News.MikeCallicrate.com | A NoBull News Service

Colorado Springs Independent: Is FoodMaven fostering change, or just feeding back into the system?

by Faith Miller | April 10, 2019

FoodMaven was founded, as many startups are, to challenge the status quo.

The U.S. food system’s chronic oversupply means billions of pounds of produce, meat and other goods get discarded each year. Though perfectly edible, this surplus ends up in landfills, wasting not only all the resources put into producing and transporting it, but creating methane releases that are many times more harmful than carbon dioxide as a climate-change-contributing greenhouse gas.

FoodMaven‘s big idea: Save and sell that excess for a profit, which would generate income for producers while also reducing carbon emissions.

FoodMaven was co-founded in 2015 by Dan Lewis, a Colorado College grad and former director of Indy Give!-participating nonprofit Colorado Springs Food Rescue, and Patrick Bultema, the former chair of the college’s innovation program. (Lewis has since left the company, and did not reply to our requests for comment on this story.)

The original FoodMaven concept was born as a way to expand CSFR’s operations: Their “direct redistribution” model diverts surplus food from area supermarkets and urban gardens to nonprofits and community grocery programs. But Lewis and Bultema found better funding opportunities via a separate, for-profit company.

Four years later, FoodMaven serves hundreds of buyers and suppliers in Colorado. Deep-pocketed investors — including the Walton family of Walmart Inc. — recently gave FoodMaven a $10 million boost. Bultema, who grew up on his family’s farm, now has ambitious plans to expand the idea across the country. He’s partnered with global hospitality company Hilton Hotels & Resorts, acquired Anderson Boneless Beef and welcomed the former co-CEO of Whole Foods Market, Walter Robb, to sit on the board of directors.

FoodMaven’s success is due in large part to its ability to brand itself as a sustainable, environmentally friendly, locally minded company. Combine the current sustainability craze with saving money, and what’s not to love?

Schools and restaurants that buy competitively priced food from the company can tout the fact that they’re diverting waste from landfills and buying local goods for prices frequently lower than those of large industrial competitors. And suppliers not only have an outlet to sell perfectly good food they otherwise would have thrown away, but they also get tax credits for the extra food FoodMaven donates (i.e. the companies can subtract the value of their donations from their owed taxes).

The “basic premise,” explains Bultema, now chair and CEO, “really is to create a more enlightened food system.”

But in 2019, is FoodMaven still changing the status quo? Some critics say “no,” claiming FoodMaven is just the next corporate food distributor — akin to giant companies like Sysco or US Foods, that are intent on forcing lower prices at the expense of smaller farmers. Those critics don’t love what they perceive as a pivot toward profit and away from sustainability.

But FoodMaven’s identity — if the company is even mature enough now to show its true colors yet — isn’t black and white.

Part of the confusion and the controversy stems from the fact that FoodMaven’s original model has changed. In its early stages, nearly all the company’s inventory was sold at deep discounts, but Bultema says that’s no longer the case.

Now, FoodMaven also sells “high-quality first product” — produce or protein from local farms and ranches “that meets the perfect retail spec… no bruises, right size, right shape,” explains FoodMaven VP of Government and Industry Affairs Megan Cornish — in addition to “second product” (off-shaped or -sized or blemished) that otherwise would have been tossed. And Bultema anticipates that Denver-based Anderson Beef is only the first of many companies that FoodMaven will acquire.

“We realized there’s a lot of mid-sized food distributors that really are third-, fourth-generation family businesses, kind of looking for an exit, looking for a home for their business,” he says. “And so we made a strategic decision that what we would do is acquire a business to enter a market.”

FoodMaven is in the process of buying an as-yet-undisclosed company in Dallas that will provide an entry point into the Texas market, Bultema says. From there, the company could expand into other cities: Houston, Atlanta or St. Louis — with plans to hit seven new markets within the year.

How does this new way of operating align with FoodMaven’s original, do-good premise? Bultema says acquiring distributors allows the company to apply its model, technology, strategic relationships and “positive social impact dimensions” to new markets.

“We’re able to kind of buy a business and then transform it into that new model,” he says.

Currently, FoodMaven says it gets about a third of its food from growers, a third from mid-system distributors and a third from large warehouses and distribution centers that supply the grocery sector.

“One of the retail grocery chains that’s in the area has a warehouse that’s 1.5 million square feet. It’s kind of hard to even visualize,” Bultema says, adding that the warehouse serves only 100-some stores out of the 2,000 in the chain. “The scale and complexity is massive. And that’s part of the problem, why all this stuff gets lost. So we really are designed as this complement to that big, complex food system to help provide a solution.”

