Luther:                        Dr. Kayla Price is the poultry technical manager for Alltech Canada. In addition to sales and technical support, Price engages in research and is an avid follower of the constant changes taking place in the poultry industry. Thank you for joining us.

Kayla:                          Thank you very much. 

Luther:                        First question out of the gate: Why is gut and intestinal health in birds so important? 

Kayla:                          Whenever I think of the bird, I always think of it as a gut with lots of stuff attached to it. For the bird to do anything in terms of performance, the gut must be working to access all the feed ingredients — the nutrition — that you’re putting into the bird.  

                                    Nutrition must be absorbed so it translates into either kilos or pounds of meat, if you’re talking about meat birds such as broilers or turkeys. On the egg side, gut health must translate into egg production.

                                    For broilers, gut health must translate into egg production and, ultimately, hatchability. Really, the question for me is, why isn’t it important? Gut and intestinal health are extremely important.   

Luther:                        What issues do antibiotics pose to the gut and intestinal health of birds? 

Kayla:                          That’s a loaded question. With antibiotics, it’s not necessarily that they pose issues. They’re an incredible invention; an incredible innovation in the treatment of birds. When they’re very sick, they really need to be treated with antibiotics to become healthy.

                                    At the same time, when we’re using antibiotics at low-level preventative measures, they do the same thing as when they’re administered at high treatment levels: They’re looking to kill bacteria. The problem, or the conversation or debate, happens because antibiotics are killing any bacteria, good or bad. Antibiotics don’t decide whether bacteria are good or bad. They just kill them because that’s their job.

                                    Some bacteria are naturally resistant. They have those resistant genes no matter what. Other bacteria become resistant because they “learn” to become resistant. As antibiotics are injected, they kill bacteria that can be killed but leave the resistant bacteria. It’s those resistant bacteria that are really the problem, as they potentially move along the food chain. That’s what people are concerned about.

                                    We want to be able to prevent that resistance from going up and down the food chain. We want to reduce the potential for drug-resistant bacteria that show up in hospitals. It’s a complicated issue. There are a lot of sides of the debate, but it’s an issue that needs to be talked about. 

Luther:                        It sounds like it isn’t the antibiotic itself; it’s the application, the use or overuse, or the fact that it does leave antibiotic-resistant bacteria behind.

Kayla:                          Yes.

Luther:                        That said, what is the future of antibiotic use in the poultry industry?

Kayla:                          You have some people saying that poultry should only be raised without antibiotics in production. But at the end of the day, I think there’s still room for conventional production. Again, we’re not looking to completely get rid of it.

                                    It’s important to have a choice in the marketplace. Consumers should have the choice to get something that is raised without antibiotics if that is what they choose to purchase, and if that is what the retailer chooses to sell.

                                    On the other side, there’s also the importance of the ability to choose good-quality, antibiotic-residue-free, conventional meat or eggs that are still very good for you and are affordable.

                                    You’ll see in the marketplace that some options lean more toward poultry that is raised without antibiotics, but there are still more conventional options.

                                    Understanding where antibiotics fit within the system is important. Again, we still need to be able to treat our birds if they need to be treated, and we also need to be able to have that choice in the marketplace.

Luther:                        What are the key questions and items that should be considered before pursuing an antibiotic-free program?

Kayla:                          I talk about it from the producer level. But from an integrated perspective, we look at things from a grand integrator level. I think one of the first things to start thinking about is your plan moving forward, and the need to have a plan. Understand what you can do when things go wrong, because inevitably, as much as we’re trying to do everything perfectly and well, something will still go wrong.  

                                    You need to have a line for birds that can ultimately be treated with antibiotics — and they will still provide good meat — and to also have a line for birds that are antibiotic-free. Then, understand what needs to happen within your system as you integrate with antibiotic-free, or “never-ever” free production, as it’s called in the U.S.

                                    I always think of it as a holistic approach: moving from the breeder system into the hatching system and then ultimately moving down to those market birds. Think of that whole system and then, depending on where you fall in the system, consider the details. Go back to the basics of actual poultry production and rethink the details, whether you’re focusing on management in the barn, feed going into the birds or even water in the barn. 

Luther:                        What are mycotoxins, and how much of an issue are they for birds?

Kayla:                          Mycotoxins come from fungi. As grain is grown, there is the potential for fungi to form on it. As the fungi start growing, they release mycotoxins. As we grind grain for feed, mycotoxins get into the feed and ultimately get into the birds.

                                    When we’re talking about poultry production, I think one of the biggest misconceptions is the potential impact that mycotoxins can have on poultry, especially on short-lived poultry such as broilers, or even turkeys, to an extent. There’s a misconception that mycotoxins do not really have much of an impact. But mycotoxins are gut irritators. You have something at a very low level that’s irritating the gut and that you, as the producer or as the technical manager, may not recognize initially.

                                    Longer-living birds such as layers and broiler breeds are also affected because they’re potentially exposed to mycotoxins for much longer.

Luther:                        What are the effects on the broilers and turkeys, specifically? There are side effects from mycotoxins. What are those side effects?

Kayla:                          There’s a long range of side effects from mycotoxins. When people think about indicators of mycotoxins, the initial tendency is to only consider visible side effects. Those may include huge lesions on the mouth, the side of the mouth, on the tongue or inside of the mouth. Other visual indicators appear as scabs on the combs or the wattles or could show up as lesions, erosions or ulcers along the intestinal tract.

                                    People often overlook indicators of low-level irritation. Those indicators may be less visually obvious but may emerge as lower weights in broilers and turkeys, for example. Or, the gut irritation may create an environment for other problems. You may see another disease or another problem happening in the bird without necessarily relating it to a mycotoxin issue.

                                    Side effects can really be a whole range of things that you may or may not see visually in the bird.

Luther:                        It sounds very similar to human beings, where you’ll see symptoms but not the root cause. In this instance, the mycotoxins could be the root cause. They’re causing some of these downstream symptoms.

Kayla:                          Yes, exactly.  

Luther:                        What about layers and broiler breeders? What effects do mycotoxins have on them?

Kayla:                          Many people don’t think of layers, broiler breeders, broilers and turkeys as being similar. It would be an overgeneralization to say that they are similar, but they may show similar reactions to mycotoxins. The look of mycotoxins in layers and broiler breeders could be very similar in the sense that birds get mouth lesions, erosions, ulcers all the way down the gut and then impacting the liver.

                                    On the low-level side, again you’re seeing gut irritation. These birds can’t translate nutrients into eggs, so your peak production could come down. Your eggshell quality could also decline.  

                                    Layers and broiler breeders are vaccinated quite a bit, so perhaps their immune system is suppressed or decreased. Then they’re not able to respond to the vaccine as they should.

                                    In broiler breeds, you have an added factor of impacting the chicks. Then you’re dealing with a range of health issues for them.

                                    With low-level toxin challenges, those are some indicators you may not have considered initially, but they could potentially lead to other diseases as the immune system is weakened.  

Luther:                        Since we know that mycotoxins cause issues downstream — some of them obvious and some of them subtle — what can farmers do to take a holistic approach with a multilayered program to control the risks of mycotoxins?

Kayla:                          On a prevention level, whether you’re talking about low-level, moderate or even high challenges, it’s important to have a mycotoxin absorbent in the feed. Specifically, the mycotoxin absorbent you want is an inner yeast cell wall, which has a very strong static bond and a large surface area. This combination allows for relatively low levels of product — or technology —to be used to bind a very large amount of mycotoxin. You’re able to eliminate or at least greatly reduce mycotoxins in the feed. Using something like a mycotoxin absorbent is very important, as these birds run into low, medium, or high-level challenges.

Luther:                        So, that’s all part of what you’re calling a multilayered program.

Kayla:                          Absolutely. I’m talking specifically about mycotoxins, but we can’t forget that they are only a small snippet of the picture of poultry production in general. When I say multilayered, we’re not just considering potential mycotoxin challenges, whether they’re low, medium or high, but also taking into consideration all components. We’re considering management, biosecurity, feed, water and so on. You take all these factors into consideration to make sure you have the best production and most successful production.

Luther:                        You’ve talked about considerations for mycotoxin management and going all the way back to the source; making sure that you have high-quality ingredients, high-quality feed. It sounds like how you handle the feed is also vitally important.

Kayla:                          Absolutely.

Luther:                        Can you address that a little bit?

Kayla:                          Let’s say you have feed coming into your production system. If we’re talking about feed processed by a feed company, their manufacturing is highly controlled. This is a low-level challenge. However, toxins may still appear in the feed later. For example, if you place feed in a bin and there’s a humid spot for some reason, now there is a potential for fungi to grow. Suddenly, that little challenge becomes a big challenge.

                                    It’s important to understand how feed is handled early, either at a manufacturer or feed mill, and then how it’s handled throughout the barn or facility itself. All those components can really influence how well birds of any feather perform.

Luther:                        What consumer demands have influenced or made significant changes in the industry?

Kayla:                          Consumers want to understand more about production. Maybe not necessarily at the farm level, but about the production process overall. More and more companies are moving in the direction of responding to consumer inquiries. In Canada, for example, A&W has made “raised without antibiotics” part of their retail strategy. Chick-fil-A has done the same in the U.S. As more groups promote chicken without antibiotics, it brings up more questions and people are more curious about certain aspects of their food. It can be debated one way or the other, but it’s certainly something that’s happening and something we must address, regardless.

Luther:                        Last question. What’s the favorite part of your job?

Kayla:                          That’s a hard question to answer! I think my favorite part of my job is being able to work with producers. Understanding how proud they are of what they do and being able to learn about their process is so exciting.

                                    I also get to travel across Canada from the East Coast to the West Coast. A farm on the East Coast could have issues or successes similar to a farm all the way out in Alberta or even in my hometown of Ontario. The farms may not necessarily be able to converse, so I get to be this middle person saying, “I saw that somewhere else; maybe you should try this…” or “I’ve seen this problem somewhere else and this is what they tried.” Being that conversation starter is a wonderful thing. I get so much out of it, and I think the farmers get so much out of it. I enjoy being able to help them improve and be successful. At the end of the day, that’s what it’s about.

Luther:                        Kayla Price is poultry technical manager for Alltech Canada. Thank you very much.

Kayla:                          Thank you very much.

Dr. Kayla Price spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab.

Luther:                        Dr. Aoife Lyons is director of educational initiatives and engagement at Alltech. She received her doctorate in clinical psychology from DePaul University and is a licensed clinical psychologist. Thank you for joining us.

Aoife:                          Thank you so much.

Luther:                        You have a unique blend of education and work experiences. How’s this given you unique insight maybe into the customer or into business psychology? 

Aoife:                          Well, thank you for that. I do have a unique blend because I’ve been very much immersed in the world of academia, but I also have a bit of business sense. I ran my own business in Chicago for a number of years before joining full-time with Alltech. So, I think that it gives me a sense of the humanity behind business and that not everything is driven by profit. And what people buy and what people decide to do is really not driven by price.

                                    My father often says, “Make a friend, make a sale.” He’s not a psychologist. He discouraged me from psychology, but I think at heart he knows people.

Luther:                        It sounds like you basically have a deep understanding of how people think — maybe sometimes not even cognitively or in their conscious mind — and how business works at the same time.

Aoife:                          Well, I hope that I do, and I hope that I contribute something to that. Something that I was talking about yesterday was price anchoring. What that means is that price is arbitrary. I was teasing my assistant, Ailish, yesterday. She loves to go to the mall when we come over to the States. She will only buy things that are on sale because she loves to see that sale tag. I pointed out to her that she could buy the same thing from Gap Kids at the exact same price, but actually she won’t if she doesn’t see that sale tag.

Luther:                        Give us a definition of what that anchoring really is. It’s our perception of a sale price maybe versus a regular price.

Aoife:                          I’ll give you a real-life example that I gave yesterday. When I was in Chicago, I was running a private practice. The cost of an hour of therapy with me was $150 and a lot of people would pay that price, but I have a commitment to helping the underserved, and they couldn’t pay that price. So, I charge them $40, which was a deep discount, but also a lot for them. I made sure that they knew that the cost of a therapy hour was $150, so they knew the value of what they were getting. That’s price anchoring.

