Food and Drink

By: Blake Friesen

And now that the Internet links buyers and sellers across the world, it is also becoming increasingly competitive. Social media has increased the power of wine critics, who write at length about the significance and history of various wines, and often highlight a certain vintage, which leads to an increase in demand. In October, 2014, Sotheby’s handled the sale of 114 bottles of Romanée-Conti, a pinot noir from the Burgundy region in France, for the fine price of US$1,609,776. The bottles’ vintages ranged from 1992 to 2010.

That sale was the world’s most expensive wine lot. The buyer, although undisclosed, was Asian, and the sale happened at an auction house in Hong Kong. Crunching the numbers, the sale averages out to US$14,141 per bottle and US$1,700 per glass. While the sale of the wine lot is impressive, the most expensive single standard bottle is a 1947 French Cheval Blanc Bordeaux. A private collector, also unnamed, acquired the bottle a Christie’s auction in November, 2010, for US$304,375.

Fine wine collection is now big business and Asia is a major source for demand. Global wine auction sales from major commercial auction houses peaked in 2010 with combined sales of US$408-million, according to Wine Spectator. Most of the sales occurred, and continue to occur, in Hong Kong. The city removed tax tariffs on imported wine in March, 2008. Since then, Hong Kong has become a wine hub for mainland Chinese buyers, most of whom are relatively new to collecting wine when compared with collectors in Europe and North America. “From 1994 through mid-2008, U.S. wine collectors built significant cellars because they were not price sensitive in their pursuit of fine wine,” recalled Jamie Ritchie, CEO of Sotheby’s Wine Americas & Asia, in 2010 after noticing a shift to Asia in the purchasing power. “Now, Asian wine buyers have taken over that role and are likely to be driving demand for fine wine over the next 15 years.”

Buyers collect fine wine for different reasons. Some want the prestige of simply owning an expensive bottle, others want to drink a rare bottle and savour the taste, and of course there are also collectors who buy wine as an investment. For buyers in search of investment grade wine, Trellis Wine Investments has a checklist of five characteristics to consider: pedigree, longevity, price appreciation, liquidity and high critical acclaim. The wine producer must have pedigree, which means a famous brand that is well known for high-quality wine. For long-term investments, the wine must be able to age at least 25 years, with maturity occurring no earlier than the 10th year.  The wine must have a consistent and documented history of substantial price appreciation and it must be produced in quantity that is liquid, but rare enough to be desired in the secondary market. Finally, the wine must receive excellent reviews from acclaimed wine critics in order for it to be investment worthy. After purchasing the wine, a collector must store the bottle in an appropriate environment, otherwise the wine will age badly and lose its value.

According to Wine Spectator, the ideal environment for storing wine is about 55 degrees Fahrenheit, humidity levels of between 50 percent and 80 percent, and no exposure to sunlight. High temperatures and sunlight may cause the wine to age prematurely, whereas low temperatures and low humidity may dry out the cork, allowing air into the bottle and spoiling the wine. The bottle should also be stored sideways so that the cork will always be moistened. If the humidity is too high, mold may grow in the wine or on the label.

The science behind wine storage ensures that the chemical reactions in the wine will take place properly. Most wines on the market are not suitable for aging; they are meant to be consumed shortly after purchase. Only about 1 percent of global wines produced annually are suitable for long-term storage, according to Trellis Wine Investment. Generally, wines that need more time to mature in the bottle are those that are high in tannin and acid. Tannin is a chemical compound found in the skin and seeds of grapes that can change over time, improving a wine’s flavour, colour and aroma.

Cabernet sauvignon grapes from the Bordeaux region, for example, have thick skins and make excellent wine that can be aged for 10 years or more. And even though pinot noir grapes from Burgundy are thin-skinned (and therefore low in tannin), the grape itself is high in acidity so it is also suitable for aging. The sugar, alcohol, tannin and acid content in the wine will chemically change in the bottle, making the original bottled wine more flavourful and aromatic. However, wines do have a prime time for consumption, and once the prime is passed the wine will taste flat and bland. The recommended aging period for different wines varies and consulting an expert is best to protect your investment and make sure it will not age past its prime.