But the company’s critics — the most vocal of whom is rancher Mike Callicrate — are skeptical that FoodMaven’s intentions are as pure as it claims.

Callicrate, the owner of Ranch Foods Direct (from whom the Indy rents space for its distribution warehouse, by way of disclosure), was recently forced to downsize his Peak to Plains Food Distributing, which transported goods from farmers and ranchers in southeastern Colorado to sell to restaurants and institutions across the state.

“I can’t tell you how much money we lost,” he says. “I mean, we put our trucks on the road to pick up produce that never had a hope of ever selling. And, you know, you take outfits like Colorado College — why would they want to pay a premium to a local supplier when they can get something from FoodMaven at half price?”

FoodMaven takes “essentially free” produce from big-box grocery stores, Callicrate argues, and is “selling it to restaurants all looking to save a buck and telling them they should feel good because they’re supporting sustainability.”

But in reality what it is doing, Callicrate says, is making it impossible for small farmers to compete in the market, because they can’t possibly sell their goods directly to restaurants and institutions at comparable prices.

In a guest editorial Callicrate penned in the Indy (“FoodMaven could do more harm than good in the fight against food waste,” April 5, 2017), he summarized: “… it’s a win-win for big grocery retailers if their waste can be used to destroy the local/regional farm-to-table food movement, which they see as a threat, since it exists outside of their control and reduces their monopoly power … The opportunistic mindset behind FoodMaven, of using steeply discounted food to make a buck, will only make it more difficult to re-localize, re-humanize and regenerate healthy food systems in the long run.”

That argument, says Bultema, is “pure, unadulterated bullshit.”

“We are actually helping local growers,” he says, adding that some producers who used to work with Callicrate are now supplying FoodMaven.

Callicrate’s response: Acquiring Anderson Beef let FoodMaven offer cheaper processing than Ranch Foods, which lost business. Meanwhile, Peak to Plains had to get rid of three trucks because stores and institutions wouldn’t pay fair prices, he says.

“The really big disappointment was that we were unable to help the farmers that we anticipated we could help with low-freight rates on backhaul [cargo carried on a return journey], because they could not access the market,” Callicrate says. “They could not get Whole Foods to buy enough stuff, they couldn’t get local restaurants … the market is just too predatory. And FoodMaven is a very, very big part of that.”

Bultema, however, maintains that a third of FoodMaven’s inventory comes from local producers — generally farms and ranches within 400 miles.

Some people, including local food advocate Sean Svette, the assistant manager of the Sustainability, Wellness, & Learning initiative at University of Colorado at Colorado Springs, say the argument for or against FoodMaven is more nuanced than either Bultema or Callicrate present. While Svette calls Callicrate “a guy who really fights for farmers” and agrees with many of his arguments, he’s hesitant to completely discount FoodMaven’s place in the larger food system.

Svette, who used to work with FoodMaven when he was a dietitian at Penrose Hospital, says the company’s model could benefit hospitals, schools and restaurants whose budgets wouldn’t otherwise be able to accommodate certain products.

“I look at them as an opportunity for some places to get items at a cheaper cost, obviously, based on their model, and sometimes that means [buyers] can afford some things that are healthier for folks,” Svette says. “[For example], I could purchase meat from FoodMaven at a quarter of the cost … then maybe I can take the 75 percent savings that I have there and apply it to local produce.”

On the other hand, he believes FoodMaven does not support local producers. “FoodMaven can get some things close in mileage, but they’re operating in the industrial food system,” he says. “They’re creating an economic benefit from the industrial food system, and they have yet to find any meaningful ways to promote farmers that we know in our community.”

Well-reviewed local dining spots Four by Brother Luck and Alchemy, as well as Colorado College’s Bon Appetit dining program, are happy to count FoodMaven as a main supplier.

Four by Brother Luck buys some potatoes, meat, cheese and produce through FoodMaven. While the restaurant often purchases the “second-product” imperfect items that are technically lower-quality due to appearance, Chef de Cuisine Hannah Cupples says customers don’t notice the difference.

Cupples adds that FoodMaven gives retail access to some local growers who might have trouble entering the market otherwise: Four buys its potatoes from Strohauer Farms in northern Colorado, for example.

“If we can’t source food locally, then we source it sustainably, and FoodMaven’s been a huge part in that,” Cupples believes.

If not for FoodMaven, Cupples says the restaurant would probably buy those products through an industrial supplier such as Sysco or US Foods — national purveyors that supply food at the cheapest costs possible.

But FoodMaven’s prices usually beat out both those companies, Cupples says, making them an even more appetizing choice.

