Finding your niche -- Other markets for food and drink products
by Ellen Gooch

There are only a limited number of food stores in the world, with a finite amount of shelf space.  For small and medium-sized food manufacturers, getting access to this shelf space is no easy task. 

The key to success lies in differentiation.  A smaller company that creates, say, a cola drink will find it hard – if not outright impossible – to compete with multinationals like Coca Cola or Pepsi.  It is better to create a unique product tailored to a specific demographic that multinationals do not yet serve.

In marketing-speak these underserved markets are called niche markets (EG note: please do not translate, leave in English).  Niche markets are characterized as those markets ignored by mainstream producers that serve a narrowly defined base of potential customers.  To be profitable, these potential customers must be accessible, their numbers must be growing, and competition for their business must be limited.  Ideally, once a company identifies a niche market, they should seek to dominate it.

Here’s an example: Terumo Corporation, a Japanese medical products company, recently launched a food product for the elderly.  The product is a yogurt-flavored semisolid (in other words, easy to chew) meal containing a balanced blend of proteins and carbohydrates.

This is pretty clever marketing.  After all, baby food sells well, so why not make other age-targeted products?  And what better age to target than the elderly, since 37% of the population of Japan is over 50.  In short, Terumo identified a niche market with an easily identifiable, accessible and growing potential customer base – and they got there first.

Greece has a fairly small population, and so the potential to capitalize on underserved markets within this population is somewhat limited.  Further, the retail channel is dominated by multinationals such as Carrefours.  Multinationals like to deal with other multinationals and this means Greek consumers are more likely to find, for example, Unilever brands on the shelves than home-grown brands.  Better opportunities exist in export.

Most Greek food and beverage companies that export are already, by default, serving a niche market: the ethnic foods market.  Mezes, cheeses, specialty beverages, traditional snacks, some dried fish, Greek sweets, etc. may be typical fare within Greece, but outside Greece they are exotic and, well, ethnic.  I would also argue that many Greek products that are produced by other countries as well, such as olives, olive oil, tomatoes and perhaps even canned fruits, while not ethnic per se, do score marketing points as ethnic products because of the fact they come from sunny Greece.

The Ethnic Foods category is one of the fastest growing sectors worldwide.  In the US, this category, already at $75 billion is 2005, is expected to increase by 50% over the next decade (source: Agrifood Canada).  This past March, Packaged Facts, a market research firm, claimed that emerging ethic cuisines would be of increasing interest to consumers, especially Mediterranean products and, more specifically, Greek products.  

As for the EU, Leatherhead, another market research firm, valued the Western European ethnic food market at €4.12 billion in 2006, with the UK in the lead at €2.34bn, followed by France and Germany. 

While all this is good news for Greek food and beverage producers, it should be noted that, while the ethnic market is a niche market, it is not exactly a small niche.  Further specialization is needed to carve out a space in this market; a niche within a niche, so to speak.  Here, then, are a few ideas.