Wine investment is considered a portfolio diversifier and a hedge against currency, inflation and market volatility. The Liv-ex Fine Wine 100 Index represents the price movement of 100 of the most sought-after fine wines for which there is a strong secondary market. The index is calculated monthly. Since establishing the index in 2001, investors have been able to compare its performance with broader indexes such as the S&P 500. Wine has proven to be relatively unaffected by volatility and bear markets. When the market crashed in the fall of 2008, for example, the prices of fine wines were largely unaffected.

The risks of owning fine wine include spoilage, damage, theft and forgery.The provenance of a fine wine is particularly important to ensure it has been stored properly. Although most collectors have their wine in secure locations, there is still a risk of damage and theft. The story of Mark Christian Anderson best illustrates a worst-case scenario for such risks. In 1999, Mr. Anderson opened a wine storage facility in Northern California. Shortly afterward, he began illegally selling his clients’ fine wine collections as his own. As suspicion of his criminal activity grew, he closed down his wine facility and started renting space in a nearby facility to continue doing business. He then decided the best way to save himself was to destroy any probable evidence by setting the wine storage facility where he was renting space on fire. In October, 2005, he went ahead with his plan, destroying 4.5 million bottles of fine wine worth US$277-million.

There is also a real risk of buying fake wine. The most infamous name in fake wine is Rudy Kurniawan, whose forgeries were sold privately and auctioned publicly during the 2000s. Mr. Kurniawan auctioned a wine lot -- completely fake -- from his own collection for US$24.7 million in 2006. He was able to fool many collectors and experts, but he was finally caught and arrested in the spring of 2012 after attempting to sell wine from the region of Burgundy that was not in production until years after the date on the bottle. The FBI raided his home and found a counterfeiting factory filled with vintage bottles, fake labels and recipes to reproduce the taste of fine wines via blends of different wines. Mr. Kurniawan’s fakes still pervade collections throughout the world today.

The best way to avoid a fake is to buy straight from the vineyard. Or if you are a high net-worth investor, the best way is to simply buy a vineyard. Chinese investors have purchased more than 100 Bordeaux wine estates since 2010, and China is now the world’s biggest market for red wine. Owning and operating a vineyard requires time and money, and having a vineyard on your list of assets is seen by the affluent Chinese as a status symbol.

2014 Fine Wine Auction Sales Summary and Future Trends

In its annual summary of fine wine auction sales, Wine Spectator calculated sales from commercial auction houses at US$352-million, up from US$337-million in 2013. The sales in 2014 are markedly lower than 2010 (US$408-million), partly because Xi Jinping’s anti-corruption crackdown has limited Chinese government officials from buying luxury items and exchanging extravagant gifts. Jamie Ritchie, CEO of Sotheby’s Wine, said to Wine Spectator earlier this year, “The austerity measures in Mainland China have impacted the market, but we are still seeing consistent demand from Asia—more consistency and less volatility so far.”

Burgundy is now the most sought-after region for fine wine. It took the lead from Bordeaux in market share for the first time in 2014. As well, California wines continue to gain popularity. Last year, for example, 26 lots of Screaming Eagle Cabernet Sauvignon with vintages dating back to 1992 were sold for US$384,720.

By Blake Friesen

The food and beverage industry outperformed the S&P 500 in the third quarter of 2015, according to a report by SDR Ventures, an M&A advisory firm in Colorado. The firm notes that consumer demand for natural and organic food, as well as gluten-free, high-protein or non-GMO (genetically modified organism) products have contributed to the sector’s growth.  This is occurring in both mature and emerging markets, and as a result there has been an increase in discretionary spending on food and beverages. 

The SDR report notes that over the past 12 months, the retail segment of food and beverage outperformed the S&P 500 by 1.9 percent.  Divided by subsectors, we have the beverage segment, which outperformed the S&P 500 by 8.9 percent, and the food products segment, which outperformed the S&P 500 by 1.4 percent.  The energy sector has dragged down the S&P 500 this year, enabling other sectors to do better.

