Originally published in Business Digest, March 1997

Soup to Nuts

by Craig C. Bailey

What's in a name? -- a lot for Vermont specialty food producers. In a state renowned for its clear waters and green mountains, hundreds of producers compete. And the one thing that ties them all together -- from mustard to ice cream, salsa to coffee -- is the good name of Vermont.

"It's one of the states that I think has been very successful in cultivating a good environment for producing specialty food," says Chris Crocker, publisher of Gourmet News, a Maine trade publication catering to specialty food professionals. Crocker credits this to an active Department of Agriculture and specialty food association in the state. "If I were to start a specialty food company in the United States today, Vermont would be a very attractive place to do it," he adds.

The hurdles to get into the industry in Vermont are lower than in other states, primarily due to softer regulations, according to Jennifer Grahovac, marketing specialist with the Vermont Department of Agriculture in Montpelier. She says the fact that Vermont allows manufacture of food products in home kitchens makes it distinctive. Budding entrepreneurs can throw their chef's hats into the ring after a health inspection, registration with the state and some other preliminary measures. "You don't have to have an Act 250 to make barbecue sauce," she says.

The result is that many hobbyists jump in thinking a good recipe will make them successful. While no one downplays the importance of a good product, the harsh reality many would-be producers face, is that the specialty food industry is as much about selling as it is about food. Those who don't have the marketing skills to survive, pack up shop within a couple of years. "You're not going to get rich doing this. And don't quit your day job," is what Grahovac tells prospective producers. "It's tremendously hard work, and very few people actually make a living out of it."

[photo of Wendy Hess] Wendy Hess of Burlington (pictured at Apple Mountain on Church Street) is a registered dietitian who creates nutritional analyses for Vermont food producers. (Photo: Jeff Clarke)

"If I had a dime for every time somebody told me, 'You just have to taste it, and then you'll know why it's such a great product,'" says Crocker. "The problem is the product is not going to jump off the shelf into my basket. It's got to get that far first," he says. "It's got to get to the shelf."

The simple problem for up-and-comers is that there are too many products competing for too little shelf space. Furthermore, while self-distribution is an option for some food producers, it's more often a necessity. "It's very tough to get distributors to pick you up," says Grahovac. Consequently, "If you want your product out there, you're going to have to schlep it around." The hidden benefits, she says, is that self-distribution puts new producers on the fast track to learning the industry.

Nancy Goodwin is co-owner of Vermont Routes, the largest specialty food distributor in the state. The Rutland company carries food from 70 producers, almost all in Vermont, and distributes to more than 500 accounts in-state. On the average, she and her husband, Jeffrey, are approached by one producer a week looking for distribution.

She says a product's label is one of the most important factors in her decision to take on a new line. The product must be unique; the entrepreneur needs to be easy to work with; the product has to be readily available; and the price needs to be right. Her tip to aspiring producers is to have a complete package -- product, packaging, labels, and price structure -- assembled before pitching a distributor.

Getting into grocery stores is complicated by slotting fees major retailers charge producers to have their products displayed in the store. "It's certainly not the supermarket industry's proudest practice," says Crocker. "Without that shelf space, you cannot sell product. So retailers have basically put a price tag on that. ... The retailer is no longer willing to take the risk for introducing a new product. They're trying to put that risk back on the manufacturer."

Jed Davis, director of marketing resources for Cabot Creamery, says slotting fees have risen dramatically in the past several years. He cites the $40,000 one-time fee to place a single stock- keeping unit into the dairy case of a major Boston area supermarket chain, which was practically half that as recently as 1990. Davis says Vermont grocers are sometimes lenient toward Vermont producers, offering reduced slotting fees or creating special displays to showcase Vermont products.