Luther:                        Thank you very much for that example. That makes a lot of sense. Is this part of the “predictable irrationality” that you’ve brought up? I know that it’s important to how we think about pricing, how we think about a business, a product, a service.

Aoife:                          Everything is predictably irrational. We just go around our worlds thinking that we’re rational beings and that we’re making decisions based on the pros and the cons. We just don’t.

Luther:                        I’m sure there are all kinds of examples of that, which you just kind of gave us. What about our human perception? Does this affect our buying decisions as well?

Aoife:                          It affects everything. One example is you get a bill in the mail, and it says that you owe $90 to the television company or whatever it is. You might ignore it. You’re going to get another bill. But, if they change the wording of the bill to include your name and then say 90 percent of the people in your area have already paid this bill, you will pay it. That is social pressure. We can use this.

Luther:                        What are some illusions in our decision-making? I think a lot of us think, “I’m logical. I make decisions based upon logic. If I make a buying decision, it’s because I’ve thought it through.” That isn’t always the case.

Aoife:                          Absolutely not. Let me ask you a question, if I can. What was the last big purchase you made?

Luther:                        A TV.

Aoife:                          How much did you pay for this TV?

Luther:                        About $800.

Aoife:                          When you went in to buy the TV, you probably saw one that was $1,200. You probably saw one that was about $600, and so that $800 looked good to you. If you had walked in and saw one for $800, $600 and $400, you would have bought the one for $600.

Luther:                        What is social proof?

Aoife:                          Are you going to go to the restaurant that has no one in it, or are you going to go to the restaurant that’s crowded? You’re going to go to the crowded restaurant because that food must be better. That is completely irrational. You base that on nothing except for the people in the restaurant. They might be actors. You just don’t know. But social proof, it’s called “herding” in psychology. We follow what other people have done.

Luther:                        In some experiments I’ve seen online that were reality comedies, so to speak, they will have a group of people in line to start off a process with no end in sight and people will come and get in line. Is that similar to what—

Aoife:                          Yes. Yes, that is exactly the same concept, and that’s social proof.

Luther:                        How can a business take advantage of that?

Aoife:                          Well, if you’re a restaurant, hire people to sit outside your restaurant, or form a line and they’ll come in.

Luther:                        Maybe scarcity is also a way to do that, perhaps?

Aoife:                          Scarcity is. But really the driving force in terms of business and what you’re going to sell right now is online. If you have enough online reviews and people who are endorsing your product, people will follow. Print ads are over. Do you believe print ads?

Luther:                        Yeah. I can understand that.

Aoife:                          I know if I’m going to buy a product, if I’m going to buy something online, I’d look at what other people have bought. I look at what they say about the product, and that is hugely powerful.

                                    Big data companies, they draw people in with their big data, but then they use the data that we’re giving them to draw more customers in. I think that’s really the way of the future.

Luther:                        It sounds like one way that you’re saying you can take advantage of it, very different from scarcity, is through social media, through social sharing, through a buzz factor. Like you said, reviews, that’s a form of being social online, and it sounds like you’re saying that we trust each other, or at least the perception of another person, over the marketing or branding that the company may be doing.

Aoife:                          One hundred percent. In Alltech, I think our driving force is our people. I often give a presentation on how to be a good Alltech ambassador, and part of that is saying we’ve got a great brand. I’m very proud of the brand. It’s a family brand, but that’s not good enough.

                                    Every time an Alltech person walks out there, they need to be an ambassador with how they dress; how they interact with people; if they’re warm; if they follow up with what they say they’re going to do; if they’re trustworthy.

Luther:                        So, moving along, what is choice overload?

Aoife:                          Choice overload is a really, really interesting point. If I were to put six jars of jam in front of you and you could taste them, you would probably pick one and buy it. If I gave you 34, you would be overwhelmed and say, “Forget it, Aoife. Not going to buy any more.”

                                    When it comes to Alltech, we used to have a huge portfolio of products. A few years ago, it was thought, “Let’s just narrow this down. We’re not going to sell products anymore. We’re going to sell solutions.” This has been really, really successful because we’re not giving a choice overload. We’re giving a solution, and the solution might be one of four. It’s much easier for us to decide if we’re given one of four.

                                    I think that this also relates to the millennial generation. Many people our age complain about them and their lack of decisiveness, and they just bounce about from job to job. The reality is I think they have too much choice.

Luther:                        From a millennial standpoint, there is so much choice out there. There are so many things to choose from that perhaps that’s part of why they do bounce from one thing to another or struggle, perhaps, to even find happiness or true meaning at times because there’s so much different variation available.

Aoife:                          Yes. Perhaps.

Luther:                        Often, companies think about focusing their products and services, narrowing them so that they can spend more of their attention and time on them, but perhaps the other effect of making that choice is that it gets rid of choice overload for consumers.

Aoife:                          We have to be in the space of creating a product that we all love and want, but we didn’t even know we wanted it until it comes on the market. So, that could be in the case of Apple, the iPhones. In the case of Alltech, we acquired a company just a year ago called KEENAN, and KEENAN makes big mixer wagons for cows. What is fascinating about them is they have gone with tech, they have gone with an app, and they have a system where someone on the phone, a young person, calls the farmer and tells the farmer what those cows are going to need before the farmer knows it. It’s the beauty of the human touch with technology. The farmers love that they can just dial into this big green machine as they call it. They have a solution, and they didn’t even know that there was a problem.

Luther:                        We spoke earlier with Jay Johnston from Fermentrics Technologies, and they actually have facial recognition for cows. They’re able to observe behavior and then they’re able to adjust according to behavior. So, these technologies are allowing us to have insights not only from humans, but honestly into animals and observe behavior and change accordingly.

Aoife:                          I’ll tell you an even crazier example of this. We have The Pearse Lyons Accelerator program going on, and one of the companies is a cow sensor company. They are putting a sensor on the tail of the cows when they’re pregnant. This sends a signal to the farmer when the cow is going to give birth. Now, it sounds simple, but it is revolutionary for the farmers because they don’t have to stay up all night waiting for the cow to give birth. They just get an alarm.

Luther:                        Wow. That’s fascinating. Consumers have more tools available to them, more information than ever before. So, with that being said, are they able to bypass some of the decision-making, some of the predictable irrationality, so to speak?

Aoife:                          We can’t bypass it. It’s just in our genes, and it serves us well.

I was asked a question yesterday, “Do younger people respond differently?”

                                    No, they actually don’t. We are programmed to have these mental shortcuts for a reason. You and I are looking at each other while we’re doing this interview. We’re focused on each other. I’m not focused on everything else around me and neither are you. Our brains need to do that in order to get things done.

Luther:                        What is the take-home message for businesses based on mixing all of this together, the psychology with business, with the consumer, decision making? What would you give as advice in how to think about this and apply it to business?

Aoife:                          First of all, be aware. We’re so influenced in our decisions. We think that we’re making decisions. We actually aren’t.

                                    Be aware of price anchoring. Use that to your advantage, what you price something at.

Second, your perception is not the same as everyone else’s.

The third point is the illusion that we make these decisions.

Luther:                        What do you find most surprising when you look at predictable irrationality in how human beings make decisions?

Aoife:                          When I stumbled on this field, I was at Harvard taking an economics course. They were talking about market demand and market supply, and they were showing me all these graphs and mathematical figures.

                                    I actually said to the professor, “But that’s not how people behave in the real world.”

                                    She just looked at me and said, “Which real world are you talking about?”

                                    Economics is so different than the real world. Then I discovered this whole world of behavioral economics, which is basically taking economic theory — which brought the downfall of the stock market because all these economists were assuming that we were going to behave in predictable ways and rational ways — and putting on psychology and trying to look at people as human.

Luther:                        At the end of the day, it still is people consuming services products that we produce.

Aoife:                          I’ll tell you two examples of this. One personal and one sort of professional. I love Apple products. One of the things that I love is their Genius Bar. I also love that, when I have a problem, I get a person on the end of the phone and that person helps me. So, Apple is selling a product that I buy all the time, but it’s also that person on the other end and that human feel. And, I would say within my own team in Alltech, the human touch and loyalty is what it’s all about.

Luther:                        Dr. Aoife Lyons is director of educational initiatives and engagement at Alltech. Thank you very much.

Dr. Aoife Lyons spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. For access, click on the button below.

Tom:                    As a registered dietitian/nutritionist and a nutrition solutions specialist at Alltech, Nikki Putnam helps farmers and producers apply the lens of human nutrition to agricultural practices for the improved nutrition of plants, animals and consumers. We thank you for joining us, Nikki.

Nikki:                   Thanks for having me.

Tom:                    So, what role do you play in the chain of events that happen from farm to table?

Nikki:                   I have a really interesting role within Alltech. I actually came from a larger supermarket chain based out of the Midwest. And what I was doing there was acting as a health and wellness spokesperson, helping consumers to understand a bit more about what was in their food, where their food was coming from and what types of food they should be purchasing for prevention of chronic disease or specific diets like food allergies.

                    So, what I’m doing is bringing that to Alltech now and helping our producers explain to consumers, explain to retailers what they’re doing on-farm and how they’re using feeds to improve the nutrition of their animals to then improve the nutrition of that food product they’re bringing to the consumer and to the retailer.

Tom:                    I think we all watch trends in our respective fields. How about you? What noteworthy trends are you keeping an eye on?

Nikki:                   A few things that I think have been really popular as of late is what I like to call the “free-from” diets — gluten-free, dairy-free, soy-free.

                    Also, paying more attention — consumers are paying more attention to food sensitivities. Are they reacting to certain types of foods? Is it an actual allergy? Is it an intolerance? Or is it maybe just more of a preference?

Tom:                    What about consumer perceptions? Let’s start with “free-from.” Is it recognized on the consumer end, and are sales of “free-from” items on the rise?

Nikki:                   I think a lot of consumers are starting to look for these types of products. They’ve been out for quite some time. I mentioned gluten-free, dairy-free, soy-free were available for people who had legitimate allergies to these products. Now, more consumers are looking for these products on supermarket shelves, and, yes, I think that specialty category is continuing to grow. We’re seeing more of that in the supermarkets, and more consumers are looking for it just to feel better. Maybe they don’t have an allergy, but they are looking for new things to help them feel better and improve their well-being.

Tom:                    And what about paying attention to the number of ingredients? Does that seem to have an impact on the consumer end?

Nikki:                   I think those two things tie in together very well. A lot of consumers are perceiving these free-from products as healthier, mainly because they contain fewer ingredients. Many of those products that are included in that specialty format or specialty aisle in the supermarket have fewer ingredients than those that may have included the gluten, the soy, the dairy, etc. 

Tom:                    Would you consider these diets something of a disruptor?

Nikki:                   Absolutely. I think it’s changing the food industry. I think it’s changing the way that producers of food, food companies, the big food industry and retailers are starting to talk to consumers, the way that they’re marketing the products. They’re also changing a lot of product lines to be able to reach these consumers looking for specialty products.

Tom:                    Anything coming along that might disrupt the disruptor?

Nikki:                   Yes, I think so. I think right now the consumers are considered the disruptor, if you will. They’re the ones demanding these different types of food products and asking for things that producers and retailers aren’t offering yet, but we’re seeing producers and retailers really catch up. They’re the ones trying to get ahead of the curve now. We’re seeing a lot of them going out and taking new leaps and forays into different types of products and specialty goods. So, they might be the next disruptor.

Tom:                    So, the potential is definitely there. What are some good ways to get involved?

Nikki:                   A good way to get involved from the producer side is really listening to the consumer. I think this has been something we’ve talked about time and time again over the years at many different events and meetings. I’ve spoken with producers about getting involved or listening to the consumer. What do they want from us? They are out there telling us specifically what they want to buy on supermarket shelves. Whether or not you can meet that exact need that they’re asking for, listen to what’s behind that exact demand. Are they asking for less processed products? Are they asking for more sustainable products? Are they asking for functional foods, maybe added selenium or DHA? They’re telling us what they want.

