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October 18, 2010

Specialty food group gains momentum

Photo/Whit Richardson Dennis Proctor, co-owner of Mother's Mountain in Falmouth, says Maine specialty food producers still face major hurdles in getting display space in major grocery stores
By Whit Richardson

In October 2006, a group of 40 or so specialty food producers gathered at Bowdoin College for a forum led by Karen Mills — then managing director of New York-based investment firm Solera Capital LLC, now head of the U.S. Small Business Administration — to discuss the benefits of organizing as an industry cluster.

Attendees were optimistic, envisioning a trade association that would offer small business owners educational, networking and cost-sharing opportunities.

But there were also reservations. It wasn’t the first attempt at organizing an association. There was the volunteer-led Maine Gourmet and Specialty Food Producers and the Maine Food Processors Association before that. Many worried momentum would fizzle, as it had in the past, once individual business owners got back to their daily grind.

This time was different. The forum harnessed critical mass that had developed among Maine’s specialty food producers. It came at a time when interest in local foods was ready to explode and economic developers were championing the potential of clusters, such as in the Brookings Institute’s report “Charting Maine’s Future,” which was released the same month the forum was held.

Three years later, in February 2009, that momentum led to a $460,000 cluster grant from the Maine Technology Institute and the subsequent creation of the Maine Food Producers Alliance, which in June 2009 hired its first full-time director, Valerie Geredien, a former marketing professional who had some experience in the specialty food industry while at Swardlick Marketing Group.

In retrospect, people in the industry now think of the 2006 forum as a pivotal point in the evolution of the state’s specialty food sector. A trade association with a full-time staff “is a dream that’s now coming to reality, and it’s fabulous,” says Cathe Morrill, owner of State of Maine Cheese Co. in Rockport. “A lot of what happened at that event propelled us to the point where we are today.”

The alliance is getting ready to hold its second annual summit, the Maine Food Means Business 2010 Summit, at the Samoset in Rockport on Oct. 28. Geredien expects more than 200 attendees.

And with close to 90 members now, the alliance continues to grow stronger, according to Geredien. Members run the gamut from small kitchen-based operations to Stonewall Kitchen. The group holds regular networking and educational sessions, such as one coming up hosted by Hannaford about how to pitch your product to buyers. It hopes to organize trips to trade shows and offer cost savings to companies that want to attend. “We are looking for ways to be relevant, helpful and important to a whole range of companies in both size and product sector,” Geredien says.

The summit’s schedule includes a trade show; keynote address by John Mahon, chair of international business policy and strategy at the University of Maine’s business school; assorted panel discussions on how to source funding and get your product ready for market; and speed dating, one of the activities Geredien is most excited about, which will give producers the chance to present their product and elevator pitch to an assortment of buyers looking for local products.

The right direction

In Maine and across the country, the specialty food sector is growing. Nationally, the industry recorded $63.1 billion in sales in 2009, a 2.7% increase from 2008, according to the National Association for the Specialty Food Trade.

In Maine, the specialty food sector’s employment grew from 5,428 people in 2003 to more than 6,000 jobs in 2008, according to data prepared for the 2006 Maine Food For Thought Forum and a 2008 report prepared for the Maine Office of Innovation and MTI.

Louise Kramer, spokesperson for the NASFT, says it seems Maine food companies are enjoying some success. Her association this summer recognized several Maine companies at its annual Sofi awards, including Hancock Gourmet Lobster in Harpswell, Appledore Cove in North Berwick, Sullivan Harbor Farm in Hancock and Sweet Marguerites in South Portland.

An industry association can offer some benefits, but it’s not a silver bullet for all a specialty food producer’s challenges, says Dennis Proctor, co-owner of Mother’s Mountain in Falmouth, which has been making mustards and jams since 1981 and is knocking on $300,000 in revenue this year. Small food companies still must find potential investors, scale up production and get their product on the shelves of major store chains like Hannaford and Shaw’s.

He says a lot of lip service has been paid to local food, but it hasn’t necessarily led to an easier road for specialty food producers. The other day, Proctor had a disappointing walk through the Shaw’s on Route 1 in Falmouth. “Other than the beer, I think I can find five Maine products in that whole store,” he says.

Proctor is particularly sensitive to the challenge small producers face getting into major stores. One of Mother’s Mountain’s major buyers — a grocery chain Proctor would not name because he’s still in negotiations — wants to pull the company’s products from its shelves for what Proctor calls less-than-honest reasons. He says it’s a cutthroat industry, where deep pockets can buy shelf space and displace the small local producers. “And there’s nothing the alliance can do about it, not a thing,” he says. “When the day is done and the sun sets in the West, we’re all on our own and doing what needs to be done to keep our business alive.”

However, Michael Burgmaier, who helped organize the 2006 Maine Food for Thought Forum while working at CEI Community Ventures, argues that a trade group’s support can be critical. Now an investment banker at Silverwood Partners outside Boston, he says an organized cluster’s greatest strength is the mutual support companies offer each other.

“It’s so hard to raise capital in early-stage consumer companies, anything companies can do in a cluster to help one another could be huge in terms of just getting through the valley of death every company will face,” he says. “Even successful companies like Stonyfield Farm almost died several times. So to the extent companies can work together and help each other avoid costly mistakes, they have a much greater chance of succeeding in the long run.”

 

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