Consumers in emerging markets have shown a willingness to spend more on a higher quality product when it comes to food and beverages.  In Asia, for example, SDR says that Chinese consumer preferences have increasingly shifted toward Western brands over the past few years, driven by food safety and quality control issues in China.  This shift has also been a driving force behind M&A deals, enabling Western food companies to sign joint venture partnerships with Chinese companies, both of which tend to benefit by improving their brand recognition of both companies in Asia.  A prime example of this type of M&A behaviour is WhiteWave Foods Co., which in early 2014 entered China in a noteworthy fashion by signing a joint venture with the country’s biggest dairy company, China Mengniu Dairy Co. Ltd.  The joint venture provided WhiteWave with sales expertise, large-scale manufacturing capabilities, in-depth knowledge of local consumers and a wide distribution network throughout China. WhiteWave has continued to munch on smaller competitors in its effort to supply the world with mass-market healthy food, and in the second quarter of this year it gobbled up Wallaby Yogurt Company, a specialty organic yogurt maker in California, for US$125-million.  It followed up that acquisition with a bigger deal, buying nutrition food company Vega for about US$550-million.  WhiteWave reported the Vega deal in June, days after Campbell Soup Co. reported its plan to spend US$231-million on Garden Fresh Gourmet, which has the top-selling refrigerated salsa brand.  From those deals alone it is clear the M&A market in food and beverage is active.

In fact, this has been one of the busiest years for M&A in the food and beverage industry, as companies are showing their preference to acquire competitors as they struggle to increase their selection and sales. In the first half of 2015, the food sector accounted for US$80.2-billion in deals, up almost 130 percent compared with the same period in 2014.   

Leading the way Hormel Foods Corp., best known as the maker of Spam, in May, 2015, signed a deal to acquire Applegate Farms LLC, a natural sausage-maker, for US$775-million.

The trend of increasing activity in food and beverage M&As is continuing in the second half of 2015.  In early July, the US$62.6-billion merger between two food and beverage goliaths, Heinz and Kraft Foods, closed, creating Kraft Heinz Co., the third-largest food company in the U.S. and the fifth-largest in the world.  It has 13 brands valued at US$500-million or more each and is backed by heavyweight investors 3G Capital and Berkshire Hathaway.

Then in early August, there was a thirst-quenching announcement of a three-way merger involving European bottlers of Coca Cola beverages, which will consolidate the bottling industry; the companies involved in the merger are hoping the merger will bring greater economies of scale that allow for cost-cutting measures. They are Coca-Cola Enterprises, Coca-Cola Iberian Partners and the German bottling business of Coca-Cola. Combined, the merged company will be the world’s largest independent bottler of Coca-Cola drinks by net revenue, with an expected market value of US$31-billion, including debt.

The merged bottling company will have operations in 13 countries, notably Great Britain, France and Spain.  It also allows Coca-Cola Enterprises to move its corporate headquarters to London and slice exposure to higher taxes in the United States.

Like all blue chip companies, the structure of Coca Cola and its various joint ventures, partnerships and subsidiaries is complex.  In 2010, Coca-Cola Enterprises sold its U.S. operations to Coca Cola Co. (from herein referred to as Coke).  Coca-Cola Enterprises itself was spun off from Coke in 1986 as a way to improve Coke’s profit margins and balance sheet.  At that time, the bottling business, although a necessity for a large soft drink maker, required lots of capital but offered low margins.

Keeping in line with the beverage business, but sliding over to something with a little more buzz, in September, 2015,  the world’s two best-selling brewers, Anheuser-Busch InBev NV and SABMiller PLC, entertained the idea of a US$106-billion merger.  For Anheuser-Busch, which approached SABMiller with the idea of a takeover, there will be many obstacles in its path to closing the deal, such as securing regulatory approval from various governments and finding enough synergies between the two companies to save on costs.  Securing regulatory approval will undoubtedly involve antitrust concessions such as breaking up SABMiller’s joint ventures with Molson Coors Brewing Co., but that would be an expected consequence of such a large deal.

One significant problem could be cutting costs; Anheuser-Busch is overseen by rigid private equity investors who are already accustomed to running a tight ship, and SABMiller has received compliments by a variety of analysts, notably Kenny Lam at Barclays Bank, for already managing an efficient overhead.  If this deal closes, however, the merged company will have annual revenue of approximately US$64-billion, and earnings before interest, taxes, depreciation and amortization of US$24-billion.  For the sake of comparison, it will match revenue of PepsiCo and surpass that of Coca-Cola.  Anheuser-Busch has plenty of incentive to ensure this deal goes through: It is on the hook for a US$3-billion fee to SABMiller should the deal fizzle.