Kosher Foods

The kosher food market is, by itself, a niche market.  However, there is a growing sub-niche: kosher ethnic food.  Both Spanish and Asian companies have made significant inroads into this market and there is no reason why Greek companies can’t do the same.  While kosher foods have historically addressed Jewish populations, this is changing.  Many consumers believe (perhaps rightly) that kosher foods are prepared more carefully and are safer to eat.  Certainly the production of certified kosher foods (we will get into certification later) is closely monitored by the certifying agency.
Let’s look at the basics of Kosher food.  To begin with, meat and milk (and anything made with meat or dairy products) cannot be mixed.  As an example, Greek meatballs made with cheese would NOT be kosher.  Not only can meat and milk not be mixed, but they may not be prepared using the same utensils, even if those utensils are thoroughly washed between uses.  For food producers, a “utensil” includes any machinery used to prepare the food.  In other words, a food producer cannot make, say, mousaka, one day and a pure meat product the next day using the same machine for the pure meat product to be kosher.
In terms of meat, it must come from land mammals which chew their cud and have cloven hooves.  This meat must be slaughtered in a very specific way that I won’t go into here except to say that it is process rarely undertaken outside of Israel.  This process also holds true for birds, such as chicken. 
Fish must have fins and scales.  All other seafood, such as oysters, shrimp, etc. is prohibited.  Caviar (and avgatarajo) is allowed.  Insects, with the exception of a kind of locust, are prohibited.  This may not seem like a big deal, but it means that vegetables must be washed very carefully indeed.
Two categories of food and beverage products – namely cheese and wine – may only be prepared in their entirety by Jews.  Specifically, the grapes must be grown, harvested, pressed, casked, bottled and labeled by Jews.  Greek cheeses and wines are therefore not potential products for this market. 
Another category -- Bishul Yisrael – must be prepared in some significant part (though not in its entirety) by a Jew.  Bishul Yisrael encompasses prepared foods, specifically prepared foods that are “fit for a king’s table.”  What does and does not constitute Bishul Yisrael is a matter of some debate, but it is doubtful that foods such as Mezes would be subject to this rule.
At first glance, it may appear that producing kosher food is too complicated to attempt.  Yet Greece has a long vegetarian tradition and many of the country’s classic Mezes are, as recipes, completely in line with kosher precepts.  And it is worth it.  According to a June 2007 report by the US Department of Agriculture, sales of kosher products now exceed $6 billion in Europe alone. 
For the US, as reported in a July 6, 2007 Ynet article called “America Goes Kosher”:
“In the last decade, kosher food sales in American supermarkets have reached a growth rate of 15 percent as opposed to a four percent growth rate for food that is not kosher. Eleven million Americans buy kosher food, and they are responsible for a yearly turnover of $9 billion [note: the source of this figure is research firm Integrated Marketing Communications]. What’s interesting in all this data is that there are only just over six million Jews in America and even fewer keep kosher. Slowly but surely the kosher food market is being taken over by non-Jewish Americans who are on the lookout for kosher food that is not just gefilte fish and matza.”
And let’s not forget Israel, According to one of Israel’s most formidable importers and distributors, G Willi Food, the annual Israeli kosher food market was approximately $13 billion in 2006.

Getting Certified
Some leading certifiers

	The Union of Orthodox Jewish Congregations 333 Seventh Avenue  New York, New York 10001 (212) 563-4000 Fax - (212) 564-9058 Rabbi Menachem Genack, Rabbinic Administrator
	The Organized Kashrus Laboratories 391 Troy Avenue Brooklyn, NY  11213   (718)756-7500 Fax - (718) 756-7503 Rabbi Don Yoel Levy, Kashrus Administrator
	Star-K Kosher Certification 11 Warren Road Baltimore, MD  21208-5234  (410) 484-4110 Fax - (410) 653-9294 Rabbi Moshe Heinemann, Rabbinic Administrator
	Star-D 11 Warren Road Baltimore, MD  21208-5234
	AGUDAH The Beth Din Zedek of Agudath Israel 02-385-2514
	The London Beth Din Court Chief Rabbi Rabbi Berel Berkowitz 01-387-4300

There are literally hundreds of kosher certification agencies.  Some are more respected than others.  One of the most respected (and the world’s largest) is the Union of Orthodox Jewish Congregations (AKA the Orthodox Union or OU).  This group certifies over 500,000 products from over 83 countries, including Greece. So far in Greece they have certified: Agrexpo Orfanos Sons Ltd;  Intercomm Foods SA;  Kozat SA; N. Gerentes SA; and Tripsas SA.

I spoke with OU’s New Business Development Associate, Phyllis Koegel, who explained the certification process thusly:

“All OU certification begins in our New York Headquarter offices. The way the process works is an application is submitted with comprehensive information about the company, its plant, products produced, ingredients, source of ingredients etc.

Once we determine that there are no glaring irregularities (obvious reasons why something cannot be kosher), we send a Rabbi located in Europe who handles countries such as Greece, Italy, Spain etc. to make an initial inspection of the plant, its production process and examine the ingredients.

The Rabbi then submits a report to OU headquarters where a contract is sent to the company with an invoice and then they become OU certified.

As part of their agreement, they will be visited and inspected regularly to make sure they are adhering to OU procedure, guidelines and that they are using the ingredients so specified and inspected by our Rabbi.”

That doesn’t sound too painful, does it?  Shalom!

Vegetarian/Vegan

Another nice niche in a niche market is the ethnic vegetarian / vegan market.  First, I’ll define terms.  A vegetarian is someone who eats no meat.  Some vegetarians will eat animal products, such as eggs, milk and certain cheeses.  These cheeses are those that do not use rennet in the cheese making process.  Rennet, a milk coagulator, is derived from the stomach lining of a young calf and therefore eating cheese with rennet is akin to eating meat.  Vegans are similar to vegetarians except that they eat no animal-based products whatsoever.  For some vegans, this animal product prohibition includes honey.

