Exploring New Markets &Crops Brett Wolff brett.wolff@uky .edu - PowerPoint PPT Presentation

Exploring New Markets &Crops Brett Wolff brett.wolff@uky .edu

Product Place Price Promotion

Kentucky Produce Marketing Channels: Farms Selling More Than 10% into One Channel 2009 2012 2018 sales Farmers’ markets 52% 41% ++ On-farm markets 41% 41% + Cooperatives/Assoc/Food hubs 2% 3% + Non co-op wholesale 15% 14% ++ Direct to restaurant 8% 7% ++ Auction 19% 17% ++ CSA 3% + Direct to retail 16% + Farm-to-school/institution 4% 1% + Source: Kentucky Produce Marketing and Planting Intentions Survey , 2010, 2012,2018

Customer Purchase Decision Features & Benefits (Value) Customer Purchase = Price

Customer Purchase Decision Color Unique formulation Quality Taste Know person Location/demand Local Presentation/ Package Merchandising Knowledgeable Service Referral Recipes …. Friendly …. Customer Purchase = Price

Market Lineup • Roadsidestand • C S A • FamersMarkets • On-FarmRetail • ProduceAuctions • LocalWholesaler • Retail Grocers • Restaurants • Distributors • Farm – to – School

KeyVariables: • Price vs. Volume • Difficulty to Enter • Product Quality, Volume and Variety Expectations • Risk vs. Reward • RELA TIONSHIPS

Roadside Stands, Farmers Markets Category Considerations Stats - High prices, Difficulty to Entry Low opportunities for Time Requirement High Producti Compatible with off-farm Yes direct customer employment on and Row Crop, Tobacco, Marketing interaction Yes Livestock Quality andShelf-life - Limited salesvolume Med-High importance Commitment Level Low-high potential Management Level Low-High Investments - Marketing istime Initial Capital Low Facility Investment Low intensive Prices High - Lower barriers to Price Stability High Incomeand Volume Low entry Potential Potential SalesVolume Low-Med Development Potential Excellent

Community Supported Agriculture Category Considerations Stats - Managing lots of Difficulty toEntry Low TimeRequirement High crops, multiple Compatible withoff-farm Yes employment harvest dates, Productionand Marketing Row Crop, Tobacco,Livestock Yes multiple seasons Quality andShelf-life Med-High importance CommitmentLevel Low-high - Verymanagement ManagementLevel Low-High Investments Initial Capital Low intensive FacilityInvestment Low Prices High PriceStability High - Customer expectation Volume Low Incomeand Potential of weeklyshare Potential SalesVolume Low-Med DevelopmentPotential Excellent

On-Farm Retail Category Considerations Stats Difficulty to Entry Low-Med Time Requirement Med-High - Low-Medium Compatible with off-farm Yes Potential Volume employment Production and Marketing Row Crop, Tobacco, Yes Livestock Quality andShelf-life - Can be time-intensive Med importance Commitment Level Low Management Level Med Investments Initial Capital Low-Med Facility Investment Low Prices Med-High Price Stability High Volume Low Incomeand Potential Potential SalesVolume Low-Med Good- Development Potential Excelle nt

Produce Auction Category Considerations Stats - Medium-to-high Difficulty to Entry Low Time Requirement Low Potential Volume Producti Compatible with off- Somewhat farm employment on and Row Crop, Tobacco, Marketing Yes Livestock - High Price volatilty, Quality andShelf-life High relatively low prices importance Commitment Level Med Management Level Med Investments Initial Capital Med - Quality expectation Facility Investment Low higher. Prices Low-Med Price Stability Low-Med Incomeand Volume Med Potential Potential SalesVolume Med-High Development Potential Good

Local Wholesaler - Significant quality Category Considerations Stats expectations Difficulty to Entry Med Time Requirement Med-High Producti Compatible with off- - Lower prices/unit Somewhat farm employment on and Row Crop, Tobacco, Marketing Somewhat Livestock - Harder to breakinto Quality andShelf-life High importance the market Commitment Level Low-high Management Level Low-High Investments Initial Capital Low - Volume expectations Facility Investment Low Prices Med-High Price Stability Med-High Incomeand Volume Med Potential Potential SalesVolume Med Good- Development Potential Excelle nt

Customer Purchase Decision Color Unique formulation Quality Taste Know person Location/demand Local Presentation/ Package Merchandising Knowledgeable Service Referral Recipes …. Friendly …. Customer Purchase = Price

