Survival of the nimblest – Long Island Business News

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Shown here are some of the industry leaders who participated in the panel, including Craig Fine, Davi Tserpelis and Craig Spierer; the panel was led by LIBN Editor and Associate Publisher Joe Dowd. (LIBN Photo)

The food paradigm is constantly shifting. With new customer preferences, mergers and regulations, change is a constant and innovation a way of life.

In this competitive sphere, it’s survival of the nimblest.

Those were the takeaways from a wide-ranging discussion with food industry experts during a participant-sponsored roundtable event held at the offices of Long Island Business News.

The panel discussion, moderated by LIBN Editor and Associate Publisher Joe Dowd, featured Craig Fine, the Long Island Office Managing Partner of Mazars in Woodbury; Craig Spierer, a member of Harris Beach’s food and beverage industry team in Uniondale; Davi Tserpelis, senior vice president and business banking manager at City National Bank’s Melville office, and Jonathan White, the executive vice president of White Coffee, which serves its Long Island clients — including restaurants, hotels, offices, coffee houses and more — from its corporate headquarters in Long Island City.

“Consumers are much more discerning now with the ease of information,” Spierer said. “They want something organic, something that comes from someone who’s giving back to society. They’re looking for more. They’re more educated with ease of information. It challenges companies to become more innovative.”

 

‘People are willing to pay extra for convenience,’ said Jonathan White. (Photo by Judy Walker)

The preferences

More than ever, consumers are very involved with where their food comes from, what the ingredients are and how the nutritional value measures up.

“People want to eat healthy,” Tserpelis said. “They want hormones out of their food. Organic and sustainability are part of a huge movement.”

This narrative is becoming more prevalent, she said.

“It’s here and it’s the big wave and it’s not going away,” she added. “And that creates this opportunity for farm-to-table folks, paying attention to the local grower and knowing he didn’t put anything into his products.”

“There’s a lot of interest in traceability,” said White, whose 80-year-old company is now in its third generation. “People want to know where their food is from, it if is grown in the Guatemalan mountains, etc. They want to know we’re doing fair trade projects. We’re doing a brand new label with Williams Sonoma Fair Trade where we show what the farmers did with the money.”

And “social media is helping with transparency and understanding the impact with food,” Fine said. “But there’s a lot of misinformation out there, and you don’t know what to read. It’s a bit of a mish-mosh if you don’t know how to do your research.”

At the same time, consumers are busy.

“People want convenience, ease,” White said. “K-Cups are a perfect example. You’re paying so much more per pound for this. People are willing to pay extra for convenience.”

 

Uncle Giuseppe’s in Melville has a variety of coffee beans from all over the world in addition to what’s typically sold on the grocery store shelves. (LIBN Photo)

The landscape

Long Island’s retail landscape continues to shift. In the last year, Stop and Shop purchased King Kullen and its Wild By Nature stores, and Lidl acquired Best Market. This followed Stew Leonard’s expanding its Long Island presence, Amazon’s purchase of Whole Foods, and the growth of existing, smaller markets such as Uncle Giuseppe’s opening in Melville, with plans to expand its Port Washington location. And many markets offer home delivery from their shops or online.

And the larger retailers are in the mix. Target, which also sells food, has turned to small format stores, stocking its shelves with a data-driven strategy to meet the preferences of local consumers.

Meanwhile, specialty stores such as H Mart, a Korean-American chain, have “created a whole new genre of food market that shoppers specifically go to,” Tserpelis said. The chain attracts a wide variety of consumers “shopping in their markets because they want unique food and products they can’t get anywhere else. And their pricing for a consumer is unbelievably less, if you’re comfortable buying their produce and labels that you aren’t familiar with.”

But to thrive, retailers must understand what local consumers want before staking a regional presence, the panelists agreed.

“It’s about knowing your local market and changing with the times,” Fine said. “Some places are a mind-numbing store to go to: high prices, one checkout line.”

Struggling retailers may be “too corporate and didn’t understand the local marketplace, or maybe it’s the local store, they don’t understand what the client wants. And that’s why you walk into that empty store and are still waiting an hour to get out of there. They don’t understand their client and business as well as they should.”

New vendors can usually partner with retailers for one-to-one marketing campaigns, handing out samples to consumers.

“It’s easy to get into local stores,” Fine said, adding that vendors may struggle when they try to get into the giant retailers.

“Then you have the other challenges,” he said. “With selling online — what about sales tax? Maybe this little company has to file sales tax returns in 20 states. Business becomes very onerous if you don’t have the right advisers and right model.”


The regulations

A majority of the states recently enacted laws requiring remote sellers to collect sales tax following the Supreme Court’s South Dakota v. Wayfair decision in 2018. That’s when the court upheld a South Dakota statute that targeted online retailers who avoided collecting out-of-state sales tax because they didn’t have a physical a store or distribution in a state — a decades-old exemption that the court threw out in its decision.

Tserpelis said the ruling presents challenges for “the small business that they may not be able to take the risk and sustain online.”

“You need a physical presence in that state now because of the internet and velocity of transactions — different states have different thresholds,” Fine said.

“It’s a huge concern of mine,” Tserpelis said. “What happens if they’re not properly handling their sales tax? What if they don’t understand the rules and regulations? If they get hurt, how will it affect the longstanding of the business and what can that do to them?”

To ensure the bank makes sound loans, Tserpelis said she has “deep discussions” with clients’ accounting and law firms.

And there are regulatory concerns, including the recent New York City ban on foie gras for 2020.

“Companies need to stay ahead of the curve,” Spierer said. “Nutrition labeling is going to take effect in 2020. CBD [cannabidol, the active ingredient in the cannabis plant] is a very hot topic in this area. Those laws — state-to-state, county-to-county — are changing by the moment.”

Spierer said that the “biggest thing for food and beverage companies is trying to stay ahead or at least up to speed with the changing regulatory landscape.”

While some trends like CBD may present opportunities, White remains cautionary.

“We turned away multiple people who wanted to do CBD coffee,” he said. “Part of it has to do with the regulatory environment and some the legal environment.”

A recent product-labeling seminar drove home the point for White who was reminded that with “every claim you make, a legal team comes in and says which claim is safe, less safe, etc.”

Innovation, consumer interest and regulations, must all be balanced, he said.

And that’s why it’s important to have a team of experts on your side.

White said he pauses whenever he encounters a new opportunity.

“The first call I make is to my lawyer,” he said, “because you’re always thinking about what can go wrong?”


The Associated Press contributed to this story.



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