Food Cluster Tag

What It Takes to Build a Thriving Food Economy

The Strathcona Business Improvement Association in collaboration with Dunefield and other local stakeholders, are championing an initiative that explores the potential opportunities and barriers of further developing a food business cluster in Strathcona. This project aligns closely with the goals of the Strathcona BIA’s Economic Vision and Implementation Plan developed in 2023, combining the plan’s focus areas of industrial lands, retail spaces, and community engagement. An economic cluster in an urban industrial business district refers to a concentration of interconnected businesses in a particular industry, ranging from manufacturers and suppliers, to service providers, retailers, and institutions. Further developing a business cluster can help lead to increased innovation, productivity, and competitiveness among the businesses within the cluster, driving economic growth, attracting investment, creating jobs and fostering collaboration within the local economy.

Focusing on the district’s food cluster was a natural choice for this economic development initiative. There is already a strong presence of food businesses in Strathcona, spanning from manufacturing, logistics, product innovation, unique restaurants, and cultural foods, showcasing all kinds of specialized food and beverage skills. This cluster includes both industrial and retail businesses, leveraging our district’s unique blend of industrial and retail zoning and proximity to residential. Many of the challenges faced by food businesses are macro-level challenges. Looking at how to address these shared challenges within the food cluster will not only benefit food businesses but also other business sectors in the area. In particular, a strategic effort to maintain the neighbourhood’s capacity to support both production and manufacturing as well as sales is crucial for retaining a competitive edge for businesses here. 

The early stages of this project have focused on engaging and interviewing food businesses in the area to uncover the key barriers and challenges businesses have been experiencing. This project aims to help connect the dots about how collaborative approaches could address some of these common challenges and capitalize on opportunities. The following interview with project leads Wilco van Bemmel and Vincent Kwan dives deeper into the exciting work of this project. Read on to learn more about the significance of establishing a stronger food cluster in Strathcona and discover some of the early findings and recommendations.

What are the key characteristics of a successful food cluster?

There are a few key aspects, and some of these are present here in Strathcona, which is good news. The first key thing is what we’re calling the ability to make and sell. Businesses need to have the ability to both create and innovate food products, as well as test them in the market. That includes getting immediate feedback from wholesalers, stockists, or customers. Which leads to the importance of the proximity to employees and residents. The cluster should be located near both employees and residents to facilitate easy access and interaction. A strength that Strathcona uniquely offers.

From our engagement in the community, businesses have shown us that for them to thrive here they need to develop a diverse business model. For example, including elements of wholesale, retail, and product innovation, or even just being smart in utilizing your space, such as allowing other businesses to use space during off-hours can be important. Only relying on foot traffic is often not enough. Another important factor is stability in land use and lease rates, which is essential for businesses to have the confidence to invest in their operations and logistics for the long term. If people feel like they don’t have any certainty of what the future is going to look like, it can deter investment and growth.  

What kinds of support or policy should we expect a municipal government to have in place for the healthy development of this kind of cluster? 

One thing that is really threatening these kinds of businesses is the way we have defined “highest and best use” for properties and land. In practice, the types of light industrial businesses where people make and sell things are not the kind of use that can generate the highest property values and taxes. In the current system they’ll often be the second pick for a landlord, especially considering barriers around required tenant improvements and the length of time to get permits. What if we shifted the conversation on the highest and best use being where people actually make healthy, nutritious, and culturally interesting foods that the local community desires and can afford? Then we can start to look at policy and incentives aimed towards making sure that is actually possible. At the moment, it’s not a level playing field. The businesses that have a connection to the local neighbourhood, that want to hire locally, be good neighbours, source their materials or ingredients locally, and want to add value to the communities, are often the businesses having the hardest time to make it work in terms of upfront investment required and length of time to get their permits. So this is an important area to look at in terms of where the government can step in with incentives. 

What are some other pressing issues facing food-related businesses right now?

One thing to keep in mind is that a lot of challenges that food businesses face are macro-challenges as well. Many businesses are still dealing with the impacts of COVID and are still recovering. The pandemic really demonstrated the argument for having a diverse business model, because it’s these businesses that had some built-in resiliency and could more easily pivot to new opportunities. There is a big concern about the loss of industrial land and also the quality of remaining or new industrial spaces. If spaces are replaced by something that on paper is still industrial but in practice is supposed to be quiet and tidy, then it loses that true industrial use. We also heard from businesses that city-permitting is taking a very long time. The whole process can feel very uncertain, a bit like a black box. Another challenge we’ve identified is the difficulty of scaling. For example, scaling up from a small-scale commissary kitchen space to your first retail front is challenging and expensive. There is a big need for smaller stepping stones and support mechanisms in scaling and growing businesses. There is a lot of food that is produced in Strathcona by talented people, but you cannot always enjoy it here – it has no outlet. It highlights the potential for more opportunities for businesses to develop, incubate, and test their products locally before expanding to other communities, without having to take too much of a risk.   

