Corporate Partner Andrew Apfelberg, Featured in L.A. Times Food & Beverage RoundtableMay 8, 2023 – Article
Andrew Apfelberg, Corporate Partner and Co-Chair of the Branded Consumer Products Group, shared his expertise on the latest trends in the food and beverage industry. Below are excerpts from the L.A. Times B2B Publishing feature:
Q: What changes made during the last few years do you think will remain in place going forward?
Over the past few years the industry has accepted, and in some cases embraced, the fact that more and more customers prefer to shop, buy and consume products at home instead of the traditional brick-and-mortar locations. As a result, the approach to packaging, marketing and distribution needed to change. So did the legal advice we provided our clients. We had an increase in the review of packaging, websites and social media to guard against false claims and for compliance with “influencer” and similar laws, negotiation of third-party-logistics contracts, analysis of the legal requirements for direct distribution in multiple states and taking a fresh look at product warranties.
Q: What are some of the hottest trends in the restaurant space?
Where previously people wanted colorful food that looked great on an Instagram post, now they want an “experience” when they eat out. They want an environment that transports them to another place and time or makes them feel “cool.” They want to be able to get into a place that all of their friends still long to go. Chefs are now celebrities and interaction with them is a big deal. The ultimate for me, though, is the “pop up” by a renowned chef within a beloved restaurant or a “smash up” where two chefs or two restaurants collaborate on dishes for a limited amount of time. One restaurant held monthly wine dinners with a ‘meet the maker’ event.
Q: What are some of the biggest mistakes that food and beverage companies made during the last few years?
The biggest mistake made was getting so immersed in the day-to-day operations that companies lost focus on their current business plan and future goals, thus failing to take steps to best position themselves for the years to come. This was necessary during peak COVID times; survival was all that mattered. However, we are now on the tail end of that, and the changes it brought to what, how and where items are consumed are here to stay. I strongly recommend companies work “on the business” instead of “in the business” and convene a team of trusted advisors to provide their perspectives and guidance. Start the discussion with a description of where you want to be in three to five years so the target is clear. Then utilize all of the brainpower in the room to determine the optimal way or ways to get there.
Q: How is the investment climate today for food & beverage companies wanting to raise capital or attract investors?
There is no question that the market for financing and acquisitions has tightened or slowed. This makes obtaining growth capital or achieving a liquidity event for a business more difficult than in the past. To be able to achieve that, companies need to have products with an almost cult-like following, an experienced management team, a clearly articulated growth strategy and identifiable, concrete steps to achieve their business plan. There is a noticeable “flight to quality” when deals get evaluated. Companies need to do whatever it takes to put themselves into that category. We are seeing an increase in transactions for less than 50% of a company so that the founders/early investors can have a “second bite at the apple” in a few years when multiples and other deal terms are more seller-favorable. Transactions are also much more highly structured or complex than in the past. It is critical to understand the “real life” impact of all of this and “stress test” it under varying potential economic and operational future circumstances.
Q: What are the pros and cons of being based in Los Angeles in 2023?
Let me start out by saying that the pros outweigh the cons. Some of the negatives include higher costs for employees and real estate as well as increased health and safety regulations as compared to companies located elsewhere. Being in a big city, there is also more competition, especially when first starting out and trying to find distribution and retail opportunities. Some of the positives, though, are the more open and accepting attitudes, willingness to try new things and diverse tastes to accompany diverse backgrounds and lifestyles. Los Angeles attracts creative people who are willing to take risks. There is also the “Hollywood” factor that can be a huge opportunity to building brand awareness and loyalty.
*This roundtable was originally published in the Los Angeles Times and can be accessed here.