Tom:                    Are food allergies on the rise? You mentioned sensitivities a few minutes ago, but are we becoming increasingly food sensitive? And if we are, what’s going on?

Nikki:                   I’m not sure that we’re becoming increasingly food sensitive. I think our awareness of food sensitivities, intolerances and allergies is growing. Only about 4 to 6 percent of the population has an actual food allergy. A larger number has intolerances and an even larger number has what we call a “food sensitivity.” So, this is something that an estimated 30 to 40 percent of the population is dealing with. It might be even coming from seemingly healthy foods like whole wheat toast or broccoli.

Tom:                                   Is it often surprising to find out that a rash or some sort of physical response that you might have attributed to any number of other things turns out to be a response to food?

Nikki:                   Yes. I think it’s often very surprising to consumers and patients alike when they find out that something they thought was very healthy like a piece of salmon or an apple is actually causing a negative reaction in their body. Everyone’s bodies are different. So, it’s very difficult for us to give a blanket “these foods are healthy” statement when we don’t know exactly how that person’s body is reacting.

Tom:                    We’ve heard throughout our lives that “we are what we eat.” What’s that implying for human health and for the way the food industry should respond?

Nikki:                   I think we’re going to see some big changes in human health. We’ve been hearing for years about eating for prevention of chronic disease and improving our health and well-being through food. I think we’re going to see this increase even more as we find out more about what foods are specifically good for each individual person. I think we might see some diets evolve into more specific programmed nutrition for each person rather than, like I mentioned before, these blanket healthy food diets.

Tom:                    Would it be a stretch to call food the new medicine?

Nikki:                   Absolutely not. I think food is definitely something we can use for preventative care. You know, Hippocrates said, “Let food be thy medicine.” That’s becoming truer day in and day out.

Tom:                    What are some autoimmune diseases that respond well to nutritional solutions?

Nikki:                   A couple of the autoimmune diseases that we’re finding more of, not necessarily because there are increased incidents, but because, again, our awareness of these diseases is increasing — celiac disease and irritable bowel syndrome are two autoimmune diseases or conditions that are greatly affected by nutrition.

Tom:                    When you think about it, how do free-from diets and attention to food sensitivities, in the end, affect the average consumer’s dinner table?

Nikki:                   I think we’re going to see more changes on the dinner table. We’re seeing more foods that have less processing. People are going back to freshness again. They’re looking for less packaged foods. Or, if they’re eating packaged foods, they’re eating them with the lowest number of ingredients they can find.

Tom:                    Nikki, what about your work do you like the most? What’s the most fun?

Nikki:                   The most fun I have with my job is meeting the farmers and producers. I’m an Iowa girl. I grew up in Iowa. I’m living in Texas now. I’ve always been interested in human nutrition, but I’ve had a soft spot in my heart for agriculture. The best part about my job at Alltech is I get to marry those two things together.

Tom:                    Nikki Putnam is a registered dietitian/nutritionist and a nutrition solution specialist at Alltech. Thank you for being with us.

Nikki:                   Thanks so much.

Nikki Putnam spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech  Idea Lab. For access, click on the button below.

To listen to our entire conversation with Matthew, click on the player.

Tom:                      Where is the world’s most exciting animal nutrition market? Matthew Smith is here to tell us about that. Hint: Matthew is Alltech vice president of Asia-Pacific. Thank you for being with us, Matthew.

Matthew:                It’s a great pleasure.

Tom:                      Let’s go to that question. What country is home to the most exciting nutrition market?

Matthew:                One word: Vietnam.

Tom:                      And why is that?  

Matthew:                I would describe Vietnam as the most dynamic marketplace for agribusiness and agri-food currently within the Southeast Asian region. It’s probably best to put Vietnam in context with the Asian countries: It has the second-highest population density of the Asian countries. Of course, number one is Singapore. Singapore is a completely different model. Food security is the main concern in Singapore. But in Vietnam, we have many hidden treasures that are yet to be discovered globally, which are making a big difference in the industry in Vietnam. They have the potential to change the way in which other countries produce protein by adopting the right technology and the right platforms to get to the consumer.

Tom:                      What are the dynamics in Vietnam? What’s driving this?

Matthew:                The consumer. It’s very much a move toward growth in the middle-income bracket and the desire to westernize. Food is very much about culture in Asia, and culture is about food. The two are inseparable.

                              We do see a significant shift toward well-being and wellness and a more informed choice about food, maybe food with a story.

                                Clearly, the dominant segment of the industry — the highest consumption — is pork. When we look at that as a metric in the feed industry, pork or swine feed would account for about 64 to 65 percent of the 19 million tons of feed consumed annually in Vietnam. The majority of the remainder is poultry feed, so it’s really very conventional.  

                               However, we’re seeing big growth now in the move toward packaged and processed food. And, ironically, the biggest segment of the packaged food market is milk. I would describe milk as probably the real disruptor at the moment within the Vietnamese industry.

Tom:                      Can you elaborate on that?

Matthew:                I say the biggest disruptor because, where is the largest centralized dairy in the world?

Tom:                      Vietnam?

Matthew:                Good answer. That wouldn’t be apparent to most people. When we say centralized dairy, there is a business in the central part of Northern Vietnam that was originally a joint venture with an Israeli conglomerate and the Vietnamese government. They decided that they were going to produce milk in what effectively is a desert. And they now milk 42,000 cows on one farm, with the majority of the feed being produced on the farm in terms of total mixed rations.

                              The business is called TH Milk. It’s a fully integrated operation, a runaway success story in terms of the utilization of technology, whether it be milking technology or feeding technology or technology that they use to purify the water for the cows to drink. Also, the way in which they process all of the effluent and waste from the dairy farm so that you will have an entirely sustainable unit.

                               But, when we talk about disruption, it’s the way in which that milk is sold. Milk is very much seen as a premium drink. Domestically, the dairy industry within Vietnam only produces about 28 percent of demand. So, that creates a huge opportunity. The business, TH Milk, and other businesses that operate in a similar fashion have really made the purchase of milk into a consumer experience. 

Tom:                      Is dairy a relative newcomer to the Vietnamese diet?

Matthew:                No. There would have been a lot of what we would describe, maybe, as backyard farming in terms of dairy production. So, it would have been sustenance. We would have two, three cows, and we would produce for the family and the neighbor. We would share the milk. However, given this huge increase in demand for the consumption of milk, that’s prompted much more cohesive dairy farming and has attracted a huge amount of investment. That sums up Vietnam’s move away in the 1990s from a centralized approach to agriculture and food production and much more toward primary production and integration.

Tom:                      What are the opportunities for emerging technologies, innovation in the Vietnamese market?

Matthew:                One of the biggest trends that we see within the Vietnamese market is the use of technology on the horticulture side. There is a lot of investment from engineering industries, from car manufacturers, from businesses that would not historically have been related to agriculture in terms of them utilizing distribution mechanics.

                               We’re talking about growing vegetables in an enclosed environment: hydroponics, etcetera. And those other industries see a lot of overlap with their technologies in terms of assisting in a huge increase in vegetables, which would be grown very close to the cities, which obviously are the primary markets.

Tom:                      I’ve read that Vietnam’s aquaculture market has nearly doubled in only a few years. If that’s true, what’s driving it?

Matthew:                One of the most recognized brands in the U.S. and Europe would be barramundi. Barramundi would be the Asian sea bass equivalent. The brand is actually called Australis. Most consumers would buy that to fillet. Very nicely packaged and very heavily branded, believing that it’s come from Australia. But it hasn’t. It’s from a very progressive operation, which grows the barramundi offshore in cages, in an extremely isolated environment that has incredible water quality, which is what’s needed for sustainability and to grow the fish and have a good feed conversion rate.

                              That’s just one example of people using a brand that doesn’t necessarily present itself as coming from Vietnam, but that is utilizing the environmental assets Vietnam has. You do have to contrast that with some of the challenges that Vietnam has in terms of the environment, the recycling of waste, areas the industry is attempting to tackle. That’s another opportunity for technology.

Tom:                      We’ve been focusing on Vietnam, but what about other countries in the region such as Myanmar, Cambodia, Mongolia?

Matthew:                All of those countries represent a huge opportunity for technology for a number of different reasons. Cambodia is wedged between Vietnam and Thailand, two countries that have much greater recognition in terms of the food chain and primary production. But Cambodia itself is a natural resource, a very clean environment where crops can be grown, particularly in the south. As you move up to the north, you start to see the opportunity for fruits and vegetables to be grown. Cambodia is the world’s largest exporter of mangoes, a fact that is not necessarily at the forefront of people’s minds when they consume a mango.

                               We have to embrace the local regulations, which, until recently, has been a challenge for businesses going into those countries to set up operations. But there is a growing industry in Cambodia on the aqua side, a growing industry on the poultry side.

                               Myanmar, for many, many years was a closed market, but now government policy is changing. Myanmar is dominated by the poultry industry. And that poultry industry has the potential to grow with technology, to scale up and be in a stronger position to supply the export markets.

Tom:                      What disruptors do you expect to see in this emerging market?

Matthew:                I guess the implementation of a more cohesive food chain, more cohesive supply chain and retail outlets.

                                Thailand and Vietnam are not well-known for having big supermarkets, but they have an increasing number of smaller retail outlets, which are generally owned as part of integrated operations. So, whilst we still have a big wet market where food is bought on a daily basis and consumed that day, there is a much greater move toward processed and packaged food, and that has big implications. It requires a supply chain. It requires refrigeration. It requires speed. But with growing affluence in that middle class, the opportunity for the consumer to purchase packaged food is a clear opportunity and will be a disruptor moving forward.

Tom:                      How is Alltech fitting into the Vietnamese market? What’s going on there?

Matthew:                We opened our Vietnamese office in 1993. So, we’ve been there for some time now. As with all of the Alltech businesses, we really look to localize our approach in terms of the makeup of the team from a production point of view, from sales, from a marketing perspective. People who really know and understand the industry.

                              Vietnam has been a very successful marketplace for us in the past 24 years, and we just see our business going from strength to strength as we are now in the position to offer more feed solutions to a growing feed industry.

                               Across the Asian countries, we’ve had a presence for a minimum of 20 years. Myanmar is new. Cambodia is new, and Mongolia will be very new for us. A very small market, but it represents the opportunity for us to localize our business and takes us into more of those countries. 

Tom:                      Matthew Smith is Alltech vice president of Asia-Pacific. Thank you so much for joining us.

Matthew Smith spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. 

Luther:                        I’m joined by Dr. Mark Lyons, global vice presid ent and head of Greater China at Alltech. He received his master’s degree in brewing and distilling and a Ph.D. in solid state fermentation at Heriot-Watt University in Edinburgh, Scotland. Thank you for joining us.

Mark:                          Thank you.

Luther:                        What are your thoughts on the rising billion?

Mark:                          I think it’s really the “rising billions” because, as we delved into this, we really started to see what is transpiring in the world and how, from my perspective living in China for the last five years, we’re only at the start of a major change.

                                    We think about the transformation of China in the last 30 years, and what’s taking place is that only 10 percent of the Chinese population has about $10,000 of disposable income in their pocket. By 2030, that will increase to 35 percent of the population. That 25 percent increase is bigger than the American population. So, if we think about that and then we think about India, we think about many other developing nations, we think about the continent of Africa, and to a certain degree we even think about the transformation through technology of our own population and millennial spending and the next generation coming after them — there’s an absolute transformation in terms of the way our economy is going to work and the way our companies need to respond.

Luther:                        How do you define the rising billions in terms of that group of people?

Mark:                          By 2022, there will actually be more people in the middle class than the poor class. So, I think we’re starting to see that there’s a group of people who have money to spend and who are interested in different types of products. Their access to technology and the transparency that that brings is extraordinary, and some of the platforms they’re using, particularly “fintech,” or financial technology, are really transforming these individuals. So, these are people for whom there’s an aspirational element. There’s a yearning to have certain types of products. And so, I think we need to market to these individuals in a different way than we traditionally do and realize that the market is much, much bigger than our traditional market or our domestic market. This is going to take different types of thinking. It’s also going to take different ways of transacting.

