Minnesota Department of Agriculture Expands Markets and Offers Support to Food and Beverage Companies

Any small business owner will tell you one of the most important keys to success is the ability to publicly promote their goods and offer samples to potential consumers. This is especially true for entrepreneurs and producers in the food and beverage space. Successful products within these sectors rely heavily on consumers trying the product to decide if they like it or prefer it over a competing product before making a purchase.

This can be a difficult and expensive endeavor for small businesses—most stores and events that offer tastings charge a fee. Participating in opportunities of these kinds on a regular basis can deplete a marketing budget quickly. This can be an overwhelming situation for a food or beverage company making its first attempts at commercialization.

But there is help available for Minnesota companies thanks to some programs and opportunities offered by the Minnesota Department of Agriculture (MDA), which works with Minnesota food and beverage companies to increase the use of Minnesota agricultural ingredients, create and protect jobs, and promote economic development in Minnesota’s agriculture and food sectors.

New Market Development

The New Market Development Program assists Minnesota food and beverage companies in exploring new markets and expanding their market reach. The program helps entrepreneurs and small food companies with business development advice and a variety of resources. More importantly, the New Market Development program helps companies gain a competitive advantage in regional, national, and international markets.

“Building a food or beverage company is far from easy,” said Brian Erickson of the Minnesota Department of Agriculture. “For Minnesota founders who are able to build a local product following, often at farmers’ markets or through a food hub, the AGRI New Markets Program is a “next-step” tool that can help them explore new channels and markets.”

According to MDA, in FY18 there were 124 food and beverage companies headquartered in Minnesota participating in the New Market Development program via Minnesota Pavilions at a trade event or benefitting from cost sharing provided by the Tradeshow and Demonstration Support Program (TSP). As a result of taking part in the program, the companies projected more than $9 million in new sales.

Minnesota Pavilions

MDA hosted Minnesota Pavilions at seven food and beverage trade events in FY18 using AGRI funds. Examples include Winter Fancy Food Show (San Francisco), Natural Products Expo West (Anaheim), National Restaurant Association/American Food Fair Pavilion (Chicago), Sweets & Snacks Expo (Chicago), and at the Summer Fancy Food Show (New York City). Additionally, MDA hosted pavilions at a number of internationally regarded tradeshows, like Anuga in Germany and Gulfood in Dubai. Approximately $161,000 in AGRI funds supported these event pavilions.

This financial support meant MDA offered 58 booths at a reduced cost to Minnesota food companies under its Minnesota Pavilion umbrella as well as help with the management needs for these spaces in FY18. Preliminary data from these companies show they anticipate increasing their 6-to-12-month sales by $6.4 million as a result of the connections made during the shows. In addition, they have also been able to create hundreds of new relationships with distributors and create more than 2,000 new business contacts.

Pavilion space is allocated on a first-come, first-served basis, with returning participants receiving priority placement. The events where Minnesota Pavilions exhibit are often very popular and some fill up as early as 12 months ahead, so it’s important to apply well in advance of any tradeshows you wish to attend. To apply for pavilion space, complete and submit the one-page application form (available on MDA’s website) as well as a 25 percent down payment to reserve your space.

Tradeshow Support Program

The Tradeshow Support Program (TSP) helps small- to-medium-sized companies exhibit at wholesale food events where there is not a Minnesota Pavilion. The program shares some of the costs of executing in-store demos, allowing companies to drive sales by introducing products to new markets and stores. Specifically, the program reimburses up to 50 percent of business-to-business tradeshow costs, including mileage and labor for in-store demos, booth space rental, shipping marketing material to tradeshows, and new signage at wholesale food shows. Applicable events are tradeshows attended by wholesalers, grocers, retailers, distributors and brokers.

MDA invested approximately $235,000 in FY18 to support more than 100 small Minnesota-based food and beverage companies. As a result of their participation in this program, the companies collectively reported a number of extremely positive results. From the TSP, the companies project $4.4 million in sales in FY19, more than 3,000 new stores added to distribution networks, and more than 100 new distributor relationships initiated.

“The support we received through the Dept of Ag’s TSP program allowed our marketing reach to stretch so much further,” said Britt Jungerberg, co-founder of Darling Pickle Dips. “We were able to significantly increase our in-store sampling events, which is crucial for driving trials and growing sales for a small company like ours. Without this support we wouldn’t have covered nearly as much ground or created so many new customers. This is a tremendously valuable program for food start-ups.”

If this program looks like it could be helpful to your business and you decide to participate, you can apply by downloading and signing the TSP Application, available on the MDA website, and email it to the noted staff member.

Eligible expenses

Booth rental (not available if you are buying discounted space in a Minnesota Pavilion).

Booth development/improvement costs: booth shipping, drayage (on-site handling), cleaning service, equipment rental, educational sessions, event-sanctioned buyer meeting costs, product showcases, badge scanner rental, and organizational membership fees (if required to exhibit).

Ineligible expenses

Travel and lodging.

Booth supplies such as plates, napkins, and toothpicks.

Your own product for sampling.

Sales sheets, business cards, and other printed literature.

Any items or services that are also reimbursed in whole or in part by another state or federal entity, for example the Food Export Association of the Midwest or the State Trade and Export Promotion (STEP) program.

To qualify for reimbursement, sampling must be done in a retail location that sells your product(s). This can include grocery stores, gift boutiques, or other retailers. It may not include your own retail store or sampling at farmers markets, festivals, or other public events.

Eligible
expenses

Labor for an employee, owner, or contracted help, at a flat rate of $10/hour.

Mileage at $0.50/mile, with a per-demo maximum of $200.

Eligible Expenses

Airfare and lodging.

Show badge.

Business education sessions or other tradeshow-related events.