Crocker adds many manufacturers remain silent about slotting fees for fear of the worst retribution possible: being banned from supermarket shelves. That hasn't stopped Green Mountain Coffee Roasters Inc. in Waterbury from refusing to ante up. While the Waterbury company's business is primarily wholesaling its product to gourmet stores, mini-marts, airlines and the like, spokesperson Rick Peyser says the firm offers a high level of support for its product in grocery stores, including customizing displays and employing its own workers to stock supermarket shelves. "Providing that service," he speculates, "probably more than offsets anything that the slotting fee would bring in."

Crocker suggests limiting distribution to smaller specialty shops that rarely charge slotting fees might be a wiser choice for Vermont specialty food producers. Furthermore, such a strategy might keep the "special" in Vermont specialty foods. "Often times companies make a big mistake by thinking that they can support a product in a larger retail environment," he says, "and they get eaten up."

The Internet might be one affordable gateway to larger markets for Vermont producers. Sam Cutting IV, owner and president of Dakin Farm in Ferrisburgh, put up his company's website Nov. 1. He says throughout the holiday season the site was responsible for 10 to 20 online orders of the company's meats, cheeses and maple syrup each day. He believes it's just a matter of time before the Net becomes a major source of revenue for his business.

Until that day, the Vermont specialty food industry will have to content itself with gross sales of $600 million each year, a substantial portion of the state's economy. The effects of that figure go way beyond the variety of salsas, salad dressings, mustards, drygoods and other products that flow out of the state. (Acidic products and drygoods are common among Vermont specialty foods, because they can be produced in small kitchens. Other products, like soups and beans, require high-heat canneries to kill harmful bacteria. Such facilities are rare to non-existent within the state's borders.)

Wendy Hess is a registered dietitian whose Burlington business has provided nutritional analysis to food producers for two years. Using a computer database, she can complete analyses of food products from a recipe or formulation, and create camera-ready nutritional facts labels. Her business is one of many in Vermont -- from labelers to glass makers, graphic artists to insurance agencies -- that thrive on the specialty food industry. That industry, in turn, depends in part on the wholesome image of the Green Mountains. However, some believe that image could be damaged, if the very food production regulations that have allowed so many of Vermont's specialty food producers to enter the field aren't amended.

While producers are primarily concerned with increasing sales, Judy MacIsaac, president of the Vermont Specialty Food Association, and co-owner of Highland Sugarworks in Websterville, places regulations at the top of her list. She says the association and members of the Legislature are working to firm up Vermont's laws, "That way, our name is never going to be tarnished."

Superbowl XXXI: Clash of the Cheeseheads
When January's Superbowl came down to the New England Patriots, the closest thing Vermont has to its own NFL franchise, and the Green Bay Packers, native sons of "America's Dairyland," the irony was sharp -- like cheddar.

Rather than let Wisconsin and its legion of cheesehead fans take center stage, marketing director Roberta MacDonald put Cabot Creamery's public relations machine in gear and sent her own ambassador de fromage to the Big Easy.

"The basis of the whole thing was to present the Patriots with New England cheddar, which is voted the best cheddar in the United States," ambassador-elect Heather Farmer says, adding, with her own air of irony, "by Green Bay, Wis., cheesemakers."

After all, like the letter from Sen. James Jeffords to Patriots owner Robert Kraft that was included with the gift said, "It is important that the Patriots do not make the mistake of eating imitations from Wisconsin before (the) big game."

Unfortunately, when Farmer, better known as senior cost accountant Heather Rumplik around the Cabot office, arrived at the team's hotel in New Orleans on Super Saturday, the team was nowhere to be found. So she left the care package -- Cabot Hunters for the players, Sage for the coaches, and Private Stock for Kraft -- with hotel staff. Did it ever make it to the team? "I don't know, actually," she admits. "I doubt it."

Rumplik's plan to hold a cheesy tailgate party the day of the game was dashed only because the Superdome's parking garages would have been prohibitive to partying. Undaunted, she set up shop outside the stadium and doled out almost 200 pounds of sharp cheddar to fans of both teams in three hours.

The score: Vermont 1, Wisconsin 0.

(Cheese photo: Cabot Creamery; coffee: Green Mountain Coffee Roasters Inc.)