The Minnesota Department of Agriculture (MDA) and the Agricultural Utilization Research Institute (AURI) recently published a research report that assesses the current state of “ready to scale” food and beverage businesses and identifies opportunities to help the capitalize on economic opportunities.
The Region Nine Development Commission (RNDC) in partnership with FoodOps LLC conducted the work. They focused on small-to-medium sized companies reporting $5 million or less in annual sales.
The goals of this project were to analyze the current state of food and beverage manufacturing capacity and capability, define the economic opportunity associated with sector investment and identify gaps, opportunities and strategies that will help these businesses grow and benefit Minnesota’s economy.
The report showcases the food and beverage sector as a driver of economic activity in Minnesota. Economic analysis indicates these businesses generate the highest overall returns of any industry in the state, with a 5 percent gain in manufacturing output yielding over $11 billion in impact to the state’s economy and an additional (estimated) 167,822 jobs.
Additionally, the report highlights two key issues that threaten to stifle the industry’s development that should be addressed. First, there is a perception among many scaling food and beverage businesses that Minnesota lacks access and capacity to affordable, right-sized manufacturing options.
Businesses reported that when they are ready to take the next step, they struggle to find an affordable manufacturing partner, also known as a contract manufacturer or co-manufacturer, in Minnesota. As a result, homegrown businesses reported they hired manufacturing companies in neighboring states or passed up opportunities to ramp up production.
Conversely, the Minnesota co-manufacturers who participated in this research report that they have available capacity that could be deployed for these scaling food and beverage businesses.
Another issue that emerged during the research was food and beverage businesses reported having difficulty accessing capital financing to support their growth goals.
To address these gaps, the report recommends the development of an online public database for information exchange among businesses and manufacturers and to help brands and co-manufacturers find one another. It also recommends developing educational tools to help manufacturers and food and beverage businesses best understand the differing business models.
“Minnesota is in a unique position to not only unlock significant economic activity with growing food businesses, but also to lead the nation in identifying solutions for affordable, accessible, and “right-sized” food and beverage manufacturing and further capitalize on consumer’s desire for local and regional products,” said Shannon Schlecht, AURI’s Executive Director. “This report is simply the first step in expanding the economic opportunities for value-added agricultural products. The next step is for stakeholders to transform this information into actionable knowledge and specific activities, encouraging both public and private investment in this important sector of our state’s economy.”