Anheuser-Busch, with its headquarters in Belgium, already controls 25 percent of the beer market.  It controls 16 brands that individually generate over US$1-billion annually, including Budweiser, Stella Artois, Corona, Hoegaarden and Leffe. SABMiller, meanwhile, is the second-largest beer company with its headquarters in in London, England.  Its long list of beers include Miller Genuine Draft, Peroni Nastro Azzurro, Grolsch and Foster’s, the latter of which SABMiller acquired in the fall of 2011 for US$10.2-billion. As well, it owns more than 150 local brands and has significant operations in Africa (SABMiller products are sold in 31 African countries), a market less explored by Anheuser-Busch, plus SABMiller produces, in partnership with China Resources Enterprise Ltd., a beer under the brand name Snow, the top-selling beer by volume in the country.

This year has been a boom year for M&A activity in the food and beverage sector.  According to investment banking firm Capstone Partners LLC, the industry has consistently grown each year over the past 10 years, even during the market collapse, with buyers attracted to the resiliency of the sector and a growing global population.  In the short term, according to Capstone’s recent food and beverage report, it looks like the trend of increasing M&A activity will continue.

“I love scotch, I love Scotch, Scotchy, Scotchy, Scotch,” says Will Ferrell in the 2004 film, The Legend of Ron Burgundy.

It would seem that since then the rest of the world has caught up with Ferrell/Burgundy’s love of fine spirits. Since 2004 the U.S market for whisky has been growing at a healthy 3-4 percent annually, with no signs of slowing. 

In 2014 the total U.S market for blended and single malt whiskies was estimated to be approximately $2.5 billion. However, while not as large in total numbers the Asian market has had the most dramatic increases in recent years, with Mainland China seeing a 142 percent increase in whisky imports in 2013 over 2011 (although numbers are down slightly for 2014), for total imports of approximately $110 million; it’s not a huge market but clearly the growth potential is there. Singapore actually has the highest per capita consumption of Scotch whiskey at 12.1 liters per person, dwarfing U.K consumption, the home of Scotch whiskey, at 1.25 liters per person (Statista.com).

Japan has long been striving to compete in the world of fine whiskey, producing several highly respected brands, including Hibiki, one of the world’s most expensive whiskeys at $2,500 a bottle. The efforts of Japanese distillers have paid off with consumption of premium domestic spirits rising there in recent years.

As well Taiwan has joined the ranks of fine spirits producers, with the award winning Kavalan single malt whiskey (at a much more affordable price $120 a bottle).

In fact the growth of premium whiskey outside of Scotland prompted the Scotch Whiskey Association to update their guidelines in 2009 for the definition of Scotch whiskey, stressing that the only whiskey that can be referred to as Scotch is whiskey produced in Scotland, using Scottish water, malt and barley.

Even within Scotland itself the varieties of Scotch can be a little bewildering to the novice aficionado, which is the largest growing demographic worldwide of Scotch/whiskey consumers.

Tyler Schramm, the founder and owner of Pemberton Distillery (Pemberton is a picturesque, somewhat affluent village three hours north of Vancouver),studied at the highly respected Heriot Watt University in Edinburgh. He explains the differences between the four main regions of Scottish distilleries.

Speyside on Scotland’s north coast despite being one of the smaller regions (second only to Islay) has dozens of distilleries.

“Most of the big names in single malt whiskies come out of that region,” says Schramm. Big names include Glenfiddich and Macallan – the current favourite among the cognoscenti. Schramm concurs that Speyside distilleries are producing some of the finest Scotch available today.

Then there is Highland Scotch, which covers almost the entire north of Scotland (Speyside being the exception) and considered home to some of the most traditional distilleries, such as Glenmorangie, Cragganmore and is Ben Nevis (one of the oldest distilleries in Scotland). Tradition in single malt whiskies tends to mean a certain smoky flavor, or as Schramm says, “Highland whiskies will always contain a certain amount of peat”. 

Then there is the Islay region to the south, which Schramm says, “typically Islay Scotch is heavily peated, very distinctive”. The last major of region is Lowlands distillers, who aren’t known for classic single-malt Scotches, but is instead home to the large blended distilleries such as Johnny Walker.

