Retail sales of all specialty (gourmet) foods are generating revenues of more than $48 billion a year, and averaging annual growth of more than 8 percent. To some, this means great opportunity. To others, it represents a formidable challenge.

Let’s put this into perspective: The average cost of getting national grocery store shelf exposure for a new product by a branded manufacturer is estimated at more than $6 million.

Still reading? Take heart, there is a proven alternative. It is the specialty food industry that has become the proven vehicle for entry-level food distribution in the United States. Different market segments and new products can be tested in the specialty food industry without the initial investment required of the major food producers. The secret has to do with superior execution of often ordinary ideas.

One of the following scenarios may describe your circumstances, and could help you respond to the important issue of just how involved you would like to become in the business.

Scenario One

You have just returned from another successful church bazaar where your homemade supply of organic and sugar-free apple-cranberry chutney was sold out. Your friends and neighbors urge you to sell your chutney to Whole Foods, where they think it will be a great hit. You think it’s a wonderful idea, but you haven’t the foggiest idea of where to begin.

In this scenario, the entrepreneur has to decide, after significant investigation, whether to continue in the “sideline” mode or to take the risk of turning the operation into a full-time business.

On the one hand, the owner has a product that has been tested, in a fashion, with positive reactions from customers, friends, and neighbors. There is reason to believe that success, at least initially, might be achieved with a reasonable expectation of profit. On the other hand, what is the required level of funding available for the venture? If the owner has an outside source of income, then the venture may be undertaken. Otherwise, the possibilities for negative cash flow (more money going out than coming in) are quite probable.

Scenario Two

Your specialty food store is doing a lot of business, especially the prepared foods section, one item of which is your home-baked, seasoned bread sticks. You note that there seems to be a growing interest in this product from a broad segment of your customer base. You wonder if it would be possible to sell the breadsticks to a wider audience in other markets in your region. Where to begin?

If the second scenario fits, then your food marketing venture could be supported by revenues from the existing retail operation. This makes market entry more attractive because many initial costs of operation could be absorbed by the retail store sales of other products. Nevertheless, you will have to devote substantial time to developing markets for the breadsticks, which will take away from time spent in the store. If this can be accommodated, then a full-time sales and marketing operation can be adopted.

Scenario Three

You have recently taken over a small chocolate manufacturing concern. Until now, revenues have come from bulk sales to walk-in and mail-order customers. You think there are substantial opportunities for developing a retail-packaged version, and you want to begin distributing it to stores all over the country.

How do you proceed? Both scenario three and scenario two require substantial time at the existing business. Scenario three, however, offers a chance to expand an existing base of sales to customers located outside of the local area. It also provides an existing source of revenue (from retail packaged sales) on which to base some of the expansion costs. It would appear, then, that turning the chocolate operation into a full-time sales and marketing operation might be an appropriate alternative.

Scenario Four

Your family and friends love your honey-and-pecan mustard, and you have been very successful in selling at the local farmers’ market and at area school fairs. You also ran an ad in a slick “upscale” magazine that cost you a fortune, but produced results in Internet sales sufficient to cover the cost. Your life is too busy to contemplate going into a food business full-time. What do you need to know about this business in order to make a little money on the side?

The challenge in scenario four is to transform your hobby into a sideline business. You can take your talent, your recipes, your promotional genius, and your money, and have your product produced, packaged, warehoused, and marketed by another company. You will definitely need the supporting funds and the knowledge of how specialty food marketing works.

Ready to start your specialty food business? Visit business incorporation services leader BizFilings today. Learn the benefits of forming an LLC or corporation to protect your personal assets and gain tax advantages for your food specialty business.

About the Author
Stephen F. Hall is author: “Sell Your Specialty Food” (Kaplan, NY. 5th Edition of “From Kitchen to Market”). Visit www.specialtyfoodresource.com to learn more, participate in related discussions and subscribe to a free monthly Food Entrepreneur eZine.