Market Analysis

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Retail Ready For Local Food
S. Gary Bullen North Carolina State University
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Local Food Market

• Interviewed 87 buyers
• Focused on fruits and vegetables
• Business Skills needed

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• What is local food?
• Little agreement regarding distance and political
  boundaries

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Defining Local in North Carolina

• Locally sourced is highly variable Grocery stores
  define local as within state
• Coop groceries stated closer is better
• Specialty food hubs define as within or a
  joining county

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Why Local Foods

• Survey of National Restaurant Association
• Locally Grown produce is perceived as hot by
  84
• Chefs want products that are raised locally and
  are harvested right form the farm and go right to
  the restaurant within one day
• We shake hands with the people we get our food
  from. How many people can say they know the
  people from where there food come from?

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Think Like a Buyer

• To be able to reach producers directly for their
  product needs just as easily as they reach
  wholesaler
• Producers to understand how a restaurant grocery
  store or distributor operates
• Producers to be acquainted with the types of food
  their customers prefer
• You need to understand their customers and how
  you can provide them with a remarkable product
  and experience

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Market Channels for Local Foods

• Restaurants
• Coop Groceries
• Supermarket and Grocery Chains
• Wholesale Buyers
• Food Service Distributors
• Specialty Distributors
• Institutional Suppliers
• Child Care Center
• Private Schools
• Colleges and Universities
• Hospitals

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Business Skills

• What are your business goals and capabilities
• This will determine the market channel that is
  the best fit for you
• What products do you offer?
• Quality, quantity, timing

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Skills Needed by Farmers

• Reliability
• Farmers must delivery product type and quantity
  as agreed to
• Buyer are planning on this and should be told of
  any changes
• Consistent with all buyers

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Skills Needed by Farmers

• Professionalism
• Many buyers made a distinction between
  professional farmers versus hobby farmers
• Not as concerned about size but intent and
  investment
• Appreciation of the buyers business activity and
  availability (Ask about best time to contact)

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Restaurants

• Only restaurants promoting local
• Questions for restaurants
• Chef/owner philosophy and restaurant identity
• Size (size of kitchen, storage space, number of
  meals served per week
• Price how expensive are items on menu
• Menu is it fixed or flexible, is local staple or
  specialty
• How formal or informal are their system

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Restaurants

• Local chefs like to visit the farm, are
  interested in sustainable practices
• Want food that consistently tastes delicious and
  is very fresh
• Written information is much easier for them
• Need regular communications
• Perhaps most relationship driven market channel
• One chef describe it as a long-term journey
• Farmers are usually able to sell at retailish
  prices

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Coop Specialty Grocery

• Company Stores Market, Hendersonville Community
  Coop, Chatham Marketplace Coop, Tidal Creek Coop,
  Deep Roots Market, French Broad Coop
• Very engaged in local sourcing and often mention
  it as part of their mission and vision
• Purchased all product categories and identify
  origin in the stores

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Coop Specialty Grocery

• Some coops were moving to 100 organic while
  others favor local over organic
• Some of the coops required farmers to sign
  affidavit about growing practices
• May be able to accommodate a wide range of
  products and a wider range of volumes
• Some have restaurants or kitchens

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Specialty Distributors Brokers

• Feast Down East, Madison Farms, Pilot Mountain
  Pride, Produce Box, Sand hills Farm to Table
  Coop, Mint Market, East Carolina Organics,
  Farmhand Foods, Piedmont Local Foods
• Buy 100 local, were created to supply local
  products
• Establish a brand for local food and aggregate
  products.
• Some process sales on line, some CSA like

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Specialty Distributors Brokers

• Capable management skills critical for the
  success of these of organizations
• Work closely with farmers, some provide financial
  support of improvements, usually willing to work
  with smaller farmers, provide training on
  quality, all required liability insurance
• Distinctive philosophy neighbors feeding
  neighbors

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Specialty Distributors Brokers

• Demand outpaces supply, more farmers are needed,
  want more products in fall and winter
• Lack of high value items such as fruits
• Wants to deal with larger customers who may be
  able to absorb occasional higher volumes
• Madison Farms emphasized need for stable
  partnerships amid market evolutions

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Grocery Store Chains

• Many express interested in local foods
• Standards of appearance, quality and consistency
  are very important
• Local usually has a regional focus

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Grocery Store Chains

• Retailers discussed how farmers should know
  quality, volume, and grading
• Retailers will buy at wholesale prices
• Volume is important as crops must be supplied in
  sufficient amount during the season

