Food Entrepreneurs Can Beat The Odds

The Blade, Toledo, Ohio

When Chris Blankenship got his North Coast Beer Cheese into 130 Kroger stores earlier this year it wasn’t just a milestone, it was a tipping point. For the first time, his fledgling food company looks set to turn a profit.

“Honestly, it’s been really good to know I haven’t been chasing windmills,” Mr. Blankenship said.

Locally grown and locally produced foods have become hot over the last several years. Consumers want them, stores want to sell them, and a budding class of entrepreneurs have made bids to get in on the action.

Even so, experts say it’s not easy to take Grandma’s spaghetti sauce from the family table to the supermarket shelf.

“There is a demand for local, but there are a lot of steps it takes to get there,” said Rebecca Singer, the vice president and director of agricultural programs for the Center for Innovative Food Technology in Toledo.

Almost universally, retailers and grocers say the desire from consumers for locally made products is greater than ever. People want to know not just what is in their food, but where it comes from.

“Customers really tend to gravitate toward local products knowing it’s from their neighborhood or their region,” Kroger Co. spokesman Jennifer Jarrell said.

Kroger makes a point to label local and Ohio products within its store. It also hosts Discover Local events across its regions. The events give local vendors a chance to introduce their items to customers, talk about their food, and offer samples. The Perrysburg Marketplace will host one Aug. 19.

Still, for most grocers, simply being shown a local product isn’t enough. The food industry is competitive — by some estimates, 150,000 products are introduced every year — and grocers don’t want to be stuck with things they can’t sell.

“The people making these things, they always think they have a great product,” longtime local grocer Walt Churchill of Walt Churchill’s Markets said. “The question is: Is there a market for it?”

One of the key roles of the food technology center is helping consumers find that market.

The group’s small, small-business program, which Ms. Singer oversees, has helped shepherd a number of food start-ups from concept to commercialization, a process that typically takes close to a year if not longer.

“It’s a challenging market, it’s a challenging business,” Ms. Singer said. “The food industry is not an easy place to get started, but it is something we’ve all very passionate about.”

In addition to operating a nonprofit cooperative commercial kitchen, CIFT and partners at the Toledo Regional Chamber of Commerce help with production tips, food safety, business plans, and regulatory issues such as nutritional labeling. The group also organizes consumer focus groups and hosts an annual food-buyer show where producers get a chance to get their products in front of grocers.

Done right, experts say the food business can be good to entrepreneurs. But not everyone is cut out for the challenge.
“We speak to hundreds of individuals that have ideas, and we have probably 40 that are making their product right now,” Ms. Singer said. “Of those probably half are really out into stores.”

Getting a food business off the ground is fraught with challenges, something Mr. Blankenship learned first hand.

A nurse by trade, Mr. Blankenship had been encouraged by friends to look into making his cheese dip commercially. After a back injury that effectively ended his nursing career, he decided to devote his time to the food business.

Issues cropped up from the start.

Because it’s a dairy product, the beer cheese must be made in a commercial kitchen, even if it’s being sold at a farmer’s market. Initial testing found the alcohol content — he uses real beer — exceeded the limit for food items by .04 percent, forcing him to tweak his recipe. Later, when tested for allergens and shelf life, the lab slapped him with a shelf life of just two weeks, effectively making it impossible for him to sell in stores.

A second lab in Kentucky more familiar with the product revised that to four to six months.

“The money it took me to get my official green light to begin production, before I spent money on materials, I would have to guess was easily $5,000 to $7,000,” he said.

Mr. Blankenship gives a lot of credit to local stores for their willingness to give a chance to products made in the Toledo area. The first stores to stock his product were the Sautter’s Markets in Sylvania and Waterville.

Owner Jim Sautter said he tries to be as open as he can when people pitch a new local item to him.

“It’s a lot easier to get it on my shelf than a chain store because I make the decision,” he said. “A guy comes to me with a product. If it’s something I think I can sell, I usually give them a shot at it.”

Though local products don’t make up a huge percentage of Mr. Sautter’s catalog — his stories carry some 20,000 individual items — he does seek them out. At CIFT’s most recent Local Food Buyer show, for example, Mr. Sautter placed orders with about 80 percent of the attendees.

Mr. Churchill also has a reputation of being accommodating to local entrepreneurs.

“We’ll make room on the shelf,” he said. “Usually you have a couple of items not selling well so you can cut down. Sometimes we’ll make a special display. You give it an honest try.”

At Churchill’s, a potential product is first tasted by the store’s food buyer. If it tastes good and seems to be a good fit for the store, they’ll invite the vendor in for an in-store demonstration with customers and gauge how that goes.

It’s generally more difficult and can be more costly getting into chains such as Kroger or The Andersons Inc., though producers say it’s worth it.

“I got a gigantic break when The Andersons decided to take us on,” said Kyle Baker, owner of Gertie’s Premium BBQ Sauce.
In 2009, Mr. Baker’s sauce won the now-annual CIFT product development contest, which paved the way for him to get to the point of being ready to go after retail. Still, it took four years of trying to get into The Andersons, which generally requires going through a distributor.

The distributor Mr. Baker ended up signing on with for The Andersons was later bought out by an even bigger company. That helped boost him into 12 more states, though Mr. Baker remains grateful for the first local stores that gave him a shot.

Sharon Haeflinger, a food buyer for The Andersons, said local products are important, and buyers try to find as many as they can, but the products still have to meet the same quality, taste, and marketability as any other item they might sell.

In the case of Gertie’s, named after Mr. Baker’s mother, she found all those things.”I really liked his product, his label, and his story. It all came together for me,” she said. “We helped him find a distributor and now he is with one of our major distributors and is enjoying some success there.”

Ms. Haeflinger, who travels domestically and internationally for The Andersons, said she typically gets two or three pitches a month. Not many make the cut. Sometimes, it’s just a matter of timing — what does she see trending and what items are already heavily stocked at The Andersons.

“There’s kind of a little checklist that I go through. We look at the product quality, ingredients, and taste, and also very important is the labeling and how well it defines the product, because a customer only has a couple seconds to make a decision at the shelf,” she said.