There are many reasons why farmers are drawn to value adding. You might have excess capacity in the field or the barn, for instance, or maybe if you milled grain into flour, you could retain good staff by providing year-round positions. Or maybe you’re wondering if an on-farm market could solve your problems by creating an opening for a young family member to join the business.
The list goes on and on with plenty of other examples of how producing a more finished product can add economic value to a commodity.
But “value adding” requires a different skill set than growing and selling a commodity. And it starts with the most valuable skill of all. How do you sort out whether your idea for a value-added product is viable?
Sima Gandhi, who teaches a Market Feasibility Bootcamp at Food Starter, a launch pad for new food products and food companies in Toronto, shares some of the concepts she covers in the 12-week course.
Gandhi, who is also an innovation consultant and entrepreneur, has been involved in entrepreneurship education for the past four years. While being an entrepreneur comes with many challenges, she says that being a “foodpreneur” comes with an extra layer of complexity due to all the rules and regulations that must be followed, such as nutritional labels, sanitation practices and packaging requirements.
If you are already selling direct to consumers, you know what your customers are asking for. But what if you don’t have that direct connection with potential customers — how do you evaluate your idea without investing a lot of time and money?
Spending time on social media is one easy and low-cost way to see how much momentum an idea has, says Gandhi. Look at related groups online and how many members they have. What are people talking about? This will also help you identify the key language your target community is using to describe your product.
However, it’s important to ensure that the market you are trying to hit is more than a fad. In Gandhi’s opinion, trends around health, aging, fitness, convenience and indulgence will have some staying power.
Gandhi has also identified what she considers to be movements, or ideas with some permanence.
The awareness of grains, fast and slow carbs and ancient grains falls into the movement category, she says. Other movements include an awareness of the health concerns of sugar and a move to eat more “natural” foods. These are foods captured by the comment: “if it wasn’t on your grandmother’s plate, don’t eat it.” Gandhi also sees plant-based proteins continuing to gain momentum.
It’s easy to fall into the trap of looking at what you can make instead of what the customer wants and needs. Gandhi recommends using the Value Proposition Matrix to help ensure that your idea, as she puts it, “solves a pain felt by a community of people.”
In order to transmit the value of your innovation to the user, you need to clearly identify your product/service, identify your target customer and describe the value you provide. This needs to be specific to help you better market your product.
Once you know your target market, Gandhi recommends creating an avatar that represents the consumer. She sees her customer as a female, with a mid- to high-range income, who is concerned about nutrition. By imagining what this ideal customer does on her typical day, Gandhi gains insights into how to market her utensil.
Gandhi illustrates how the process works. Being concerned with health and fitness, this client likely does yoga which means that following the marketing of Lululemon, a popular brand of yoga wear, will shed light on what appeals to this target market. “It’s a blunt, easy way of understanding the values of a community,” she says.
With food products, going to stores and even to farmers markets will help you get a feel for your market, continues Gandhi. “See who buys your product, give out samples,” she says. “Or go to the grocery store and ask if you can stand in the aisle and ask questions.” Gandhi looked at marketing a tool to help rinse quinoa, so she stood in the quinoa section at her local grocery store to ask shoppers whether or not they washed their quinoa before cooking. “Women did, men didn’t, … that helped her define her target market as women,” she explains.
Sometimes it’s helpful to think beyond the obvious. One client brought back an artisanal pasta concept after visiting Italy. What goes better with pasta than wine? Sampling the pasta at local wine bars is a creative way to validate the market.
Doing a competitive analysis of your product will help you determine where your product fits in the market. By doing a comparison of serving size, price, available flavours, etc., you can see if there is a gap in the market. For example, a few years ago no one was making a single-serving-size gourmet frozen pizza, points out Gandhi. She notes that market gap has since been filled.
Her final message is encouraging, however. The timing is good for farmers who want to move their product up the value chain. The enduring interest in knowing where our food comes from is creating opportunities for farmers locally, while the internet and online sales have made it easier than ever to market products globally.
Common “foodpreneur” pitfalls
In her work as an innovation consultant and instructor for the Toronto Food Starter Market Feasibility Bootcamp, Sima Gandhi regularly sees would-be food entrepreneurs making these mistakes:
- Underestimating what it takes to create a successful business venture. Too many people who have developed a product think they can get it onto grocery store shelves in just a few months. Unfortunately, they don’t understand how grocery stores value their shelf space. If you go to the grocery store, you will usually see a whole line with a variety of flavours. “One product does not make a business. Making the product is the easy part these days.”
- Being too emotionally invested in an idea and having feedback only from family and friends. You need to seek unbiased input from outside your own network.
- Being unaware of the rules around selling food made in your own kitchen.
- Not having thought about your end goals. Many are too attached to manufacturing and selling their product themselves when selling or licensing the idea may make more sense. Ask yourself, what is your vision? Do you want your business to be big or small? To sell locally or nationally? What is your exit strategy?
- Not knowing your costs. There’s a big difference between making a batch on your kitchen stove and going into production.
- Not talking to partners and families. Launching a business will have a big impact on their lifestyle and finances too.
- Ontario Ministry of Agriculture and Food, direct farm marketing resources
- AMI’s Transition Smart for those shifting from production to processing
- Georgian College food entrepreneurship
- Food Starter provides a range of services to help entrepreneurs commercialize and sell their food products
- Strategyzer Lean startup resources
- Innovator Lab blogs and ideas for working on your startup.