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

Foo

d S

yste

m O

verv

iew

Food & beverage

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

sectors

Identity W

hy

Foo

d M

atte

rs

Food is a celebrated & essential part of

Berkeley’s identity & economy

Local Food System Benefits W

hy

Foo

d M

atte

rs

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

0

2,000

4,000

6,000

8,000

10,000

12,000 1

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Nu

mb

er o

f Em

plo

yees

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

Wh

y Fo

od

Mat

ters

Competitive Advantage Berkeley has a high concentration of food,

proportionally

Wh

y Fo

od

Mat

ters

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

Wh

y Fo

od

Mat

ters

Methodology S

ecto

r P

rofi

le &

Fin

din

gs

Mix of quantitative & qualitative methods

Stakeholder Interviews

Business Surveys

Data Set & Media Analysis

Sector at a Glance S

ecto

r P

rofi

le &

Fin

din

gs

Sector Composition S

ecto

r P

rofi

le &

Fin

din

gs

0

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 S

ecto

r P

rofi

le &

Fin

din

gs

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 S

ecto

r P

rofi

le &

Fin

din

gs

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 S

ecto

r P

rofi

le &

Fin

din

gs

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 S

ecto

r P

rofi

le &

Fin

din

gs

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 W

hy

Foo

d M

atte

rs

0

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

0

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

Sec

tor

Pro

file

& F

ind

ings

Since 2011, the number of firms has rocketed up

Shrinking Employment Food & beverage manufacturing firms

employ fewer workers than before

Sec

tor

Pro

file

& F

ind

ings

0

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 S

ecto

r P

rofi

le &

Fin

din

gs

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 S

ecto

r P

rofi

le &

Fin

din

gs

There are three distinct food & beverage MWD firm clusters west

of San Pablo Avenue

Zoning

Business Type

Trend: Hubs & Space-Shares Hubs & space-shares boost sector growth and

support the evolution of many firms

Sec

tor

Pro

file

& F

ind

ings

- 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 S

ecto

r P

rofi

le &

Fin

din

gs

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 & organic

• In commercial zone • Not yet at capacity • New firms

Trend: Hybridity S

ecto

r P

rofi

le &

Fin

din

gs

Offering retail, tastings, or food service

on production site is often 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 S

ecto

r P

rofi

le &

Fin

din

gs

Fieldwork Brewing exemplifies hybridity,

offering service & retail on the production

site

Patron bar

Brew tanks

Quick-service kitchen

Business Spotlight S

ecto

r P

rofi

le &

Fin

din

gs

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 St

ren

gth

s

25%

25%

33%

50%

58%

To be near freeways and/or other major transportation

infrastructure

Availability of appropriate operational/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” St

ren

gth

s 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 St

ren

gth

s 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 St

ren

gth

s Longtime and new

firms alike find ideal customers in Berkeley

Vik’s Distributors & Chaat Corner

Local Greens

Challenges Overview C

hal

len

ges

20%

20%

28%

28%

32%

36%

Too few operational spaces

Difficulty accessing financing

High labor costs

High equipment costs

Burdensome regulations or permitting

High operational space costs

Challenges for Berkeley Food & Beverage MWD Businesses

Multiple selections allowed n=25

High Space Costs C

hal

len

ges

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 C

hal

len

ges

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 C

hal

len

ges

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 C

hal

len

ges

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 C

hal

len

ges 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 O

pp

ort

un

itie

s 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 O

pp

ort

un

itie

s Key point here

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

Op

po

rtu

nit

ies

Simplify Permitting

• Identify opportunities to clarify and simplify regulation of incidental uses

• Clarify health permit jurisdiction (city versus state)

Facilitate Space Creation O

pp

ort

un

itie

s

• 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 O

pp

ort

un

itie

s

• 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 O

pp

ort

un

itie

s 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” O

pp

ort

un

itie

s 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