Specialty foods: Going to market

Specialty food company owner Clay Meers had a hankering for hot sauce his whole life.

 “I’ve been eating green chilies as long as I can remember,” said Meers, who grew up in New Mexico and now calls Northern Colorado home.

When Meers and his wife, Tamara, were dating, she carried a bottle of hot sauce in her purse just in case. Now they’re saucy business partners at Yampa Valley Sauce Co., based out of Steamboat Springs.

The Meers’ path is a scenario often duplicated, said Dawn Thilmany, professor of agricultural economics at Colorado State University. A personal passion-turned-specialty- product is a pattern that new food producers in Colorado follow more than 80 percent of the time.

Meers started cooking to share with friends and family. Taste tests of his habanero pepper sauces earned rave reviews and prompted the business school graduate to create a business plan and launch production in larger quantities.

Meers initially used the restaurant kitchen where he worked as a full-time chef to concoct his sauces after his shift ended. He introduced two flavors at the Steamboat Farmers Market in summer 2013.

“We decided to first start with the farmers’ market because it’s very local and we could see one-on-one reaction with customers and meet with end-users,” said Meers, who introduced a Habacado sauce with an avocado base and Strabenero with strawberries. He added a third with blueberries this year.

The company’s sauces are available online at yvsauce.com.

FIRST STEP FOR VENDORS

 “I get a lot of calls such as, ‘I make this great salsa for friends and family, and I’m looking at opportunities to market it,’” said Wendy White, marketing specialist with the Colorado Department of Agriculture. “Farmers markets are a great place to start selling and getting a lot of customer research. It’s a great place for vendors to sample products and try packaging and price points.”

A common next step is to sell to hometown stores and attend food industry shows to make connections and find outlets.

“Growth depends on the goals and desires (of producers),” White said. Those aims range from direct sales to online to supplying to restaurants. “It depends on how far they want to go and what their business plan and strategy is all about.”

Many successful food entrepreneurs say they struggle with the decision to expand and hire a co-packer to make their product.

Distinctive foods and beverages made by small, local manufactures have become big business, reaching more than $88 billion in sales in 2013 in the U.S., according to the Specialty Food Association.

ALTERNATIVE AVENUES

Colorado is following national trends in the types of specialty foods its people are producing, with particular success in the beverage business as well as the health-food sector.

Producers who have an existing relationship with merchants may be asked to develop new products to fill a need or replace a substandard item. Steve Ela, manager of Ela Family Farms in Hotchkiss, started selling fruit at farmers’ markets years ago, but later found an outlet for an additional product through his established connection with Whole Foods Market.

“They came to us and asked, ‘Can you provide us with frozen apple slices for our bake house?’ They wanted to sell pies with Colorado-grown apples,” Ela said. “It was a good way to enter that market with a known buyer.”

Another avenue is the expansion of a family business to develop new items and income for children coming home to the family farm.

At the James Ranch north of Durango, Kay and Dave James have raised grass-fed cattle for decades, but in recent years they helped four of their five children and spouses create new enterprises by offering land and capital to incubate other products.

“These kids have wanted to come home and be back on the ranch, and they have picked the leading edge in marketing and growing,” Kay James said. Now the ranch and family have lines of products such as artisan cheese, pork, eggs, and organic fruits and vegetables.

Startup support

Food producers can receive business development assistance through the Colorado Department of Agriculture (ColoradoAgriculture.com), ranging from in-person consultations to daylong marketing workshops offered two times a year.

Colorado Proud

ColoradoProud.org

A free marketing program to promote food and agricultural products grown, raised or processed in the state, with some 2,000 current members.

Colorado Farm to Market

CoFarmtoMarket.com

A website for farmers’ market vendors and managers, agricultural producers and food product manufacturers who are targeting direct markets such as schools or restaurants.

Colorado Specialty Food Makers

meetup.com/Colorado-Specialty-Food-Makers

A Front Range networking and educational group that started in January and has 80 members so far.

Sell Your Specialty Food

A book by Stephen Hall.