Braving the Food Market

 

Determined to put a new product into the fiercely competitive food marketplace? You could shut your eyes, plug your nose and jump in. Or you could spend months, even years, analyzing the product’s technical feasibility, market potential and financial strengths — and maybe never launch it.

Most entrepreneurs start somewhere in between — aware enough to see where they’re going, but not spotting all the land mines. For those willing to take the time, there’s plenty of information out there on developing and marketing new food products, from books, studies, government agencies and consultants.

But perhaps the best advice comes from those who can avow the cliché: “Been there, done that.”

In this issue, Ag Innovation News presents interviews with entrepreneurs and AURI staff who have first-hand knowledge of commercializing a new food product.

Each of the six entrepreneurs who responded to our Q&A has braved the marketplace for at least a few years, albeit on a shoestring. Indeed, AURI has seen dozens of food innovators successfully commercialize value-added ag products, an important part of our mission.

But beware, there are also a number of smart, hard-working AURI clients who have quit or sold out for a myriad of reasons: overbearing competition, high production costs, a fickle market, labor shortages, not enough financing. If you’re thinking about starting a new food venture, talk to people whose ventures have failed as well as those who succeeded — both are valuable teachers.

While the risk is ominous, one winning value-added food product can make up for a half-dozen attempts. All of Minnesota gains when processing and marketing revenues from ag products stay close to home.

Who we interviewed:

Pete Jager

Jager Foods Inc.

Long Prairie, Minn.

Farmer Pete Jager started experimenting with shiitake mushrooms in the late 1980s “when prices were going down the tube and farmers were dropping like flies.” After selling his dairy cows, he and his wife Susan started raising the exotic Japanese mushrooms on red oak and ironwood logs. At a local ag event, they served up shiitake and wild rice soup “to show people how to use them.” Their neighbors enjoyed the soup so much that “they told us to forget the mushrooms, sell the soup,” Pete says.

The Jagers first marketed their dry soup mixes through specialty shops, then the produce section of major grocers, and are now refocusing on niche gift, health food and upscale grocery markets. Jager Foods Inc. sells about 5,000 cases per year through mail order, Kowalski’s, and co-ops such as the Wedge in Minneapolis.

For more information write to Jager Foods at Route 2, Box 70, Long Prairie, MN 56347, (320) 732-6925.

Kim Samuelson

RBJ’s Spreadable Fruit

Crookston, Minn.

Kim Samuelson never expected her rhubarb- strawberry jam to win fans across the country. Five years ago, the owner of RBJ’s Restaurant just wanted “to serve something unique to our customers.” Her unconventional marketing methods have ranged from sending sample jars to retailers randomly selected from the yellow pages to appearances on the QVC television shopping channel.

Samuelson’s product line now includes honeys, syrups and other fruit spreads such as rhubarb pineapple, strawberry peach and rhubarb almond. She also markets gift and sampler packages and a rhubarb recipe book.

RBJ products are in national grocery and specialty shops. For more information or to order by mail, contact Samuelson at 1-888-711-3636.

George Economy

Helios Nutrition

Sauk Centre, Minn.

In 1997, George Economy founded Helios Nutrition to produce kefir, a fermented dairy beverage with more beneficial bacteria than yogurt. Three years later, when the Sauk Centre creamery that was making the kefir decided to sell out, Helios Nutrition bought the 80-year-old plant, one of the few independent dairies remaining in the state. It bottles Pride of Main Street milk and ice cream as well as Gemini Guernsey milk and other private-label specialty products.

The rBGH-free milk and ice cream are delivered through independent distributors to homes and retail stores between St. Cloud and Alexandria. The Helios Nutrition Organic Kefir with FOS is sold in all 50 states in natural food stores as well as Coborn’s, CashWise, Byerly’s and Kowalski’s.

For more information, contact Economy at (651) 735-0919 or geconomy@heliosnutrition.com.

Steve Klein

Klein Foods and

Walnut Grove Mercantile

Marshall, Minn.

Steve Klein left teaching in the early 1980s to take over his dad’s half-century-old bee business. Ten years later, he started adding flavors to whipped honey, such as hazelnut, amaretto, blueberry and apricot.

He had so much success with his flavored honeys — frequent champions at the annual National Honey Show — that he expanded into more products. He now sells Walnut Grove Mercantile handmade soaps, syrups and preserves along with Klein and Camden Wood gourmet honeys.

Klein’s products can be purchased at gift stores, tourist shops and by mail order, and are also sold under private labels. Klein is building a new facility “that will have a retail store and a lot more production capabilities,” he says.

For more information, contact Klein at 1-800-657-0174.

Eileen Carlson

Eichten’s Hidden Acres

Center City, Minn.

In the mid-1970s, Eileen’s dad, Joe Eichten, a dairy farmer disgusted with his dwindling milk checks, heard that the University of Minnesota was looking for pilot farms to make European-style cheese. Soon after, Joe and his wife Mary made their first Gouda cheese; the wheel still sits in a cooler display at the 500-acre family farm.

Today, Eichten’s Hidden Acres Cheese-n-Bison Farm produces 2,000 pounds a week of Swiss, Tilsit, Cheddars, flavored Gouda and other Dutch and Danish cheese. They also raise and process bison, making jerkeys, sausage and other specialty products.

Of the Eichtens’ 10 children, Eileen and three of her siblings are still active in the operation. Beside selling products through farmers markets, the Internet, mail order and delis, the Eichtens run an

on-farm store off Highway 8 near Center City.

For more information, call (651) 257-4752 or visitwww.specialtycheese.com.

Troy Gullekson

Penn Foods

Fertile, Minn.

Old-fashioned potato dumplings, pancakes and lefse are still loved by the descendants of Scandinavian immigrants. But spending a half day to make a batch isn’t a 21st century ideal, so Troy Gullekson sells mixes that can be whipped up in 20 minutes. The appeal has reached a national scale, even with Czechoslovakians and Germans, who are adapting the mixes to their own recipes. Last year, Penn Foods added a dry bean soup mix to its line and is working on a multi-grain pancake mix and other products.

Gullekson purchased Penn Foods, which makes the Ragna’s brand mixes, with his wife Michelle in 1999, though he is continuing his full-time job with the University of Minnesota-Crookston beef research herd. The potato mixes are sold primarily through retail groceries, gift shop markets and the Internet.

For more information, visit www. pennfoods.com or call (218) 945-6927.

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