The rise in consumption of spirits (not just whiskies) in North America has led to a proliferation of small, or micro distilleries catering to a select (but growing market) of consumer who wish to imbibe not just premium spirits, but those with great attention to the highest quality (preferably local) ingredients.

Although Schramm and his older brother became distillers about seven years ago, it was based on the idea for their 'project’ of over a decade ago.

As noted Schramm did a Masters of Science in Distilling, and Brewing at Heriot Watt University, considered the education for those endeavoring to have a complete understanding of the distilling process.

Schramm returned to Canada to launch his distillery a little ahead of the curve in rising demand for fine craft spirits.

“I got back when the micro distilling industry was just taking off. Not much was happening in Canada, but worldwide whiskey was undergoing a rebirth, especially in Asian countries.”

He began with the basics, producing a vodka from locally grown potatoes. Then as soon as it was feasible they created their first whiskey (2010), which was partially released to great acclaim in 2013 (whiskey must be aged at least three years in oak casks to be considered whiskey). Most of their product will remain in casks and continue to mature, with only small lots of each year’s output released in three-year increments (and a just-released five year whiskey)

Schramm says they get their share of Asian visitors but don’t market to the Asian market. Though obviously he is more than aware of the rise in the appreciation for quality spirits, mainly whiskey, in Japan, China, Taiwan and other countries in the Asia-Pacific region.

“I haven’t tasted Kavalan, but I know they very much followed the Scottish tradition in their process. Using brewer’s malt, which produces a single malt with a little more sweetness.”

Japanese distillers like Suntory and Nikka have won multiple awards for their single malts in the past 15 years. While they cannot call their product Scotch, they did bring in Scottish distillers to help them craft fine whiskies. However they have been less successful in creating popular blended whiskies (like Johnny Walker) that are usually consumed in cocktails, and as a result in much higher quantities.

But as Schramm says so much of making a whiskey popular ultimately comes down to marketing.

“For [higher end] single malts one whiskey is not necessarily better than another. If you serve  100 whiskies you’ll get 100 different opinions. That’s where marketing comes in, if you can get a lot of people upfront to try your whiskey…well that’s where a large marketing budget makes a huge difference, especially for single malt distillers.”

It begs the question then, why become a small distiller, surely there are easier ways to make a living?

Schramm laughs at the question, “Yes definitely, 100 percent of people who go into this business do so because they’re passionate about it, it’s a labour of love.” Even now with a growing market he doesn’t see British Columbia distillers becoming a major industry anytime soon, if ever.

“In the last few years there’s been a massive boom in the U.S, but I don’t think we’ll see that here, the tax structure is too difficult and that will always be a limiting factor.

House Spirits Distillery in Portland Oregon is one of those small distilleries that has benefitted from the boom in the consumption of fine crafted spirits.

Christian Krogstad founder and distiller at House Spirits, founded in 2004, says their flagship product is actually gin, specifically Aviation American Gin.

While vodka continues to be the number one consumed spirit in the world gin, like whiskey, has a growing following of drinkers who like something a little more complex to compliment their cocktails.

Krogstad explains that their gin is the first, ever conceived through a collaboration between a distiller and a mixologist. For the uninitiated a mixologist is a bartender who has taken the fine art of mixing drinks to a somewhat more advanced level. After all we can’t have all those expensive drinks being served by just any old person can we?

Gin is actually the main component of most drinks in the Savoy Cocktail list (the bible of classic cocktails), something Krogstad says their product pays homage to, saying Aviation Gin is, “steeped in history,” and harkens back to pre-prohibition American cocktails that have also seen a great revival in recent years.

But more importantly how big is the boom in small distilleries that Schramm says the U.S market is experiencing?

“The crafts spirits business here in the U.S is growing quickly and it shows no signs of slowing down. Today there are more than 800 small distilleries in the U.S alone, up from three-dozen a decade or so ago. Last year craft distillers generated 25 percent of the growth [of total U.S sales of spirits]. Some experts estimate there will be  1,000 small distilleries by 2020, capturing 8 percent of the total spirits market (up from 2 percent today). Yes the market share for fine spirits is small, even for long established single-malt distillers in Scotland.