Luther:                        So, how are we going to connect these people to the internet? What technologies are going to be used?

Mark:                          Yes, there are some really exciting projects. There’s Project Loon, which is essentially launching a bunch of mini satellites and ways for people to be connected. Just the emergence of accessible smartphones, so people are able to get access to the internet. Some of the estimates are that by 2030 we’ll have about 50 percent of the global population connected to the internet. I think that’s probably conservative. I think this is all going to happen a lot faster.

                                    Some of the projects that people are looking at — you’ll virtually be able to access the internet anywhere in the world at low cost. Already in China we’re using social media to pay, so Alipay, or a lot of other pay programs through WeChat, through social media. That’s transforming things, because people who don’t even have a computer are accessing information, but they’re also paying for products. In Africa, we’re already seeing that just through text messages people are paying for products, and that’s been in place for over five years.

Luther:                        How will the rising billions disrupt the global economy?

Mark:                          Look at the approximately 325 million Americans and the position of the number one economy globally. I think we have to accept the fact that there are countries that obviously have much bigger populations than us that are going to be — even if they’re half as affluent — their economies are going to be bigger. Obviously, there’s a lot of focus on China — but all the ASEAN countries, India, again Africa as a region — you’re talking about populations that dwarf ours. So, we have to start to switch our mindset from being so focused on our domestic market to start to think like these more nimble, smaller countries that are really export-focused.

                                    We’re originally from Ireland. Everything is about export. Everything is about the global network and being connected. I think, as a country, America needs to reposition itself to being a leader in technology, perhaps being a leader in innovations, and that those are the types of things that we’re going to lead the way in.

Luther:                        What should businesses be doing to prepare for the arrival of these additional billions of people coming online?

Mark:                          I think it’s really a way of seeing these as market opportunities and getting out there, visiting. Educate yourself, educate your people, start to think globally, and not in the closed mindset that we have.

                                    Unfortunately, I think politically and globally right now, there’s a lot of pullback. There are a lot of people pushing against globalization, but I think it’s just something that’s inevitable. Once that door opens, and how connected people are, if we don’t get involved in that, we’re going to be sitting on the sidelines.  As a very global company operating in almost 130 countries, we can’t think any other way. I always encourage people: Get out there. See what these markets are like. Find the ones that you think fit you, and your business, and your culture, and go there and make it happen.

Luther:                        What about in a local economy? You’re a global company. What about for a business that may be more local? Do you see an effect on that from the billions coming online? Is there something they should be doing?

Mark:                          I think the other aspect of it is that you see some of these markets, and you see similar challenges that they’re going through. I think there’s often a lot that can be learned.

                                    It really is incredible to see in China people going to Starbucks with no money — they get 10 people in line and no money changing hands. Isn’t that amazing? China’s probably going to be the first cashless society and also the largest country in the world.

                                    Are there things like that that maybe we could bring back here and we could innovate? Are there new technologies? Are there new ways that we could do things? I think that’s probably one of the parts that we find most interesting traveling around the world. You see something in some place, and you see applications for it in another.

                                    I think the local part is going to be critical because people are searching for — Europeans call it “provenance.” We call it “origin” or “traceability.” People want authentic products. They want local products. So, all of that is very, very important.

                                    Yesterday, we had a beer festival. Five thousand people came through. More than 5,000 people. What were they looking for? They were looking for beers that were local. They were looking for products that were local. That’s the real draw. The story…and that traceability is something that local companies will have as an advantage over global big brands, and that’s something they need to exploit.

Luther:                        You addressed the fact that in China they are exchanging currencies cashless. In what ways are the rising billions coming online that are different than the Western world?

Mark:                          I think that there’s obviously this whole discussion around leapfrogging, and the fact that they’re not having to go through all the steps. So many countries have just forgone having phone lines and all these networks that are very expensive and expensive to maintain. They’re skipping a lot of those infrastructure steps because they’re just able to go straight to cellular. Leapfrogging brings a certain expectation of speed, an expectation of change.

                                    The biggest difference is that they’re so much more open to change and anticipating change, whereas we’re often pushing back against change and wanting to have things stay the same. That’s something that concerns me, because I think that if you’re anticipating change, then you’re much more innovative. You’re much more likely to come up with new ideas. That’s something that I think we need to be aware of — that change is a good thing. Change is something that we should want, and we should be driving it forward.

Luther:                        Are there potential negative consequences to the rising billions coming online?

Mark:                          I think that geopolitical shifts and power shifts in the economy will cause eruptions. They’ll cause confusion. I think there’s a big feeling in this country of people who feel like America is number one. Wait a minute, what if we’re number two?

                                    Number one in what, and what is it that we’re really after here? I think repositioning America as a leader is really important. Are there negatives? I think that’s going to be down to how we handle the situation. There are incredible positives. The number of people that are going to be lifted out of poverty, and poverty being something that is of the past is very much an idea that we can be thinking about and realize is going to happen. That’s a tremendous positive; that can’t be a negative.

Luther:                        How will the rise in billions affect the average consumer?

Mark:                          I think that we’re going to see a total transformation in terms of the number of people in this middle class. In Asia today, about half a billion people would be considered in the middle class. By 2030, we’re talking about 3.2 billion.

                                    For the average consumer, I think that just transforms everything. We’re going to live in a world that’s totally different. The communication we’re going to have with these individuals around the world is going to be extraordinary. And so, I think for the average consumer, and we’re definitely going to see it in the next generations coming through, they’re going to grow up with a totally different mindset. I think that’s supposed to be the exciting part for us, but also maybe one of the challenges.

Luther:                        Amazon is always referenced for having taken advantage of the long tail effect. Do you see the rising billions as a similar effect to the long tail, maybe not as high in income, but because of the quantity that are coming online, the opportunity there for disruption and for profitability and companies that take advantage of it?

Mark:                          Absolutely. I think we’ve seen this now with companies that are operating in these very large markets. The population is so big that you can come up with something, make not that much money on it, and you’ve got such a scale that once you start to get out of your own country, your competitiveness is just off the charts. Certainly we’re seeing that in China. I think we’re already seeing that in India with some of the domestic companies. Once they start to step out of their own markets, they can really take a dominant position. That’s going to be something to keep an eye on.

                                    Already we’re facing a situation that seems like we don’t have that many companies that are really dominating the space, and that may even become fewer when we look at it globally. So, I think that’s something that many, many companies are seeing as a big opportunity.

                                    On the other side, I think back to the local idea, how do we come up with ways that we can play in those niche spaces that could be much more profitable? So, I think that in certain regards there are going to be dominant players, but sometimes those spaces are not that profitable. We’ve seen in many cases that, in certain niche areas that are very specialized, you can be making far less revenue and similar profits.

Luther:                        What other facts about the rising billions do you find surprising or intriguing or that you’re seeing that the average person in America or in the Western world may not realize?

Mark:                          I think the big message is that these individuals have the same types of desires and interests and want experiences and products that are probably not dissimilar to what we would want.

                                    I think their spending patterns are quite different than ours. I’m amazed in China. Beijing is such an expensive city. I look at the salaries that my colleagues make and the salaries that friends make, thinking, “How are people living on this?” You realize it’s because they’re not buying a lot of the types of things we’re buying. They don’t have two, three, four cars. They don’t have a television in every room. They think of debt in a very different way. And so, there’s a whole array of surprising things about these individuals and their spending patterns, but I think there’s opportunities within that.

                                    At the end of the day, I think our similarities are much greater than people anticipate. People care about the same types of things. Their family, certain interests, feeling important, feeling recognized. Those things are fairly universal.

Luther:                        Dr. Mark Lyons is the global vice president and head of Greater China at Alltech. Thank you for joining us.

Dr. Mark Lyons spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech  Idea Lab. For access, click on the button below.

To listen to our entire conversation with Mary, click on the player.

Luther:                        Mary Shelman is the former director and is currently an advisor to the agribusiness program at Harvard Business School. She is an internationally recognized thought leader on the future of the global agri-food industry. A native of Kentucky, where she still owns a farm, Shelman received her bachelor’s degree in chemical engineering from the University of Kentucky and her master’s degree in business administration from Harvard Business School. Thank you for joining us.

Mary:                          Thank you.

Luther:                        Do millennials really see the supermarket as a daycare center for the elderly?

Mary:                          You know, that’s a great introduction, isn’t it? It really gets people’s attention.

                                    If you stop the millennial walking down the street — and for those who might not know, a millennial is someone born between 1980 and 2000 —that’s not the answer they give to you, but the idea came from my good friend, Aidan Connolly of Alltech. He was running a training program in Lexington with a group of young people from all over the world in their early twenties, and he took them out on this visit to a number of supermarkets here in town. They went to Kroger, and Whole Foods, and I’m sure some others. And he came back and was doing a debrief with them. He said, “Well, what did you think?” “Oh, yeah, those were great. Those were really, really nice.” And then he asked, “Would you shop there?” “Oh, no, we’d never go there.” “Well, why not?” “Well, that’s not the way we would expect to get our food. We’re going to order it online. Somebody is going to bring it to our house, you know.”

                                    So, that led him to the question, “Well, then, there’s no future for supermarkets, right?” And they said, “No, no, we didn’t say that at all.” “Well, what is it then?” “Well, supermarkets are really important because, you know, old people need some place to go, and to get some exercise, and to have some interactions, and be able to get out of the house and move around.”

                                    Aidan just paused and said, “Oh, wow, it’s like a daycare for the elderly.” And that’s where that idea came from. This thing that we’ve been used to all of our lives might not be relevant for this next generation of consumers.

Luther:                        Speaking of consumers, those aged 18–34 are the largest buyers of organics, and they’re the most likely to consider themselves knowledgeable about their food. Is this the newly engaged and empowered food consumer you’re referring to?

Mary:                          Well, they do consider themselves very food aware. They are very interested in cooking and sharing what they eat.

                                    It’s also an incredibly large demographic group. It’s the largest demographic group now in the United States. There are 83 million millennials. There are only 77 million of us baby boomers.

                                    So, when you think about this millennial group, now they’re having families, they’re moving into some portion of their earning power. It’s a very compelling-sized group for the food industry to look at.

                                    However, that’s not the only thing that’s behind this engaged and empowered consumer. I think, overall, the whole country, and perhaps the whole world, is in the midst of this food movement. People want to know more. They care more about their food. They want to know where it comes from. They want to know where it’s produced. And the availability now of information and where they can get that from and how quickly they can get it has really changed their behaviors. I was just looking up the numbers before I came down here to do this with you. There are almost 4 billion internet users in the world now. There are almost 2 billion Facebook users in the world. So, information travels radically (fast).

                                    I was teaching in a program yesterday, and we were having this conversation about this one group that was having a lot of influence, and it sounds like a very rich population, but someone from Honduras was there. He spoke up and said, “No, no, no. In our country (which has very different socio-demographics in terms of economics), people get information very quickly now.” He talked about this idea of engaged eating. So, this consciousness is not just here in this young person group, but that is a group that’s very important because of their purchasing power.

Luther:                        So, we’re talking about millennials and how they’re rejecting the typical grocery store. Can you give us maybe just a summary of why they’re rejecting the grocery store?

Mary:                          I think it’s very simple. It just doesn’t meet their needs, or it doesn’t meet their expectations. I mean, how do they get their food? They order it online. They have it show up to their house. It’s the same way they get their music. It’s the same way you get your taxi now to go to the airport. You call Uber.

                                    They have grown up in a different world, and they don’t understand why they should have to go and wait in line to pay for something, to wade through a store that has aisles and aisles of things that they don’t need.

Luther:                        I think many people view millennials as this enigma, right? “They’re demanding; they’re lazy” are a number of terms. I wonder if that’s your view or more the fact, as you said, the way they grew up is different than the way that you and I grew up. It’s really a generational difference, and the fact is that change is happening faster; it’s just that that change has happened faster than it has in the past.