Jeff Fryer, the executive chef and general manager of Alchemy in Old Colorado City, tells a similar story.

“I’m saving money and customers are saving money,” Fryer says, through the discounts FoodMaven provides on products like potatoes, vegetables, pork products and beef. He also likes that he can buy local products through FoodMaven, and cites the company’s zero-waste initiative. (In 2018, FoodMaven says it diverted 246.7 tons of food from landfills, and in its first quarter this year they claim to have already redirected 135.7 tons.)

Fryer, like Cupples, said he’d buy from companies like Sysco if FoodMaven wasn’t around to supply a cheaper, more environmentally friendly alternative.

But, Svette cautions, restaurants that buy from FoodMaven shouldn’t assume they’ve found a one-stop-shop that sources food ethically and sustainably.

“If [buyers] think that they’ve accomplished all of what they need to do on the local side with FoodMaven, and ‘Hey we can save money and go local,’ they’re missing a big piece of this, which is just paying people for their work,” Svette says.

While Svette concedes that the restaurant industry is a “cutthroat business” with narrow profit margins, he argues that restaurant owners should look for local food in other places.

And there are other options.

One way schools, hospitals, restaurants and hotels can buy local — and still ensure farmers are getting paid fairly, according to advocates — is through regional food hubs or co-ops. These hubs, which connect producers across a region and provide a common point of sale, give small farmers access to the retail market.

Doug Wiley, who runs Larga Vista Ranch with his wife, is president of one such local hub, Arkansas Valley Organic Growers. He isn’t impressed by how little FoodMaven pays producers.

While Wiley says he supplied some products to FoodMaven when they first started out, he learned “it was easier just to take the stuff home and feed it to my pigs. I got more value that way, let’s just put it that way.”

Later, when Wiley realized FoodMaven was a competitor with AVOG, he stopped doing business with them, he says. But he believes that restaurants and institutions continue to ignore small farmers, and that Colorado Springs has forgotten what local really means.

“This local thing is going around a lot, and everybody wants to be known as buying or serving local produce or food,” Wiley says. “I mean, you can get local produce off of a Sysco truck too, and it’s bigger growers, and they’re local, that’s fine… It’s not just FoodMaven, that’s just the nature of this market, is it’s hard for small outfits.”

“It’s so easy to order from someone who can supply everything,” he adds. “They don’t need us small guys because they can get all that.”

Wiley figures that larger producers are more likely to have enough excess supply to benefit from selling it through FoodMaven.

But Bultema contends that FoodMaven doesn’t work with “big corporate farms.” He describes his sellers as “not the 1-, 2-acre-type operations, they’re more family farm, family ranch type operations.”

Ela Family Farms falls into that category, and representative Jeni Nagle says they’ve found success working with FoodMaven.

The 99-acre farm in western Colorado grows about a million pounds of certified organic peaches, pears, apples and cherries a year, Nagle says. It sells some first-grade product to FoodMaven, as well as fruit that’s “slightly imperfect” and even frozen peach puree — which FoodMaven has been able to market to breweries.

Since many large institutions don’t like working with individual farms, Nagle says, FoodMaven has helped Ela Family Farms connect with new buyers.

“They were able to get some of our fruit to the Hilton,” she says. “Typically, the Hilton would not just work with one small grower.”

FoodMaven’s partnership with Hilton, announced in March, drives its decision to expand in the Dallas market, where the hospitality company launched some new strategic initiatives.

The hotel chain says it aims to cut its environmental footprint in half in the next decade and double its international social impact investment, to include reducing food waste and expanding sustainable sourcing, according to a statement announcing the partnership.

Svette concedes that some good could come out of companies like Hilton — a global chain comprising more than 5,600 companies worldwide — partnering with FoodMaven, if they wouldn’t otherwise take any steps toward sustainable or ethical practices.

“It just seems like FoodMaven operates on a certain scale and they can be of benefit to certain people that … say, ‘We really have no intention of shifting a budget to a more ethically sourced value-chain produce item,'” Svette says.

“There is an argument there with Hilton that it’s a net-good if you can pigeonhole the argument with that framework,” he adds, questioning if the type of person who stays at a Hilton would be upset if they had to pay a dollar more for a hamburger made with high-quality meat from a local ranch.

So, while the debate about FoodMaven’s impact on the food world isn’t likely to end any time soon, the company continues to attract investors with an eco-friendly image and affordable prices. Its future expansion seems assured.

“That’s really the magic of FoodMaven … it’s like have your cake and eat it, right?” Bultema says. “Wow, we’re going to do this good thing from an environmental and from a sustainability and social responsibility perspective, and we’re going to probably save some money… That’s a very attractive value proposition.”