Still looking out ten years (to their 20th anniversary) Krogstad is optimistic. “A decade ago we were one of the only craft distillers in the U.S. Today we’re one of 800.” He says small craft distilleries are at the same point micro-breweries were 15-20 years ago. “There was a lot of hand-wringing over the saturation of the market and [the thought] have we hit a plateau? But the industry has continued to grow with no end in sight.”

Although gin is their flagship product House Spirits does produce a single malt whiskey. “We are in the midst of what some experts are calling a global whiskey renaissance, which is to say we’ve seen an incredible amount of growth within this spirit category – which includes Scotch whiskey, Irish whiskey, Japanese whiskey and of course American whiskey. On top of that we are experiencing a growing demand for and interest in small American craft spirits. So yes I’d say the market is ripe for what we have to offer.”

Gordon Glanz, the founder (along with partner Joshua Bach) and distiller of Odd Society Distillery in Vancouver agrees that there is an overall world growth in whiskey, in fact it has impacted his business directly in that there is now a worldwide barrel shortage (needed to age whiskey). But as he says, perhaps more importantly for his industry, there is a growing appreciation of craft spirits and the time and effort that goes into creating these products.

Odd Society, which opened its doors in 2013, is still aging their first whiskey (in fact you can order your own 30 liter cask and have it bottled just for you) but Glanz, also a graduate of the Heriot Watt program, says whiskey was always at the top of their minds when starting a distillery.

“Whiskey is where it’s at, that’s what we believe. It’s the whole reason Josh and I got into this [distilling] but it takes years.” He concedes that becoming a distiller of whiskey is a challenge, since their product must be stored for a minimum of three years. Of course in the meantime they must sell other spirits. And like most small distilleries (outside of Scotland) they started with vodka. However like House Spirits they are seeing a growing demand for gin. Glanz says his marketing people tapped into the appreciation for organic, natural ingredients. “In our Wallflower Gin we emphasize the florals, rose petal, lavender, elderflower,” Glanz says their Wallflower Gin is similar to the popular Hendricks Gin. “I think gin is now overtaking vodka as our best seller.”

But, like Schramm, he’s not as optimistic about the growth potential for small distilleries in British Columbia. They have benefitted from new tax laws for craft distilleries, reducing the provincial mark-up, however even under the best of circumstances the business is a challenge. “Breweries have large volumes, for us if you sell a bottle of vodka, well that bottle is probably still on your shelf a month later.”

Again, it begs the question, why start a distillery in the first place? “It takes a bit of insanity, it’s really just serendipity that the [tax] laws changed just as we got started, but it’s a tough business.”

Despite that dozens of new distillers have plans to open distilleries in B.C in the next few years. As Krogstad says U.S growth continues at a frenetic pace. Even in Scotland, centuries old distilleries that had been shuttered at the turn of the 21st century have reopened, revamped and are apparently turning a profit.

Sidebar:

Cocktails:

Malt Whiskey Fizz (recipe courtesy House Spirits)

2oz Westward Oregon Straight Malt Whiskey

1/2oz Cointreau

1oz freshly pressed lemon juice

1/2oz cane syrup

Soda water

4 drops Angostura Bitters

B.C Bramble (recipe courtesy Odd Society)

1.5oz (45ml Wallflower Gin

0.75oz (22.5 ml fresh lime juice

Splash simple syrup

O.5oz (15ml) Crème de Cassis

Pemberton Fall Fizz (recipe courtesy Pemberton Distillery)

1.5oz Schramm Organic Vodka

0.75oz pure cranberry juice, unsweetened

1oz Pemberton Distillery Spiced Apple & Pears

0.5oz fresh lemon juice

Dash Angostura Bitters

Fresh or Frozen cranberries

soda

Pemberton Distillery

1954 Venture Place, Pemberton, B.C.

pembertondistillery.ca

Spirits:

Organic Single Malt Whiskey

Schramm Organic Potato Vodka

Schramm Organic Gin

Aged Apple Brandy

KartoffelSchnaps

Organic Wildcrafted Absinthe

Byron’s Organic Coffee Liqueur

House Spirits Distillery

Housespirits.com

65 SE Washington St. Portland, Oregon

Spirits:

Aviation American Gin

Westward Oregon Straight Malt Whiskey

Volstead Vodka

Krogstad Gamle Aquavit

House Spirits Series Coffee Liqueur

Odd Society Distillery

1725 Powell Street, Vancouver, B.C

oddsociety.com

Canadian Single Malt Casks

Wallflower Gin

East Van Vodka

Crème de Cassis

By Alan Forsythe

It used to be someone selling hot dogs on the street was almost the lowest of that low when it came to entrepreneurship, maybe a just a step or two above hawking newspapers.

