In this issue

Our Specialty Food Marketing Discussion Forum

Notes and Comment

All About Food Labels

Specialty Food Resources

The "Ins" and "Outs" of Product Liability Insurance

A Specialty Food Marketing "Mini Case Study"

All About Packaging

More On Pricing

Our Specialty Food Marketing Discussion Forum

Here's what is happening on our Discussion Forum. Click here to do all of the following:

Register as a forum participant (this keeps the SPAM down);

Go to the forum topic of interest, say "Packaging Your Product," and open the topic

Click "New Topic" and make your entry. You can preview it before you submit it.

Also indicate your interest in receiving copies of any follow-up emails.

Make this your first point of contact for any question you may have about specialty food marketing.

Finally, let me know how we can make it easier and more vital.

Dear Stephen,

Welcome to the 13th issue of Food Entrepreneur eZine (FE). I invite you to submit articles for publication in future issues of FE.Topics are welcomed that impact almost any aspect of specialty food marketing. We will be happy to help.

In this issue:

1. Notes and Comment - FE offers another "Mini Case History" with its link to WorkingMother.com's article on Dancing Deer Baking Company CEO Trish Karter. Imagine! A $20,000 investment yields expected 2007 annual sales of $10 million. And this in just 12 years. See below for more.

2. Specialty Food Marketing Resources - Our resource listing has been "acting up" lately. We should have it up and running again by the end of the month.

We invite and welcome your comments. Let's work together to learn ways of succeeding in specialty food marketing. Stay tuned...

Wishing you great profits and Compliments of the Season.

Steve

Stephen F. Hall
Author, "From Kitchen to Market"
Editor, Food Entrepreneur eZine

·  Notes and Comment

1.Click here for a Complete Listing of FE Contributors

2. Future Issues of Food Entrepreneur eZine:

- "Minority certified." Many so-designated firms can get an edge. What does this mean to you? Please note: All of the so-called "minority business directors" whom I have tried to contact have yet to return my calls. More later...

- Office Management - Ideas about products, software and service requirements.

Email us at steve@specialtyfoodresource.com to let us know what other areas you would like us to address.

·  All About Food Labels

GOOD COUNSEL FROM TWO PROFESSIONALS

Food Consulting Company's Karen Duester includes the following tropics in the latest edition of Food Label News:

- Reader Q&A Spot: Small Business Exemption - "I'm launching my first food product; I have heard about a small business exemption for nutrition labeling. How can I find out if I qualify?"

- More Guidance for Allergens on Food Labels

- FDA Guides Consumers on Nutrition Labels Calorie Info

- FDA Regularly Updates Food Labels Claims

- Service Tip: Key to a Happy New Year

Readers of Food Label News can submit their food label questions free of charge for possible publication in the Q&A Section of Food Label News.

To read the latest issue of Food Label News, click here.

On The Menu's Julie Bush offers nutritional analysis, labeling and marketing services, and comments on FDA labeling requirements.

This month, she talks about Dual Declaration Labels.

The FDA allows modified formats of the standard Nutrition Facts food label. One of the recognized formats is the dual declaration or dual listing label.

Click here to learn more about dual declaration labels and to see three samples.

·  Specialty Food Resources

Visit our free resource center

·  The "Ins" and "Outs" of Product Liability Insurance

Please click here to read U.S. Small Business Administration's SMALL BUSINESS INSURANCE & RISK MANAGEMENT GUIDE, by Susan Anastasio, The Travelers, Hartford, Connecticut. [A sure cure for insomnia. :-)]

·  A Specialty Food Marketing "Mini Case Study"

In the next issue of FE, Dancing Deer Baking Company CEO Trish Karter answers pressing FE questions:

1. How do you define success?

2. Are you successful?

3. If so, how long did it take?

4. How much did it cost?

For more about Dancing Deer, please click here to see an article about Trish in the December issue of Working Mother Magazine.

Also, you can go to www.dancingdeer.com for more about Trish's gingerbread.

·  All About Packaging

The Glass Packaging Institute's GPI Glass Quarterly - Winter 2006 - has the lastest on its recently launched a new web blog providing important information for packaging professionals and consumers seeking to know more about the right packaging choice for organic foods and beverages. A national survey of organic shoppers' packaging preferences is premiered on the new blog.

Findings from the study indicate that "when it comes to the 'organic consumers,' the preference for glass packaging increases significantly." GPI President, Joseph Cattaneo, similarly agrees, saying, "If the product is truly organic, keep it organic—choose glass."

Click here to read more about which packaging is best for organic foods.

·  More On Pricing

In September 2006, I had the pleasure of reading about Rutgers University's Food Innovation Center in its publication: The Innovator.

I sent them the following email [to which I have had no reply]:

"I had the pleasure of reviewing subject newsletter. Nicely done; however, the section on page 7 entitled: "Mark-Ups and Margins in Produce and Food Distribution" might be misleading to the food entrepreneur.

Since the proven vehicle for entry level food marketing in the U.S. is the specialty food industry, and since most new products (from the non mainstream food producers such as General Foods) are introduced this way, pricing is based on margins not mark ups.

Establishing a selling price does not come from the cost-side of the calculation, but the market side: What do other similar products to the one being introduced cost at retail? If the retailer assumed margin is 40% and the new product is sold for $4.99, the retailer wants to pay $2.99 After freight (distribution) that might yield the manufacturer $2.80, for example. Minus the cost of the shipping carton, container, ingredients, label and overhead. Profit or loss? The “working-back from the market” method is much more realistic. If the packer can't make money at the $4.99 level, he/she can propose to the retailer a $5.99 SRP.

For example, if the new product exwarehouse cost is 1.00 and you want to add in 5% for broker fee, then you will divide the 1.00 by 95 = 1.05. BUT, you do this AFTER you add in your profit because the broker gets paid 5% of the price to the distributor.

New Product X:

Exwarehouse = 1.98

Profit margin (25%+5% for broker) = 0.80 Price to Distributor = 2.78 Distributor profit margin (30%) = 1.19 Price to Retailer = 3.97 Retailer profit margin (40%) = 2.65 Price to Consumer = 6.62

See the difference between "margin" and "mark up?"

To confuse the issue, you can work with "mark ups," especially if you are comparing to the mass market (slotting allowances and all). You must determine how the mainstream groceries of the world are pricing competing products. Otherwise, you will find your costs off base. Ask distributors what they do. Ask retailers what they do. If your best prospects are in the mass market, then go for the mark-ups instead of the margins.

You may want to have a look at the pricing section in my book: From Kitchen to Market. - Selling Your Gourmet Food Specialty for more detail (4th Edition, Kaplan Publishing, Chicago).

I welcome your comments and would be happy to amplify any of this."

Comments, anyone?

sfh

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