Local entrepreneurs in Twin Falls, ID develop specialty foods

TWIN FALLS — After making a number of mistakes over the years in the specialty food business, Dave McCollum has developed three rules.

McCollum, president of Twin Falls trout farm Silver Creek Farms, said his No. 1 rule for product development is: Make what they are already buying. Making the product better or more efficiently is the way to go.

His second rule: "Production problems are more easily solved than marketing problems," he said.

And third: "Sales cure all problems," McCollum said.

By Lorraine Cavener
Times-News correspondent

Silver Creek Farms grows and processes trout and produces value-added items such as smoked trout as well as a few specialty products.

"You can make all kinds of things people love, but it won’t work very good in the marketplace," he said.

In production, business people need to consider packaging, artwork, ingredient lists, regulations and more. All will factor into the cost of production.

"You have to be very analytical how you cost out a product," he said. "You would be extremely lucky to hit your theoretical projections accurately."

Dealing with regulations is also a factor.

"And that is assuming you already have a certified licensed plant," McCollum said.

Often customers will ask for a change in the product to fit their particular profiles or packaging needs, he said.

"You will be losing money for quite a while," McCollum said.

Marketing involves highly expensive processes such as shipping free samples to potential customers. First-time charges also need to be taken into consideration, such as having specific-sized boxes made and labels printed, he said.

Theon Merrill, owner of Neon Foods, a specialty dried-food business in Declo, agrees with McCollum about marketing.

"It’s a far cry from what a few people would buy versus what it would take to manufacture that product," Merrill said.

He recently sunk about $160,000 into Neon for manufacturing equipment and other necessities to start a dried-foods business, which features dried mashed Idaho potatoes that he gets from an Idaho Falls company. The products include a dry food mix, soups, pancake mix, mashed potatoes, jams, sauces and gravies. He is in the process of finalizing USDA certifications at the plant.

So far he has found that marketing is the hardest part. He tried unsuccessfully to get the products into grocery chains.

"You have to buy shelf space and pay to be in their ads," he said. "If your product doesn’t meet certain formulation they drop the product."

Instead Merrill has decided to work with a home distribution system where his dried products will be featured with other Idaho products.

"We’re going to take our Idaho products to Idaho homes," he said. "They will go in and cook up a meal and give samples."

Expensive packaging will give way to a sticker on a pouch or box.

"In reality what people want is a good product for a low price," he said.

While some specialty food products can be as simple as mashed potatoes, others are fancier.

About two weeks ago Silver Creek Farms began marketing something new — a stuffed salmon product called Salmon Florentine. The company put about six months and a $30,000 to $40,000 investment into development.

But on this particular product, the company chose to team with another producer.

"It is sometimes better to look for cooperative situations and spread development costs out," McCollum said.

On this new product McCollum broke his own first rule. Instead of making something consumers are already buying he is trying to get a new product established on the market.

For marketing the company depends on a sales force to show the product one-on-one to targeted customers.

"We have no idea whether it will work or not," he said.

To help those interested in finding out whether a product will work, a workshop is available this week.

People call three or four times a week to inquire about starting a specialty food business, said Mandi Thompson, marketing specialist for the Idaho Department of Agriculture, one of the event sponsors.

"The workshops are the result of a public-private partnership to develop the full potential for value-added specialty food products," she said.

Many successful businesses started with a favorite family recipe, identification of an untapped opportunity, or a love to tinker in the kitchen with favorite foods or sweets, Thompson said.

"Individuals also enter this field with many different financial goals, including supplemental farm income, vertical integration of agricultural enterprises, the creation of a home or family business, or a larger venture, with the potential to create many jobs," she said.

The Agriculture Department said more than 100 small companies make specialty products, with potential for a lot more. Examples of successful existing specialty food and confection products in Idaho include salad greens, sausages, barbecue sauces, lollipops, spice mixes and smoked sturgeon.

Times-News correspondent Lorraine Cavener can be reached at 436-1351 or [email protected].

http://www.magicvalley.com/news/business/index.asp?StoryID=1557