Grass Fed Meat from Wal-Mart? Learn More in this Guest Post

Note: I took down the part of this post that referred to a particular meat company after realizing I had violated my own policy of posting blog that challenge the integrity of individual agriculture companies. I don’t consider Wal-Mart an agricultural company, and this guest post by my friend Scrapple isn’t about big companies anyway. It is simply a thoughtful piece about how small farmers might learn to develop more effective marketing strategies that allow them to compete with large companies (though not any particular company) that co-opt the small farm model of marketing local and organic food, grass fed meat, and other things that have been staples for the economic survival of small farms for decades. Here is the “meat” of the post:

The topic of what to do when big money moves in to a small, but rapidly growing, niche market like “local” or “grass-fed” foods is something I think about a lot. After all, our goal at Little Seed is to be one of those small, local family farms, so it’s logical for me to think about what will happen when we’re in the same position one day.

Big corporations and people with money have a long history of taking niche markets and exploiting them to the point where the novelty, or niche, is completely eroded. The key for small business owners is to maintain a level of differentiation that separates themselves from the big boys.

Direct Marketing Can Give You an Edge
One way to combat the encroachment of large corporations is through direct marketing. Know your customers and make damn sure that they know you. Establishing that relationship will bring loyalty and a sense of caring that no other company can replicate. So how can you create that direct connection?
1.) Harness the power of the internet
The internet makes direct marketing a heck of a lot easier than it used to be. If you don’t have a website, blog, facebook or twitter account you should set one (or all) of them up. Pick one or two and then slowly expand from there. It may seem intimidating at first, but not only will you will pick up new skills to help you grow your business, but you’ll also have more fun than you think. Customers looking for local food rely on the internet to identify nearby farmers, you need to be there to take advantage of that.

2.) Consider starting a CSA or a local buying club
CSA’s have really gained steam across the country in the past few years, and for good reason. They are a great way to build a community of loyal customers that would never leave in favor of supporting a larger corporate entity. As a consumer you get to participate in the success (or failure) of the farm. You also eat more seasonally, meet other members, get an opportunity to visit “your farm”, and, of course, you get to “know your farmer”. That sense of reconnecting without having to grow your own food is highly valuable for many people concerned about where their food comes from, but without the time/space/etc to grow it on their own.

3.) Open an on-site farm store
Having an on-site store gives customers the chance to come see exactly where their food is coming from. City folk love the opportunity to visit a farm and see where their food is coming from. They also relish the opportunity to speak with a farmer. As a farmer you get the opportunity to answer questions and explain why supporting the little guy is so important. That face to face connection is not easily replicated by the larger corporate farm.

4.) Host farm events
Dinners in the field, butchering, cheesemaking and other classes will draw loyal customers out to your farm and help you establish a lasting connection. The old saying is true: give a man a fish and he will eat for a day, teach a man to fish and he will eat for a lifetime. Teach your customers a skill and they will never forget you.

If you don’t want to offer a class you can do something as simple as inviting people over for a fall harvest. Put them to work! Many people in the city are yearning to get their hands dirty and would be happy to lend a helping hand.

The list could go on, but the short story is to get in front of your customers and make that direct connection.

Separate from the Herd
Differentiation is critically important for the survival of almost any business, but is arguably even more important for small businesses facing behemoth competitors.

Try New Stuff
Be creative, innovative and fearless. Don’t be afraid to try something new or test the waters in different markets. Some of the greatest companies in the world started by throwing a bunch of ideas out there and seeing what stuck. 3M started as a mining company and only through luck stumbled upon success in the sandpaper and abrasives categories. J&J similarly stumbled into consumer products (such as baby powder and band-aids) after a long history of being a hospital supplier. Trying new things and giving innovative ideas a chance can pay off. Take it slow though, don’t bet the farm on an unproven, new idea.

Find a Market Specialty
Consumers are impressed by companies that focus on producing a specific product. Being an “expert” in something can differentiate you from a big guy that sells everything. Specialty retailers can successfully compete against department stores, specialty food purveyors can successfully compete against grocery stores, and you too can find a specialty to help you succeed. Of course you have to back up your title as an expert, the worst thing you could do is make a claim and not be able to back it up.

Own an Attribute
Products are known for being unique. Find a unique attribute for your product and market it that way. Farmers may argue that they compete in “commodity” markets and that there’s no way to differentiate their products. That’s not true, commodities can still be differentiated through attributes. Beef and tomatoes may appear to be commodities, but breeds of animals, varieties of seeds, and many other interesting elements of your product’s heritage can create an attribute to help differentiate your product.

As an example, you can look at what Target did in the face of competition from Wal-Mart. Wal-Mart’s attribute is “everyday low-prices”. Target can’t win the battle against Wal-Mart by trying to beat Wal-Mart’s prices, it has to find a different attribute. So Target went with a classier spin, and many of you now may refer to it as “Tar-zhay”. This “mass with class” strategy ascribed a certain attribute to Target and separated it from Wal-Mart. You can do the same when facing a larger competitor with lower prices.