Mary:                          I think that’s very true. What they have grown up with has been different. Maybe not the way they’ve grown up, but what they’ve grown up with.

                                    The Apple iPhone was introduced in 2007. So, think about how fast that’s changed our behaviors. They’ve just had access to this, a part of this digital economy there.

                                    My son, who is 25, so clearly in this group, is much more vocal in his beliefs, and his friends are as well. But I think what’s interesting is that there are some very good aspects about them. You use the term “kind of lazy,” and I don’t think that’s true at all. I think they just have a different idea about what’s important compared to maybe what you and I grew up with.

                                    Many of them seem to be much more interested in health than other generations. They’re very conscious of their diet and that link between diet and health. They’re much more likely to exercise. So, they’re making food choices based on what they perceive as being healthy, fresh, clean, “free from” these different ingredients. We’d like to go to farmer’s markets where we can see things and engage with farmers.

                                    I think they see food as adventure as well. I grew up in Elizabethtown here in Kentucky and in, basically, a very traditional family. My dad liked beef. So, we’d have beef four or five nights a week and then maybe have a couple of other things. But, you think about the diets now and the diversity that shows up, so one night it’s Chinese, the next night it’s Thai, the next night is sushi. I think these millennials would eat sushi five, six, seven, eight times a week if they could. You know, it’s Italian, it’s Ethiopian, it’s Moroccan. So, that’s just a fundamental change in what they consider as part of their eating habits. They’ve been described as “food thrill seekers.” Maybe you’re at a stage that you can’t travel because of family economics, but you can get some thrill out of your food, and you can share this thrill with your friends.

                                    Seventy percent of this age group takes pictures of their food before they eat it, and many of them put that on Facebook. They share it on Instagram. So, food has become part of their identity, well beyond just fuel for the body and something that’s linked to health. It’s actually part of who they are. And because of that, they want the food they eat to have the values that they have themselves.

                                    They want to be individuals. Think about the craft food movement, the craft beer movement, which was one of the first harbingers of this, how successful that’s been because, hey, if I can have on my iPhone exactly the music that I like, why can’t I have exactly the same kind of curation of food that I like?

                                    The other thing is, they want to buy products that share these values. They believe in the purpose of these companies. So, something like 37 percent of millennials buy products for a cause, so something like Rainforest Alliance. Even if they have to pay more money for that, that’s important to them.

                                    Forty-two percent of this group say that they don’t trust “big food” companies. They feel like those companies, even kind of “big farming” as well, have violated their trust, that they haven’t made good responsible choices, and they push products onto consumers that really have ended up not being good for them. Too much sugar, too much fat, too many unnatural ingredients in there.

Luther:                        So, hitting on that point, it sounds like there are some big implications for the food industry, as you said, that perhaps some of the power is moving to the consumer, where before it was in the producer’s hands.

Mary:                          Right. I’m not sure it’s ever been — So, a producer in the sense of a manufacturer, a big food company.  It’s never been in the farmer’s hands.

Luther:                        I think that’s important to clarify.

Mary:                          Exactly. The big food companies: the Nestlés, the Krafts, the General Mills.                                  

                                    This is creating tremendous uncertainty for them, these changes in the consumers. The models they have used in the past — putting it on product shelves, getting distribution in every store, advertising on mass media, big promotions at the supermarket — they just don’t work anymore in order to drive sales. Those old models are broken, and they’re really struggling to find out what the new models are and what the new products are that satisfy this group.

                                    Just to give you some idea of how serious this is, in the last 10 years, big brands have lost share in 42 out of 54 product categories. Between 2005 and 2015, the top 25 firms have lost $18 billion in market share.

                                    It’s extremely difficult now for these firms to find growth. And so, what they typically do, the first thing they say is, “Oh, you know, our products don’t meet consumer expectations anymore, so let’s reformulate. Let’s take out the sugar. Let’s take out the salt. Let’s make them healthier.” Well, that’s great, but it doesn’t increase sales. It might stop a decline, but it’s not increasing sales.

                                    They say, “Well, let’s introduce our own version of organic, or GMO-free, or gluten-free.” But it’s not getting back to sales growth because when you look underneath, it gets back into this distrust of these companies. And so, that’s forcing them to look at who is being able to grow.

                                    The opportunities that these changes have created are actually for the younger and the smaller companies. These big companies are needing to look to them and say, “Well, I can’t do this myself, I’m going to go out and buy somebody.” So, General Mills bought Annie’s, the maker of all-natural mac and cheese. Perdue bought Niman Ranch. Campbell’s bought Bolthouse Farms just in order to get there.

                                    But think about the disruption that’s being created. Go back in your mind to the yogurt category in 2008. You had products like Trix yogurt and Dannon yogurt, and they were basically all of it. It’s either targeted at women on a diet or kids. The products, honestly, they were disgusting. I just thought they were either too sweet, or they had all these artificial sweeteners and artificial things.

                                    We’ve got this Turkish immigrant who comes in. Hamdi Ulukaya bought this old yogurt plant in upstate New York and introduced this product to the market after spending like two years working on packaging and product quality, but introduced Chobani and basically said, “Hey, we want this product. It’s going to be a great product. It’s going to be great-tasting. It’s going to be this Greek yogurt style. And I don’t want to have it as a special product. I want to make it very accessible to the masses.” So, he was on the protein trend. He was on natural even though it wasn’t organic. It wasn’t non-GMO, but it was natural ingredients. He was riding the social side of it, using social media. He didn’t have any money to advertise. And five years later, that company, Chobani, had $1 billion dollars in sales. In 2012, it was a sponsor of the U.S. Olympic team at the London Olympics. Now, Greek yogurt has gone from nothing to 36 percent of the yogurt category. Walk in the store, it’s almost all Greek yogurt. That category has doubled in size because you’ve got this better product quality there.

Luther:                        Well, I think that fits really well into another news item I saw that Whole Foods has had six straight declining quarters of revenue. In response, they created what they’re calling a 2.0 version: 365 by Whole Foods. They’re actually targeting it at younger, budget-conscious consumers. They claim that it provides easier use, a better grocery experience through a blend of design, technology and experience. Do you think there’s going to be some success out of that? 

Mary:                          I haven’t been in a 365. I’m really anxious to. But, just from what I’ve read about it and what I have read of other people assessing it, I don’t think they have the answer yet. I think they’re just reshaping.

                                    I think getting the size down is good. They can put it in more urban settings.

                                    We have young people now, they want to live back in urban areas again, where they can walk. A lot of them don’t even want cars anymore. So, it’s important that it’s some place that they can get to and shop easily and then get back again.

                                    The format that I think is much more interesting to watch is what Amazon is experimenting with out in Seattle. They started it just after the first of this year, a store called Amazon Go. Basically, it’s a store without lines. The worst thing about going to the grocery store is waiting in line to check out. The way that Amazon Go works is, you walk in, and you scan your phone over a reader. Then, you walk around and you put whatever you want into your basket, and you walk out of the store and go home. They send you a receipt afterward showing everything that you purchased. And there’s also a lot more prepared foods there, which is another aspect of what I think everybody is looking for now. It’s like we need help with thinking about what to eat. So, that’s a more evolved concept of 365.

                                    I think that it’s really hard if you’re an established player in an industry to disrupt yourself. When Whole Foods came in, they came in from outside the industry, brought in something new. What they brought in were all these natural, specialty and organic products. Those have all rolled out into Kroger. You can buy almost the same product quality there, but Kroger wasn’t the one to introduce that to start with. So, I think the format’s like that.

Luther:                        So, what about ClickList? Do you think that’s enough to appease the millennial?

Mary:                          I think it’s definitely a piece of it, online shopping, being able to pick it up. I think that’s helpful, but I think that evolves.

                                    With ClickList, I still have to go to the store to get it. If I click AmazonFresh, it shows up at my house.

Luther:                        I probably should have specified. Kroger ClickList allows you to shop online and then go and pick the groceries up. They’re ready for you.

Mary:                          That’s right. So, you order online and then you make the trip there, and they put it in your car. That’s been successful.

                                    Again, that next evolution of it that’s playing out is where it comes to your house. In this case, it could be Kroger making that delivery, even though I think they’ve chosen not to, but in the Northeast, it’s Stop & Shop, and Peapod is part of a division of Stop & Shop that makes the delivery.

                                    Or is it Amazon? I mean, everybody’s very comfortable now with Amazon. So, do you trust Amazon more to bring you fresh produce than you trust Stop & Shop?

                                    If you look overseas, if you look to the U.K., there’s a supermarket company called Ocado that you buy from online. It shows up at your house. It’s the largest online grocery company. They have no stores at all. So, it’s basically the supermarket without the store. And because of that, they can manage their inventory better because the products make one stop.

                                    Think about fresh foods. They come into the Ocado warehouse. Or you think about fresh foods coming to Kroger. Often they come into the Kroger distribution center. They get split again, and they go out to the different Kroger stores. You go in as a consumer and maybe it’s been sitting there for a few days, but you buy it and take it home. It spends another few days in your refrigerator and then maybe the quality is not so great. With Ocado, it comes into their distribution center. You order it. It immediately comes to your house. So, it’s bypassing that trip to the supermarket plus sitting on that supermarket shelf. So, Ocado says we actually have a higher purchase of fresh products even though here we typically think, “Oh, I’ll never buy a fresh product from an online experience because I can’t see it myself.”

Luther:                        So, continuing the theme of convenience, the millennial doesn’t look at food the same way we do where you go to a grocery store, you buy the parts, you go home and then you have these variable parts that you can assemble via a recipe into X, Y or Z. Are the millennials actually also potentially looking at just skipping that part and going straight to, “I just want a meal sent to me and I’ll choose what meal I want and it’s already assembled, or maybe all the ingredients are there and I just put it all together at that point?”

Mary:                          I think there are a couple of different cuts at that that are very interesting right now.

                                    First, we see the rise of these meal kits that you can order online, and it shows up at your door. And, in many cases, it shows up at your doorstep, and what you’re getting in that box is exactly the amount of ingredients that it takes to prepare the meals. So, if you have a recipe that calls for two stalks of celery, you don’t have to buy the bunch of celery and then have the other six stalks rot in your refrigerator until you throw it away because you have no idea what to do with it.

                                    One in four households in the U.S. have tried meal kits now. There’s like 150 companies operating in this space. Unilever just made a $9 million investment into one of these companies earlier this month. So, they’re getting some serious traction. The retention rate is very high once you try because it turns out the product qualities are good.

                                    You think, “Well, wait a minute, this seems all very expensive to have this come to your house,” but the cost of that meal that they’re sending you is $10–$12. It’s not really that much. Maybe if you have a family of six or eight or 10, that’s too high, but certainly there’s a lot of one- and two-person households out there. So, you get the convenience that it shows up at your house.

                                    You get the fact that you’ve really cut down on food waste, both on the ingredient side, but also you don’t have all these leftovers that then you have to throw away.

                                    The other thing it cuts down on is choice. We always think choice is good. But if you’re pressed for time or if you don’t know how to cook and you’re looking maybe to learn, then you want a recipe already there rather than having to look to a cookbook, right? Everybody says, “Oh, we’re offering all these recipe solutions.” Well, I don’t want to have to look through those recipes and decide. Here, it just shows up, and you’re getting your cooking lesson on top of it. So, I think there’s a lot of interest in that space.

                                    Blue Apron, the biggest player, is now delivering 1 million meals a month. It’s a big number, right? At $10 a meal, it’s about a $1 billion-dollar business. Valuation is probably $2 billion. And they work directly with the farmers. So, an interesting piece of their model is how they decide what recipes to offer. Some of it is based on what consumers want, but some of it is based on what’s available. They can find out from their farmers what’s in season right now and what the prices are at different times of the year. They basically come up with what they’re going to offer based on being able to meet their price points.

Luther:                        Very interesting. So, to bring this back home to supermarkets, how do they meet the expectations? How do they have authenticity, and transparency, and traceability from the producers, holding manufacturers accountable, and at the same time maintaining the convenience at a price point and profitability through all of this?

