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KEYNOTE: Managing in an Uncertain Economy  

The highest-rated speaker of the ELF 2019 program, Brian Beaulieu, CEO and Chief Economist, ITR Economics used humor and wit to entertain the crowd while providing recommendations on the projected economic cycles of the coming years. 

Beaulieu laid out the economic landscape for the near future. He explained how the U.S. and the global economies are currently slowing down as interest rates prepare to rise and disposable personal income begins to decrease.   While ITR Economics predicts the economy will ramp up in 2020 and overall through the next decade, this growth will not occur in a straight line. Beaulieu predicts a significant decline in 2023. Anticipating this event will allow snack manufacturers to strategize to protect profits and prepare for inevitable growth in the latter part of the decade by taking advantage of low rates and investing in their businesses.   

“Use this time to get your house in order, then get your resources lined up for the next rising trend because there is going to be a next rising trend,” Beaulieu said. “We’re not immune to the business cycle – figure out how you’re going to make money in the next rising cycle.” 

Despite the projected slowdown, Beaulieu assured attendees that they can think positively about the future. 

“Don’t get bogged down by all the negativity. We’re going to enjoy a really good run in the 2020’s,” Beaulieu said. “So, if you hear nothing else from me, hear that. This is a good time to be in business.” 

Beaulieu also discussed a topic affecting the snack industry every day – the manufacturing labor shortage. He emphasized that due to the 248,000 unfilled manufacturing jobs, snack companies will continue to be challenged by the labor market for the next eight years. He advised attendees to embrace change and to take advantage of automation and robotics.

“How is your business changing? What aspect of your business is changing?” Beaulieu asked. “It must be changing if it’s going to thrive in this future.”

Role of Private Equity in Disrupting Food Industry  

As investment funds continue to flow into the snack industry, SNAC Chairman Fritz Kohmann, CFO, Shearer’s Foods, sat down with three panelists presenting distinct perspectives on how private equity funding is fueling growth. 

The panelists began by discussing Kainos Capital’s process acquiring Whisps, how Wells Fargo's Chris Nay helped facilitate this relationship, and how the Schuman family initiated the transaction that turned Whisps into a fifty million-dollar brand. It all began when Neal Schuman, CEO, Schuman Cheese, needed to borrow funds from Wells Fargo for dehydration technology to turn the company's Italian cheese into an on-the-go, pure, baked cheese crisp made from a single ingredient – cheese. As the new product began to take off and become more time consuming, the Schuman team decided to bring in additional outside funding from Kainos Capital – a firm they believed had complimentary company cultural values, experience carving businesses out of corporations, successful management teams and a track record building brands from scratch. 

“We wanted to make sure we made a deal that had the least friction possible to our 1,300 employees, and to do that, it was really aligning our cultural values and internal core values,” said Keith Schuman, Manager, Risk Management and Business Development, Schuman Cheese. “That’s how we made that final determination.” 

Robert W. Sperry, Founding Partner, Kainos Capital, said his firm found Whisps attractive as a convenient, clean, better-for-you snack that could create value and deliver returns. From Sperry’s point of view, Schuman Cheese’s success lies within the company’s self-awareness. The Schuman family understood what they were good at – procuring cheese and mitigating the risks associated with the dairy supply chain – but they knew they didn’t have expertise navigating the snack market, so they sought out experts. 

Taking a big picture look at private equity in the snack industry, Kohmann asked Chris Nay, EVP, National Food and Beverage Leader, Wells Fargo and Sperry what drives private equity investment decisions.  Sperry explained that his top factors for identifying attractive investments are growth potential, differentiated products, and having the right existing team in place.

“There’s a conversation we have where if you’re really serious about this going forward, right now, what is your ‘go forward’ to you?” Sperry asked. 

Chris Nay believes innovative companies like Schuman Cheese will continue to attract private equity funding because firms look for brand and product potential and how they can benefit from increasing profit margins. Nay also suggests creating differentiated products and identifying “pockets of GDP” with high growth rates (snack sales continue to outpace total food and beverage sales, according to IRI).   

“Companies with growth and innovation are going to command large premiums, and you see that across the scale with the 70 to 80 deals that have happened this year,” Nay said. “PE firms want to see growth. You can’t make it work if you’re going to be $100 million in sales today and $105 million three or four years from now.”

Industry Insights: Adapting and Innovating to Exceed Consumer Needs

As consumer preferences evolve, snack companies must be agile and adapt to stay relevant. Jolie Weber, CEO, Wise Foods, asked three panelists with unique perspectives from retail and manufacturing to shed light on this challenge. 

