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By J.G. WALLACE with GLEN WERLING
An idea unveiled during Mayor Ted Ellis’s 2007 State of the City Address, a proposal to create a commercial test kitchen and specialty food incubator project in Bluffton, continues to move forward.
On Wednesday a meeting of the mayor’s specialty food incubator group was held at Bluffton City Hall for the purposes of reviewing the project’s feasibility study and focusing on a future course of action.
Ellis said that if the community supports the project the next step would be to fund the development of a full business plan. Earlier Ellis had said grant money for developing a business plan may be available.
Representatives from the study’s authors at the Northeast Indiana Innovation Center reviewed the study’s findings for a diverse group of business and community leaders.
The mayor’s study group includes representatives from the area school districts, businesses like Pretzels, Inc., the Inventure Group (formerly Poore Brothers), Heyerly’s Market, the Wells County Chamber of Commerce, Buckhorn, Ossian Meat Packing, Ivy Tech, the Purdue Extension Service, and the State of Indiana.
“The next step is to put a business plan together,” Ellis said. “To start attaching dollars to this project and see if we can find enough, and whether there is community support or not.”
Ellis urged caution during the meeting, noting that this is a long term venture, and will not likely be an overnight success.
Ellis has long likened the idea of transforming Bluffton into a specialty foods hub to the Warsaw area’s transformation into the world’s orthopedics capital.
“This is a long term project,” Ellis said. “This is not something we’re going to build and cut the ribbon on and Smuckers will decide to move to Bluffton next year and won’t life be great.”
“They didn’t start putting hip joints together in Warsaw last week,” Ellis said. “As such there’s going to be a long, slow process. It has the potential to be a great project, but we all need to know that up front.”
“If the community is willing to make the commitment then I think there’s nothing but good times ahead.”
The study was drafted by the Northeast Indiana Innovation Center in cooperation with Ivy Tech. That study determined that there are 1,153 other food processors within our 150-mile target radius of Bluffton.
These processors, before introducing a new product, must use a test kitchen to test production and packaging methods. In addition, specialty food production (small batch, distinctive products) is a fast-growing market, growing 22.3% between 2003 and 2005.
Kim Pontius of Ivy Tech said, “We’re in the preliminary steps right now. We need to find out it there’s enough interest in the community to make this a reality.”
“This is what I’d call a legacy project,” Pontius said. “This is going to take some time to put together enough consensus from the area to see if they want to make something like this real, and then the next step would be to put together a formal business plan.”
Pontius suggested the business plan should be drafted by the Innovation Center as they have already compiled extensive data through their work on the feasibility study.
Pontius noted the Innovation Center is well known across the country for the success of their high tech business incubator, and he suggested the specialty foods incubator could also be a successful venture.
“If we’re talking about incubation and business incubation then obviously the Innovation Center is a regional leader,” Pontius said. “They are also nationally recognized for their success in Fort Wayne with the high tech business incubator.”
The facility proposed in the feasibility study would incorporate a commercial test kitchen for food producers that may be drawn from a 150-mile radius of Bluffton.
It could be used to develop new recipes, packaging, or preparation methods, and to allow food manufacturers to conduct consumer studies on new products.
The center proposed for Bluffton would also incorporate a business incubator that will teach not only technical skills of food processing and packaging, but also the skills needed to start and run a food related business, including the areas of marketing, USDA and FDA certification procedures.
Any course offerings could be done through the auspices of Ivy Tech Community College. Ivy Tech would also offer courses for area people who wish to work in the food industry. Ivy Tech has already located a classroom trailer in Bluffton which could be used for the classes until a permanent facility is completed.
Ellis said the facility would provide additional business opportunities for local businesses that may already be retailing specialty food products, doing website design and hosting and marketing of those products through the internet; and for businesses to meet the packaging and distribution needs for the new food products.
The study also suggests that the facility would operate as a co-packer business for some of the products developed on site, where manufacturers could purchase a turn-key service that included packaging and marketing components.
Another large revenue source for similar facilities is storage. The study reads, “Storage is a money-maker that grows as the client base grows. It can easily grow to become one of the largest revenue sources for the kitchen, if not the largest revenue source.”
The study noted that kitchen incubators, like general business incubators, require additional revenue streams to supplement client fees.
The study had determined that while the specialty food business is growing each year and the products tend to command higher profit margins the industry is lacking facilities like the one proposed for Bluffton.
For many reasons the Innovation Center study concluded, “We find that the proposed specialty food kitchen incubator is feasible, assuming that the venture adopts a creative hybrid business model, actively extends its marketing activity outside its four-county area, and leverages the collective strengths and population draw radius of Northern Indiana, and the tri-state area.”
The study also suggested that the kitchen incubator project could be tied to a “destination complex,” like Richard’s Restaurants Bearcreek Farms, and could attract out of region spending and a ready-made agritourism destination.
“Bluffton’s proximity to Interstate 69 would be an asset, making it easier to attract culinary tourists,” the study stated.
While drafting the study, Steve Franks of the Northeast Indiana Innovation Center interviewed specialty food manufacturers, surveyed the industry at large, and visited similar facilities in Madison, Ind., and Hart, Mich.
Franks also surveyed 30 test kitchens across the country, about half of which also serve as business incubators like the facility proposed for Bluffton.
During 2006 about 64% of consumers bought specialty foods, up from just 58% 2005. Overall the specialty foods industry is outpacing the growth of the food industry at large. 5,168 specialty food items were introduced in 2005, and more than 5,000 have been introduced each year for the preceding three years.
Five specialty food categories experienced growth over 50% from 2003 to 2005; breads and baked goods, carbonated, functional and ready to drink tea and coffee drinks, water, yogurt products, and juice type beverages.
The study also noted that in a 150-mile radius of Bluffton there are 52,000 potential clients even before any new food businesses are created.
There are already 2,183 raw materials producers, 1,167 existing food processors, and 49,572 food wholesalers and retailers.
The study stated that, “the region’s strengths in agriculture and food businesses appear to make it an ideal candidate to house a specialty business incubator focused on a shared commercial kitchen.”
The report stated that there are only 14 similar incubators in the country, and locating one here would provide the region with a clearly differentiated niche.
To succeed the venture would depend on four factors, according to the study.
The first is an adequate market for specialty food products. Secondly, there would need to be an adequate supply of potential specialty food manufacturers in the region.
The study said the other needed factors to succeed would be a focused business model for the facility and adequate resources in the region to execute the business plan.
jgwallace@news-banner.com
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