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Brands Grapple With Coronavirus Conundrum at Expo West

Carol Ortenberg Mar. 2, 2020 at 6:55 PM

Sunk costs. That’s what a lot of food and beverage companies facing the potential of a Coronavirus-reduced Natural Products Expo West show were regretting over the weekend as they wondered whether they could do enough business with the show’s drastically-reduced retailer contingent to justify the money they had already laid out.

In its email and separate postings, conference organizer New Hope Network confirmed the list of retailers and brokers who will no longer attend, including Whole Foods, HEB / Central Market, Kimberton, Costco, MOM’s Organic, Harris Teeter, National Co+op Grocers, Wegmans, Fresh Direct, Raley’s, Ahold, Wakefern, Hyvee, Cambridge Naturals and Advantage Solutions. Thrive Market, 7-Eleven and Kroger separately also announced its plans to cancel their teams’ attendance. In online posts other retailers such as Amazon and Southeastern Grocers have announced a scaled back presence.

It was this departure of retailers on Friday and Saturday that led many brands to cancel their own participation in the event.

“The health and safety of our team and families is our highest priority and the benefits of attending the show have now diminished to a point that does not justify the risk,” Egglife CEO David Kroll posted on Linkedin about his company’s decision to pull out of its booth. “While we believe the actual risk of the Coronavirus remains moderate, the loss of most key retailers actually makes participation especially difficult to justify.”

Throughout the weekend, in emails and grassroots conversations through a variety of social media channels, organizer New Hope faced questions regarding safety concerns, as well as the cancellation policies surrounding the annual conference, which typically attracts roughly 90,000 attendees.

Cancellations snowballed through press time today. The first indications that brands would pull out began to appear on Friday evening, but they were largely confined to big brands and multinationals. At the time, New Hope said that less than 8% of companies had reached out about canceling and that most requests to do so were due to corporate travel policies. However, that soon changed as retailers began to cancel, and in turn, midsize and small brands, also began to pull out of the show.

According to a statement issued by New Hope yesterday, the event now expects a 40%-60% decrease in attendance.

In an email to attendees, New Hope executives stated that while there have been numerous calls to cancel the show, the company has also received pleas to keep the show up and running. “The polarity of responses leaves us in a difficult position, as we do not want to upset or let down anyone in our community,” the email stated.

As of now, about 45,000 attendees are expected — still double the size of Natural Products Expo East 2019 in Baltimore, which hosted a reported 29,000 attendees.

In its latest update, New Hope reiterated its plans to add step up cleaning of high traffic areas and add additional hand washing stations. The conference will now see 18 hand washing stations and 27 Mrs. Meyer’s hand sanitizing stations. The company also stated that it was requesting that attendees traveling from countries with CDC Level 3 travel restrictions (China, South Korea and Italy) to no longer attend the conference.

For many brands, the decision simply came down to the retailers who weren’t coming, however.

“Given the cratering attendance of vendors and the fact that almost all major retailers have now opted out, from a business point of view, we couldn’t justify the ROI, in spite of the huge sunken cost,” Saffron Road CEO Adnan Durrani noted on LinkedIn.

Beyond the list of retailers, other key industry partners have pulled out as well, such as investors VMG, AccelFoods and S2G Ventures. Concern around the virus also led to the cancellation of several of the social and networking gatherings that take place during the annual event. Cancelled social events include CAVU Ventures’ networking party, High Road’s launch party for its new line of ice cream, Houlihan Lokey and L.E.K. Consulting’s networking event, Presence Marketing’s annual dinner, and one of the conference’s biggest parties at the House of Blues, which was sponsored by Anchin, ForceBrands, Giannuzzi Group and Whipstitch Capital.

For those brands that are concerned about the lack of access to retailers, investors, suppliers, New Hope promised to find ways to facilitate those connections in the coming months.

“We are committed to working with those exhibitors who will not have the conversations or make the connections they need to, to find other ways to support them, either through Expo East or other products and platforms,” the company wrote in its latest email, signed by Fred Linder, Group President of New Hope Network, along with EVP Scott Owen and Carlotta Mast, the company’s SVP of Content and Insights. New Hope did not specify, however, if that would be through online introductions, credits to future New Hope events or partial refunds.

