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

2012 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

Results from a 2011 study conducted to elicit U.S. consumer preferences for elderberry juice and jelly products were analyzed and submitted for peer review publication in 2012. An online survey collected self-reported information from 1,043 U.S. residents. The study employed a conjoint analysis to determine the importance of product attributes in determining overall consumer preferences for elderberry juice and jelly products. Elderberry products were examined based on four attributes: 1) price; 2) health claims; 3) origin of production; and 4) fruit type. Based on results, strategies were identified to successfully introduce elderberry products in different market segments.

A second major focus of 2012 activities was to disseminate our research results through workshops, outreach guides, decision support tools and peer reviewed journal articles.

In conjunction with one of our SARE farmer collaborators, Terry Durham of Eridu Farms, results were presented at two workshops and one panel presentation: 1) Elderberry Growers Mentoring Workshop (March 15, 2012, Hartsburg, MO); 2) Elderberry Comprehensive Workshop (June 7, 2012, Hartsburg, MO – workshop co-sponsored by UMCA); and 3) the Small Farm Trade Show (November 2, 2012, Columbia, MO – panel presentation).

UMCA organized an elderberry winemaking workshop in Columbia, MO on October 26, 2012. SARE Project collaborator Dr. John Brewer, president of Wyldewood Cellars in Wichita, KS was the course instructor. As an outcome of that workshop, a video recording was created and is posted in the Center’s website.

In 2012, an Agroforestry in Action Guide, a Financial Decision Support Tool and two peer reviewed articles were published (Agroforestry Systems, HortTechnology) and a third article will be published in 2013 (HortScience).

Objectives/Performance Targets

The main objectives for the second year of the project were to continue research on consumer preferences and to disseminate in-depth information to support producer decision making process for on-farm and value-added enterprise opportunities.

1. Increase growers and value added producers knowledge about the elderberry market, future trends and growth potential;
2. Increase knowledge about consumer preferences, recommend specific marketing strategies;
3. Launch the Elderberry Financial Decision Support Tool to assist multiple level decision makers from the family farmer to the agricultural lender; and
4. Expand elderberry value added production opportunities.

Accomplishments/Milestones

In-depth information was created to support the producer decision making process for on-farm and associated value added enterprise opportunities.
a) Increased knowledge about the elderberry market, future trends and growth potential:
a1) Results show a nascent industry with mostly small scale participants poised for growth.
a2) Demand trends are favorable and prices are good across the value chain.
a3) Based on identified market size and demand, opportunities exist to increase the domestic elderberry industry across the value chain.
a4)160 individuals were exposed to information about the elderberry market during the Comprehensive Elderberry Workshop (100) and the presentation at the Small Farm Trade Show (60).
a5) The topic “Elderberry market and market potential” motivated the most participants to attend the Comprehensive Elderberry Workshop, based on results from an evaluation survey administered to all workshop participants (the topic obtained a 4.36 rating on a scale of 1 to 5).
a6) “Elderberry market and market potential” obtained the second highest score for gain in knowledge of all the topics presented at the Elderberry Comprehensive Workshop
a7) A comprehensive Market Research Report and Market Directory are available on the UMCA website. Study results were published in Agroforestry Systems 86(3):365-377.

b) Increased knowledge and support in using the Elderberry Financial Decision Support Tool (EFDST):
b1)The tool exemplifies how changes in management practices will affect the financial performance of elderberry “orchards” 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 techniques that will generate the best economic returns. Default methods and costs are based on current elderberry production methods and 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.
b2) The EFDST was presented at the Elderberry Mentoring workshop (50 attendants), Elderberry Comprehensive Workshop (100 attendants) and Small Farm Trade show (60 attendants) and to individuals who requested assistance.
b3) The tool is available for download from the UMCA website (www.centerforagroforestry.org).