Mary:                          It’s a huge challenge, isn’t it, especially if you already have a big business model and a big footprint that operates in a certain way. It’s just like death by a thousand cuts.

                                    Think about the impact of, you know, certain categories moving online. So now people buy their diapers online. So now your supermarket is too big because you don’t need to have as big of a diaper stock anymore. Well, you have supermarkets that are too big, but yet you can’t lop off a supermarket because it still means that the supermarkets that you have left are still too big. So, how do you repurpose that space? I think it’s a real challenge.

                                    But, some of the things that I think that really need to be done are — one of them is a mindset shift. We see some of this going on. I think for a number of years, supermarkets really considered themselves as, basically, “Our role is to rent real estate to manufacturers of food products. We just display it. You work on your products and bring it in, and we’ll display it. If it happens to sell, that’s great. And if it doesn’t, we’ll kick you off the shelf. And by the way, you’re going pay us for the right to be on that shelf because we’re taking a risk putting you there because we’ve had to take something else off.” That mind shift has to shift back to, “As a supermarket, my role should be as a gatekeeper to this set of products that my customers really want. And not only am I giving them the products that fit their needs, but I’m also working in that store to create experiences for them,” because this young group now — and many of us, right? — we have too much stuff. So now we’d rather invest in experiences than we would products. So, how do you make food an experience? How do we make sure in that supermarket it is going to have to tell a story of the food product? That’s the important piece of it.

                                    In Milan, a couple of years ago, there was the World Food Expo, and there was a supermarket of the future there. And, basically, you walked around the store and you had augmented reality where every time you looked at a category, you could see visually the product information and where it came from, who grew it, whatever. I don’t think shoppers want to see that every time. To me, I’m not sure that’s the supermarket of the future. I do think people will want the experiences, the authenticity, the stories, the engagement, but at the same time, this convenience piece is really important. So, supermarkets are going to have to be omnichannel. So, you’ve got a store that has some elements of this, but it also has to come to the house. And analytics. Data analytics. You know, being able to really dig in and understand what sells, what doesn’t sell, what price points.

Luther:                        Mary Shelman is former director and is currently an adviser to the agribusiness program at Harvard Business School. Thank you for joining us.

Mary:                          Thank you.

Mary Shelman spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. For access, click on the button below.

To listen to our entire conversation with Emmet, click on the player.

Tom:                           Emmet Savage is co-founder of Moocall, one of the 10 finalists in The Pearse Lyons Accelerator program and one of two out of Ireland. He has founded numerous companies in the construction, demolition and fashion sectors. Moocall, however, is quite different from all those. And, under Savage’s leadership, the Moocall team has expanded into 38 countries in 28 months. Thanks for being with us, Emmet.

Emmet:                       Thank you. Nice to be here, Tom.

Tom:                           So, what inspired this technology?

Emmet:                       It all came about when a guy who used to work with me on the demolition side came to me with an idea. He was a farmer’s son, and they lost a heifer and a calf, which was really a huge loss to the family both emotionally and financially. So, he had an idea that there was really something specific in the movement of the cow’s tail when she’s close to giving birth. He had done some really early stage testing on it, and then he brought it to me. I was able to put some seed capital behind it, and we proved the concept really quick. So, it was that original loss that spurred the thought process around how we could solve this problem, and Moocall was born.

Tom:                           Is this “tail switching” something that’s commonly known in the cattle industry?

Emmet:                       It would definitely be commonly known by the farmers that a tail moves in a specific way. No one had actually gone into scientifically looking at what those specific movements were. But, when we started to research the tail movements, we realized very quickly a contraction makes the tail move a specific way. So, our device measures contractions and can then accurately give a farmer an hour’s notice as to when the calf is going to be born.

Tom:                           Your website says, “Enjoy healthier cows and calves, more sleep and increased profits.” What is Moocall, and how does it deliver healthier cows, more profit and, above all, more sleep?

Emmet:                       Sure. Obviously, healthier calves are a direct result of the farmer being there when the birthing process is happening. In a lot of cases in calving, there are problems with getting the calf out, or there could be a leg back. There are all sorts of problems. At that point, if the farmer is there, he can then make a decision to intervene himself or to call the vet. So, in doing that, we’re increasing profits on farms, delivering healthier calves and helping the farmer.

                                       And sleepless nights are something a lot of farmers will understand. They set alarm clocks every few hours to check on their herd. Most times when you’re walking down to check on the herd, there’s nothing happening. So, it’s a wasted trip, and sleep deprivation happens. With Moocall, you have it on the cow’s tail. You go to sleep soundly with the knowledge that Moocall will wake you when you need to be awakened and not unnecessarily.

Tom:                           Could you describe exactly what the device looks like? It slips onto the tail, correct?

Emmet:                       It doesn’t actually slip on. What we have is a ratchet system that you’re going to open up. You wrap it around the cow’s tail. You put the strap back through the ratchet. We put it in what we call “hand tight,” which is basically pushing the strap in, and then you give it two or three clicks of a ratchet, which tightens it onto the tail just enough to hold it in place. It’s like a turtle shell, and it’s actually designed on the concept of a turtle shell because there are no hard edges for the sensor to catch when it’s on a cow’s tail. So, it’s a turtle shell-shaped green sensor that has a little ratchet strap for attachment.

Tom:                           And so, it sends data to a smart device — a cellphone, an iPhone or whatever, right?  

Emmet:                       Yeah. It sends to any phone that can receive a text message. That’s good enough to operate our device.

Tom:                           What if the farm is located in a weak area for cell service?

Emmet:                       Yeah. We’ve pretty much got around that as well. We have a roaming agreement with Vodafone, our connectivity supplier. These big telcos have lots of tier partners around the world. So, for example, in America, AT&T and a lot of other cellphone providers work with Vodafone and allow Vodafone’s internet of things (IoT) service to roam on to their services. So, in most cases, our device will roam on to another network provider because of a deal done higher up the chain with Vodafone themselves.

                                    We’re also sending a very small piece of data. It’s not really like a text message. We gather all the data. We send it to a server in the cloud and that then sends the text message. So, when it’s a smaller piece of data, it’s easier to get out. In nearly all cases, our devices will work even with the lowest cellphone signal.

Tom:                           Electronics are not known to be very moisture-friendly. What if it rains?

Emmet:                       We have a fully watertight product. We conformal coat all our electronics inside the device, and then we have an ingress protection rating on the device as well. So, it’s fully waterproof. It can even be washed in a bucket of water. There are no problems with moisture or rain.

Tom:                           Can more than one of these sensors be used at the same time?

Emmet:                       Oh, absolutely. The unit itself is fully transferrable. We recommend one unit for every 30–40 head of cattle depending on your calving pattern. If you’re calving year-round, it might go as high as one to 60 or 70 cattle. But if you’re compact calving or really tight calving, it might go as low as one to 20. So, what we ask our farmers to do is go out, have a look at what one or two sensors will do for them, and then they make the decision themselves how many they need.

Tom:                           And how about accuracy?

Emmet:                       We’re at 95 percent accuracy across all commercial and pedigree breeds. So, it’s only that 5 percent we miss that are the really easy calvers. So, if you can imagine a really old mature cow putting out a really small heifer calf, her contractions don’t hit the levels that would be required to trigger the device. So, in that case, that’s the 5 percent, and nearly always that calf will be born quite easily without stress, anyway.

Tom:                           Do you consider Moocall technology an industry disruptor, and in what way?

Emmet:                       I think it’s a huge disruptor. When we started to research what was available to farmers in calving detection, there was very little. There were very expensive inserted probes that use a base station. These were generally $4,000–$5,000.

                                    Then there were the old-fashion cameras, which are very expensive and only will work if the cow is facing in the right direction. They’ll never pick up an internal problem in the cow. And, obviously, the alarm clocks we mentioned earlier!

                                       Moocall retails at $299. So, that’s very disruptive against an offering that’s more than 15 times more expensive. And we’re accurate, easy to use. People understand what we’re doing very, very quickly. So, hugely disruptive. The internal probe company that had been operating in Ireland had literally moved out within a year of us launching, and we haven’t seen them since. So, we’re obviously disrupting a little bit!

Tom:                           Do you have other devices under development, ready to roll out?

Emmet:                       We sure do. What I’m really, really excited about is, we have a product going to launch in September. It’s an IoT device again, and it will be in the heat detection and breeding management space. This device will quite simply text you when a certain cow enters her standing heat. That is hugely valuable to any farmer. Once he knows she’s in heat, he can then get his artificial insemination guy or a bull. When the cow doesn’t cycle again three weeks later, we know that she’s pregnant and the exact due date of the calf she’s having. So, all that information will be available.

                                      The sensor is going to auto-populate the breeding management system as well, which is key for all the farmers. You will have a smartphone in your hand with all of your breeding information on it. You will have inputted none of the data. It’s all auto-populated by the sensor. We spoke about disruption a minute ago. This is equally as disruptive. The offering at the moment out there for heat detection again is base station-related and is in the region of $10,000–$15,000 for a system for 50 head of cattle. We’re going to come in one-tenth of that. And, it’s fully mobile.

                                       So now the beef guys have a full solution. Today, they’re using tail paint and very primitive ways of measuring heat. We will give them an option to adopt high-accuracy technology at a very affordable price.

Tom:                           It sounds to me as though there is just a wave of technology entering the agricultural realm. Big changes.

Emmet:                       Huge changes. I see a lot of changes in what I call our area of expertise, IoT, the ability to use the cell phone network to transfer data back to the farmer’s phone so he can act on making informed decisions. I see it in the accelerator that I’m involved in, such as magnetic spraying that reduces drift. You magnetize the water. You break up the particles much smaller. They stick to the plants you’re trying to spray and reduce chemicals and reduce drift.

                                       What you see in the accelerator is probably cutting-edge for what is happening, but there’s so much happening. It’s all about data. It’s all about recurring revenue. And it’s all about making the farmers’ lives easy.

Tom:                           And what about your work do you enjoy most?

Emmet:                       I just love the fact that I’m in a startup. Nothing ever goes as planned. There are so many highs and lows. You’ve got financial concerns and you’ve got staffing concerns. All these problems pop up at a minute’s notice. It’s never, you go in and you think, “Today is going to be clear. I’m going to get loads done.” But it’s that unpredictability of a startup that I love and the challenge of getting over these problems that arise on a daily basis. Keeps you on your toes!

Tom:                           Moocall co-founder Emmet Savage. Thank you so much for joining us.

Emmet Savage spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. For access, click on the button below.

To listen to our entire conversation with Gary, click on the player.

Tom:                           We’re talking with one of the 10 finalists in The Pearse Lyons Accelerator program, MagGrow. Gary Wickham is CEO and founding member of the Irish ag-tech startup. We wanted to talk with Gary about the company’s technology, which uses magnetic fields to reduce the waste of water in spraying crops. We thank you for joining us, Gary.

Gary:                           Thank you.

Tom:                           So, tell us about this technology.

Gary:                           MagGrow, as you said, is an Irish-based company. We were set up in University College Dublin in an incubation center to solve this particular problem around pesticide spray drift. It’s a consistent problem worldwide.

                                    Using conventional technology, 70 percent of water sprayed is waste. There’s $60 billion of pesticides sold worldwide, but 70 percent does not reach its target.

                                    The way farmers solved the problem of drift, driven by increased regulation, is to add water to the droplets, and they use coarse nozzles. All that does is create a secondary problem. You get runoff into the soil, rivers and streams, and you get massive contamination. So now, you’re wasting water and you’re creating waste.

                                    So, only 30 percent of what they spray goes to the crop. All farmers are very clever. They know that if you use smaller droplets, you get better efficacy. Conventional technology does not deliver both. Up to now, we didn’t have a solution to control drift and also give you excellent coverage, until MagGrow came along.

Tom:                           So, you’re employing magnetic fields to make this happen. How does that work?

Gary:                           Effectively, electromagnetic fields. So, it’s actually similar to the principles of generating electricity, where you pass currents through magnets.