Street food has come along way since the days of the lowly hot dog vendor with his pushcart. Starting in 2008 in Los Angeles (Roy Choi’s Kogi truck is often attributed as being the first) gourmet food trucks quickly proliferated. Whomever was the first it is clear their genesis was a combination of bad economic times and the rise of social media.

As some chefs pointed out (not all are in the food truck business) social media allowed these businesses to connect directly with the consumer, and relatively low start-up costs made proof of concept much less risky. It’s a lot easier to find out if your gourmet tacos or BBQ ribs are going to sell using a food truck than setting up a bricks and mortar restaurant.

Jasmine Wolf, the chef behind The Lobos Truck, voted by LA.Eater.com as one of the top 18 must-try food trucks in L.A, has a little more esoteric take on the appeal of food trucks.

“Food trucks are really cool, [they’re] traveling restaurants! All over the world street food is a big part of culture, it was only a matter of time” [that we would see such a rise in their popularity].

While it is certainly true that street food is a big part of culture tall over the world, only in North America has it achieved such a premium niche and devoted following of foodies.

That said,  The Lobos Truck is hardly what you’d call gourmet. It’s more comfort food done really, really well. Or as Wolf says, “My concept: American comfort food is love on a plate.” For example Wolf describes one of their signature items, Wachos - nachos prepared on a waffle grill. It sounds like something one would have at a carnival and probably regret later. But done right people, that is people who usually frequent cafes and trendy bistros, will come back for them again and again.

“I had them on the menu as a side originally, but they became so popular we sell six different kinds now.” Wolf describes her demographic as kid and foodie friendly. It’s comfort food, but as noted, done well and with imagination, so a family with two young children will be just as happy with it as the local hipsters.

Wolf says the path to creating a successful food truck business is to think fresh and simple, and to focus on your demographic.

“My menu is great for lunch because folks can get a burger or salad and fries, or mac [and cheese] & a drink, and at dinner people can go family style and get wings, ribs & wachos. We hit all the flavor points.”

Wolf says she loves what she does and got into the business, because she saw it as endless opportunity. “I saw the food truck industry like the wild-west, untapped potential. I got one [food truck] and one became four very quickly.”

Strangely it was in the west, in Los Angeles that the food truck craze first took hold. Strange because Los Angles, unlike NYC or even San Francisco, is not known for it’s pedestrian traffic, one would think that would be a critical factor when looking at the market for mobile take-out food outlets. And in fact if we look at street food around the rest of the world those types of outlets are always found on pedestrian malls, plazas or open-air market places where thousands of people congregate.

It indicates how successfully social media was utilized by the food truck industry. Through Twitter and Facebook (although mostly Twitter) food trucks announce at what locations they will be at and for how long. Take-out street food is no longer approached as an impulse buy that attracts people by the scent or look of whatever food is on offer as they amble by. Now food trucks, despite their mobility, have become destinations.

In Los Angeles there are designated areas where food trucks and people congregate on given days. The Main Street Lot in trendy Santa Monica is one such location, where once a week you will see the rare sight of Los Angelenos out of their cars, walking. Many people even arrive on a bicycle.

In some cities restaurants have complained that the rise of the food truck industry, with their low overhead and mobility, has taken an unfair bite out of their sales. However in Santa Monica The Victorian bar, adjacent to the Main Street Lot, allows patrons to bring in food truck items (as long as they buy a drink in the bar of course) despite the fact they have a full menu.

Similarly, in Vancouver food trucks often park that outside of micro-breweries (that don’t serve food) and complement their business. Local micro-breweries in Vancouver will even advertise online which food-truck will be parked outside of their business on what days.

Although despite being mobile finding a good location is not always so easy, as owner of the Pressure Box food truck Scott Lesko has discovered.