c) Increased knowledge about consumer preferences and target markets:
c1) Results of the online survey distributed to a sample of over 1,000 U.S. consumers, show one-third of respondents are familiar with elderberry. The most common elderberry products sampled and purchased were juice, jelly, and wine. The consumer sample was divided into current and potential consumer groups. Health conscious and less health conscious consumer segments were identified within each group, composing four market segments in total. Current elderberry consumers (14% of respondents) strongly prefer locally produced juices and elderberry juice to other types of juices. For this category of consumers, elderberry juice products can be positioned as novelty products that are perceived to be healthier and more expensive than other comparable products. Including a qualified health claim on the label would reinforce the health benefits of elderberry products and potentially increase less health conscious consumers’ likelihood to purchase them. Market segments comprised of those who have not yet tried elderberry are characterized as appreciating locally produced products but as having greater price sensitivity than current consumers. Elderberry juice products can be introduced to these segments as value healthy products (similar to cranberry), emphasizing the health benefits and local origins while maintaining a lower price.
c2) Results of a conjoint analysis suggest elderberry products that disclose qualified health claims and produced locally were the best positioned to compete for greater shares in the jelly and juice product markets. Although consumers were 27% less likely to purchase elderberry jelly and 23% less likely to purchase elderberry juice relative to products containing competing fruit types, “fruit type” comprised only 9% of jelly and 13% of juice purchasing decisions for consumers. More important than fruit type, consumers valued product price, disclosure of health claims and origin. Our results indicate that an introductory strategy that combines the strength of preferences for locally produced products along with the disclosure of qualified health claims at a competitive price can be an important tool in expanding the market for elderberry products in the U.S.
c3) Results of these studies were presented in 2012 at the Comprehensive Elderberry Workshop (100 attendees) and published in HortTechnology 22(4): 556-566 and will be published in HortScience (accepted) in 2013.
c4) Expanded elderberry value added production.

d) Generate options for higher rates of return for producers by adding value through product processing:
d1) Potential marketing strategies to successfully introduce elderberry juice and jelly were suggested as result of the Consumer Research studies.
d2) An elderberry winemaking workshop attended by 50 people was organized. The workshop strengthened communication among people interested in winemaking and elderberry production and among them and successful winemakers and researchers. There was a significant gain in knowledge that improved the understanding of the winemaking process. The workshop helped support the potential growth in value added elderberry production.

Outputs

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 available online on the Center for Agroforestry website at: http://www.centerforagroforestry.org/profit/elderberryfina.ornce.php

An elderberry “Agroforestry in Action” guide, Growing and Marketing Elderberries in Missouri, 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

Under the guidance of project team members Dr. Francisco Aguilar and Mihaela Cernusca, Phillip Mohebalian completed his M.S. degree in Forestry at the University of Missouri entitled “U.S. Consumer Preferences for Elderberry Products”.

Based on this research, the following article was published:
Mohebalian P., M.M. Cernusca and F.X. Aguilar. 2012. Discovering Niche Markets for Elderberry Juice in the U.S. HortTechnology 22(4): 556-566.

Additional project research resulted in the following publications:

Cernusca M.M., M.A. Gold and L.D. Godsey 2012. Using the Porter Model to Analyze the U.S. Elderberry Industry. Agroforestry Systems 86(3):365-377.

Cernusca M.M., M.A. Gold. 2012. Elderberry Comprehensive Workshop Evaluation Report.

Cernusca M.M., M.A. Gold. 2012. Elderberry Winemaking Workshop Evaluation Report.

As an output from the winemaking workshop, the following video is now available online:

Brewer, John. 2012. Elderberry Winemaking Workshop Video. http://www.centerforagroforestry.org/pubs/workshops.php

A second article is forthcoming in 2013 from the Mohebalian thesis:

Mohebalian P., F.A. Aguilar, M.M. Cernusca. Comparative Conjoint Analysis of U.S. Consumers’ Preferences for Elderberry Jelly and Juice Products. HortScience. Accepted.