                                    What we do is use permanent rare-earth magnets, the strongest magnets known to man. We retrofit a tractor boom, and we pass the fluid through that under turbulent flow conditions. That creates a positive-negative charge into the liquid. We basically transform the physical properties of the liquid, making it easier for those droplets to attach to the crop. Then, we can use the off-the-shelf nozzles for smaller droplets that are readily available, but farmers don’t use them because of drift. But, with our technology, you can spray without the drift. In fact, we reduced drift by over 80 percent using small droplets.

Tom:                           I was going to ask you, if you were to do them side by side, conventional versus the MagGrow method, what would you see?

Gary:                           We’ve done that worldwide with the major research centers and our customers worldwide as part of our validation. It’s a patented new technology, so that was vital. But, basically, you’ll just see a massive cloud with conventional technology, and you can hardly see the spray using the MagGrow system. We have a video on our website, which clearly shows that, on maggrow.com.

Tom:                           This sounds like a bonafide agricultural technology disruptor.

Gary:                           Absolutely. Hugely. Because if $60 billion of chemicals have been sold annually and growing…70 percent of that is not needed.

                                    And, of the ingredient they spray, 99 percent of it is water. In California, Africa and Asia, we’re using over 80 percent of the total available water for agriculture right now.

                                    The world needs 70 percent more food. Africa needs 300 percent more food. We need sustainable innovation, using less to grow more, and that’s where MagGrow steps in.

Tom:                           You mentioned that you manufactured a device that’s attached to a tractor boom. What about portability? Backpack sprayers, that kind of thing.

Gary:                           Yeah, we did two water products. One for greenhouses. Backpack for greenhouses. The fluid is piped into the system, and it goes through a MagGrow magnetic manifold. We basically then use the small nozzles again.

                                    We have customers in East Africa who are the fourth- and fifth-biggest flower growers in the world that are using 50 percent less water, 50 percent fewer chemicals. They’re getting uniform coverage under the leaf as well as above the leaf and less disease pressure because there’s less humidity in the room.

                                    And again, they are problems that we can solve.

                                    Finally, we’ve developed a product for the small farm holder, which is 500 million farms worldwide. This is really exciting because they’re the poorest of the poor. We’re using a technology in East Africa right now that’s produced 300 percent higher yields because they’re working off a low base, using the same amount of chemicals they currently use right now because we make the chemical last four times longer with small droplets. Current technology would just waste and blow away. With our system, it’s very efficient, and we allow them to use six-nozzle systems instead of a one-nozzle system. We are trialing that with the World Bank, the Bill & Melinda Gates Foundation, and the Dutch government and other interested parties in East Africa right now.

Tom:                           Was it a challenge to make it cost-effective to bring the technology to the point where it’s affordable even to the small farmer?

Gary:                           For the small farmer, basically, they use a simple knapsack, which is $40. The air system is $1,000, but you don’t need one for each farm.

                                    We’re using a pay-per-spray model for those small farm holders to take the (in)affordability away. Basically, what we do is we supply the equipment under license to an agent who is selling the inputs to them. We make sure the input is of the correct quality because you need to have the correct chemicals that are not diluted. Then we train the agent to spray for the farmers. We’re getting 300 percent higher yield for the same money. Africa needs 300 percent more food. And we’re saving 50 percent water.

Tom:                           I’ve read that attracting U.S. investors is a desire of many an Irish startup. What does it take to attract American investment?

Gary:                           We, from the very beginning, were solving a problem, not developing a technology and trying to find a problem. I think that’s a big distinction. We had a problem to solve that was worldwide and universal in a market that’s worth over $8 billion. So, that attracts the big U.S. investors, the size of the market. They also look at the team.

                                    This is my second startup. My previous startup is now a $60 million business that I set up myself. It serves apartment business that’s operating all over Europe. I exited it two years ago to try and set up MagGrow, which is what we’ve done successfully. I brought a team of people that have over 50 years of collective startup experience as well as multinational experience.

                                    You can have a wonderful product, but you need to have a world-class team. Then, you’ll need a business model that makes sense to the investors. So, we were very clear working with large customers, working with the leading research centers to validate our technology, get the patents in place and then start selling direct so that we could control the sales process, to get customers doing the early adapting, doing field demos and then find local distributors to scale and partner.

Tom:                           There were in excess of 180 applicants for The Pearse Lyons Accelerator program. What was it like to get that e-mail, or phone call, or letter in the mail telling you that you were one of the 10?

Gary:                           It was fabulous. It was fantastic because, actually, since we invented this technology, Alltech was on our radar, and we were trying to get to the top people in Alltech because I knew our technology would interest them as they’re in the crop protection space, especially in the biologics space, which is opposite to the petrochemical-based pesticides. With those products, too much of it gets blown away, so it’s not affordable for our farmers. The holy grail is those biologics for use for farms; you don’t even need to wash the crop. MagGrow can solve that problem.

                                    I knew I needed to get in front of them. To be actually selected and now going to the mentorship program, having a very good mentor, getting access to their network, their channel partners, and now we’re working with them all over the world…so we were absolutely delighted and chuffed to achieve that.

Tom:                           For the listener whose focus may be more on the consumer end than on the producer end, how would you say that your technology, MagGrow technology, affects the average consumer’s dinner table?

Gary:                           There’s a number of ways we help the consumer. One, for the people that work in agriculture, we’re making their lives safer. They’re not breathing in these products because it’s going straight to the crop. We’re stopping the 70 percent waste going into our rivers and streams. We’re not contaminating. Pesticides blow into other fields and cross-contaminate. It’s called a minimum residual level problem. So, we’re not cross-contaminating other food with other pesticides. We’re making sure it only goes to the crop and nowhere else. So, water is not contaminated. Water is cleaner and healthier.

                                    And, because you need fewer inputs, we can drive the cost of food down. That’s affecting the consumer in terms of having higher quality food, better use of scarce resources and making it more affordable when the world needs 70 percent more food.

Tom:                           Gary, what would you say you enjoy most about your work?

Gary:                           Myself and the team are very passionate about what we do because the world, as I said at the beginning, needs 70 percent more food, and it’s using 80 percent of all water. There’s a massive challenge over the next 30 years: 2 billion more people on this planet.

                                    We get up every day excited because we know we’re doing our bit to solve some of the biggest food and water challenges this world is going to face, and we’re working with small farm holders. That makes us feel good every day.

Tom:                           Gary Wickham, CEO, founding member of MagGrow. Thank you so much for being with us.

Gary:                           Thank you.

Gary Wickham spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. For access, click on the button below.

To listen to our entire conversation with Aidan, click on the player.

Tom:                As Alltech's chief innovation officer, Aidan Connolly is responsible for the commercialization of Alltech's global research efforts. And as a company vice president, he oversees corporate account strategy. He led the implementation of The Pearse Lyons Accelerator, a late-stage agri-tech accelerator, and he joins us to talk about it. Thanks for being with us.

Aidan:              Thank you.

Behind the scenes of the first Pearse Lyons Accelerator program

Tom:                First, who originated the idea of establishing this accelerator program?

Aidan:              I think it's actually hard to remember exactly where it starts. I know the genesis, as always, came from Dr. Lyons himself. He has tasked us with trying to make the ONE conference the biggest, the greatest, the reason to come to Lexington in May, and obviously 4,000 people have responded to that. But this accelerator was to help people like himself, back 20, 35 years ago, starting their own businesses to have the help that they need to be successful.

Tom:                Okay. And we'll get into what you're looking for in just a minute. First of all, Alltech has partnered for this program with Dogpatch Labs of Dublin. What does each company bring to the project?

Aidan:              Well, Alltech, for those not familiar, is headquartered here in Lexington, Kentucky. We employ (approx.) 5,500 people, and we're in (approx.) 130 countries. So, clearly, from an agricultural perspective, from a food production perspective, we've got a very big footprint.

                        Conversely, Dogpatch is all about startups. It's all about people with ideas. Usually, they start on their own. Maybe a couple of people decide they're going to form a company, and they have been very good about helping those companies get started. We felt they would help us with the companies we selected, typically who are a little bit further down the process, but would provide some of that mentoring and help that we were looking for.

Tom:                So you put out this call for accelerator applications, and you got quite a response. What did it look like?

Aidan:              To put it in context, we got 183 applicants from 38 countries. In the agricultural technology field, that would already make it the number one program in the world. So just overnight, it became the number one program. And Dogpatch has connections with Google, and they have connections with many of the top organizations in the world as well. So, clearly, they brought something to the table. But I think there's a lot of attraction for these startups and partnering with Alltech and seeing that as part of their successful future.

Tom:                183 applicants and you had to pare this down to 10. It must have been quite challenging.

Aidan:              We did. It was a big task, and I think some dropped off fairly quickly, as can be the case. But I still think we had about 150 really good applications, which is remarkable. And when you're looking at them, you are looking to think, “Is this the next Alltech?” It was very exciting to be part of that, and I know that's a big thing to think about, but I think from their side as well. They were very happy to be evaluated on that basis. They were very excited about what they are doing.

Tom:                And we have potential investors coming to town to listen to their pitches. Any estimate of how many?

Aidan:              Well, the part of the conference that's specific to investors will be attended by almost 200 people who are uniquely coming to the investor part. Of course, there's a further 3,500, close to 4,000 people, who are coming to the conference for the overall conference. But, yeah, those 200 people would represent some of the bigger investors in agriculture and indeed in startups. They're not just coming from overseas, not just coming from California, of course, but even from Louisville and Cincinnati and Nashville. There are quite a lot of these startup hubs and investors who are both angel investors and venture capitalists really excited about the idea of being here.

Tom:                And does Dr. Lyons himself get involved while they're here?

Aidan:              He does indeed. In fact, he got involved with the program at every stage of it. Of course, he remembers starting Alltech in 1980 with $10,000. When you have somebody, a live person who actually built their own business, who has created something the size of Alltech, it's exciting, I think, if you're an entrepreneur, to imagine yourself being that person in the future.

Tom:                You touched on this earlier, but maybe you could expand on the benefits of this accelerator program?

Aidan:              Everybody sees things through their own eyes. But what I could say is, the 10 companies came back and said they had all raised an excess of $3 million each already, from finance rounds. So $30 million over 10 companies; they didn't really need more money. What they did need was help with sales and marketing strategy to find customers. So this was a very big deliverable for them. Frankly, being in front of 4,000 people in Lexington is a very big deal for them. What's better than when you have a great idea to get that level of exposure?

                        At Alltech's global footprint…that is something that if you're starting out with two people, 10 people, or 15 people, you just don't readily get access to. I'd say those are the three deliverables that they highlighted primarily that they saw coming from the program.

Finding a home for agri-tech and food innovation

Tom:                Dr. Lyons has suggested that Lexington should become a hub of agricultural technology innovation. Do you agree with that? Tell us what you envision.

Aidan:              I think Kentucky can sometimes underplay Kentucky's role in terms of agriculture. It obviously has a tradition of tobacco. It has a tradition of beef cattle. It recently has become a pretty big producer of chickens, soybeans, corn. From that aspect, there's a lot going on in Kentucky with some of the larger farms. But Kentucky is also very much focused, or has a tradition of small farms as well. And I think you see consumers looking increasingly for local, fresh, to know the name of the producer, the farmer, to be able to go and visit them. So I think opportunities for cheeses, et cetera.

                        What we're looking at in farming is basically 12,000 years of doing the same thing. And this digital disruption, this explosion in using sensors and using robots and using drones. It's changing every aspect of our life. But it's changing agriculture even more than it does the rest of life.

                        Lexington, and Kentucky in particular, has an opportunity to be front and center in this, as it wants to be. Alltech is doing its best to make sure that that happens. We would love for more people to join us. We're hoping to see people there at the conference. And if they come up and say, "How are we going to help make this happen together?” we're all ears; that's our goal.

Tom:                From what I gather talking to various folks from Alltech, there's a great deal of enthusiasm about the work at hand. And I'm asking everybody, "What is it about what you do that you enjoy most?"

