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Published in the Deseret News, 14 August 2005

A taste of business

Specialty food producers may form state association

By Greg Kratz

Spotted Dog Creamery content begins...

Dinner guests at Kasha and Debbie Rakhsha's Sandy home like to linger over their lettuce.

That's because salads at the Rakhsha home are topped with a balsamic vinaigrette dressing, homemade by Kasha, with an exotic blend of herbs and spices that has been a huge hit with almost everyone who has tried it.

"Everyone kept telling him that they loved that balsamic vinaigrette so much," Debbie Rakhsha said. "It's a family recipe. He's Persian, so the herbs he uses are kind of a Persian style. It's not something that's really familiar to people, but they really like it."

Their guests' enthusiasm persuaded Kasha and Debbie to start their company, Metro21 Inc., and produce the dressing as a side business.

The Rakhshas started selling batches of the dressing last year. This year, they added a tomatillo sauce - a creamy ranch sauce with peppers - to their repertoire. They sell their dressings at farmers' markets, community festivals and in a few stores.

But turning a favorite recipe into a business hasn't been easy.

"It's our family business," Debbie Rakhsha said. "The kids help out. We've just been trying to market it.... Right now, we're doing everything. We're doing all of the processing and packaging, labeling, everything."

What they could really use, Debbie Rakhsha said, is a chance to network with other people who also are trying to make a little extra money by producing so-called "specialty foods."

Fortunately for the Rakhshas, help may be on the way.

Strong growth in the number of Utah's small food companies convinced Utah State University Extension food safety specialist Brian Nummer that the time has come for the formation of a Utah Specialty Foods Association. USU Extension will sponsor a seminar for such producers Saturday to provide some basic business information and see if the producers are ready to band together.

"They say 10 percent of these businesses are active a year after they are formed, and a lot of that has to do with, they are just unprepared for the complexity, unprepared for product safety and unprepared for business," Nummer said.

"Most of these folks just say, 'Everyone loves my salsa,' or, 'Everyone loves my sauce.' They basically have a lot of heart involved, and they proceed on to create a business, and they get overwhelmed and it just goes away."

Looking for help

The Rakhshas want to avoid that fate for their business, and they think a specialty foods association could be the key.

"I think it would help, especially with networking, to talk to other people that are starting this," Debbie Rakhsha said. "My husband and I both work full time, and we've never been in the food business before. I think the association would help as far as advice, especially with marketing advice.... Marketing is going to be one of the most important pieces."

Nummer said the Extension service already provides some resources to producers like the Rakhshas.

"We're using our expertise in the product safety side and product development," said Nummer, who came to USU from a similar position at the University of Georgia. "Then we have a program in entrepreneurship that helps small businesses in general.... It was just a logical thing to put these two things together. There's just so much activity. I've been contacted by 15 small businesses that need help, and that's just being here since April."

But for the industry to really take off, he said, specialty foods producers must work together. He hopes a critical mass of business owners will show up Saturday - about 100 are expected - and will choose to take it upon themselves to form an association.

Hopper, for whom the creamery was named, gets a taste of a super premium ice cream cone at the Spotted Dog Creamery, located in South Salt Lake. Photo by Ravell Call, Deseret Morning News

"From USU's standpoint, we'd like to encourage them or facilitate this formation of an association, but it would be their own, private association," he said. "It wouldn't be university-based."

Karen Biers, Extension home-based/micro-business specialist at USU, said it is important that the food producers drive the association, because they are the ones who will benefit.

"One of the things we look at particularly with food people is the networking that's going on," she said. "So if producer A is looking for something, but producer B is already getting that, they could network. Particularly when people are starting and only producing small quantities, maybe they need a special container, but the company that makes those containers needs you to order in quantity, and you don't have the money to order that many, or the storage space. If they could partner up, . . . three people go together and order this large quantity and then divide it."

Members of an association also could work together to add value to their products, or to market them.

"If you've got a company that maybe makes a seasoning and a company over here that makes a food product that could use that seasoning, you could get those two to work together," Biers said. "It's a way to look at the resources that are available and let everybody know what those resources are."

Growing industry

Similar associations have met with some success in states like Georgia, Oregon and Washington, Nummer said.

Ron Tanner, vice president of communications for the New York-based National Association for the Specialty Food Trade, said his group has 2,390 members who manufacture, import and sell specialty foods.

The industry did $24.7 billion at retail nationwide last year, Tanner said, and that does not include products sold through restaurants or other venues. Between 2002 and 2004, the industry grew 17.9 percent nationwide.

John Winders and Kristin Johnson's Spotted Dog Creamery has had to relocate three times as it has expanded. Photo by Ravell Call, Deseret Morning News

"I think that most people have one or two foods that they really like that aren't mass-produced," Tanner said. "So they may like a really nice cheese. They may like a really nice jam.... They don't purchase a lot of them, but there are a few different things that they like."

In fact, Tanner said, 58 percent of U.S. consumers say they purchase specialty foods. And as grocery stores realize people want such items, they will stock more of them.

John Winders has found that to be the case. A chef by trade, he started in the specialty food business by selling his ice cream at local farmers' markets. Everywhere he went, people would ask where they could buy his products.

That's when Spotted Dog Creamery was born.

"I was in a small facility, then went to a medium-sized facility, and now I'm in a larger one," Winders said. "I've moved the company three times based on demand."

In business for more than two years now, Winders recently negotiated a deal to get his ice cream in five local Smith's grocery stores. He also sells it online at www.spotteddogcreamery.com.

"Why do they want my product? I think they're starting to realize there's a backlash on this Wal-Marting of America," Winders said. "You've got to look to your local community. You've got to look to the Spotted Dogs of the world to give your store a little bit of cachet or a little bit of a local connection."

Heading for success

But despite his early success, Winders said he still would benefit from membership in a Utah specialty foods association.

"Smith's is wanting me to move a lot of product," he said. "I have to self-distribute it, organize it....

Hopper gets ice cream from John Winders and Kristin Johnson. People also love the ice cream, which is now being sold in some stores. Photo by Ravell Call, Deseret Morning News

"I think (an association) would be great, because there are so many laws (from) the (U.S. Department of Agriculture), the county health department. There are so many different angles, and it's very challenging, resourcing money, writing business plans, packaging requirements, labeling requirements, nutritional requirements. It's a minefield, and if you do something and you make a decision and it's the wrong one, you're eating that cost."

If Utah had an association, he said, it would give him a place to go for advice on running his business, for updates on regulations and for ideas on finding venture capital.

"The agricultural roots of this community are disappearing very quickly," Winders said. "The only way to save it is to make it a revenue source, to make it a viable form of revenue to be a cherry farmer or a peach farmer."

An association could help producers get their specialty foods in front of more consumers. And Winders said that is all it takes for people to become fans of food lovingly produced in small batches.

"If there are no small guys getting to market with a new product, how are they going to succeed? For me, that's exactly where I'm at," Winders said. "I'm trying to make all-natural, super-premium ice cream. I want to make great ice cream.... But the consumer is the one who makes these decisions. The only reason Spotted Dog is in the stores right now is the consumer. They were demanding it.

"At some point, hopefully people will realize you've got to support the locals. You've got to support the little guy."

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