Impacts and Contributions/Outcomes

Impact was measured with pre- and post- training surveys administered to participants attending the Comprehensive Elderberry Workshop and Elderberry Winemaking Workshop. The surveys were specifically designed to determine participants’ motivation to attend the event, their level of satisfaction with the content and organization of the event, to document participants’ gain in knowledge and obtain suggestions for future programming.

A. The Elderberry Comprehensive Workshop (June 7, 2012, Hartsburg, MO):
In conjunction with grower/producer Terry Durham, the workshop was organized in Hartsburg, MO and co-sponsored by UMCA with SARE funds. As the workshop title indicates, the workshop was comprehensive on scope, with a wide array of topics ranging from “getting ready for elderberry production” (Buying elderberry plants with NRCS funds, Elderberry from the ground-up), “elderberry production research” (The Elderberry crop improvement project), “commercial production” (Commercial production of elderberries, Elderberry cultivars), “pest research” (2012 elderberry pest research), “value added production” (Value added product development), to “financial analysis” (The elderberry economic assessment tool), market research (Elderberry market and market potential) and “consumer research” (Consumer preferences for elderberry products). The impact indicators are presented below:

A1) Participation in the activities organized (number and demographic characteristics of people participating)

Well over 100 people participated in the day long June 7, 2012, comprehensive workshop. Based on 84 surveys collected at the beginning of the workshop, the demographic characteristics are as follows:
– 7% were less than 35 years old, 13% between 36-45 years old, 34% were between 46 and 55 years old, 34% were between 56 and 65 years old, and 12% were older than 65.
– 31% were high school or technical school graduates, 35% held a college degree and 29% held a graduate degree.
Out of 70 respondents at the post-workshop survey, 38% have some involvement in the elderberry business. Out those with a stated connection to the elderberry business, 20% are involved full time, 64% part-time, and 16% as a hobby.

A2) Participants self-reported evaluations (motivation to attend, level of interest and degree of satisfaction)

Motivation to attend the workshop:
Elderberry market and market potential; Commercial production of elderberries; and Elderberry from the ground-up were the topics that motivated the most respondents to participate in the workshop. On a scale of 1 (not at all) to 5 (very much), the average ratings for how much each topic motivated the participants to register for this workshop are presented below (highest to lowest):
? Elderberry market and market potential: 4.36
? Commercial production of elderberries: 4.28
? Elderberry from the ground-up: 4.03
? Value added product development: 3.93
? Consumer preferences for elderberry products: 3.93
? Elderberry cultivars: 3.81
? The elderberry economic assessment tool: 3.76
? 2012 elderberry pest research: 3.46
? The Elderberry Crop Improvement Project: 3.45
? Buying elderberry plants with NRCS funds: 3.27.

Level of interest and degree of satisfaction:
Participants were very satisfied with the workshop. Selecting among the options – Excellent, Good, Fair, Poor and Unsatisfactory, the quality of workshop overall was rated “excellent” by 44% of participants and “good” by 54%.

Based on a “participating in the elderberry workshop was worth your time” scale of options ranging from – Not at all, Little, Somewhat, Much, Very much – 56% of respondents selected much and 43% very much. Ninety percent of respondents indicated that the level of workshop was “about right” while 6% thought it was “too advanced” and 4% “too basic”.

Learning (gain in knowledge, perceived gain)
Participants’ level of knowledge before and after the workshop was evaluated in the post- workshop survey. A scale of 1 to 5 – 1 (nothing), 2 (very little), 3 (some), 4 (quite a bit) and 5 (a lot) – was used to assess their pre- and post-conference level of knowledge. For example, the topic “Elderberry cultivars past, present and future” had a pre-conference knowledge rating of 2.01 (very little) and a post-conference rating of 4.50 (quite a bit) for a gain in knowledge of 2.49. All topics presented showed a gain in knowledge ranging from 1.4 to 2.49.