Aidan:              Well, if you didn't have fun, then you weren't enjoying it, you shouldn't work for whoever you're working for, but you will find that Alltech people have a disproportionate level of enjoyment in their company.

                        Clearly, we as locals will know here, we do make our beer, our own whiskey and bourbon, and that does help of course, as well. But the food business has become a very exciting business to be in. Some people call it a sexy business, which it traditionally was not. For the last whatever number of years, certainly in my career, it never seemed as though my mom was proud of what I did. Now, when you ask her, she's very proud that I don't work for the traditional industries of banking or real estate or whatever else, because food is critical. And people understand, and have a relationship with what they're consuming. They want to understand more about it. They want to be healthy. They want to be natural. And they want to do good for their body and for the bodies of their children. So yeah, it seems to be really the right time to be in this business.

Tom:                Alltech chief innovation officer, Aidan Connolly. Thank you so much for joining us.

Aidan:              Thank you.

Aidan Connolly spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. For access, click on the button below.

To listen to our entire conversation with George, click on the player.

Tom:                            Tesla Motors, Apple, GAP: George Blankenship’s executive resume fairly screams disruption. At Tesla, redefining the car buying experience. At Apple, designing brand-building retail methodology. And at GAP, managing the growth of more than 250 stores per year, with an eye on energy and environmental efficiencies. Thank you for joining us, George.

George:                       My pleasure to be here.

Disruption: Driven by pursuing customer delight

Tom:                            So, Tesla, Apple, GAP: Three iconic American brands. What are your key takeaways from those experiences?

George:                       Well, I think the one thing that all of them do is, they focus on the customer first and then sort of back into everything from there, whether it was the way we presented clothing and the design of the clothing or the way we looked at what would be good for the customer, and then back into the technology. And then at Tesla, we looked at the customer experience of buying a car and thought, you know, there’s probably a better way than the way it’s been done for the last 100-plus years. And so, we thought there’s probably a better way for the end user, the customer, and that’s what we set out to do.

Tom:                            I’m sure it’s not news to you and you’re following this, but retailers are filing for bankruptcy at a record rate these days. They’re trying to cope with a rapid acceleration of online shopping. During the first quarter of this year, at least 14 retail chains filed for bankruptcy, almost surpassing all of 2016. Retailers are closing stores faster than ever. A deep recession might explain this, but GDP has been growing for eight straight years. Gas prices are low. Unemployment is under 5 percent. In the last 18 months, we have seen wage growth, especially for middle- and lower-income Americans. What’s going on?

George:                       I think it’s a couple of factors. One is obviously online retailing is impacting brick and mortar. But I think as important or more important than that is that a lot of companies over-expanded, and there was a lot of supply of places for them to go. A lot of shopping centers that maybe shouldn’t have been built in the first place. There’s one there, and then another one comes and builds across the street. And so now, you have two in a place where really one would thrive. So, one ends up winning, the other one ends up losing.

                                    And a lot of the retailers you’re talking about, one of two things happened: either they over-expanded and they shouldn’t have, or they didn’t react enough to downsize when they should have, or they lost connection with a customer.

                                    And I think what’s important is, while the bankruptcy is going on, most of those companies are not going to go out of business. They’re going to right-size and come back.

                                    But, at the same time, there’s some major companies out there who are going into brick and mortar. You’ve got Warby Parker, who was online and going into brick and mortar. Amazon Books just opened up their sixth brick-and-mortar retail store. They’ve opened up Amazon Go in Seattle. So, while one’s moving out, there are also ones that are moving in.

Tom:                            Among those moving into brick and mortar, are they making this move to provide experiences, especially the kinds of experiences that make for good social media content?

George:                       I think it’s really to learn as much as they possibly can about their customer.

                                    An online retailer has a connection in a certain way with a customer. They know their buying habits. They know the kind of things they buy. They know those types of things, and they can suggest that online, based upon an algorithm, but people aren’t algorithms. People are people. They have a character. They have a desire. They have a way of looking at the world, and sometimes the only way you can interact with that — the only way you can really learn about that is to interact with them directly.

                                    Why did Apple open up stores in shopping centers when no one was doing that, whether it was to interact directly with the customer when they were not thinking about buying a computer? We wanted to be there, take care of them, and then open the Genius Bar. So, no matter what Apple products you have, no matter where you bought it, no matter when you bought it, if you need help, we’re there for you and you can come to the Genius Bar and get taken care of.                                   

                                    Tesla opened up in shopping centers so that we could interact with people when they were not thinking about buying a car, and it’s just a totally different relationship. And that’s the reason you do it. It’s so you can interact directly with your customer and so they can understand you better and you can understand them better.

Defining disruption

Tom:                            The theme of the Alltech Ideas Conference was disrupting the disruptors. Disruption sounds a lot like chaos to a lot of us, but it’s important today. And why is it important to understand disruption as a positive thing?

George:                       Well, yeah, disruption could be thought of as chaotic and confusing, and people see it as reckless, but it’s really not.

                                    It’s really very, very simple. It’s when you look at something. It could be an industry, or an activity, or a process that’s been done the same way for a long period of time. It could be done the same way for 20, 30, 40, 100 years and generally people think it’s okay. But the reason it’s important is because the end user, the customer, usually develops a new set of benefits, a new set of things that are better for them as a result of the disruption.

                                    I mean, think about the Apple iPhone. Think about all the things people rely on their iPhone for today, whereas if you went back before the iPhone, phones worked. They were phones, but they weren’t an active part of your daily life. Now a smartphone is a part of most people’s daily life.

                                    You think about things that have been done the same way for a long, long, long time and somebody comes in and just finds a better way for the customer to interact with something or to do something. And it’s just different benefits that are generally better.

Tom:                            Innovation in technology is keeping a pretty blinding pace these days. If disruption in that area or disruption in general becomes the norm, is there risk of all that constant churning and change outpacing our capacity to process and roll with the changes?

George:                       Not at all. People embraced the iPhone right away. People embrace the way Tesla sells cars, which is different than the auto industry has worked for 100 years. You know, they embrace it right away.

                                    I think back, 20 years ago, Amazon went IPO 20 years ago. And now, look at the impact Amazon has had on the way we do things. At first, it was Amazon and then it was Amazon Prime. So, you get delivery in two days. Now, it’s Prime Now, where you can get thousands of things available for delivery in an hour.

                                    Yes, the technology enables things, but some of it is the people enabling things.

                                    Look at Uber. Think about Uber. All right? Technology, a smartphone, allows you to have a sharing type of way of sharing your car. So, think about the experience. You push a button and a car shows up on a map. You can see where it is. It shows up at your house or your business. You get in the car and you go. You never pull out a credit card. It’s just a better overall experience.

                                    Tech enables a lot of things, but sometimes it’s just the process, like how you buy a car. It’s done differently now at Tesla without any change in technology other than you can order something on the web: a car. But other than that, it’s the shopping for the car that actually changed, that’s disruptive. But again, we thought it was a better way for a customer to buy a car.

Tom:                            From the business perspective, not the consumer point of view, but the business perspective, are the concepts of disruption and sustainability compatible?

George:                       Well, sure. Look at what Tesla’s doing. Let’s use them as an example, alright? At a Tesla store today, you can walk in and you can buy a car or you can buy what’s called a power wall, which is a battery pack that you hang on your garage and you charge it up and then it runs your house from the batteries. And then with their acquisition of Solar City last year, I mean, today, you can walk into a Tesla store and you can buy an entire program. It will take you from solar, the battery, battery to run your house and charge your car. So, it’s disrupting the way you buy a car, but it’s also disrupting the way you can actually get off the grid and from there charge your car. So, you can live totally off the grid with one visit to a Tesla store.

Funding disruption 

Tom:                            How about attracting investment capital to a business model that relies on game-changing technology, on constant innovative change? Is that difficult?

George:                       Well, when you live in Silicon Valley, there is investment capital that’s out every single day searching for what they believe could be the next disruptive technology or disruptive process to invest in. There’s a big difference in how it’s looked at today versus in the past. In the past, they were saying “Okay, show me how soon you’re gonna make a profit, and how much profit, and how soon?” All those kinds of numbers, whereas today, it’s looking like, “How much money do you need to become the leader in this?” You’re probably not going to make money for seven, or eight, or nine, or 10 years or whatever. But if you can become the leader in what you’re doing, that’s more important to us investing in you than it is saying, “Oh, in 29 months, I’ve got to break even.”

                                    So, it’s a little bit different here. Now, I realize that I’m sort of in a unique pocket here in the Silicon Valley. I’m sure it’s probably more difficult to raise investment capital in other places. But here, you’ve got people looking to invest and you’ve got people looking for the investment. And is it available? Yes, it is if you have a great idea.

Tom:                            To what extent should a disruptive concept or technology be market-tested before there’s hope of attracting that investment capital?

George:                       Well, a lot of investment capital, they want to be in so early that there really is no time for testing. You’re investing in an idea because that’s where you get in the earliest and where you get in with the most opportunity for the lowest price. You know, obviously, if you’re early in …you’re the one who has the most opportunity to make the biggest gain. They would rather take multiple shots at something like that, knowing that two or three or four of them might not make it out of 10, but the ones that make it could be substantial. I mean, think about if you were one of the early investors in Google or some of the online — I mean, I saw the other day where 20 years ago — I think it was May 16 — Amazon’s IPO. And if you had invested $10,000 in Amazon 20 years ago, it would be worth $4.8 million today. So, how tested was Amazon before it went in and how long did it take to make a profit? And look at all the incredible things they’re doing today.

                                    You want to be in early. So, oftentimes, there isn’t a lot of time to test it before you actually invest.

Tom:                            So, it’s really a very strong hunch that what we’re talking about holds promise.

George:                       I think seasoned venture capitalists and those investing money are able to step back and look at things and say, “You know what, I think this has a niche. I think it has a place. And I think the place could be very big in the future. And if we get in on this now, and this becomes the leader, this could be really big.” And they step back and they sort of — you know, there may be five people in the room and they’ll look around at each other and go, “What do you think?” And if three or four of the heads nod yes, well, “Here. Here’s $30 million dollars.” It didn’t use to be like that, you know? It didn’t. No one ever did that kind of thing. But in today’s world, that’s what happens with a great idea that seems to have legs that people can look at and say, “If you can own this, it will be huge.” And that’s what people want. They want to own something and be huge.

Tom:                            So, what can make the difference between a business being disrupted versus being the disruptor?

George:                       Well, let’s go back 10 years ago. iPhone 1 was launched in June of 2007. And I believe the iPhone disrupted the cellular phone industry, actually the whole phone industry. And ask yourself: If on the day that Steve Jobs stood up and said we’re going to do a phone, chances are if you had a phone in your pocket, a mobile phone, it was a Nokia, a Motorola, a Palm or a Blackberry. Well, how many people have those in their pockets today? So, you can either be the disruptor or be disrupted. I think those four phone companies would probably wish they were the disruptor, not the ones who were disrupted. I think you always want to be on the front end of that.

Tom:                            You’ve long been a change agent, if you will. A champion of innovation. What sort of disruption are you engaged in these days?

George:                       Well, I’m helping Amazon open up their brick and mortar stores, just as a consultant, just sort of helping them get into that world. Other than that, what I’m doing now is I’m being disrupted as a grandfather. I’ve got four grandkids, and I love spending time with my wife, and my kids, and my grandkids. And I think, you know, the nice thing about grandkids is they make you young again. So, I guess I’m being disrupted by them as much as I’m disrupting the world.

Tom:                            My last question was going to be what about your work do you most enjoy, but I think it’s been upstaged by grandchildren.

George:                       Once you have grandchildren, they make you young again. They have a perspective on life that just makes you smile every time you see them, and they’re always glad to see you too. So, it’s a wonderful, wonderful situation.

Tom:                            George Blankenship, thank you so much for joining us.

                                    We appreciate it.

George:                       Absolutely my pleasure, Tom. Have a great week.

Tom:                            You too.

George Blankenship presented at ONE: The Alltech Ideas Conference (ONE17). To hear talks from the conference, sign up for the Alltech Idea Lab. For free access, click on the button below.