When Weber asked Burke Raine, VP and GM, Snacks, ConAgra Brands about the top snack industry trends, he emphasized that better-for-you (BFY) is the most prominent and the most relentless trend. Raine suggested breaking this trend into different components. The first is snacks perceived as having healthier attributes, especially plant and meat-based proteins. Because wealth and protein intake have a positive correlation, Raine attributed the growth of ConAgra’s Slim Jim and Duke’s brands to the current booming economy. The second component is permissibility, or consumers using snacks to indulge in a guilt-free way. Raine emphasized that there will continue to be interest and focus on indulgence, but companies must include modern attributes, such as “made in small batches,” “includes real, whole ingredients,” “made with real sugar,” and “gluten and allergen free.”

“What we are seeing now is for a millennial, variety is the routine,” Raine said. “If you’re not constantly evolving your brand and keeping up with consumer trends that are changing far faster than you’re used to, then all of a sudden you end up with stagnated brands that don’t command any interest and don’t get picked up anymore.”

Venessa Yates, VP, Snacks, Walmart expanded on the BFY trend.  “Better-for-you is evolving in terms of what you’re expecting to see inside a pack or in the store,” she said. “Is it just a better-for-you play, or is it a better-for-me, better-for-my-family, better-for-the-environment conversation?” 

Weber then asked Karl Schroeder, President, Seattle Division, Albertsons Companies Inc. how he thinks retailers are incorporating emerging brands into their stores. Schroeder said the rise of better-for-you and emerging start-up brands has caused a shift in Albertson’s Companies’ culture and treatment of prospective brands. Before, many retailers didn’t take the first chance on new brands. Retailers were known to offer emerging brands a brief pitch meeting and to almost always ask the brand to reschedule after they’ve secured shelf space elsewhere. Today, retailers are more proactive and send team members to trade shows across the country to scout for new products. 

“We’re each assigned to pick a category or two and we’ll come back and compare notes,” Schroeder said. “Then we’ll reach out to folks and say, ‘we want to sell your product – how can we help you?’”

To close the discussion, Weber asked Venessa Yates how Walmart continues to attract and retain talent. Yates explained how Walmart is driving U.S. production by committing to invest $250 billion by 2023 into the U.S. manufacturing base to create jobs and infrastructure. Walmart also prioritizes training employees. The company has launched in-store academies for associates to learn how to become successful, valuable employees and has implemented a “Dollar a Day” program where Walmart offers associates the opportunity to earn a degree for $1 a day. 

“We don’t have a requirement that those associates then stay at Walmart for ‘X’ amount of years. If an associate gets a degree in a certain field, and they want to leave the next day, that’s perfectly fine because that’s beneficial to the U.S. economy and the U.S. workforce,” Yates said. “We’re spending a lot of time and resources and energy trying to upskill both our associates and our communities, and we’ll continue to focus on that.”

Fully Staffed: How to Attract, Develop and Retain Workers

Eric Chester, Founder, Center for Work Ethic Development, shared practical strategies on how to recruit and retain employees during one of the most challenging labor markets in history. He discussed the importance of hunting (not fishing) for potential hires by targeting a specific audience instead of posting a job ad on a generic platform. Companies should prioritize building relationships with schools and retirement communities by visiting, snacks in hand, with something to offer potential hires.

“We need to recruit returning military. Oftentimes we don’t really have a strategy for doing this, but great companies do,” Chester said. “They know where the returning military goes, what skills they have – they know exactly how to go about recruiting those people.”

Chester also discussed the importance of redesigning employee referral programs to target exceptional employees. To make the referral program worth an employee’s time and effort, Chester suggested offering tickets to their favorite concert or sporting event as a reward for successfully recruiting one of their friends or professional contacts. Because people tend to have friends similar to themselves, this method ensures companies are hiring more top achievers.

Finally, Chester recommended cultivating a “people first culture” by discovering what potential employees desire from their careers, aside from compensation. Companies must understand the new workforce in order to attract and retain them. Chester emphasized that Millennials and Generation Z crave working for companies that share their values, and that cultivate growth by investing in their futures.  

“Great companies are continually training their people,” Chester said. “They have a learning agenda – everyone is learning something all the time. We know where they are and we know where they want to go, and we’re helping them get there.”

WinS Panel: Empowering Women to Fuel Growth

At the 2018 Executive Leadership Forum (ELF), SNAC’s Board of Directors approved the launch of WinS (Women in Snacks), an initiative aimed at fostering leadership development for women snack industry executives. Indra Nooyi, then Chairman and CEO of PepsiCo, helped launch WinS at last year’s ELF. In the past year, SNAC held webinars focusing on women empowerment, along with a workshop at SNAXPO19 with round table discussions on self-limiting behaviors. All WinS events have been inclusive of both men and women.   

