Developing successful marketing strategies for elderberry growers and value added processors: a model for specialty crop development in the U.S. Midwest.

2011 Annual Report for LNC10-324

Project Type: Research and Education
Funds awarded in 2010: $105,427.00
Projected End Date: 12/31/2013
Region: North Central
State: Missouri
Project Coordinator:
Dr. Michael Gold
MU Center for Agroforestry

Developing successful marketing strategies for elderberry growers and value added processors: a model for specialty crop development in the U.S. Midwest.

Summary

Research was conducted to increase knowledge about the elderberry market, future trends and growth potential, to identify the most appropriate strategies for adoption by elderberry growers and value-added processors.

Preliminary research identified the importance of elderberry product attributes based on consumer segmentation and also evaluated existing consumer knowledge and opinions regarding elderberry products. This information was used to develop a more extensive conjoint analysis survey evaluating national and niche markets for elderberry juice and jelly.

The development and publication of an online, Excel-based, elderberry financial decision support tool, facilitates producer decision making for elderberry business plan development and orchard establishment.

Objectives/Performance Targets

The main objective for the first year of the project was to make available in-depth information to support the producer decision making process for on-farm and value-added enterprise opportunities.

1. Increase knowledge about the elderberry market, future trends and growth potential
2. Increase knowledge about consumer preferences
3. Develop an integrated Elderberry Financial Decision Support Tool to assist decision makers from the family farmer to the agricultural lender.

Accomplishments/Milestones

Elderberry market analysis

A combination of quantitative (mail survey) and qualitative (phone interviews) methods were used in the market research analysis. The theoretical model used for the survey and interview script development and analysis was based on the Porter Five Forces Model (PFFM) which describes the competitive forces that coordinate and control the market. The PFFM has been used previously to shed light on the redcedar, chestnut and shiitake mushroom specialty crop markets.

Out of 159 surveys sent to all the companies involved in the elderberry value chain, identified through Internet search and referral, 74 responses were obtained. A follow-up 24 interviews were conducted with survey respondents that agreed to participate. Results show that elderberry is a small but growing industry with high future growth potential. Being in its developmental stage, the industry is represented by a few important players who are entrepreneurs and innovators and other participants producing at a small scale. Producers sell to early adopter customers and focus their efforts on creating consumer awareness for the product and the industry.

A market research report and a market directory have been developed and posted on the Center for Agroforestry website

Elderberry consumer research

A consumer survey was conducted at the 2010 Missouri Chestnut Roast Festival to evaluate the importance of elderberry product attributes based on consumer segmentation and evaluated existing consumer knowledge and opinions of elderberry products. These preliminary results were used to develop a more extensive conjoint analysis survey to evaluate national and niche markets for elderberry juice.

A focus group was organized to refine the survey questions. The survey was conducted nationally and over 1000 responses were obtained. This national study was analyzed and completed in 2012.

Elderberry financial decision support tool (EFDST)

To assist elderberry growers with management decisions, an Excel-based Financial Decision Support Tool was created. The tool illustrates how changes in management practices will affect the financial performance of the elderberry plantation in terms of potential increases and decreases in net present value, internal rate of return and annual equivalent value.

This tool allows the user to select multiple options from a list of the most common establishment, management, harvesting and marketing techniques to determine the approach that will generate the best economic return. Default methods and costs are based on current elderberry production methods; however, they may be modified by the user.

The EFDST uses the financial indicators of net present value (NPV), present value of costs and revenues (PV), annual equivalent value (AEV), modified internal rate of return (MIRR), internal rate of return (IRR), and years to break even.

Milestones and Outputs

Outputs

Results of initial elderberry market research were presented at the American Society of Horticulture Science annual conference in Palm Desert, CA, in July, 2010. The presentation was entitled “A Competitive Market Analysis of the U.S. Elderberry Industry”. Forty people attended this presentation and over 700 people attended the ASHS conference.

The market research report and the market directory are available online on the Center for Agroforestry website at http://www.centerforagroforestry.org/profit/elderberrymarketreport.pdfand http://www.centerforagroforestry.org/profit/elderberrymarketdirectory.pdf

The EFDST is online on the Center for Agroforestry website at
http://www.centerforagroforestry.org/profit/elderberryfinance.php

An elderberry production and marketing “Agroforestry in Action” guide was developed in 2011 (and published online at the University of Missouri Center for Agroforestry website in 2012) http://www.centerforagroforestry.org/profit/ElderberryGuide.pdf

Results of elderberry market and consumer studies were presented at the 12th North American Agroforestry Conference in Athens, GA, June 4-9, 2011. ~45 people attended each oral presentation and a total of 140 people attended the biennial conference. In addition the papers were published in the conference proceedings.

