Berkeleys Food & Beverage Manufacturing, Wholesale, & - - PowerPoint PPT Presentation

Berkeley’s Food & Beverage

Manufacturing, Wholesale, & Distribution Sector

Office of Economic Development Worksession Presentation to the Berkeley City Council May 26, 2015

Agenda

• Food System Overview
• Why Food Matters
• Sector Profile & Findings
• Strengths
• Challenges
• Opportunities
• Q & A

Food System Sectors

Production Wholesale & Distribution Manufacturing Recycling & Waste Retail & Purchasing Food Service & Consumption

Food System Overview

Food & beverage manufacturing, whole- sale & distribution (MWD) are major sectors

Identity

Why Food Matters

Food is a celebrated & essential part of Berkeley’s identity & economy

Local Food System Benefits

Why Food Matters

Local production delivers economic, environmental and public health benefits

Boost local markets, activate multiplier effect Increase access to fresh, healthy food Reduce greenhouse gas emissions

2,000 4,000 6,000 8,000 10,000 12,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Number of Employees

Axis Title

Bay Area Food Manufacturing Employment by County, 1990 - 2012

Alameda Contra Costa Marin Napa San Francisco San Mateo Santa Clara Solano Sonoma

High Volume of Jobs

Food is also an important part of Alameda County’s identity & economy

Why Food Matters

Competitive Advantage

Berkeley has a high concentration of food, proportionally

Why Food Matters

8% 10% 12% 15% 0% 5% 10% 15% 20% Population Food retail firms Food service firms Food manufacturing firms

Berkeley’s Share of Alameda County’s Total Population and Food & Beverage Firms, 2012

Job Creation

Food & beverage MWD firms promote blue-collar jobs and economic diversity

Why Food Matters

Methodology

Sector Profile & Findings

Mix of quantitative & qualitative methods Stakeholder Interviews Business Surveys Data Set & Media Analysis

Sector at a Glance

Sector Profile & Findings

Sector Composition

Sector Profile & Findings

5 10 15 20 25 30 35 40 45 1998 2000 2002 2004 2006 2008 2010 2012 2014

Number of Food & Beverage MWD Firms in Berkeley, 1998 - 2014

Food Mfg Beverage Mfg Food/Bev Wholesale

Food Manufacturing Beverage Manufacturing Food/Bev Wholesale & Distribution

20% 21% 59%

Food & beverage MWD businesses by type, 2013-2014

Sector Composition Detail

Sector Profile & Findings

Baked goods & specialty items like coffee, tea, mixes & spices (“other”) are top categories

Baked Goods Other Sugar & Confectionery Fruit & Vegetable Preserving Dairy Products Animal Processing

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Berkeley Food Manufacturing Firms, 2014

Sector Composition Detail

Sector Profile & Findings

Breweries Wineries Distilleries Non-Alcoholic

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1

Berkeley Beverage Manufacturing Firms, 2014

Breweries & wineries are top categories

Notable Sector Growth

Sector Profile & Findings

Takara Sake Trumer Pils Fieldwork Brewing Covenant Winery Broc Cellars Mead Kitchen Mosswood Distillery Rare Barrel Hoi Polloi Urbano Cellars Eno Wines Donkey & Goat

Beer, wine, & spirits manufacturing is blossoming!

Sector Composition Detail

Sector Profile & Findings

Wine & specialty groceries are top categories

Wine Other Grocery General Grocer Meat Confectionery

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Berkeley Food & Beverage Wholesale/Distribution Firms, 2014

Growing # of Firms

Why Food Matters

5 10 15 20 25 30 35 40 45 1998 2000 2002 2004 2006 2008 2010 2012 2014

Number of Food & Beverage MWD Firms in Berkeley, 1998 - 2014

Food Mfg Beverage Mfg Food/Bev Wholesale

5 10 15 20 25 30 35 40 45 1998 2000 2002 2004 2006 2008 2010 2012 2014

Number of Food & Beverage MWD Firms in Berkeley, 1998 - 2014

Food Mfg Beverage Mfg Food/Bev Wholesale

Sector Profile & Findings

Since 2011, the number of firms has rocketed up

Shrinking Employment

Food & beverage manufacturing firms employ fewer workers than before

Sector Profile & Findings

100 200 300 400 500 600 700 800 900 1000 1998 2000 2002 2004 2006 2008 2010 2012

Number of Food & Beverage MWD Employees in Berkeley, 1998 to 2012

Food Mfg Beverage Mfg Food/Bev Wholesale

Loss of 1 large and 1 mid-size brewery.

Sector Age

Sector Profile & Findings

Many food & beverage MWD firms in Berkeley are young, reflecting uptick in new firms

17% 17% 16% 36% 14% 0% 5% 10% 15% 20% 25% 30% 35% 40% > 20 years 10-20 years 6-10 years 2-5 years 1 year

Berkeley Food & Beverage MWD Businesses by Age, 2014

Sector Geography

Sector Profile & Findings

There are three distinct food & beverage MWD firm clusters west

• f San Pablo Avenue

Zoning Business Type

Trend: Hubs & Space-Shares

Hubs & space-shares boost sector growth and support the evolution

• f many firms

Sector Profile & Findings

• Craig Boon, owner of Nuthouse Granola,

a tenant at Berkeley Kitchens

I just knew that the idea of having an incubation situation with a bunch of similarly minded people was going to be

• cool. Everybody is doing something a little

bit different, so you get exposed to all different aspects of a similar industry.

