There’s growing interest among farmers and ranchers to market and sell directly to consumers.
Selling directly to consumers isn’t a new phenomenon within agriculture. The roadside retail farmstand or farm store is almost as old as farming itself, for example, and urban, suburban and rural farmers markets have existed and prospered throughout the country for many decades.
But the growing interest I’m referring to goes beyond selling directly to consumers at the traditional farm store and at farmers market venues, to utilizing digitalization to reach consumers directly wherever they live via a website or online store as well as through social media platforms, along with creating products and marketing and selling them through retail grocery stores, where over 90% of all packaged foods products are still purchased.
There are numerous examples of farmers and ranchers successfully selling some of what they produce, including fresh produce, nuts, meats, seafood, dairy products and more, directly to consumers online, as well as creating value-added grocery products, which they sell both online to consumers directly as well as to retailers.
The primary logic in doing this is to diversify their operations, gain a bit of added control over what they produce and how it’s sold, and to increase profit margins by eliminating some of the intermediaries like brokers and wholesalers who by necessity have to take a share of the farmer and rancher profit margins.
If you’re a farmer or rancher who’s considering selling directly to consumers via an online store or creating your own value-added grocery products to sell directly to consumers online and to grocery retailers, these are some things you should take into consideration before investing time and money into the process.
First, when it comes to selling what you produce directly to consumers, you need to make sure there’s a consumer interest in and demand for what you want to sell.
For example, it’s doubtful that there will be much consumer interest in buying iceberg lettuce directly from a grower. On the other hand, specialty crops like premium citrus, stone fruits and pears offer good opportunities, as do things like premium and organic nuts.
The key is that the products to be sold need to have a point of differentiation from what consumers can buy at a much cheaper price at the grocery store.
This is where branding comes in. As an example, Lake County (California) Pears have strong brand differentiation, and consumers, particularly those who live outside of California, are willing to not only buy them directly from growers but to also pay a premium price for the pears.
When it comes to selling directly to consumers, the product – its quality and uniqueness – and the farmer who grows it are the brand, which is where marketing comes in because in addition to having an online store, it’s also imperative to have a marketing plan. For farmers and ranchers that plan needs to be centered on the product, how it’s grown, what makes it special, and the farmer and rancher who grows and produces it.
When it comes to creating a value-added specialty food product, farmers need to do a bit more homework. But this too starts with the product, the grower or rancher who produces it, how it’s produced and what makes it unique.
For example, Kozlowski Farms in Forestville, California started out as a family fruit-growing operation. In the 1980s the family made the decision to create its own brand of fruit preserves, later branching out into numerous other value-added specialty food products made from the crops they grow. Today you can find Kozlowski Farms products in grocery stores throughout the country, as well as at their own store at the farm in Forestville. The company also sells the products online directly to consumers, as well as on various online stores like Amazon. It’s a multi-million dollar brand that returns a much higher profit margin than selling the fruit to wholesalers.
The California wine industry is a good example too of growers diversifying from primarily growing grapes that they sold to large wineries to creating their own branded wines and selling directly to consumers as well as to grocery distributors, who in-turn sell and distribute the smaller boutique brands, many of which have become huge brands, of wine to retailers.
The same model is happening in the California olive oil industry, where many growers have realized there’s very little profit in selling their olives in bulk to others, so over the last few years they’ve created their own brands, which are being marketed and sold at grocery stores as well as directly to consumers.
A number of almond and pistachio growers also have realized the opportunity of creating value-added products and selling them directly to consumers and in specialty foods stores and grocery markets.
Newman, California-based Stewart & Jasper is a pioneer in this niche. The family-owned diversified farming and agribusiness company is one of the major almond growers in the San Joaquin Valley. Stewart & Jasper started out selling 100% of its almond crop bulk wholesale but many years ago realized that greater profit margins were possible by diversifying. Today they sell directly to consumers online and at three company owned stores, as well as selling dozens of branded value-added products via distributors to retail stores throughout the U.S.
The effort has paid off well for Stewart & Jasper; they’ve built a brand out of a common crop – almonds – as well as diversified their operations, increasing profit margins in the process, just as Kozlowski Farms has done with fruit and related specialty food products.
My advice to farmers and ranchers looking to diversify their operations by selling directly to consumers online or by creating value-added products for retail store sales, is two-fold: Do a lot of research before spending any money and reach out to someone who has experience in the business for advice and help. Doing both of these things will save you both money and heartache.
Digitalization has opened the door of opportunity for farmers and ranchers to diversify their business model by marketing and selling directly to consumers. It makes sense for some farmers and ranchers and doesn’t make sense for others.
Additionally, the increased demand by consumers for authenticity in food products, coupled with the growing buy local movement, offers opportunity for growers and ranchers to create value-added specialty grocery products, which can not only be sold online direct to consumers but also in grocery stores, where the demand for specialty foods and farmer-produced products is greater than it’s ever been. Retail grocers are looking for authentic products, and those produced by farmers and ranchers are at or near the top of their list.
My Job Depends on Ag Magazine columnist and contributing editor Victor Martino is an agrifood industry consultant, entrepreneur and writer. One of his passions and current projects is working with farmers who want to develop their own branded food products. You can contact him at: victormartino415@gmail.com.
