Anheuser-Busch is no average player in the organic food market.
After all, it is the largest brewer in the U.S. and its parent company generated over $54 billion in global sales in 2018.
With nearly unparalleled scale and resources, the company’s strategic moves in our industry can be of real significance.
Case in point was when it ran a Super Bowl ad several months ago for its organic beer Michelob ULTRA Pure Gold.
Not only was it the first commercial in the history of the Super Bowl to promote an organic product, but it essentially served as an advertising campaign for the entire organic sector.
The high-profile ad, which featured actress Zoe Kravitz, was seen by an estimated 150 million people (the total number of people who watched the Super Bowl and the Grammys, and saw the ad online).
And just yesterday, Anheuser-Busch made yet another move of real note when it announced its new ‘Contract for Change’ initiative. This program will help support American barley farmers who want to transition to organic production.
Michelob ULTRA will sign long-term, full-rotation contracts to purchase the barley grown from the beginning of the transition period through the first year of organic production. The company will purchase transitional barley at a premium price, supporting farmers during the transition window.
“The growers are really excited because this provides them a contracting option to de-risk the process of transitioning to organic,” said Azania Andrews, Vice President of Michelob ULTRA.
In addition, farmers participating in Contract for Change will benefit from the ability to sell organic crops, other than barley, that are grown in the rotation. Anheuser-Busch will not be purchasing these rotational crops directly from the farmers but will assist them in finding buyers in the marketplace, thereby creating additional revenue for the farmers.
The company worked closely with the Sustainable Food Lab to create a contract that was of maximum benefit to the farmers’ needs, and participants in the program will also have access to Anheuser-Busch’s 15 on-staff agronomists across the country. This is particularly important because growing organic barley is not known to be an easy endeavor.
The initial pilot for Contract for Change will consist of 6 farmers in Idaho, totaling 600 acres for the 2019 crop year, and the goal is to expand it from there.
With the success of Michelob ULTRA Pure Gold — sales are up 200% since the Super Bowl ad and the company said it is the #6 share gainer in the entire beer industry — Anheuser-Busch’s involvement in organic only deepened.
“When we learned more about the organic industry, we saw that organic farmers needed more opportunity,” said Azania Andrews.
WHAT IT ALL MEANS
Contract for Change is incredibly meaningful for a few reasons.
1) While Anheuser-Busch is definitely not the first to help transition farmers to organic — Kashi and Prairie Organic Spirits have established formal programs to do the same — it is the largest, with the highest profile.
With U.S. farmland comprised of less than 1% organic and no federal program offering farmers financial assistance to transition to organic, the onus has been relegated to the private sector.
Companies understand both the importance of getting more farmers to go organic and the need to build out their supply chain. Yet, waiting for the USDA to address this issue is hardly the prudent thing to do.
2) This is strong confirmation that we have reached a tipping point, in that the purchasing power of organic consumers can truly influence the business decisions at the world’s biggest food and beverage companies.
What is becoming obvious is the organic industry would greatly benefit by having some type of nationally coordinated resource center to facilitate and assist all players in the transitional process, including farmers, distributors, brands and end-users of transitional crops.
Whether this comes to fruition remains to be seen.
However, what cannot be doubted is that Anheuser-Busch’s new initiative is of tremendous significance.
There may be very few people in the country who know more about selling organic food directly to consumers than Michael Joseph, the founder of three direct-to-consumer organic food companies.
His most recent startup, Green Chef, raised more than $70 million in venture capital funding and grew to become the country’s leading organic meal kit service. Last year, Green Chef was sold to Hello Fresh, a publicly traded meal kit company.
In this wide-ranging conversation on The Living Maxwell Podcast, I spoke with Michael Joseph about how Green Chef got started, the company’s incredibly rapid growth, his experience in raising tens of millions of dollars in flip flops (yes, it’s true), how the company brought unique digital marketing experience to this sector, and whether the meal kit space is actually a viable business or not.
Max Goldberg, Founderlivingmaxwell
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