AIC Insights. Ten Local Food Opportunities

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1 AIC Insights This article is part of a series intended to spur and support growth and innovation in Wisconsin s agricultural industry. In 2010, the series will focus on specialty food processing; local and regional food markets; and food marketing strategies. Articles by AIC staff and guest writers, plus interviews with industry experts will appear at along with biographies and background information. Ten Local Food Opportunities While the so-called local food trend is widely acknowledged and appears to be growing, the geography, the values, and the opportunities associated with the term vary considerably (as might be expected) from place to place, and from person to person. This article focuses on opportunities that I see in grocery stores across South Central Wisconsin, identified through an informal inventory analysis conducted over the past eighteen months as part of a regional economic development project. (1) It is not presented as ranking or Top Ten list, but as general categories that farmers, processors, distributors, grocers and consumers may want to explore. Additional market research would be absolutely necessary before making any investments into these niche markets. If there were not barriers to entry, these niches might already be filled. In some cases, local products are filling the space, but are not effectively branded or merchandised as local. A public resource that may be useful in conjunction with this article is the new website developed for the state s Something Special from Wisconsin program, With that, here is my list of local food opportunities that I see in SCHOOL SNACKS Finding snack foods to send to day care and elementary school is becoming ever more difficult. Health concerns over food allergens and childhood obesity are removing nuts, fats and sweets from the list of acceptable donations. Ideal products should be easily divisible into kid-sized portions, travel well in a backpack, and last several hours without refrigeration. Keep in mind teachers like to minimize clean-up, while many parents may hope to minimize cost in this category. Given those challenging parameters, whole apples in season are a low hanging fruit. At least one Wisconsin-branded yogurt is available in small portions. Other potential openings could include dried fruit, baby carrots, and applesauce. When developing product brands, keep in mind that children like to weigh in on this purchase. 1

2 SOFT DRINKS Some of the world s largest soft drink brands are bottled in Wisconsin using local water and employing local people. However, until they stamp the manufacturing location on their cans, consumers looking for local won t know the difference. There are a number of soft drinks produced by small breweries in the state. They are clearly labeled as such, and many stores carry them. However, they are often merchandized at a disadvantage. Local point-of-sale (POS) materials like the shelf talkers, rail strips and product stickers available from the Something Special from Wisconsin program might help, but beverage distributors have been slow to embrace them. And while smaller companies cannot afford optimal shelf space, end cap displays or coolers in checkout aisles, one area of the store that local soft drinks might get more play is alongside refrigerated lunch items often found in the deli section. Consumers looking for cold single-serve beverages may also purchase milk, juice, iced tea, cold coffee, health and energy drinks. Some of these subcategories may offer local food opportunities. One notable item missing from Wisconsin grocery shelves is a cranberry juice clearly labeled as harvested and bottled in the state. FRESH PRODUCE I cannot explain why, but fruits and vegetables seem to be the quintessence of local food. Perhaps it is because fresh produce is where the local food and healthy diet trends merge. The produce department is often the entry point into a supermarket, and it is certainly a factor in how customers judge of a store, whether that is by quality, price, display or their supply of organic and local products. A grocery can differentiate itself by the impression it makes here. For these converging reasons, I see demand growing substantially for local produce in the retail food sector. An obvious obstacle to supplying grocery stores in Wisconsin with local produce is our six months of frost. Another is that we have a two-pronged produce industry: very small diversified farms selling direct to consumers, and large farms selling fewer crops under contract to canners. A third is that it is difficult to brand a green pepper. The opportunity here is for small farms that can grow more cheaper, large farms that can act small, and distributors that can pool product under a local food brand. DESSERT There are three aisles of the grocery store that seem to offer few if any local alternatives. One is the cookie aisle. Granted, a grocer s in-store bakery may produce 2