What are some of the potential economic impacts of developing an even stronger food cluster in Strathcona? Why is this work important?

Food businesses have a high percentage of economic spin-off that stays within the vicinity of the community compared to other business sectors. This is evident in the sourcing of ingredients, packaging, staffing, and menu items, all of which contribute to the local economy. Some of the practical reasons for the local economic impact are cost-effectiveness and logistical advantages such as ensuring product freshness. For example, sourcing locally reduces financial risks associated with sourcing from distant locations. So there is something intrinsic in food businesses that make them have a local footprint. Which is great, because if we want to build strength as a cluster, that’s exactly what you want to see. When businesses are actively seeking opportunities to collaborate and source locally this enhances the return on investment in the food cluster.   

Food as a sector is an important one because it serves all categories of end-users in the economy, including residents, workers, and visitors. While sectors like high tech and green technology often receive a lot of attention, the food cluster is essential due to its direct impact on a wide array of end-users. Especially given the City’s current interest in supporting small businesses, it makes a lot of sense to prioritize the food cluster in local economic development strategies. This should include setting industrial land targets to preserve and support the sector. 

A big consideration is what is the role of different stakeholders within the ecosystem? We are actively asking ourselves what is the role of government, community entities, and then of course BIAs in filling those current gaps in economic support, and how can BIAs be empowered more to play a stronger role in filling those gaps. Focusing on the food cluster work helps expose a lot of those opportunities.  

What are some of the early findings and recommendations for creating a supportive ecosystem for food businesses in the neighbourhood?

Firstly, we should engage in a debate with the city about the highest and best use for the area, ensuring that the types of food businesses we actually want have a fair chance to thrive here. Discussions with the city should also include long-term things like land-use and zoning. In the shorter-term, we should be thinking about the relaxation of rules. This could involve challenging rules and processes that make it difficult to experiment and innovate. For example, could we streamline the process for someone with a successful commissary kitchen product to transition to a retail setting, by identifying a suitable location and obtaining necessary permits within one month. We should be encouraging pilots that push some of these existing boundaries, and involve multiple stakeholders, like landlords and banks, for support and funding opportunities. 

We have also heard that businesses have a hard time connecting to innovation. Many feel like existing support programs are geared toward larger companies, and so there’s a lot of potential in providing support for small businesses here to connect with innovation so they can implement it into their processes. The connection to education is another area to explore. It seems like there is a lot of potential in helping bridge the gap between businesses and educational institutions that are addressing topics like food security and food systems. 

Finally, there is a large need to address the high costs of running a food related business, whether that be startup costs, operational expenses, or scaling. The lack of coordination between government and other stakeholders is inevitably leading to inefficiencies and higher costs. A more structured approach to incentivize collaboration and improve coordination is needed to support businesses more effectively.  

What role do you see technology and innovation playing in the development of a food business cluster?

Quite a few businesses are very interested in the connection between food and health. There are businesses out there challenging the way we think about the ingredients in our foods. I think we’ll see innovation around plant-based foods, customer education, and changing people’s food habits towards more healthy foods. Another interesting area is the production process itself. We’re seeing a focus on making the production process more sustainable and circular, even on a smaller scale by sharing waste streams and resources within the community, with interesting opportunities for technology there. When thinking about the stepping stones required for scaling, the connection between digital and physical space will also be really interesting. In what ways can businesses build a customer base even without having a physical presence yet, or use digital as a way of connecting with suppliers and bring down the costs of starting your business? The connection between digital and physical will be an interesting angle for more businesses to be experimenting with.

Connecting the Dots and Creating Opportunities

Part of the aim of this project is to identify gaps and make meaningful connections within the food business cluster ecosystem in Strathcona. By helping articulate gaps and connecting dots the Strathcona BIA can work with stakeholders to understand the actionable steps needed to further develop a strong food cluster in Strathcona. Acting as a nimble connector, the SBIA strives to facilitate collaboration with key players and government to drive new initiatives and policy changes that will benefit the food business sector. Together, we can build a thriving and sustainable food business cluster in Strathcona, leading the way for innovation and economic development. 

Next Steps

One concrete next step is that we will be supporting food talent in Strathcona towards a food retail (pop-up) presence. We want food entrepreneurs who today work in commissary kitchens and small production spaces, to have a low-risk, affordable way to reach a new customer base and test their readiness for a permanent retail space. We hope this will create new food options that Strathcona residents and workers need and crave, like fresh greengrocers, more lunch options, a greater variety of local and cultural foods, and food experiences in the late afternoons.

We recently interviewed some exciting Strathcona businesses as part of our focus on the local food economy.

Learn more about Tommy’s Whole Grain Bakery, a new bakery in the district committed to redefining baking with whole grains here.

Dive into the world of shared kitchen spaces in this interview with B3 Collective Commissary Kitchen here.