Assessing market demand for Finger Lakes specialty cheese

Project Overview

ONE13-192
Project Type: Partnership
Funds awarded in 2013: $15,000.00
Projected End Date: 12/31/2016
Region: Northeast
State: New York
Project Leader:
Monika Roth
Cornell Cooperative Extension Tompkins County

Annual Reports

Commodities

  • Animals: goats, sheep
  • Animal Products: dairy

Practices

  • Education and Training: farmer to farmer, networking
  • Farm Business Management: budgets/cost and returns, marketing management, farm-to-institution, market study, risk management, value added
  • Sustainable Communities: sustainability measures

    Proposal abstract:

    Specialty cheese producers in the Finger Lakes need to balance time demands for cheese making and sales. Greater efficiency is needed to ensure viability of individual farms as well as the FL Cheese Trail operating for mutual benefit. The group lacks market data for sound decision making. A thorough market analysis is needed. The viability of small artisan cheese producers depends on effective marketing. This project will: 1)describe current markets 2) identify potential new markets 3) determine distribution logistics and costs 4) analyze wholesale pricing 5) evaluate producer capacity to meet price and volume requirements. The project will involve primary research using surveys and interviews to gather data from producers, buyers and distributors. We will characterize current markets, distribution tactics, and production capacity of cheese makers in the Finger Lakes. A second step will be to identify new cheese outlets in the Finger Lakes and in metro areas (Buffalo, Albany, Hudson Valley, NYC); to assess potential based on volume and ability of producers to meet demand, prices, and distribution costs. A marketing plan will summarize results and provide a road map for growing collective marketing of Finger Lakes Cheeses via regional and statewide market channels. Grant results will be shared via farmer, extension, and SARE reports and conferences.

    Project objectives from proposal:

    This project will elicit baseline information about producer capacity, current markets, cost of marketing, and market potential for farmstead and artisan cheese makers in the Finger Lakes.
    This project will focus on market research:
    1) describe current markets utilized by FL cheese producers, associated costs and returns
    2) identify the potential to expand marketing in the FL region and beyond into metro areas of the state
    3) determine the logistics and costs associated with mobilizing cheese into new markets
    4) analyze wholesale pricing for cheese (competitive consumer prices, standard industry margins and mark ups)
    5) capacity of FL cheese producers to meet price and volume for expanded marketing

    The end goal of this work is to produce a marketing plan for FL Cheese Trail members that provide a roadmap for market expansion through collaborative effort. Our hope is to identify the right size markets for producers that provide the price points that farmers can live with and grow their businesses, improving farm sustainability and
    quality of life.

    METHODS AND OUTCOMES
    The project will involve primary research using survey instruments and interviews as the key means of soliciting data from producers, buyers and distributors. We will draw upon published data and prior studies to inform our work and avoid gathering information that is already known.
    Survey questions will be developed with input from Cornell researchers. Surveys will be tested prior to release by at least 2 cheese makers.

    STEP One: characterize current markets, distribution tactics, and production capacity of artisan and farmstead cheese makers in the Finger Lakes. We will do this by: developing a survey that producers complete, and follow up as needed in person to fill data gaps. We envision creating an online input form so answers are standardized and can be easily summarized.
    The above data will help us measure the following:
    -current markets and volume of sales per channel (e.g. farmers market, restaurants, specialty food stores, retail stores, distributors) will enable us to quantify demand by channel and help
    producers understand the performance of each channel – i.e. what is the volume demanded by each channel, what are the returns, what time is involved in serving this channel
    -distribution strategies used by farmers and how those impact cost of doing business – i.e. what are the comparative costs when farmers do their own marketing and distribution versus utilizing a distributor; when does it make most sense for the farm to deliver product (distance and volume), compared to using a distributor

    STEP Two: selectively meet with current buyers to ascertain if there is additional unmet demand and if so, what are the products, what additional volume, what delivery schedule, etc.

    From buyers and cheese makers, we will characterize customer demographics so that in seeking new outlets, we focus on those that serve the demographic interested in buying artisanal and farmstead cheese.

    Because there is a primary cheese distributor, Artisan Foods, that many cheese makers use, and a freight company, Regional Access, that also features NY artisanal cheese in their catalog; we will be able to gather data on the cost of marketing and distribution borne by these service providers. This information will be factored in to the consideration of new markets.

    STEP Three: identify additional cheese outlets both within the Finger Lakes and in selected metro areas of the state beyond the Finger Lakes (Buffalo, Albany, Hudson Valley, NYC); to assess their viability based on volume and the ability of producers to meet
    demand, prices points, and distribution costs. We will focus on identifying outlets who serve the demographics of customers we seek. We will identify outlets via published data, the names of cheese
    shops, specialty shops, retailers, etc. who currently feature NY artisanal and farmstead cheese. Tools available that will help us find these outlets include: Market Maker, Pride of NY, local foods directories, trade associations, etc. Our intention is to identify at least 10 outlets within a targeted metro area. We will conduct
    phone interviews to verify whether they do in fact carry cheese, identify types of cheese in demand at their outlets, if they have demonstrated customer interest in artisanal and farmstead cheese
    from NY, volume needs, how they do business, etc. The end game is to identify those outlets that appear to be most promising and have a group of FL cheese makers pay them a visit with samples of cheese. During a face to face meetings additional details pertaining to price and delivery will be elicited.
    Criteria will then be established to rank the viability of selected outlets based on information gathered pertaining to demand, demographic fit, price, and distribution logistics.

    As part of this process, a key need is to gather information that will help producers realistically adjust pricing to meet wholesale buyer expectations. Research is needed on:
    -the actual competitive consumer shelf prices in target market (current and new buyers)
    -the standard markup and margins (probably a range) for buyers in various markets
    -if applying industry margins what are the required price points for FL cheese makers to sell via a distributor to new metro areas
    -determine whether price points provide enough profit for FL cheese makers to invest in selling to a new buyer
    -if price points are feasible, determine maximum deliverable product volumes and frequency that each cheese maker is capable of meeting; gather information in a catalog or online ordering system to initiate sales (it might also be good to investigate opportunities for contracting with buyers for set amounts)

    The above information will be gathered using a variety of tactics, including shelf price surveys in current and new outlets. Mark ups will be a question asked during buyer and distributor meetings.
    Price points and capacity will be something that cheese makers will need to assess for their own business. It is anticipated that the producers who feel they can meet the price and volume of a particular buyer will work collectively on distribution and marketing to new outlets that appear viable based on this study.

    Final Step: A marketing plan will also be developed to provide a realistic road map for growing collective marketing of Finger Lakes Cheeses via regional and statewide distribution channels. Our intention is to summarize information from the study pertaining to the viability of all markets including:
    open house, off farm events, farmers markets, restaurants, specialty stores and retailers, and wholesale distribution. We anticipate discovering more capacity to expand markets in the Finger Lakes and that a strategy of marketing close to home may prove to be the best option for many of the producers currently involved in the Finger Lakes Cheese Trail. This study will, provide the data that will help cheese makers individually and collectively optimize their marketing potential.

    Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.