How Colorado food businesses diversified during the COVID-19 pandemic
Regardless of business model, food entrepreneurs have been pushed to diversify with more digital options in the wake of the coronavirus pandemic, a trend discussed during the latest educational webinar offered by the Colorado Proud marketing program housed within the Colorado Department of Agriculture.
According to Chef Jason Morse, owner of 5280 Culinary, a food marketing and advocacy consultancy, the pandemic year was a good time to look for gaps in the market and think about ways to fill them.
He founded his company in 2010, after years of working in institutional food settings such as hotels and country clubs as well as restaurants. Among other things, he now serves as a national spokesperson for Ace Hardware. He also works with Colorado-based agricultural commodity groups.
He spent the past year cutting costs, fine-tuning and diversifying his business, he said during the webinar.
“Consumers wanted a digital experience, so we added the digital experience to the other activities we were already doing,” he said of his three-person staff.
Early on Morse saw a need to break down barriers between producers and consumers and get producers more familiar with tools that allow them to tell their stories.
“Producers do a great job, but they are constantly being scrutinized and beat up for doing what they do. I don’t blame them if they want to hide out in the pasture with their animals,” he said.
But while engaging is likely to bring a few negative comments, learning to deal with detractors is necessary to meet the rising consumer demand for information, he said.
“In the absence of a story, there’s scrutiny,” he said.
He gave an example of how to do this in a positive manner by using a specific commodity, San Luis Valley-grown potatoes. Consumers want to know how they are grown and stored, and who the people are behind the products.
“There’s a hunger for that,” he said. “Make it cool, make it fun, and that makes it easier to promote the product, build a brand and stay true to what that brand is.”
He also stressed being creative and adaptive, something the pandemic dictated for businesses large and small.
“When we couldn’t do a potato festival, we did a drive-up baked potato bar,” he said. “It was such a feel-good at the end of the day.”
Filling in the gaps
The pandemic provided an unexpected opportunity to identify gaps in the market and think about how to fill them, he said.
For example, consumer surveys show that Instacart shoppers generally trust the online grocery platform to pick out chicken and pork on their behalf, but not to pick out a cut of steak.
“That led us to thinking, how could we work with the beef industry to train grocers to pick out a great cut?” he said.
Since the convenience factor is increasingly important, having better trained sales associates coupled with better shopping tools offer “a huge win for everyone,” he said.
Elizabeth Moser has been looking to find and fill gaps too. Moser is the founder of LoCo Food Distributing, which represents 140 Colorado food brands that sell to wholesale buyers at grocery store chains and smaller independent outlets from Fort Collins to Colorado Springs.
One thing she focused on over the past year was making sure local products are just as accessible as national brands through online shopping portals.
“It’s been a steep learning curve, and as we learn, it seems to change,” she admitted. “Even our contacts at the grocery stores do not seem to be experts on it.”
An interesting thing they’ve discovered is that online ordering options often change by zip code.
“We’re working on making sure there are local options, not just when someone is in-store shopping, but making sure our products are available through third party options like Instacart as well,” she said. “I think that will be an ongoing concern.”
So far LoCo works mostly with processed items such as salsas and sauces, oils and condiments. But Moser said she’s interested in handling more perishables, specifically produce, dairy and meat.
Since these items have limited shelf life, sufficient volumes are key to making this segment work, she said.
“If you only get an order for one case here and maybe another there, it is hard to keep that product in your catalogue so it’s available when someone suddenly wants it,” she said.
Support from large chain grocers is critical to building up necessary volume, she added.
For example, Whole Foods Market now carries ORIGIN Heritage a2 Guernsey Milk. The milk is produced through a partnership with Colorado Cow in Kersey.
With Whole Foods carrying it in their stores, LoCo is able to offer the product to smaller independent outlets located on the same delivery routes.
Working with perishables also requires a precise and dependable system of fulfillment, she added.
“We have to have the logistics worked out with producers,” she said.
For a Friday order, it might be necessary to pick up the item the following Monday so it can be delivered that same week to insure freshness, she said.
LoCo provides resources to start-up businesses, including a decision tree they can use to plan and scale up wholesale distribution. Moser said it works best if entrepreneurs begin building demand for their product through product demos, farmers markets and individual wholesale relationships before contacting LoCo.
After an individual outgrows what they can do on their own, that’s the ideal time for LoCo to step in and take their product to a larger audience, including national chain stores, she said.
Morse has experience with that side of things too. He recently started his own line of low-sodium barbecue rubs, brines and sauces, which were initially offered in three stores but are now available in 3,000 Ace locations nationwide.
What he took away from the past year’s surge of online buying activity was the need to put more emphasis on high quality photos and making sure the online shopping experience was “totally dialed in.”
He hired an additional employee just to insure all online orders ship the same day.
“We include a hand-written card in every package that goes out,” he said. “And we add little things in there from time to time, an extra item to reward the customer. There are no price deductions — we don’t want to devalue what we do — but if you order a certain amount from us, we’ll throw in an extra item.”
“It’s about adding value versus reducing the value of our products,” he said.