Retail Grocer Category Considerations Stats - Moderate volumes Difficulty to Entry Med and difficulty of entry Time Requirement Med-High Producti Compatible with off-farm Somewhat employment on and Row Crop, Tobacco, - Quality and ShelfLife Marketing Somewhat Livestock are IMPERA TIVE Quality andShelf-life High importance Commitment Level High Management Level High Investments -Prices can be Initial Capital Med-High Facility Investment Med moderate in the right Prices Med-High situation (customer Price Stability Med-High Incomeand Volume Med demand, localvalued, Potential Potential SalesVolume Med etc.) Good- Development Potential Excelle nt

Restaurant - Quality, varieties are very important Category Considerations Stats Difficulty to Entry Med Time Requirement Med-High - Communication about Producti Compatible with off-farm Somewhat employment on and needs very important Row Crop, Tobacco, Marketing Somewhat Livestock Quality andShelf-life High importance - Considerationsabout Commitment Level High delivery (costs vs. Management Level High Investments Initial Capital Med-High value) Facility Investment Med Prices Med-High Price Stability Med-High Incomeand Volume Med Potential Potential SalesVolume Med Good- Development Potential Excelle nt

Distributor - Volume-driven market Category Considerations Stats channel Difficulty to Entry High Time Requirement Med - Low prices, high Compatible with off-farm Difficult employment Productionand volumes Marketing Row Crop, Tobacco, Difficult Livestock Quality andShelf-life High importance - reduced marketing Commitment Level High time, longer supply Management Level High Investments chains Initial Capital High Facility Investment High Prices Med - Quality isnon- Price Stability Med Incomeand Potential Volume High negotiable Potential SalesVolume High Development Potential Fair-Good

KDA Programs K YProud • 6000+ food businesses andmarkets • Importance of brandprotection • Ramping up new supplier readiness andcapacity K D A Merchandising P O P grants Restaurant Rewards/BuyL o c a l • 57 restaurants in2010 • 95+ farms, 7distributors • 160restaurants/institutions L o c a l ProductsMarketing • Grocery • Restaurants, schools, andfoodservice • Farmers markets ( S N A P , W IC, SeniorNutrition) • Dept Public Health & home-basedprocessing

Use a market-customer diagram to stimulate ideas Think of all the possibilities, then focus Use your results to launch market researc Product ……… Possibilities Customer Groups ………

Example Pumpkins Sweet Corn Strawberries Bulk opportunities, Low volume, higher Highest $ for short smaller volumes price potential. Lots window, may Direct Retail of space/weight. discount for canners Some seasonal food Small to medium May pay more for interest, also volumes, moderate quality. Bring Restaurants decorations price samples. With established Talking with buyer Shelf-life relationship offers ahead of time considerations of Grocery volume possibilites crucial, but picked ripe, worth it? Consider offering Food trucks may Emphasizing quality decoration packages serve sweet corn, is crucial. Labor to homeowners, canners may want to intensive crop Other buy bushels. businesses or demands higher working with Consider sampling to prices. U-pick or on- someone who does farm are options. show quality.

Market Coordination • Some products may not generate a profit in some markets but can be the reason customers come to you. • Y ou cant always sell everything at the Farmers Market. • Don’t stretch yourself too thin trying to access multiple markets. • Be careful with prices – make sure they are consistent throughout differing markets.

KeyVariables: • Price vs. Volume • Difficulty to Enter • Product Quality, Volume and Variety Expectations • Risk vs. Reward • RELA TIONSHIPS

Sampling & Demonstration Services in Perspective Services in most demand in K Y Farmers' Market Sampling Expandedmarket days Expanded market hours Rest room access Debitcard 9 10 Cooking/recipe demonstrations Expandedparking Senior nutrition and/or food stamps Entertainment 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Based on 302 patron intercepts in 11 different K Y Farm Markets, Summer 2009 Services rated on 1 = ‘not important’ to 10 = ‘very important’

Frequency of Product Purchasing N = 1,132

Horticulture BizQuiz C C DT eam: Brett Wolff ChristyCassady JoshKnight Hort Council ExecutiveDirector: CindyFinneseth

How does it work? • Series of Questions • Key variables: • Land(Y/N) • Capital (Y/N) • Labor (Y/N) • Provides starting point to talking with agents