Reaction to training (changes in behaviors and practices)
Workshop participants varied greatly in their level of involvement and interest, from active growers already involved in commercial production, to beginning growers that are propagating plants or want to expand production, to people exploring their interest in potentially growing elderberry as a new farm crop, to people that are interested to find more about elderberry strictly from a consumer point of view.

Most of respondents increased their interest in elderberry as a result of the workshop. Based on their initial involvement, some plan to pursue commercial production, others plan to get started, while others intend to “spread the word” about elderberry.

In conclusion, the June 7, 2012, Elderberry Comprehensive Workshop was very successful. The workshop strengthened communication among people interested in elderberry production, including connections between participants and established producers and connections between participants and researchers. There was a significant gain in knowledge that improved the understanding of the design and application of elderberry production. The workshop helped to support future adoption of elderberry as a profitable crop across Missouri and the U.S.

A complete workshop evaluation report is attached.

B. The Elderberry Winemaking Workshop (Oct. 26, 2012, Columbia, MO):

The workshop was organized by the Center for Agroforestry in Columbia, MO with financial support from the ongoing SARE R&E project. The workshop was led by SARE project collaborator Dr. John Brewer, President of Wyldewood Cellars, the largest elderberry winemaker in the US, located in Wichita, KS. He presented information about wine making in general and about using elderberry for winemaking, wine equipment and wine chemistry. Lunch and an elderberry wine tasting was provided to all participants.

The impact indicators are presented below:

B1) Participation in the activities organized (number and demographic characteristics of people participating)
50 people participated in the elderberry winemaking workshop. The demographic characteristics, based on 37 pre-workshop surveys are as follows:
– 3% were less than 35 years old, 8% between 36-45 years old, 24% were between 46 and 55 years old, 35% were between 56 and 65 years old, and 30% older than 65.
– 18% were high school or technical school graduates, 30% held a college degree and 41% held a graduate degree.
Out of 38 respondents submitting the post-workshop survey, 48% were not involved in elderberry business, 19% were involved as hobby, 26% part time and 7% full time. Specific to winemaking: 61% were not involved in the winemaking business, 36% involved in the winemaking business as a hobby and 3% part time.

B2) Participants self-reported evaluations (motivation to attend, level of interest and degree of satisfaction)

Motivation to attend the workshop:
Using elderberry for winemaking was the topic that most strongly motivated respondents to attend the workshop. On a scale of 1 (not at all) to 5 (very much), the average ratings for how much each topic motivated the participants to register for this workshop are presented below:
Using elderberry for winemaking (4.32)
Learning about wine equipment and wine chemistry (4.08)
Tasting elderberry wine (4.08)
Learning how to make wine (3.95)

Level of interest and degree of satisfaction:
Participants were very satisfied with the workshop. The quality of workshop overall was rated excellent by 59% of participants and good by 38%.

Fifty percent of respondents rated participation in the elderberry workshop was “much” worth their time and 38% “very much” worth their time. Eighty-four percent of respondents considered that the level of workshop was “about right” while 11% thought it was “too advanced” and 5% “too basic”.

Learning (gain in knowledge, perceived gain)
Participants’ level of knowledge before and after the workshop was evaluated in the post- workshop survey. A scale of 1 (nothing), 2 (very little), 3 (some), 4 (quite a bit) and 5 (a lot) was used to assess the level of knowledge. All topics presented resulted in a gain in knowledge ranging from 1.27 and 1.6. The topic Using elderberry for winemaking achieved the highest gain in knowledge (1.6).

Reaction to training (changes in behaviors and practices)
Many respondents increased their interest in winemaking (20) or elderberry production (2) as a result of the workshop.
The elderberry winemaking workshop was very successful. The workshop strengthened communication between people interested in winemaking and elderberry production and between people interested in elderberry production, successful winemakers and researchers. There was a significant gain in knowledge that improved participants understanding of the winemaking process. The workshop helped support the potential for expansion of elderberry value added production. A two-part video of the entire winemaking workshop is available on the Center for Agroforestry website.

A complete evaluation report is attached.

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