Digitizing the Local Supply Chain

David Stone is the founder and CEO of Forager, a Portland, Maine-based tech company devoted to simplifying the sourcing and distribution of local foods for grocers.

Jon Springer: David, welcome to the Break Room. What’s the big idea behind Forager?

The local food economy is the fastest growing segment of the food sector nationwide, driven by the desire of millennials and other key market segments to eat fresh, local, healthy food in addition to meeting their concerns around sustainability. Food is the largest industry in the world and has the greatest impact overall. Food affects the environment, healthcare and socio-economic systems, reduces our carbon footprint, creates local jobs and brings people together.

Sourcing local foods from independent farms has traditionally been a difficult, complex and expensive process done mostly by phone and email, making it a non-starter for many grocers. Most payments are still also made by check — slow in processing and a real pain for both the producer and the buyer. The Forager platform fundamentally changes the methods of sourcing, digitizing the supply chain in order to save money, reduce errors, and plan much more effectively. All of this makes our mission possible: to make locally sourced food more available to all.

Related:What Food Retailers Can Learn From Their Landlords

You’ve said that only 3% of all the food we consume is local. What’s a realistic figure in five years, or 10?

Maine and Vermont have already doubled that figure, as independent farms are experiencing a resurgence after years of decline. In fact in Maine, 1,000 new farms have been started in the last 10 years, the majority by people 35 and younger, and 40% by women. Across the country, many states are taking measures to advance the local food economy. The market for local food has grown four times faster than industrial agriculture in the past decade, expected to reach $20 billion by 2019.

Given the strong demand and increasing supplier capacity I predict local food will make up 10%-15% of the market within five years, which would result in a market in excess of $100 billion. 

Sourcing local food is one thing. What have you observed those retailers who’ve been successful at selling local food also done?

As we talk to more and more grocers, both conventional and independents, the vast majority are working hard to improve their local sourcing for two reasons. The first is skyrocketing demand. The second is current market forces: in the wake of Amazon’s acquisition of Whole Foods, offering a variety of local produces year-round is a key differentiator that can drive more visits to the local grocery and bigger basket sizes. What we’ve witnessed with a significant number of the grocers on our platform is an 11% increase in local sourcing, along with leveraging our data to price and select products that sell more effectively. All of this is contributing to increased sales for grocers.

Related:One-on-One With A Natural Foods Authority

 You are also the founder of CashStar, a leading digital gift card and loyalty currency company that was sold to BlackHawk Networks last year. How has that experience contributed to what you’re doing at Forager today?

As a serial entrepreneur and after years of building and raising more than $50 million for CashStar, I learned so very much through building a successful company that achieved more than $2 billion in digital prepaid value. The lessons run across the board for my current role as CEO of a start-up, from hiring the best people, to building products early and getting them to the market to get reaction from our customers, to better thinking about raising capital and which venture capitalists are best for us to work with, and finally, to finding the most effective strategy to build a brand and get national exposure across multiple media channels.

So far, you’ve gotten good participation and success among small farmers and small retailers. Can Forager also be a solution for big chains? Why or why not?

Absolutely yes. While I fundamentally believe small independent grocers are making a comeback, large conventional grocers still dominate the market. We are already seeing success with a top 10 grocer, as well as with grocers with six or more locations and 35,000-square-foot stores. We’re in conversations with multiple chains, as everyone is looking to expand or enter the local food market.  Lastly, unlike their processes with big distributors, local sourcing from multiple farms is historically painstakingly difficult and as far as we can tell, most grocers have no systems and very little intelligence (i.e. analytics) to manage and improve the local food supply chain.

Lightning Round

What was your first job?

I was a stock boy at a discount retailer first, followed by my first entrepreneurial venture:  a canteen at the high school that the school closed down, as it was so popular as to be disruptive!

Three favorite all-time Red Sox?

Pedro Martinez, David Ortiz, Carlton Fisk

Forager takes no small pride in Maine’s local food leadership. What in your opinion is behind that?

Once considered the “bread basket of New England,” Maine has a long tradition of local food–for example, Maine fed the Union Army (mostly with potatoes). The state is seeing a resurgence of independent farms, having started 1,000 new farms within the last 10 years. The increasing variety of local produce is amazing. One of our farms has 28 varieties of lettuce, and many farms are growing produce that was once unheard of in the Northeast, and year round, like cilantro, ginger and sorrel.

Next time we visit Portland what local foods should we try?  

Depends on the season of course! As I write this, I’d say oysters, chioggia beets, watermelon radishes, and of course wild organic blueberries.