Kansas City feasts in food and beverage

KC SmartPort’s 12th annual industry briefing was held on June 24, focusing on the food and beverage industry and the growth of the Kansas City region as a hub for food logistics. 

Jason Robertson, vice president, food + beverage, at CRB, joined Chris Gutierrez, president of KC SmartPort, on stage.

“What else connects our personal lives, our business lives, creates those life experiences besides food and beverage,” said Gutierrez.

From a temporary sidewalk stage, Gutierrez addressed a crowd of more than 300 seated at tables on 13th Street under the Kansas City Convention Center.   

“There are a lot of things happening in food and beverage.  Whether it’s what you eat, how it’s made, the production innovations that are happening, and of course, how is it distributed and delivered in an on-demand world,” Gutierrez said.

Currently, more than 670 industrial food and beverage operations call the Kansas City region home.  This $125.4 billion Kansas City industry employs more than 25,500 people in food and beverage manufacturing, warehousing and distribution.

Gutierrez said that food and beverage projects have increased 64 percent year over year in the Kansas City market.  In the last 18 months, several food and beverage companies, including Dot’s Pretzels, Hostess Brands, World Pantry, Pretzels, Inc. and Niagara Bottling, have come to the market.

KC SmartPort reported that the food and beverage companies attracted to the Kansas City area in the past two years have pledged to create more than 1700 jobs, invest more than $330 million and occupy nearly 3.5 million SF.

Nationally, the demand for cold storage in temperature controlled space is not meeting the supply; but, Kansas City has stepped up, Gutierrez said.  

Liberty, Missouri will be home to the recently announced Heartland Cold Storage Logistics Center.   Gutierrez said CBRE will announce in the near future another cold storage facility coming to the region.

“It’s coming and there’s more on the horizon.  We’re meeting that demand.  There’s a lot of need for cold storage in this region,” said Gutierrez.

Robertson said the consumer is driving how food production facilities are designed and built, how food is packaged and what foods are coming to grocery shelves.  

“Really the millennials and Gen Zs are those that are looking at a different type of interaction with their food products.  I quickly compare that to maybe what Kraft macaroni and cheese used to be to now where Annie’s is really one of those top products,” said Robertson.

Workforce issues present one of the most challenging aspects of the food and beverage industry, said Robertson.  

“I think there’s certainly a quality of life that the food producer is going to have to address,” Robertson said.  

The design and construction of new food plants in the post-pandemic world will need to account for social distancing.  

Food processors, particularly in the meat processing industry, learned during COVID-19 that “you just can’t social distance by the way that those products are ultimately processed and packaged,” said Robertson.

The industry also must address the challenge of retaining workers in facilities with temperatures of 30 degrees. 

“You want to keep that worker because the dollars you invest to recruit and retain and so then ultimately, how do we create an environment for them to succeed and be happy to go to work every day,” Robertson said.  

Not only did online grocery sales explode during the pandemic, but so did subscription food box sales.

“I would say that’s the future.  That’s here to stay,” said Robertson.

Robertson said the industry will need to address how delivered food is packaged as some consumers complain about the use of too much plastic.  

The industry also must evaluate packaging within the grocery stores.  With more shoppers having groceries delivered to their homes or directly to their cars, Robertson asked whether the industry needs as many packaging types of materials to catch the shopper’s attention.

Gutierrez and Robertson discussed the advantages of the Kansas City region to the food production/food distribution industry, an industry facing rising costs and supply chain challenges.

Robertson noted that the average age of truckers is “north of the high 50s”, and that it takes several days to move product from coast to coast.  Also, wages and costs per square foot in the Midwest are a fraction of the costs on the coasts.

“I just think that the play for logistics and more of a centrally located play is here to stay - will always be here to stay.  I think that’s what we need to rally around as we recruit new prospects to the region,” Robertson said.

Connecting KC metro to the rest of the world

May 12, 2021 was KC World Trade Day, and the KC Downtowners celebrated the occasion by featuring Melissa Miller, director of World Trade Center Kansas City (WTCKC), as the virtual speaker.

The meeting also marked the transition of KC Downtowners leadership from outgoing president, Kim Gile, community reference manager, Kansas City Public Library, to incoming president, Stan Meyers, client development manager at Terracon. 

WTCKC, established in 1990, is part of a network 330 world trade centers located in more than 90 markets around the world, considered to be the largest global trade network.  Greater Kansas City Chamber of Commerce holds WTCKC’s license and is one of only three chambers of commerce in the United States to operate a licensed world trade center.

“Our mission is to facilitate international trade in Kansas City by connecting, educating and providing resources and services to the regional business community,” said Miller.

Miller said WTCKC covers the Kansas City metropolitan statistical area comprised of 14 counties across the bi-state region; however, WTCKC has a secondary territory that extends further.  The nearest world trade center is in Rogers, Ark. to the south.  There also is a world trade center in St. Louis to the east, Denver to the west and none between Kansas City and Winnipeg, Manitoba to the north. 

Miller said WTCKC helps businesses of all sizes, types and industries.  To access the resources of WTCKC, a business does not have to be a KC Chamber member. 

Some of the services which WTCKC provides are market and industry briefings and trade education. WTCKC brings in market experts, dignitaries, ambassadors and service providers who specialize in a specific area of international trade to discuss opportunities that they are seeing, market trends and other topics that Kansas City businesses need to know to perform successfully on the global stage.

As of 2019 (2020 numbers are not available yet), the Kansas City metro area was the 45th largest metro exporter, with $7.7 billion worth of goods exports.  Miller noted that the 44 markets above Kansas City are largely located on the coastal regions of the United States, the Gulf region, the Great Lakes region or in major air cargo hubs. 

“So it’s a lot of where those goods are leaving the United States,” Miller said.

Miller said Kansas City, at 8.6% of export share of GDP, trails the national average which is approximately 10%.  The largest markets to which Kansas City area businesses export are Canada and Mexico.

Why does Kansas City need to be global? 

“From a business perspective, you can weather an economic downturn better.  It’s that old adage--don’t put your eggs in one basket.  Businesses that export spread the risk over several markets.  So if one market’s not doing particularly well, you’ve got another market that you can rely on to help offset that,”  Miller said.

Exporting also helps some businesses minimize seasonal fluctuations, said Miller.  For example, a ski gear manufacturer may not make many sales in July, but while it’s summer in the US, it’s winter in the southern hemisphere.

“So that’s another market that you could go sell those products to keep it moving year round so you’re not relying on one market, one season,” Miller said.

Kansas City perceived as a global city is more attractive to site selection committees for large conferences, trade events and sporting attractions like the FIFA World Cup.  It also helps attract global talent to Kansas City and increase tourism.

On the global stage, Kansas City is a learning hub.  Miller pointed to the Kansas City Animal Health Corridor.  Companies are moving to Kansas City not just from other US cities, but from around the world to be part of the Animal Health Corridor, which represents 56% of total animal health, diagnostics and pet food sales.

Miller said there are 238 Kansas City companies that have overseas offices in 75 countries around the world.  Kansas City also boasts 1,135 foreign owned companies, not including branch locations.

The metro area has 34 sister-city relationships, 12 of which are solely with Kansas City, Mo.   There are 21 foreign consulates located across the metro area, and in 2017, Kansas City was designated a UNESCO Creative City of Music.

In addition, the United States Army Command and General Staff College at Fort Leavenworth, Kan. has an international military program that has graduated 8000 officers from 164 countries, many of whom end up as heads of state.

“It’s in our benefit to be a global city, to be connected with the rest of the world,” Miller said.