Farmers Markets Incubate Start Up Organic Food Companies

Posted by: : Paul EbelingPosted on: October 6, 2013 Farmers Markets Incubate Start Up Organic Food Companies

Several  St. Louis companies have this in common: They got their start at the Tower Grove Farmers Market.

Launched in Y 2006 with group of local organic farmers, the market has morphed into an incubator and economic driver for the surrounding area, drawing thousands of people each Saturday and spinning off at least 4 bricks-and-mortar businesses, with more on the way.

“The farmers market is a low-risk way to test a product, and you don’t have to commit too much,” said Patrick Horine, who launched the market and owns nearby Local Harvest Grocery and Local Harvest Cafe. “You have to find a commercial kitchen to work in, but outside of that, it is once a week. You just see how your business works.”

The number of farmers markets, according to the US Department of Agriculture, has nearly tripled over the last 10 yrs, rising to 8,144 this year. In the process, more small-scale organic produce growers, driven by demand for locally grown organic produce, have gotten into farming.

But the markets themselves do not just bring farmers into a newly sustainable business. These markets, often in urban areas, bring jobs and have economic impact beyond fruits and vegetables.

 According to a Y 2012 study of 9 markets by farmers market organization and think tank, Market Umbrella, the economic impact on vendors was as high as $40-M, while the economic impact on nearby businesses hit close to $16-M and the impact on the broader community reached more than $56-M.

The study looked at smaller, fledgling markets, as well as larger established markets, in Baltimore, Cleveland and Los Angeles. One of the markets in Cleveland, had roughly 50,000 visitors a year, and yielded $1.8-M in receipts. Using a Bureau of Economic Analysis multiplier, the total annual economic impact in the region was about $3.4-M.

St. Louis’ Tower Grove Farmers Market gets about 100,000 customers a year, at 4,000 per Saturday and has receipts of as high as $2-M.

“We found that markets do two things really well,” said Richard McCarthy, founder of Market Umbrella, and now executive director at New York-based Slow Food USA. “One is they serve as platforms for teaching business skills. By directly connecting producers to consumers, the markets begin to formalize businesses. The other is they often rebrand neighborhoods as safe or desirable. They lure foot traffic, and nearby businesses see this extraordinary spinoff effect.”

In other words, the market served as a market research tool and marketing outlet at the same time.

“It really was a leg up, a way to see what people were interested in,” said Mark Sanfilippo, owner of Salume Beddu, which now has a store, and has been lauded as one of the best salumerie, or salami shops, in the US. “We got a firsthand account of what people liked and didn’t like.”

Even with a robust lunch business and storefront, which opened in Y 2010, Salume Beddu, like other Tower Grove spinoffs, continues to sell at the market each Saturday. “Honestly, it’s because they’ve been so good to us, and I believe in it,” Mr. Sanfilippo said. “And, a lot of the customer base knows us best for that.”

Traveling Tea, a Maplewood, MO -based tea company, and Whisk, a small Southside bakery, also got their starts at the market, and now have storefronts.

“We just developed an excellent customer base — people who would come and get a couple of cupcakes. It was great seeing people enjoy my work,” said Kaylen Wissinger, who opened Whisk last November. “If we hadn’t been invited there, I don’t think we’d be doing more than just making cupcakes for friends.”

Kitchen Kulture, which makes prepared foods from locally sourced ingredients, currently operates at the market and does the occasional pop-up restaurant. But the owners are thinking about opening a storefront and are working on a direct appeal to customers and fans for funding.

The market for them was the logical place to start. “We felt the market was a really good cross section of foodies and nonfoodies, city and county people,” said Chris Meyer, who co-owns Kitchen Kulture with Michael Miller, the chef at Dressel’s Public House. “It was a great place to test the market and see if people responded. And it’s easier to get started because there’s low overhead.”

Shoppers at farmers markets all over America tend to be fiercely loyal, a handy attribute for a startup or for a farmer just getting into the business.

“These are centers for authentic relationships. That’s what keeps this incredible staying power of markets,” Mr. McCarthy said. “They’re a nightmare to manage. They have a surprisingly complex set of relationships. But underneath that fragility is an incredible customer loyalty that any other business would kill for.

“People get up whether it is, raining, snowing or the sun is out,” Mr.  McCarthy added. “They know “Farmer Brown” is out there, and they want to make that connection.”

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.
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