child-friendly restaurant is convenient, eco-friendly and features healthy, farm-to-table ingredients. It also has an advantage over most startups: It is owned by former Miami Heat star Ray Allen and his wife, Shannon, who can afford to hire experts to run many aspects of their business. Most entrepreneurs don’t have anywhere near those kinds of resources.

“They often don’t know what they are stepping into, that it is a beyond full-time career, especially in the first year as they are building their brand” says Jesus Vazquez, program director at Miami Culinary Institute. Vazquez, who has owned and run restaurants and done international consulting work for food chains says, “Yes, it’s about the food, but food is really a small part of it. You have to be brutally honest with yourself, and if there is a weakness, before you spend everything you have, work on developing the skills that are lacking.”

Fortunately, it can be done, as local entrepreneurs are proving, and new local, free resources that can help are taking root.

Vazquez mentors students in the free two-year-old 10,000 Businesses at Miami Dade College that has graduated nearly 200 businesses, including about a dozen food entrepreneurs that have included Panther Coffee, Cold Pressed Raw and Little Havana’s Azucar Ice Cream.

Small Business Development Centers in Fort Lauderdale and at Florida International University, the Hispanic Business Initiative Foundation (HBIF) and Endeavor Miami are all focused on helping startups and existing small businesses scale up.

This fall, FIU plans to open Food FIU, an incubator and accelerator program on its Biscayne Bay campus. The program will focus on helping businesses in low- and moderate-income communities in three stages of development — those at the concept stage, entrepreneurs selling in farmers’ markets that are ready to move to the next level, and later stage companies that want to scale. The food innovation hub, supported in part by a $500,000 grant from Citi Foundation, will be one leg of a larger effort called StartUP FIU, an interdisciplinary multicampus resource for FIU and the community that will include physical spaces, programs and events.

The beauty of a program like Food FIU is that the program is individualized, said Valeria Perez-Ferreiro, manager of community relations for Citi Community Development, who has been working closely with the Food FIU team. “It will be uniquely shaped by Miami and this incredible asset we have in the Chaplin [School of Hospitality and Tourism Management at FIU], which is one of the top hospitality schools in the world. We’re helping make this amazing asset accessible to low- and medium-income communities.”

Indeed, Food FIU sees its incubator as a potential economic driver for struggling areas of Miami. Aspen Institute research found that food businesses are No. 1 among Hispanics and No. 3 for African-Americans in the so-called informal economy. Citi Community Development has already been working on food entrepreneurship pathways in New York City and was an early supporter of La Cocina, a food incubator program that Perez-Ferreiro founded in San Francisco.

Endeavor, a global nonprofit that selects, mentors and accelerates high-impact entrepreneurs from all industries, opened its Miami office with Knight Foundation support in 2013. Three local food-related companies — DeliverLean, My Ceviche and ginnybakes, are among 14 local companies selected to be part of the Endeavor global network so far, and several more are in the pipeline.

In a recent study, Endeavor found that food and beverage is one of five areas that could sizzle for entrepreneurial activity in South Florida because the ingredients are already here. Miami has been outperforming the rest of the state in food service earnings growth, while the number of firms and sector employment have been increasing. There’s a foodie culture here, expertise, a talent base and educational opportunities to augment progress, as well as a strong healthy and green trend to ride upon, the report found.

Failure rates are high — as much as 90 percent in some culinary sectors — and the process complex. Successful entrepreneurs may need to work with brokers, distributors, packers and grocers to get a product on store shelves. Once a product has been developed, entrepreneurs need to meet labeling and regulatory compliance, find a processing facility location, determine pricing and develop promotional material, all while dealing with perishable products.

It all takes money. Many entrepreneurs have to bootstrap it, maxing out credit cards and borrowing from family and friends.

Endeavor’s report noted that South Florida entrepreneurial investment in this sector has been sorely lagging, forcing food entrepreneurs to go elsewhere for funding.

That’s what Austin Allan did. The CEO of Tio Foods recently landed a $1.5 million investment from General Mills and other venture partners, but the process was long and difficult, he said. “There are more investors interested in food, but they didn’t understand my niche — drinkable, organic and gazpacho. They thought it was too many things,” he said. Now he plans to venture into more types of drinkable soups, and with the funding grow the line beyond the Northeast, where most of his customers are now.

Often it is an innovative twist such as the portable nature of Allan’s soups that helps them stand out in the crowd. Cold Pressed Raw, an organic and vegan juice line, opened its first of many CPR vending machines at The LAB Miami and is developing new products such as a new shot line and a cold brew coffee line in conjunction with Panther Coffee, said founder Tatiana Peisach.

A celebrity aboard doesn’t hurt. Shanti Bar partnered with soccer star Hope Solo to promote its new protein and energy bars.

The star power of Enrique Iglesias helped propel Atlantico handcrafted rums. Iglesias is not only a vocal fan of the brand (Atlantico toasts have become a staple of his shows and videos); he’s an investor and full partner.

Della Heiman went a different route. When she couldn’t make the numbers work on a brick-and-mortar restaurant space for her concept, Della Test Kitchen for plant-based food bowls, she went the food truck route — but with a big twist. She leased a large lot in Wynwood and created the Wynwood Yard, which hosts her business and a half dozen other artisan food startups she selected, along with a community garden, events stage and large centerpiece bar that has become a hangout and venue for activities ranging from tasting dinners to concerts to yoga classes. The food startups at the yard can experiment with their businesses without being under the weight of expensive rent.

“Starting small allows you to have access to the funds to make the necessary pivots to where you need to be,” said Shelly Bernal, who mentors entrepreneurs through the Small Business Development Center at FIU. The SBDC has worked with Natural Sins, a fruit and vegetable chip company, media business Hispanic Kitchen, and Expressed Juice, among others.

“Companies fail . . . usually because they ran out of time. The runway was cut short. That is usually because of timing and miscalculations along the way,” said Bernal, a specialist in international trade who has worked for Kraft Foods and Hormel Foods. “If you can reduce the costs of those miscalculations, then you have a longer runway to pivot enough to get onto the winning track. We try to help them lengthen the runway.”

And when expertise is added to natural passion, perseverance and creativity, the recipe is promising. “I do think that food entrepreneurs tend to be more emotionally attached and that’s a good thing,” Bernal said. “The art side is most amazing to witness. The stories behind food entrepreneurs are fascinating, and I appreciate the creativity and innovation that come from those stories.”

Fresh Start Beverage Company is one of those stories in the making. H.E. Neter Kush Ben Alkebulan and his girlfriend Trendolyn Hopkins, taught themselves business planning at the library while attending Florida Memorial and working three jobs. The Palm Beach County couple saved money by living in her car for awhile and developed their first product, an organic non-dairy banana milk inspired by his grandmother’s ancient African recipe.
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After testing their creation in farmer’s markets for a year, they hit their first big company milestone this summer: Banana Wave is now in Whole Foods stores throughout Florida.