Beyond Borders: Northern food producers tapping export market
REGION – It's a popular misconception that only behemoth corporations can succeed in exporting internationally. Many small companies are finding that their competitive advantage lies in unique or niche-type products. Nowhere is that truer today than among Michigan's farmers, growers and food producers.
In 2010, more than 60 percent of all Michigan's agricultural exports went to Canada, our No. 1 export market. But neighboring Canada isn't the only country craving the Michigan-made foods: Mexico, Japan, Korea and China are in line right behind.
The Traverse City Business News talked to five companies that are seizing the opportunity and meeting the demand for international exports.
Jeff Hughes, owner
Brownwood Farms opened its doors in Williamsburg 11 years ago, manufacturing specialty food products like mustard, jams and sauces, and has expanded to more than 30 selections today. In 2007, they started exporting their products across the border to Canada. The Canadian market is only about three percent of Brownwood's business, but it's still a sizeable step on the bottom line, says Hughes.
"Our biggest customer actually buys our Cherry Barbeque Sauce as a private label," Hughes says. "It's the same recipe, same process, same jar – we just don't put our label on it."
Brownwood has launched a new wing sauce recently, so that will also be exported to Canada, along with their Famous Kream Mustard.
"Any sales, even three percent, will have an impact on the company – it's not just a few cases here and there, it's a big order three times per year," Hughes says. "We are not looking for something that changes our company over night, but anything to expand our reach across the border is good."
Brownwood Farms also has its products in Whole Foods, which has stores in London, England and is in the process of opening new stores in Canada. Hughes says London is a "natural product pull through" because Brownwood won't have to take on the task of pushing sales into another market; Whole Foods will be exporting Brownwood's products. But given the chance – especially to Canada – Hughes says export is a smart option.
He says Canada's geographical proximity to Michigan is a major boon for food producers here. "Most other states have to go through multiple states just to get to another country. Whether our exporting is large or small, the fact that another country is one state away makes it doable. That's what makes Michigan and all of the other border states unique – the opportunity is right there! It's a good option."
Chateau Grand Traverse
Ed O'Keefe III, president
It started with one vineyard in 1974. Now Chateau Grand Traverse is in its second generation of family winemaking – producing 18 wine varieties from four vineyards.
"We've always dabbled in export a little bit, but in recent years we have gained enough production that we can now go after other markets," O'Keefe says. "We ship six different wines to China currently, but it looks like the one that they are focusing in on is our No. 1 seller, Late Harvest Riesling.
"What might seem like an innocuous request may turn into something big," O'Keefe says. "Our Chinese connection happened through a gentleman who is from China but was living in Chicago and really liked our wines. They have an import company in China, and we pursued it. You just never know when an opportunity is going to rise – you need to follow through on it."
O'Keefe says Chateau is already seeing a return of interest for their wines from Japan.
"Financially, exporting has not yet had an impact on our business, but we are pursuing it," O'Keefe says. "I think it can end up being a pretty significant thing. However, you have to crawl before you run."
He expects to be running soon and credits the far-reaching reputation of the state's fruit with paving the way. "The products that are made from Michigan fruit have tremendous potential in the world market, just from the high quality."
Cherry Central, Inc.
Richard Bogard, president
Located in Traverse City, Cherry Central launched in 1973. The company is a co-operative; it acts as the sales and marketing agency for several fruit growers and processors. Cherry Central sells products from Michigan-grown fruits and vegetables, including apples, blueberries, cherries, blended juices, cranberries and canned asparagus.
Cherry Central began exporting during their first year in business and now exports dried, canned and frozen fruit to 27 different countries, amounting to about 15 to 20 percent of Cherry Central's sales. Home to their biggest international buyers is Japan, Australia, Germany, United Kingdom and Israel.
"Exporting for our business has had a very favorable impact, increasing our sales, therefore increasing our revenue," Bogart says.
In 2010, Cherry Central focused on expanding its foreign markets and saw an increase of more than 20 percent in its export business. This year, it's projecting even greater growth.
Bogart's advice to interested exporters is to find a competent freight forwarder. Cherry Central utilizes a Michigan-based logistics firm that arranges for and ships its international exports.
Alan DeVore, CEO
Frankfort-based Graceland Fruit, in business since 1973, is a leading producer of fruit products. It uses proprietary technologies to produce infused dried fruit products that retain their quality.
"Although Graceland began to export in the late 1990s, the greatest amount of growth in the company's export business has occurred over the last two years," DeVore says. "Over the last 12 months Graceland increased its export sales by over 20 percent and now generates approximately 40 percent of its revenue from international markets. This growth has resulted in the company achieving record sales volumes of dried fruits during 2011."
Graceland exports a variety of dried fruit products and juice concentrates. Its products are exported to more than 40 countries, with Japan and Germany being two of its largest international markets. Graceland not only expands its market by exporting, it also helped introduce Michigan agriculture around the world.
"Knowing that you can compete on an international playing field can help build up your company's confidence and energize its performance," DeVore says.
DeVore recommends understanding what your company's core business and competencies are and sticking to them. The preferences of new markets may be distinctly different than your current markets. Therefore, remain receptive to feedback from international customers – it could lead to greater overall success.
Michelle White, president
Founded in Leland by Michelle White in 2001, Michelle's Miracle started exporting its Tart Cherry Concentrate in 2006. Its exports to Canada and Mexico amount to about 40 percent of the company's business.
"Exporting offers a significant impact to my company for building awareness and providing buying power," White says. "The export business also offers significant value to the cherry industry and Michigan – as we expose the healthy benefits of tart cherries to those living in other countries. Michigan's agricultural business is also a beneficiary, as millions of pounds of tart cherries are grown, harvested, and processed right in the Great Lake state."
White suggests that companies measure the margins and risk while pursuing international markets. Fortunately, help is available. Seeking advice and support from a local state agricultural promotion agency and other export providers can provide a company with a wide range of international export assistance. If a company is interesting in exporting, networking can also be a key factor. BN