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Opportunities – New food products

Maybe the way to consumers’ hearts is through the stomach, but the food industry can get closer to their pocketbooks by stressing convenience, health and safety, according to AURI meat scientist Darrell Bartholomew. Along with tasty, healthy food, consumers look for quick and easy meals, he says, and product success often comes with an astute combination of both.

“We’re seeing more companies get into niches like snack foods,” observes Jeff Phillips, an international trade representative with the Minnesota Trade Office. “The specialty food and gourmet niche is one that small companies tend to delve into in the beginning;” those specialty items often include organic and natural foods. Small companies also are “good at private label products, where they don’t need to be out promoting their brands, competing with big companies.”

To Korea and beyond

One area of continued focus and growth for U.S. food producers is foreign markets. Minnesota’s major food exports are breads, baked goods and pasta, according to the Minnesota Trade Office.

“In general, all exports are growing,” Phillips says, but growth is strongest in private label and food service products. “Generally, over half of the food exports from the United States are to Canada. In Southeast Asia and China, there’s a big increase in food service establishments. For example, Hormel is the main supplier of pepperoni products for Pizza Hut in China.”

Retail sales, Phillips adds, are more difficult, and require a promotion budget typical of a large corporation. General Mills’ Bugles are tailored to Chinese palates and selling well, and Act II microwave popcorn from Golden Valley, Minn., is selling well in Asia, he says.

Minnesota food product exports totaled $666 million in 2001, the most recent year for which complete figures are available, according to the Minnesota Department of Trade and Economic Development. That was down 1.3 percent from the previous year.

Yet while exports to Canada, the biggest importer of Minnesota foods, declined by eight percent in 2001, exports to Korea grew by 30 percent — a $10 million increase. Korea is Minnesota’s third largest foreign market for food products.

“We should see steady increases in Korea, in particular, for snacks and health foods. There’s a strong organic market there,” Phillips says. The Minnesota Trade Office hosts private label buyers from Japan and Korea who are interested in organic products.

Organics are out there

Another opportunity in the U.S. food industry is in organic and natural foods, growing at about 15 percent per year, Bartholomew says.

USDA national standards for organic foods, issued in October 2002, “will be good for business,” Phillips says, but in the short term, the rules may add some headaches as small companies gear up to comply with labeling requirements. The standardized labeling should make informed shopping easier for consumers of organic products

The organic market is “clearly an area that has growth opportunity,” Bartholomew says. “We have worked with a processor called Organic Valley out of Wisconsin, which has producers in Minnesota, that’s strictly organic. We’ve worked with them on . . . value-added products where they didn’t want nitrite in the product, such as bratwurst.”

Other AURI clients include Pastures A Plenty in Clara City, marketing nitrite-free pork products, and Coleman Natural Beef, selling hot dogs with no added nitrites. Bartholomew says nitrite-free meats are “a growing market area.”