Cernusca, M.M, M.A. Gold and L.D. Godsey. 2011. Using the Porter model to analyze the US elderberry industry. In Ashton, S. F., S.W. Workman, W.G. Hubbard and D.J. Moorhead, eds. Agroforestry: A Profitable Land Use. Proceedings, 12th North American Agroforestry Conference, Athens, GA, June 4-9, 2011. p.191-200.

Mohebalian, P., M.M. Cernusca, F. Aguilar. 2011. Consumer preference for elderberry juice products. In Ashton, S. F., S.W. Workman, W.G. Hubbard and D.J. Moorhead, eds. Agroforestry: A Profitable Land Use. Proceedings, 12th North American Agroforestry Conference, Athens, GA, June 4-9, 2011. p. 181-190.

Both proceeding papers were selected for peer review for consideration to be published in a subsequent special issue of the Agroforestry Systems journal. The manuscripts were accepted for publication in late 2011 and revised according to reviewer feedback (and will be published in 2012).

The EFDST was presented at the Elderberry workshop held in June 2011 in Hartsburg, Missouri. The EFDSTwill continue to be presented at future workshops and conferences in 2012 and 2013.

Phillip Mohebalian completed his M.S. degree in Forestry at the University of Missouri entitled “U.S. Consumer Preferences for Elderberry Products”.

Impacts and Contributions/Outcomes

The two presentations regarding marketing elderberry at the 2011 North American Agroforestry conferencewere well received by conference participants. The conference, attended by ~140 participants, had a national and international audience. More impact will be obtained after the publication of the two articles in the Agroforestry Systems journal.

The EFDST was presented at the annual elderberry workshop held in June 2011 in Hartsburg, Missouri, in front of over 100 participants and was received with great interest. Existing landowners have already used it as part of their business plan development.

The results of the research conducted in 2011 will be more widely disseminated starting in year 2 (2012). After the first series of workshops are completed we are expecting to obtain more information on specific outcomes and impacts.

Collaborators:

Patrick Byers

byerspl@missouri.edu
Regional Horticulture Specialist
MU Extension – SW Region
Greene County MUExtension Center
2400 South Scenic
Springfield, MO 65802
Office Phone: 4178818909
Website: http://extension.missouri.edu/directory/people.aspx?C=44637
Andrew Thomas

thomasal@missouri.edu
Research Assistant Professor
MU Division of Plant Sciences
Southwest Research Center
14548 Highway H
Mt Vernon, MO 65712
Office Phone: 4174662148
Website: http://plantsci.missouri.edu/faculty/thomas.htm
Larry Godsey

godseyl@missouri.edu
Research Associate
The Center for Agroforestry at MU
203 ABNR Bldg
Columbia, MO 65211
Office Phone: 5738843216
Website: www.centerforagroforestry.org
Mihaela Cernusca

cernuscam@missouri.edu
Research Associate
The Center for Agroforestry at MU
203 ABNR Bldg
Columbia, MO 65211
Office Phone: 5738824848
Website: www.centerforagroforestry.org
Park Bay

parkb@centurytel.net
Ag Lender
Landmark Bank
PO Box 1867
Columbia, MO 65205
Office Phone: 5734997315
Julie Rhoads

rhoadsj@missouri.edu
Event Coordinator
The Center for Agroforestry at MU
203 ABNR Bldg
Columbia, MO 65211
Office Phone: 5738823234
Website: www.centerforagroforestry.org
Terry Durham

eridu-farms@yahoo.com
Farmer
Eridu Farm
19010 S. Mackie Lane
Hartsburg, MO 65039
Office Phone: 5739993034
Website: http://elderberrylife.com/
John Brewer

elderwines@aol.com
President
Wyldewood Cellars
PO Box 45
Mulvane, KS 67110
Office Phone: 3165549463
Website: http://www.wyldewoodcellars.com/
Francisco Aguilar

aguilarf@missouri.edu
Assistant Professor
Dept of Forestry
203 ABNR Bldg
Columbia, MO 65211
Office Phone: 5738826304
Website: http://www.snr.missouri.edu/forestry/faculty/aguilar-f.php