Friday, May 27, 2011

Surveys of mid-Atlantic consumers conducted by Penn State researchers part 12

As a food producer, setting a price for your product can be difficult. When setting a price, you must consider product production costs, competitors, target customers, and product qualities. One example of a production cost (and subsequent product quality) is producing certified organic products. In 2010, Penn State researchers conducted a study on consumer purchasing habits. One question asked participants how much they would be willing to spend on a pound of certified organic apples compared to a pound of non-certified organic apples priced at $1/pound.

As you can see by the graph below, 32.1% of respondents said they were unwilling to pay more for organic Gala apples. Conversely, 57.6% indicated that thy would be willing to spend at least $1/pound for organic Gala apples.

This survey only asked respondents about organic Gala apples, but this specific example can be helpful in understanding consumers' willingness to pay for organic produce in general. To read more about this study, please read the press release.

When pricing your organic produce (or any product), you must carefully position your price to attract the most buyers. It is extremely important to inform and remind consumers about the product attributes and proposed benefits of your product through appropriate advertising and in-store promotions. Want more help in pricing your product? Check out our Value-Added Marketing Series. We have a publication titled "Product Pricing: What Do I Charge?" which will give you some good info on pricing your product!

Friday, May 13, 2011

Craft brew- Is it right for you?

Beer industry sales as a whole dropped 2.2% in 2009 and 1% in 2010, but craft brewer sales are up 12% (as reported by the Brewers Association). What exactly is a "craft brewer"? The Brewers Association describes a craft brew as "small, independent and traditional. Small: Annual production of 6 million barrels of beer or less. Beer production is attributed to a brewer according to the rules of alternating proprietorships. Flavored malt beverages are not considered beer for purposes of this definition. Independent: Less than 25% of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member who is not themselves a craft brewer. Traditional: A brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewers brands) or has at least 50% of its volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor."

Some facts about the craft brew industry:
-Growth of the craft brewing industry in 2010 was 11% by volume and 12% by dollars compared to growth in 2009 of 7.2% by volume and 10.3% by dollars.
-1,759 craft-breweries were in existence in 2010 (up by 100+ since the previous year) and over 600 are being planned.
-Craft brewers sold an estimated 9,951,956 barrels of beer in 2010, up from 8,934,446 in 2009 (11% increase).

Is this an industry for you? As always, DO YOUR RESEARCH! The Brewers Association website offers some great materials on getting started in this industry. Their business help includes marketing tools (press releases, a media list program, sell sheets, etc), an export development program, and label approval guidance for the Tax and Trade Bureau. Some other things to think about if you are considering entering the craft brew industry:
-What type(s) of beer do you want to offer (stout, lager, porter, etc)?
-What ingredients do you need and how easy/difficult is it to obtain these ingredients?
-What training do you need in beer-making?
-What supplies do you need(bottles, tanks, boxes, etc)?
-What are your state's laws on producing and selling alcohol?

The above points are just a glimpse at the many, many questions you will need to answer before entering this or any industry. As always, Penn State Extension is here to help you in this process!