Traditional Greek cuisine abounds with purely vegetarian dishes.  For many Greek companies, such as prepared food, canned goods, olive and other producers, the only thing that needs to be done to make their products vegetarian is to proclaim it on their labels.  Specialty food markets catering to vegetarians and vegans can be found all over the EU, the States, Australia – really, all over the world.  India and Buddhist countries, for example, have an important vegetarian tradition.

According to market researcher, Mintel, as of 2006, the worldwide market for foods replacing meat and other animal products was estimated at $2.8 billion.  And this is just for the replacement market, as in fake cheese made from soy beans.  A Food Institute report claimed that the total US market for vegetarian foods was $1.6 billion in 2003 with a five year growth rate of nearly 100 percent.  Taylor Nelson Sofres, yet another research firm, estimated the total meat-free and vegetarian market in the UK to be worth £617 million in 2004. More recent data –and a testament to the true growth in this sector – will be presented at this year’s Anuga, which will offer Europe’s first meat-free conference as part of the show [Note: this article went to print before the show].

Rule Organica

Yet another niche market is the organic market.  For this market, the ethnic subcategory has yet to be fully exploited, especially for Mediterranean foods.  Organic dolma, for example, has potential.   Really, I believe that almost any organic product produced in Greece would have potential in the US market, with the proper marketing (more on this later).  

American’s buy organic.  Retail sales of what we American’s laughably call organic foods are expected to exceed $15 billion in 2007 and are projected to grow to $32 billion in 2009, according to the Organic Trade Association.  Sure, the conventional food industry rakes in over $550 billion a year, but their growth rate is a measly 2% compared to the staggering 17 to 20 percent growth rate that “organics” enjoys.

I put “organics” in quotations because food labelled as such in the US is not necessarily organic at all. 

Why?  US agricultural policy is inclined to serve the interests of large-scale farmers.  The Non-governmental associations that once regulated the organic market had rules that were impossible for large-scale farmers to comply with.  So the US Department of Agriculture stepped in and, in 1990, formed the National Organics Standards Board.  This board created standards that made big farmers happy.  Here is their definition of organic:

“Organic agriculture is an ecological production management system that promotes and enhances biodiversity, biological cycles and soil biological activity. It is based on minimal use of off-farm inputs and on management practices that restore, maintain and enhance ecological harmony…Organic agriculture practices cannot ensure that products are completely free of residues; however, methods are used to minimize pollution from air, soil and water.”

One hates to guess how they quantify “minimize”, but if you are really curious there is a 558 page document in legalize that supposedly clarifies the term.

Contrast the US approach to organics to the approach of the EU: night and day.  The EU actually has an organics policy and, what’s more they enforce it – and not just for European products.  There are only a few countries, known as 11.1 countries, which have production rules and inspection systems equivalent to those employed by the EU.  The US, unsurprisingly, is not among them.  And now, this past June, the EU has introduced even stricter regulations for organic food production and labeling.  These new rules, most importantly, require that organic food must contain less than 0.9% of GMOs, regardless of whether such presence was “accidental.” (Currently organic producers can still use the organic logo even if their products exceed the 0.9% GMOs limit as long as they claim that the excess was unintended).

 Interestingly, Greece, along with Austria, Belgium and Italy, promoted a zero tolerance approach to transgenic content in food labeled organic.  They were denied, but at least the “but I didn’t mean to allow GMOs in my food” loophole was removed. 

I suspect that reason Greece favored a stringent ban on transgenic content in food is because it sees, possibly correctly, that the country is uniquely qualified to produce truly GMO-free food.  GMOs, as well chemical-intensive farming, are the provenance of large-scale farmers.  The average farm size in Greece is about 6.6 hectares, hardly large scale. Plus, Greece is relatively isolated from areas practicing conventional farming, mimimizing the possibility of transgenic content.
 
 If American’s really understood the difference between a European organic product and an American one, I believe they would choose the European brand.  This is where marketing comes in.  This needs governmental support.  I hope the EU takes the time to promote what European organic food is all about.  Standardizing the EU organic label is a good start; a sister label for PDO products is already gaining recognition in the US. 

Other Niches

There are many other possible markets besides the Kosher, vegetarian and organic niches.  Manufacturers could create special products for diets (the Atkins and South Beach diet being two of the most popular).   Targeting certain age groups, as Terumo does, has potential: how about a healthier Mediterranean version of Kraft Food’s Lunchables children’s snacks?  There are underserved markets out there.  Finding and exploiting them just takes a little imagination.