Friday, August 27, 2010

Wine consumption on the rise in the U.S.

In the midst of our country's economic recession, consumers have cut back on spending, but wine does not seem to be one of those cut backs. "The 2010 Wine Handbook" (which delivers analysis on wine consumption, consumer drinking preferences, and economic/demographic data) reports that overall wine consumption in the U.S. rose 0.8% to 297.0 million 9-liter cases.

The increase is obviously not a large amount, but in an economy where many industries are just trying to stay afloat, ANY increase is eye-catching. 2009 is not the only year that wine sales have increased in the U.S.; last year was the 16th consecutive year of growing wine sales. "The 2010 Wine Handbook" also reports that domestic wines are outselling imported wines. Domestic wine sales are up 1.8% to 222.7 million cases while imports dropped 2.2% to 74.3 million cases.

Eric Schmidt, Manager of Information Services for the Beverage Information Group (the publishers of "The 2010 Wine Handbook") predicts, "As the country recovers from the recessionary environment, the wine industry continues to look positive. We expect to see wine consumption increase to 310.7 million cases by 2014."

As a winery owner, how has the recession affected your business? Have your sales increased as "The 2010 Wine Handbook" reports? As an ag entrepreneur, has this article sparked your interest in adding wine to your product offerings (for example, a cheesemaker may partner with a winery to sell wine and cheese pairings)?

Friday, August 20, 2010

How will new Mexican tariffs affect U.S. ag producers?

A statement was released yesterday by the Mexican government announcing 10 new tariff items to be added to its original 99-item list released March 2009. Mexico has placed tariffs on certain U.S. ag products because it feels the U.S. isn't living up to its North American Free Trade Agreement (NAFTA) obligations.

The original 2009 list contained produce including cherry and apricots. Since the tariff was instituted, the Northwest Horticultural Council (NHC) reports that cherry and apricot producers in Idaho, Washington, and Oregon have lost about $25 million in revenue. The new list includes apples, grapefruits, and oranges. The NHC commented that, "Adding apples would be unfortunate and economically damaging. The reduction in pricing goes directly back to the grower, and it comes out of the grower’s pocket.”

Census Data shows that over $1 billion worth of produce and nuts were shipped from the U.S. to Mexico in 2009, up 45% from 2005 when the U.S. shipped approximately $748 million worth of these products.

Meat and cheese are also included in this new tariff list. Fresh cheese will be facing a 25% tariff, pork cuts will be facing a 5% tariff, and cooked pork rinds will be facing a 20% tariff. From January to June 2010, Mexico's pork imports were up 32% (totaling $261 million) as compared to January to June 2009.

The article "Mexico adds pork to tariff list" describes the affect the tariffs will have on U.S. ag producers. "Mexico is one of the biggest foreign customers for U.S. agricultural products, particularly meat, fruits and vegetables. Last year, Mexico imported U.S. pork valued at $419.6 million, second only to the $1.46 billion shipped to Japan, according to government data."

As an ag entrepreneur, do you export any of your products to other countries? If you export to Mexico, have you been affected by the new tariffs? If you export to other countries, are you afraid that these other countries will start implementing tariffs like Mexico?

Monday, August 16, 2010

Alerting customers about a new product, part II

I thought I would write another blog entry and continue suggesting ideas for ways to alert consumers about new products. Customers will need your ideas on how the product can be used. By developing a recipe that uses the featured product and place it near or attaching it to the package of the featured product, you may provide consumers with some inspiration. If you use newsletters to reach customers, be certain to include the recipe(s) to encourage repeat purchases. We talk a good deal about value-added processed products in this blog, but many of our readers may not have interest or facilities available to process raw items. Consider instead something that can be referred to as "value-added light." Select a recipe that lists the featured product as an ingredient along with a few other products you offer. Assemble the ingredients in quantities appropriate for the recipe, package together, and showcase it in a prominent place in your outlet.

Along with placing the recipe on the package, include a shopping list with items or ingredients that are needed for the meal but that you don't stock or sell. This way your haven't taken away all the work for consumers, compared to a completely processed product, but you have taken away the guess work as to what he/she will need to complete their meal. For example, do you produce or sell most if not all of the ingredients needed to make salsa? Can you assemble the ingredients you sell (tomatoes, black garlic, peppers, etc.) together and promote it with a recipe? Most likely there are several recipes you could use as the basis of "value-added light" products, again, even if you don't sell all the ingredients - just be sure to include the shopping list for the other items needed to complete the recipe.

Perhaps you have the space and labor available to provide consumers with a sample, either the item alone or in a recipe. Samples reduce customer risk. Why not allow them to try the item before they buy it? This helps reduce buyers’ remorse and may increase customer satisfaction with your retail outlet. Though "unmanaged" sampling, where the product is placed on tables alone and the consumer serves themselves is an easy option, think about the power of having an employee handout samples, recipes, guide the consumer to the shelf where the product is stocked, and provide additional information on how to use the featured product. You may see sales increase significantly.

Whatever strategy you choose, be sure to evaluate your return on investment (both monetarily and labor wise). Did placing more signs throughout the retail outlet that highlighted uses and benefits pertaining to the product increase sales? Did developing and publishing recipes or creating "value-added light" packages have a positive impact? Related questions could be developed for sampling and other promotions. Keep in mind that strategies that work for one product may not work for another and that more energy may need to be expended to encourage sales of more "unique" items compared to items that consumers can quickly identify a use for.