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Grocery Stores Chains

• Getting in the door can be a challenge, need to
  understand the direct to store vs. selling to the
  entire chain may take some work
• Three grocery store chains in NC who are very
  interested in buying from local farmers are
  Ingles in West, Carlie C's IGA, Piggly Willey in
  eastern NC and Lowes in NC SC and VA

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Wholesale Distributors

• Honeycutt Product, Ward Produce, Alberts
  Organics, First hand Meats, Leading Green,
  Southern Foods
• Goal of this group is to provide consistent
  predictable products. Scale is usually large with
  crops sources in many locations.
• Buying local presents a logistics problem for
  many wholesalers
• Many companies are sourcing local but usually do
  not label as local

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Wholesale Distributors

• Many expressed interest in sourcing local
  products, if they can make the logistics work
• Do not have the capacity to train farmers
• Working to keep the supply stream closer to
  origin
• Many products sold to distributors are sold
  retail ready, (clean, and boxed) very exact
  specifications.
• Scale is usually large and fast paced

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Wholesale Distributors

• Will pay wholesale prices
• Need exacting food safety and other requirements,
  GAPS and liability coverage is generally required
• May be difficult to break into market, finding
  the right person
• With the market expansion of local, may provide
  marketing opportunities

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Food Service

• Foster Caviness, Bon Appetite, Fresh Point, Ford
  Produce, Mountain Food Products, US Foods,
  Compass, Aramark, Sodexo
• Very similar to whole distributors sell mainly to
  restaurants and other companies serving food to
  public
• Food service is divided into commercial and
  institutional, schools, hospitals, nursing home

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Food Service

• Very specific purchasing guidelines
• Increasingly provides more ready to cook or
  ready to heat
• Schools have less space/staff/ equipment to
  prepare foods

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Evaluating the Institutional Market Channels

• Advantages
• Can offer a steady and large market less
  vulnerable to economy
• Understanding the procedures and working of the
  institution is critical for the farmer
• Challenges
• GAP certification and liability insurance
  required
• High volume and very consistent quality over
  longer period of time
• Becoming vendor may be long and tiresome process
• May take 30 days or more to be paid
• Gov. institutions may use low bid procurement
  system

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Institutional Market Channels

• The place of food, institutional culture
• Population characteristics
• Kitchen characteristics
• Can they prepare fresh food
• Does staff have kitchen skills
• Management of operations
• Some are self operated
• Others are contracted by food management company
  EX Compass, Aramark, Sodexo

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Evaluating the Institutional Market Channels

• What is level of interest in local foods
• Do they cater for special events
• Do they have multiple dining venues
• Do they have the ability to process and freeze
• Interest in specific crop for seasonal menus
• See the nutritional and maybe ed. value of local
  foods

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Hospitals

• Interviewed Carolina Medical Center (Charlotte)
  Wake Med, UNC Health Care are very interested in
  fresh, local foods rooted in wellness programs
• Food safety and emergency recall program must be
  in place
• Direct sales are very rare, and hampered by
  complexities of becoming vendor and providing
  adequate supply and quality
• Some hospitals food services may be contracted or
  self operated, either case will rely on large
  scale suppliers
• Some distributors have separate price sheets
  (local, state, regional) items that meet the
  price points.

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Retirement and Continuing Care Retirement
Communities

• Interviewed Southminster Retirement Community,
  Carol Woods Retirement Community, Salemtowne
  Retirement Community which are using the dining
  services as a way to distinguish themselves. One
  dining room director mentioned hospitality not
  hospital
• Some CCRC are hiring restaurant chefs with local
  food experiences for their institutional kitchens
• Food safety including GAP certification is a
  priority
• Food and dining plans may focus tightly on
  nutritional strategies
• Menus are planned months ahead, often quarterly
  to incorporate nutritional planning
• Some distributors have separate price sheets
  (local, state, regional) items that meet the
  price points.

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Opportunities

• Products goat cheese, beef and pork some
  vegetables broccoli and celery, and onions, and
  fruit
• Shoulder season crops by season extensions.
  Greenhouse tomatoes and greens
• Valued added processed foods such as jams and
  jellies
• Honey was mentioned by several buyers

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Farmers Survey

• Why are selling to retail buyers
• market you can count on weekly
• Set price no worry of price fluctuation
• Price, get higher price from retail instead of
  wholesale
• Value added product, supply of a local product
• Local food movement

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Farmers Survey

• What are your challenges of working with retail
  buyer
• Cooling and transportation
• Need for constant supply and lower price
• Getting orders filled in a timely fashion
• GAP certification, cooling truck
• Increased expenses while getting commodities
  prices
• Need a way to sell to larger buyers like a
  dedicated salesman for small farmers

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S. Gary Bullen
North Carolina State University Gary_Bullen_at_ncsu.e
du 919.515.6096