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OCTOBER 10, 2000

SMART ANSWERS
By Karen E. Klein

Making Dough from Organic Bread
Market research is important -- but educating customers is absolutely vital when carving a niche in a premium market


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Q: I have an authentic bakery with the major market share in New Zealand for upmarket artisan breads, supplied to restaurants and cafes. We will be introducing organic flour, imported from the States, which costs four times more than our regular flour. How do I promote this organic product line and make my customers aware that it will be more costly?

---- Maria Gray, Pandoro Panetteria, Auckland, New Zealand
A: One would assume, since you've already decided to introduce a product line based on organic flour, that you have completed extensive market research and found an unmet demand for this type of bread. Your best tool in selling the product to your restaurant and cafe customers will be to show them this research, demonstrate the interest that exists, and persuade them that carrying your organic breads will bring in new customers and mean additional revenue.

If you haven't done sufficient testing of the waters, you need to back up and do so now, experts say. You're introducing a costly, high-end item that will appeal to a fairly narrow market. This can be risky and difficult: As your production costs rise drastically, your margin may shrink unless your clients can sell the loaves in volume at a good markup. So here are some questions you need to address:

KNEAD SOME ANSWERS.  Is there really so much demand for organic bread in the marketplace that your retailers will be able to sell it at a premium price? How much competition do you face from other wholesalers of organic baked goods? Are your current clients already selling to this market share, or can they attract new customers with an interest in organic and health foods? Do they offer similar products on their menus? If so, are they selling well? Is this project really going to be worth your time and investment?

Research the health-food market in your area, and survey the customers at the restaurants and cafes where your products are sold. Ask them how interested they are in buying organic bread, and how much they would be willing to spend for it.

Once you're sure that you can produce and distribute this product line successfully, make sure your clients are thoroughly educated about it, says Steve Steinhauser, director of the restaurant-industry practice for Deloitte & Touche. "From the restaurants' point of view, this product has to line up well with their concept or they won't carry it," he says.

"Be sure your clients understand what you're doing in terms of the organic flour and why," says Steinhauser. "Distinguish this line from your other products with educational information, packaging, and special promotion." You must persuade your restaurant clients that their patrons will recognize your products' superiority and value their restaurants more because they sell organic, upscale Pandoro bread.

FOOD FOR THOUGHT.  In communicating with your clients, emphasize the public interest in healthful foods and unprocessed products, says Steve Davis, vice-president of Technomic Inc., a food-industry consultant based in Chicago. "Restaurants and cafes that are active in promoting organic foods will be viewed as contemporary in that they're addressing an emerging consumer trend and possess a concern for maximizing consumer satisfaction," he says.

This focus on positive-image enhancement, coupled with an ability to increase check averages by offering higher-end menu items, could go a long way to justifying the higher-cost flour with your clients. While you're communicating the special qualities of this product line to your retail clients, you should also help your retailers promote the products directly to consumers, says Ray Coen, a Los Angeles-based food consultant. "Chances are, unless they're educated, uninformed customers may recognize that the bread is good, and regulars may recognize that it is different. But unless someone tells them about the origins, they won't know it's worth more money," Coen explains.

SUCCESSFUL RECIPE.  As part of your marketing for the organic product line, you could create point-of-sale materials for menus, table displays, and take-out counters that extol the value of your clients' menu items made from organic flour. You should also give your organic product line its own brand identity and consider giving your retail clients an allowance to advertise it.

"If your PR campaign and advertising to the end consumer convinces them that they should value Pandoro's bread, the restaurants will start coming to you and asking to carry it," he says. That's a much better outcome than making the investment and having your dough fall flat.


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