Business Spotlight

Sector Profile & Findings

Berkeley has two new hub & space-shares, each filling a different niche

• 15 kitchens
• Lease for exclusive use
• Some retail on site
• In MUR zone
• At capacity
• Young firms
• 6 kitchens
• Hourly rental
• Certified gluten-free &
• rganic
• In commercial zone
• Not yet at capacity
• New firms

Trend: Hybridity

Sector Profile & Findings

Offering retail, tastings, or food service

• n production site is
• ften essential

have a retail space on site Of survey respondents… have a restaurant or café on site have a tasting room on site

Business Spotlight

Sector Profile & Findings

Fieldwork Brewing exemplifies hybridity,

• ffering service & retail
• n the production

site

Patron bar Brew tanks Quick- service kitchen

Business Spotlight

Sector Profile & Findings

Urbano Cellars & Mead Kitchen exemplify hybridity & space- sharing trends

Patron seats (tasting room inside) Wine- barrels Mead- making inside, too Wine-making equipment

Berkeley’s Attraction

Strengths

25% 25% 33% 50% 58% To be near freeways and/or

• ther major transportation

infrastructure Availability of appropriate

• perational/production

space To be near customers To be near home Brand association of Berkeley and/or San Francisco Bay Area

Top Reasons Food & Beverage MWD Businesses Locate in Berkeley

Note: Multiple selections allowed, n=24

The Berkeley “brand” is a major draw, as is being near home and ideal customers

Berkeley “Brand”

Strengths

The Berkeley “brand” is an asset that stands for local, seasonal, sustainable & fresh

I appreciate the high level of food consciousness in Berkeley. It stands for health, wellness, and sustainability when it comes to food.

• Survey respondent

It’s nice to be part of a community where people are aware about food – where they care about it. - Survey respondent

Ideal Customers

Strengths

Many survey respondents reported choosing Berkeley because of its “ideal” customers

People in Berkeley are more open to trying new things.

• Survey respondent

Berkeleyans value local, healthy food for the whole family – reaching [those] customers is part of our business model.

• Survey respondent

Business Spotlight

Strengths

Longtime and new firms alike find ideal customers in Berkeley

Vik’s Distributors & Chaat Corner Local Greens

Challenges Overview

Challenges

20% 20% 28% 28% 32% 36% Too few

• perational spaces

Difficulty accessing financing High labor costs High equipment costs Burdensome regulations

• r permitting

High operational space costs

Challenges for Berkeley Food & Beverage MWD Businesses

Multiple selections allowed n=25

High Space Costs

Challenges

Industrial & warehouse space in Berkeley is among the most expensive in the East Bay

$0.99 $0.68 $0.65 $0.54 $0.50 $0.34 $0.32 $0.37 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 Industrial Warehouse

Average Asking Rate (Per Square Foot) of Industrial & Warehouse Space in the East Bay, 2014 Q1

Berkeley Emeryville Oakland Richmond

Source: Cornish & Carey Commercial, 2014 Q1

Limited Inventory

Challenges

0.8% 1.9% 1.8% 8.9% 2.9% 6.0% 11.3% 4.6%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Industrial Warehouse

Vacancy (Percent of Square Feet) of Industrial & Warehouse Space in the East Bay, 2014 Q1 Title

Berkeley Emeryville Oakland Richmond

Industrial & warehouse space is more limited in Berkeley than elsewhere in the East Bay

Source: Cornish & Carey Commercial, 2014 Q1

Growing Pains

Challenges

Two-thirds of survey respondents are planning near-term expansion, but…

Very likely 30% Somewhat likely 0% Not sure 6% Somewhat unlikely 29% Not likely at all 35%

Likelihood of Food & Beverage MWD Businesses to Stay in Berkeley When They Expand

n=17

Access to Capital

Challenges

1 in 5 survey respondents cited “difficulty accessing capital” as a top concern

Difficulties include:

• Raising enough and the right kind of capital
• Unique start-up costs (expensive build-out)
• Smaller profits vis-à-vis many other MWDs
• Conventional loans typically tough to acquire
• Public fatigue with crowdfunding

Regulation/Permit Process

Challenges Difficulties include:

• Barriers related to pursuing incidental uses
• Confusion about health permit jurisdiction

Some survey respondents praised the regulatory process, but others cited frustrations

Menu of Opportunities

Opportunities

There are many ways the City and its partners can support the food & beverage MWD sector

• Emphasize marketing and placemaking
• Clarify and simplify permitting controls
• Facilitate creation of new production space
• Boost technical assistance
• Support networking opportunities
• Encourage and enable City to purchase locally

Marketing & Placemaking

Opportunities

Key point here

• Expand on the Visit Berkeley tagline
• Support development of destinations

Opportunities

Simplify Permitting

• Identify opportunities to clarify and simplify

regulation of incidental uses

• Clarify health permit jurisdiction (city versus

state)

Facilitate Space Creation

Opportunities

• Explore policies and programs to facilitate

development of new production space

• Consider feasibility of

public/private/nonprofit partnership to create space

• Focus on multi-tenant commercial kitchen

incubation space

Develop Networks

Opportunities

• Present results of this report to food &

beverage MWD community of firms

• City or partner can convene firms once or

twice a year to support a strong network

Boost Technical Assistance

Opportunities

Enhancing access to high-quality free or low-cost TA could address many firms’ challenges

• Explore partnering with East Bay

municipalities, the County SBDC, and others to meet the need for single-source TA

• Develop a website for food & beverage firms

about permit/license process and existing resources

• Conduct targeted outreach about City’s

Revolving Loan Fund

Promote “Buy Local”

Opportunities

Council’s 2001 Food & Nutrition Policy asserted the importance of local, sustainable (“values- based”) purchasing

• Review City guidelines for values-based food

procurement

• Evaluate City’s current food procurement

practices

• Identify and reduce barriers to local, values-

based food procurement by the City