Friday, August 13, 2010

Research conducted to examine the purchasing behaviors of mid-Atlantic consumers

If you are a mid-Atlantic specialty crop producer, retailer, or wholesaler, you may be interested in checking out Under the "Newsroom" tab, you will find multiple news articles summarizing 4 surveys conducted over the past year by Penn State. The surveys explore the produce purchasing behaviors of mid-Atlantic consumers.

1,565 total participants from the metropolitan areas of New York City, Philadelphia, Baltimore, Washington, D.C., and Richmond were surveyed on what types of food products they purchased, where they purchased these products, and what variables may have affected their purchasing behaviors. Issues addressed in the consumer surveys include labeling, children in the household, origin of farmers’ market produce, food safety, snacking, certified-organics, state promotional programs, locally grown, and natural.

Some interesting information gathered:
-The majority of participants (78%) defined “locally grown” as 100 miles or less from their residence.
-29.3% of survey participants selected farmers’ markets/CSAs as their primary source of produce when local produce was in-season.
-The majority of the participants (53.8%) believed that 50-99% of produce at a farmers' market was grown by the market farmers.
-The majority of participants who reported purchasing certified-organic fruits and vegetables either made these purchases 2 to 3 times per month (30.7%) or once per week(29%).

As an ag entrepreneur, how will you use the information from these surveys in your business? Do you regularly look for research like this to learn more about your customers? What other types of research topics would help you become a better entrepreneur and/or strengthen your business?

Tuesday, August 10, 2010

Alerting customers about a new product

I just finished reading my July issue of Produce Business, a publication that I find to be very helpful in discovering new products and learning about how supermarkets, grocery stores, and club stores merchandise new and established products, packaging, national promotional programs, etc. While flipping through the pages, I saw a picture of black garlic, something that I was able to taste at the 2009 Summer Fancy Food Show in New York City. On first glance, you might not find this product to be visually appealing. The bulb certainly looks like a garlic bulb you would find in a supermarket. Instead of a creamy translucent- looking bulb though, the contents are a dark black, almost charcoal-looking. Being someone who loves the flavor of garlic, I was pleasantly surprised to find, as stated in the Produce Business article, that the garlic tasted "milder and sweeter" than traditional garlic. The bold color could really add dimension to a dish.

I must admit that if not presented with the opportunity to try the garlic at the Food Show and hear about the various ways that it could be used (in place of or in addition to traditional garlic) I would have probably passed by without a second look. I'm sure that there have been instances where you have seen a new product or service and weighed the cost vs. the benefits that the item would have provided you. If you are a retailer or a wholesale grower who gets feedback about consumer response to products you sell in an outlet, perhaps you have learned about or witnessed consumers looking at or touching a new item that is offered but instead of placing it in their basket, they return it to the shelf. The consumer might not even know what the product is, how to store it, how to prepare it, and/or how to serve it. Attendees at the Food Show (most of whom are retailers, brokers, and others involved in the food industry) benefitted from some insight about the product. It is best that retailers consider the same level of promotion and education in their own stores.

What are some simple promotions that a retailer could implement whether it be at an independent grocery store, a farmers' market, on-farm market, or other?

-Signage that describes the item is one example and probably something you already implement. Do you describe the products flavor, how it could be used, and how easy it is to prepare? The idea is not to make the sign too busy with words and overload the customer, but rather pick three brief but informative points and include them on the sign.

-How about making the new product the "product of the week?" Add extra signs throughout the store to alert customers of the new addition.

-Product placement may also be something to consider. Keep the featured product near the other like items but also position smaller batches for sale near the register and other items consumers tend to purchase frequently.

Perhaps to get you started, visit a few retail outlets that appeal to your target customers and see how they are using signage and product placement. What works for them might just work for you.

Friday, August 6, 2010

Study analyzes traits of successful small business owners

If you are an entrepreneur or are thinking about becoming an entrepreneur, you know that there is a lot of hard work involved in being successful. A recent study by The Guardian Life Small Business Research Institute, a research center that studies small business owners and the businesses they build, surveyed 1100 small businesses (with 2-99 employees) and developed a list of 6 traits that seem to be prevalent in successful small business owners.

Traits of a successful business owner

1. Ability to collaborate- Small business owners will likely have strong customer relationships if they can build and maintain strong relationships with their management team and employees.

2. Being self-fulfilled- Successful business owners highly value "doing something for a living that I love to do".

3. Future-focused- Being able to plan well is a key to being successful. This includes both short-term and long-term planning.

4. Curious- Successful small business owners are constantly learning about how they can make their business better.

5. Tech-savvy- Investing time and money into a company's website and social media can make a small business more effective and efficient.

6. Action oriented- Bumps in the road are a good thing. Successful business owners find adversity helps them to constantly look for new ways of thinking and acting.

As an ag entrepreneur, do you feel that you posess all of these qualities? Do you think these traits are innate or do you think they can be learned? What other traits do you think are necessary for becoming a successful entrepreneur? If you are thinking about becoming an entrepreneur, do you feel that you possess all 6 of these traits? If you don't, do you think you can learn them?