And the financial conundrum loomed largest for many brands. Snack brand KIND, a long-established company that planned to debut innovations such as its new refrigerated bar at the show, decided Sunday evening to cancel its involvement. In an open letter posted online, CEO Daniel Lubetzky noted the financial ramifications for smaller brands who would lose sales opportunities.

“I am very worried about the impact this is having on start-ups and small companies,” Lubetzky wrote. “[New Hope’s] communications and lack of leadership have missed the mark. Specifically, they seem to be forcing companies to choose between having to lose what to many of them is the largest investment of the year or to face what could turn out to be a potential threat to their health and wellbeing.”

In the wake of these concerns, discussions simmered throughout the weekend online among members of the natural food and beverage industry. Notably, both Wayne Wu, General Partner at VMG, and Jeremiah McElwee, Chief Merchandising Officer for Thrive Market, created two forums for discussion. An open source google document was also started to track cancellations and attendees, along with a New Hope Linkedin thread.

Meanwhile, as of this morning, the U.S. now has a total of 89 confirmed COVID-19 cases, with 28 cases in California. The weekend saw the first two deaths from the disease. Experts project the number of cases may increase over the coming days, as more testing kits become available and the criteria for testing has broadened.

Other conferences in California, such as San Francisco’s Game Developers Conference (which is also a subsidiary of New Hope’s parent company Informa), San Diego’s Young Presidents’ Organization (YPO) Edge Conference, and Long Beach’s Trans-Pacific Merchants (TPM) conference all cancelled their events over the next few weeks. In a statement posted to their website, TPM’s organizer cited “the rapid growth in global cases of COVID-19, in particular in the Western United States over the past 24 hours,” as a reason for the cancellation. Elsewhere, the Inspired Home Show in Chicago was also cancelled.Despite other conference cancellations, Michael Lyster, chief communications officer at the City of Anaheim, said that he remains cautious, but not concerned, about Expo West. Lyster noted that the city’s high visitor count (roughly 25 million visitors a year) has prepared it for any crisis.

“We have a lot of history and a lot of preparation and management,” Lyster said.

Lyster added that Los Angeles International Airport, a key hub for those attending the show, is one of 11 airports nationwide that is conducting additional COVID-19 screening. Currently, he said, Orange County has had only one confirmed COVID-19 case, although the Orange County Department of Health has recently received COVID-19 testing kits to evaluate potential infected individuals. If someone at the convention center does exhibit signs of the virus, there are emergency protocols in place to quickly escort them to an isolated area before they can be brought via ambulance to a facility for further testing. Above all else, Lyster maintained, this was no different than flying elsewhere or riding the subway in a major urban center.

“This is not a situation unique to Anaheim,” Lyster said. “All you can do is look at empirical evidence, the advice of health care officials, and make the best decision you can with that.”

Meanwhile, brands and service providers have responded to the changing landscape with creative solutions designed to connect with potential partners. Some brands shared their success cancelling their hotel rooms at the Anaheim Hilton located at the convention center, as well as with AirBnB rentals due to the COVID-19 concerns. Both JetBlue and American Airlines have also agreed to adjust change fees and cancellation penalties for some flights, although most Expo West flights will not meet the companies’ policies.

On its LinkedIn page, kombucha brand Rowdy Mermaid offered a calendar link where retailers can sign up for meetings and for samples of its newest flavor, Watermelon Bloom. Meanwhile, noting the lack of retailer and distributor attendance, brand management and consulting group Cascadia Managing Brands will offer all snack or non-alcoholic beverage companies exhibiting at Expo West a free month of consulting services.

“[This will] help them through this time and fine tune their approach to put them in a better position to bounce back from the show and sell more of their product,” the company noted in a release. “There have been times in our career, well before we became successful, where people helped us and have coached us and this is our time to give something back to the industry.”

Marty Caballero, Jeff Klineman, Brad Avery, Erin Cabrey and Beth Kaiserman contributed to this story.

Please see below for a list of members of the food and beverage industry that NOSH or BevNET have confirmed as no longer attending Expo West, as well as all brands that New Hope has listed as no longer attending. This list is current as of 5:45pm on March 2nd.