A Few Cautions
Be weary of growth. Growth destroys uniqueness. For some reason there is a constant desire among business owners to keep growing. If you’re going to be a small farm then you can’t also grow so much that you no longer fit that image.

Trying new ideas and offering new products is important, but don’t dilute your core brand with too many line extensions. If you truly want to be different you’ll need to have some focus.

Once you’ve established why you’re different be sure to stick with it. Be consistent and stick to your values. Make your values known and offer examples where you were faced with a tough call and decided to stick with what you believe.

At the end of the day I agree that it’s a major setback for the small farms near Belcampo, but I have faith in the little guy and I hope this discussion got your creative juices flowing. One thing is certain, when competition moves in you can’t sit still. You must adapt and change. Whether it’s changing your product offering, marketing efforts, or something else, you have to adapt to survive.

– Scrapple

Little Seed Farm is the story of our mission to farm. You can read more about our journey at www.littleseedfarm.com.

9 Comments on Grass Fed Meat from Wal-Mart? Learn More in this Guest Post

  1. Scrapple-

    thanks for reading my article about Belcampo. You bring up some good points in your article, especially for beginning/aspiring farmers. However, things are very different for established farmers in the face of monied competition like this. I have already spoken to 3 California farmers who have lost partial market share because of Belcampo. Despite their long-standing relationships, use of social media, values, etc., they are loosing market share to a company that has lots of money to throw at marketing, sales staff, and can afford to give away product for FREE to get it into the hands of chefs and other food influencers. Also, just because you have a CSA does not mean you are not going to loose customers. Many CSAs I have spoken to this year say that they are facing a lot of turnover and not filling their shares like they used to. I have seen CSA turnover rates around 20%. You are right on many facets of marketing, like giving people real, tactile experiences on the farm. That might not be something that Belcampo can do, given that they are hundreds of miles away from their consumers. Who knows though- maybe they will pay to bus or fly consumers up there, or just post some really well produced videos on their website bringing the consumer to their farm virtually. Regardless, I hope that consumers stay on the lookout for further corporate takeover of our food system and make an effort to search out the family-farm that is accountable for what they produce. Keep up the thought-provoking posts!

  2. How on earth can they lose market share to a company that is not selling anything ?

    How is that possible?

  3. Belcampo is both selling product and giving away freebies to entice new customers. One grassfed beef producer I talked to lost out on thousands of dollars of sales for the Eat Real Festival because their normal butcher decided to go with Belcampo meat that was sold to him (the butcher) at a discount. Big companies can do that- sell things at a loss- they are called loss leaders or product promotions.

  4. Hi Rebecca,

    Thanks for your insights and comments about the impact on local farmers. I help manage distribution for a large CSA in New York and was surprised to see the high level of turnover as well (over 20%). When I looked into it further I found that much of it was due to people moving (NYC is very transient) and increasing competition from other small farmers getting into the CSA game, not so much from larger farms stealing customers with lower prices. With a bit more marketing we were easily able to sell out our shares once again this year. One day that may not be the case, but I still think the CSA model is highly under-penetrated and with the proper customer outreach a turnover rate of 20% per year would be manageable. Easy for me to say though, it’s never been my farm faced with that situation! I’m sure it’s much more difficult than I appreciate, but I have seen it done at our CSA and NYC is a competitive market.

    Without knowing the specifics of Belcampo’s exact business model I will be very curious to see if their deep pockets can weather the capital equipment investment, the losses sustained in stealing market share and the working capital required to maintain the business over-time. I would venture to guess that it will take at least 3-5 years to reach profitability (and maybe longer) if most of the data you have laid out is accurate. Clearly, it’s of no benefit to any of the competitors for Belcampo to use a low-cost strategy, but it’s also very difficult for a low-cost strategy to survive in a relatively low volume, high fixed cost business that is also high in labor costs and distribution costs. If this business has a substantial debt-load it almost certainly won’t survive. If it’s supported by a large amount of equity then all bets are off. I would guess the guy funding it will get sick of losing money and/or find another “cool” thing to invest in and get bored with this and that’s how you will see a Belcampo exit.

    It’s certainly a difficult position for the small farmers nearby and it will probably continue down that path. That’s why I wanted to offer up some ideas for how to combat it and hopefully encourage others to discuss what they’ve done in similar situations. Adapting to market circumstances will be very important, and frequently that’s one of the hardest things for a business to do. I wish all those farmers the best and I have faith that they’ll work through it.

  5. Rebecca, at this link:

    http://eatrealfest.com/event/Oakland/California/2011/eat-vendors

    Belcampo is show as a hotdog purveyor. Was there some other meat that your friend was to supply?

    And the reason I mention this is that there are all sorts of other vendors listed there. Why wasn’t your friend there when all of these other vendors are?

    I’m a bit skeptical of this — it’s not checking out.

  6. I called the Eat Real folks this morning and confirmed: Belcampos participation in the eat real festival was limited to selling hotdogs off a truck. There were several vendors selling grass fed beef there apparently. They were not a sponsor (like whole foods and jack london square and toyota)

    Can you explain, Rebecca?