One year later, Cindy Kuester, Director of Sales, Snak King, and Co-Chair of the WinS Steering Committee, sat down with three snack industry leaders who shared personal experiences of helping to propel women into leadership roles, as well as encouraging diversity and inclusion. 

Kuester asked Gregg Roden, SVP, Supply Chain, Frito-Lay North America how he fosters visibility and female advancement at his company. Roden suggested that regular, open and transparent conversations with high-potential women are key, and that elevated roles must be conducive to women with families, without unrealistic relocation requirements. He also suggested implementing mentoring programs between senior and junior female employees and including mentors in promotion conversations with direct bosses for perspective and support. 

“I think it’s about creating opportunities and creating assignments so we can have these transparent conversations,” Roden said. He noted the importance of asking questions like, “‘where do you want to live?’, ‘where can you live?’” and assuring candidates that, “‘we want you to do the job.’”

Kuester also asked the panelists to reflect on how diversity within their companies has helped overcome business challenges. Valerie Oswalt, CEO, Century Snacks emphasized the importance of leveraging diversity within companies to inspire innovation. When Century Snacks wanted to create a flavor to launch in Mexico, the executive team consulted a few Hispanic team members for sensory sampling and feedback. She also cited studies from the Network of Executive Women (NEW) showing that companies with diverse leadership teams were considerably more profitable compared to their less diverse counterparts.  

“Whatever your business challenges are, whatever your financial goals are, there are endless studies that show when there’s more gender diversity and more diversity and inclusion on your executive leadership teams, your business performance is better,” Valerie Oswalt said. 

Finally, Kuester asked the panelists how to combat the notion that women are often promoted based on what they’ve done, whereas men are often promoted based on potential. Monica Cole, EVP, Division Executive, Food & Beverage/Agribusiness, Wells Fargo said sometimes women need extra encouragement and discussed how to reconstruct company culture so as to not prioritize candidates for promotion simply because they’ve been at the company longer. These gestures can change the way women see their opportunities to advance.

“One thing that’s really important is for the male executives to go to a woman who has the potential to do more when jobs are being posted, and say, ‘look, I really think you should put your name in the hat for this opportunity,” Cole said. “All it takes is just that little bit of encouragement.”

KEYNOTE: Life Beyond Limits with Amy Purdy, World-Class Paralympic Athlete 

After experiencing flu-like symptoms at 19, Amy Purdy was rushed to the hospital in a state of septic shock and experienced respiratory and multiple organ failure. She was given less than a 2% chance of survival, put on life support and placed into a coma. Eventually, doctors diagnosed her with Meningococcal Meningitis, a vaccine-preventable bacterial infection. Because of the septic shock and the lack of circulation, Purdy had both legs amputated below the knee. A week before her 21st birthday, her world turned upside down again as she underwent a kidney transplant. 

As an avid snowboarder with a dream of traveling the world, Purdy was determined to master her prosthetic legs. To move forward with her life, she did everything she could to embrace “the new Amy,” and to turn her biggest loss into her biggest asset by changing her mindset. She joked about how she could now adjust her height depending on the person she was dating, fit into shoes on the sales rack, and snowboard all day without her feet going numb. She challenged attendees to always find a silver lining, to take control of their lives, and to ask themselves: “if your life was a book, and you were the author, how would you want your story to go?” 

When Purdy attempted to snowboard again for the first time since her surgery, she discovered her prosthetic feet didn’t move in the way she needed them to, and there were no prosthetic feet designed for snowboarding. Instead of giving up, she decided to make her own feet. 

“If I can figure out a way to get my ankles to bend in the way I need them to, then maybe I can do this again,” Purdy said. “And that’s when I learned that the borders and the obstacles in our lives can only do two things: one: stop us dead in our tracks, or two: force us to get creative.” 

Using rusted bolts, rubber and pink duct tape, Purdy and her leg-maker created the ideal bendable feet for snowboarding. She used this innovative, never-give-up spirit to create countless feet for different situations, including using swimming feet when she competed on ABC’s Dancing with the Stars. Because of her creativity and relentless determination, she won three medals at the USA Snowboard and Freeski Association National Snowboarding Championship, received the most medals of any Paralympic snowboarder in US history, and competes at the world class level as the only double-leg amputee. Purdy’s innovation, positive outlook and passion made her dreams possible. 

“There’s a power of intention,” Purdy said. “Not hoping to do something, not trying to do something, but absolutely declaring it.”