Opened this past July he admits the food truck business has been a steep learning curve, despite his years of experience as a cook at Vancouver’s Joe Forte’s, Chin Chin and several locations of the Glowbal Group.

“Knowing where to take the truck is the first challenge,” said Lesko. Originally he thought his menu of pressure cooked casual American food would appeal mostly to downtown business people looking for a quick lunch. “People downtown didn’t seem too receptive, so I had to move around a lot. I parked in front of a few craft breweries, and really found my business was out of the downtown area. Some food trucks do find one place and park there and it works for them. Others [like me] have to keep moving around.”

He refers to food trucks like Mom’s Grilled Cheese, which has a regular location in front of Vancouver’s downtown art gallery building, which does a booming business (and yes, except for a couple of items, it’s pretty much just grilled cheese sandwiches) as one of those food trucks that seemed to have successfully found their niche.

He admits that it’s been a struggle to figure out how to create demand, and that he has been slow to take advantage of social media. “I didn’t fully appreciate the importance of it [social media] in the beginning. And because of my background I’m not all that proficient at it, but friends have been helping me and getting me up to speed.”

Like Los Angeles, Vancouver has a weekly food truck festival (during the summer months) at a vacant parking lot close to downtown where food trucks and people congregate every weekend. Unfortunately for Lesko he started a little too late in the season to be part of it, and he’s not in the Street Food Vancouver Society, a non-profit organization that organizes the food truck festival. In Los Angeles it’s the Southern California Mobile Food Vendor’s Association that organizes and designates who’s included in the weekly Main Street Lot gathering. There is also the NYC Food Truck Association.

Membership in these organizations is based on some straightforward criteria, such as having a valid business licence and health permit, but other, admittedly subjective criteria play a part as well. Mainly how good, original, creative is your food, and how good are you at marketing it?

Being included in one of these organizations is a huge advantage to any food truck proprietor. Besides organizing and promoting food truck gatherings, it also provides or helps to facilitate public relations, media coverage and helps to streamline the regulatory process.

Obviously these organizations wish to represent businesses that are either successful or are deemed as having a good chance at achieving success in order to reflect positively on the industry as a whole. However these organizations demonstrate that the wild-west mentality of the industry’s early days is rapidly giving over to organization.

But the industry does need a lobby, since street vending and food trucks are still not a widely accepted business across North America. In Toronto, Canada’s largest city, food truck businesses are very tightly regulated, down to how they look and the menu on offer. As a result Toronto has not experienced the boom in the industry that Vancouver has.

Even Los Angeles has struggled with its regulatory approach to food trucks, and laws pertaining to street vendors across the U.S continue to evolve (not always favourably towards the industry).

Portland, Oregon, which some would argue is the true birthplace of the food truck, has the most open, and business friendly approach to the industry. As a result the Pacific Northwest city of just over 600,000 has over 800 food truck businesses. Portland unlike Los Angeles does have more pedestrian traffic, and Portland’s city council created food truck pods to help spur economic activity in less prosperous commercial districts.

These 'pods’, similar to the weekly gatherings in Vancouver and Los Angeles, are groups of up to 20 food trucks positioned around the city, creating an instant take-out food market, with shared resources to allow them to work more safely and efficiently.

Portland, along with the state liquor control authority, has also recently allowed food truck vendors to obtain liquor licenses, a first for North America, and a step towards a more European approach to street vending.

Foodtrucksportland.com is not an association or society, however they do promote for the industry locally with reviews and maps of businesses, as well as conducting food truck tours around Portland. By taking a more egalitarian approach to their collective promotion of the industry one could argue they have helped make it stronger and more diverse.

Back in Los Angeles, that whatever the hurdles, Wolf remains very optimistic about her business at least.

“My model was created for duplication, so I can go as big as I want it.”

Although each of her 'locations’ are small trucks, each one has a manager, assistant manager and their own set of employees and that team is responsible for the ongoing quality and efficiency of their truck. She sure makes it sound simple, and the proof is in her track record.

“I have never been inspected by the health department in my more than three and a half years as a [food] trucker.”

She adds that generally people in the food truck business are people with a long history of restaurant experience (15 years in her case) and  they have a passion for what they do. “It’s hard work (and expensive) to book, cook and run a food truck.”