  7. Hi – I am the CEO of Belcampo. I posted a comment on Rebecca’s post on Honest Meat because literally nothing in her post was factually correct. Rebecca has not approved my comment for posting on her blog (surprising?), I emailed her a follow up but have not heard back. So, I am posting my comment here in its entirety. This addresses the errors in Rebecca’s post, which are the underpinnings of the errors in this post on Beginning Farmers. I wish you all would check your facts before writing things. – Anya
    **
    Response to Honestmeat Post:
    There are a number of major factual errors in your post, which I find surprising as you know me personally, we’ve worked together in the past, and you could have easily reached out to me to verify your facts.
    Here are a few points to correct the errors in your write up:
    – I personally developed the idea for Belcampo Meat Company and the business plan for it. I am thrilled there’s an investor who believes in this vision, has the land to support it, and is willing to provide the patient capital it takes to do things right. We are opening a group of butcher shops in California in the next few years, we are also opening our own slaughterhouse. More than 80% of the meat we process in our slaughterhouse starting next year will be from other farms. I think many small farmers in Oregon and California will be thrilled about this.
    – Will our stores take business away from small farmers? We are not going into farmers markets, we’re not wholesaling to any restaurants….I think I am going to be opening a complementary business that will raise awareness for quality meats that will have a real benefit for small farmers in the Bay Area.
    – Belcampo is not owned by an investment firm. The primary shareholder in Belcampo also owns Global Portfolio advisors, these are completely separate investments. The trademark for Belcampo was pulled by a company that coordinates the primary investor’s work simply because we had not yet received the business license for Belcampo.
    – When I was running a sustainable food and farm business consulting company, I met the investor behind Belcampo – Todd Robinson – and developed the concept for this business, wrote the business plan, and secured his investment in the business. As part of that, me and other people from our team called various small farmers to verify numbers and assumptions. We did this for all kinds of businesses I planned. There is no good general data on sustainable, extensive animal husbandry data so we had to build it from the ground up. Often, we paid people, sometimes they were offended when we asked. So we played it by ear. I think that the development of good generalizable economic data around sustainable farming is crucial to making more farms more successful. The majority of farmers we spoke with were happy to help out.
    – I am the CEO of Belcampo, I have closed my consulting company to focus exclusively on Belcampo. I am not a lobbyist/marketer.
    – The biggest meat provider by far at Eat Real are Del Monte Meat Company (their sustainable line) and Whole Foods. There was no exclusivity for Belcampo at all in either Los Angeles or in Oakland. There were dozens of other meat companies present at the event. One of our goals at the festival is to get many local street food sellers to use quality meat. To that end, Eat Real has built relationships with companies that produce quality meat, we achieve that by having as many meat companies participate as possible. As an FYI, Eat Real is now becoming the annual fundraiser for the non-profit Food Craft Institute, hopefully the relationship with all our meat providers will continue to thrive.
    Anya Fernald
    CEO, Belcampo
    510-250-7810

  8. Hi Anya,

    To which “errors” in this post are you referring? I appreciate that you are frustrated by the article on Rebecca’s blog, but in all honesty this post has almost nothing to do with Belcampo or Honest Meat. In fact, I went through great pains to make it abundantly clear that “This article is not about whether Belcampo’s (or Wal-Mart’s) actions are right or wrong, it’s about how you, the small family farmer, can prepare your business for the realities of competing with large, well-funded businesses.”

    I was inspired by Rebecca’s post to address a concern within the small farm community that I think deserves some attention. Namely, what do you do when a big competitor moves into your market? I think this is a valid concern and I hope small farmers took my advice and developed their own strategies. It’s an important consideration and deserves some thought. I’m sure you would agree, given that you were a small farm consultant.

    If you disagree with my statement that Belcampo is a large, well-funded business then I guess that’s your opinion, but from the vantage point of a small farmer I’m sure Belcampo appears to be just that. If your main beef with my article is that I said Belcampo is owned by Outpost International and it’s actually owned by Todd Robinson through a separate investment vehicle then I think you’re just arguing semantics and failing to grasp the true point of my article.

    I respect (and approved) the decision to remove reference to Belcampo from the beginning of this article because unfortunately its use had deviated the focus of readers away from the true intent. For anyone who would like to read the original paragraphs in the post you can visit our site: http://www.littleseedfarm.com/to-be-a-farmer-blog/grass-fed-meat-from-wal-mart.html

    Again, Anya, I understand your frustrations, but please don’t misdirect them at an article whose very clearly stated purpose is to help small farmers, not detract from Belcampo. Thanks and good luck.

  9. I updated the blog post here- http://www.honestmeat.com/honest_meat/2011/09/whos-your-farmer.html, however I believe the issue and particulars remain largely the same. The key question that Scrapple posits for this article about larger corporate outfits getting involved in sustainable agriculture and what this means for the rest of us who have been living & breathing it for decades (& the newbies who are eager to start out but lack much financial capital) is still an important question to ponder. Can we market our way out of it? I am not sure, but I sure hope so.

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