3 its own cookies a hundred feet away. But packaged cookies another staple in a parent s grocery cart are seldom produced locally. There are low-cost national brands, but there are also high-priced European imports. In recent years, the Dairy State finally produced a small number of high-end ice creams. They appear to have had limited market penetration so far, in-state or out. One of my favorite discoveries of the past eighteen months is a rice pudding made in Southwestern Wisconsin. I have yet to see a Wisconsin candy bar. Dessert is an item that even people on a budget will occasionally splurge on. TOMATO-BASED PRODUCTS If fresh produce is the quintessence of local food, the tomato is king. Six months of frost may explain why Wisconsin is not a top national producer, but every year around the third week of September we usually have too many. How many acres of tomatoes are plowed under in Wisconsin every October? Processing foods to preserve surplus crops and extend markets after harvest is an ancient strategy that industrialization has made cheap. Small-scale alternatives will never compete on price, but there seems to be space on shelves for local pasta sauce or high-end ketchup. The first high quality products to market can often sustain a high price in upscale markets. But pressure on prices over time tends to be downward. While in 2010 there appears to be room for local salsas, I suspect that processors that can get their retail price for a 16-ounce jar of Wisconsin tomato-based salsa under $5 will see increased demand going forward. BREAKFAST A second section of the supermarket that is a desert for local food is the breakfast cereal aisle. I know of one company in the state that boxes granola, but it is usually found in the bread aisle. Slotting fees may be a major barrier to entry, but so is the lack of product. Cereal requires milk, of course, and a few small bottlers are tapping the local food market in South Central Wisconsin. There is no shortage of Wisconsin-made breakfast sausage, but local pancakes are much harder to find. Local granola and yogurt are a perfect pairing, and they would go well with fresh berries in season. The major appeal that I see in a public branding program like Something Special from Wisconsin is its ability to bring different companies products together into ad hoc collaborative marketing strategies. 3

4 READY-TO-SERVE Ready-to-serve, ready-to-eat meals have been around a while. Growing up, we called them TV dinners. But healthy, high quality quick meals are a newer trend, and it appears that local may be the next progression. Specific opportunities may include soups and frozen entrées. While local food consumers may prefer healthy, high quality meals, the higher the price, the smaller the customer base. Pizza is a time-honored quick meal, and of the several companies producing them in state, only one larger brand, which prides itself on using local ingredients, is clearly marketing itself as Wisconsin-made. SNACK FOOD Local food may have an affinity with healthy eating, but I suspect many locavores also eat between meals on the couch while watching cable. Several national snack food companies have operations in Wisconsin, and they presumably use considerable quantities of corn and potatoes grown in the state. But consumers looking for local food don t want to presume, they want to know. And even if these larger companies made the effort to track and promote their local ingredients, other common affinities for local food consumers include small-scale production and local ownership. I am aware of one brand of tortilla chips made with Wisconsin organic blue corn. It goes well with salsa, hummus and dairy-based dips. Jerky, popcorn, and crackers are a few more examples. Any of these could tap the local food trend if effectively labeled and merchandised. ETHNIC FOOD This category, like several of those above, is a general consumer trend to which the local label can attach. A niche within a trend. The ethnic section is the third supermarket aisle where I see very little penetration by local foods. While national brands dominate the Italian, Mexican, and Asian inventories found in most stores, there may room for high-value niche products targeted to customers looking for something special. How about local chili peppers in a clear jar, or ethnic sauces made from local ingredients? One overlapping trend I see growing are ethnic foods that are also ready-toserve. Boil the packet, tear open and pour over rice. Or empty frozen contents into a frying pan with a tablespoon of canola oil and serve in five minutes. Tasty, healthy, fast, ethnic just add local. 4

5 NUMBER TEN I will leave opportunity Number Ten open for discussion. What have I missed? Where was I wrong? As James Joyce once said, mistakes are the portals of discovery. The AIC Insights series welcomes readers feedback on this and future articles, and we will post selected comments with the article on the website. Send your comments to ***@uwex.edu and please provide your name, affiliation and location. (1) Visit for more about the project called Grocers Buy Local, initiated by the Wisconsin Grocers Association and supported by Thrive, the Agricultural Innovation Center, and the Wisconsin Department of Agriculture Trade and Consumer Protection, under the banner of the state s Something Special from Wisconsin program. UPCOMING ARTICLES Article Two: Article Three: Article Four: Pricing Your Products for Retail and Wholesale Markets Interview with Mark Olson Becoming a Specialty Food Processor By Anne Pfeiffer Your Brand, Your Market, Your Price By Greg Lawless and Laura Salyer 5