Sonoma County’s organic, artisanal food future looks bright

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Sonoma County’s love affair with organic and artisanal food is showing no signs of slowing down.

As more consumers embrace those food products locally and across the nation, the specialty food and beverage manufacturing sector continues to grow at a rapid clip, in terms of both profits and employment, according to a December 2016 industry report from the Sonoma County Economic Development Board.

Sales of organic food and nonfood products have grown nearly three times as fast as conventional offerings in the last decade, and robust growth in food and beverage manufacturing lifted overall factory payrolls to the highest level since 2006, the report said.

“There’s something about the artisanal culture here that seems to permeate all industries here in Sonoma County, even our food manufacturing,” said William Silver, dean of Sonoma State University’s School of Business and Economics.

Silver saw evidence of this at the first Harvest Summit in Sonoma in October. The summit was billed as a gathering of innovative leaders in technology, media, entertainment, food, wine and consumer products. The people that were gathered there, the nature of the conversations and the event itself was not like your typical industry affair, Silver said.

“It wasn’t a ballroom setting with PowerPoint presentations,” he said. “Even ‘networking’ is too 1990’s a term to describe what was happening there. It was people from different sectors getting together and using their experiences, talent and excitement about where we live and what’s happening here to talk about possibilities for the future. People love what they do here and are passionate about it. That’s where the energy is. We’re doing things very differently here than in other parts of the state and the country.”

Silver cited the success of local businesses like La Tortilla Factory, Traditional Medicinals, Krave Jerky and Amy’s Kitchen.

More county food producers are also seeking startup financing, although IT and medical device firms have traditionally attracted the highest share of venture funds. Access to plentiful startup financing in the Bay Area and in the county itself will enable local producers to better compete on the national stage, the economic board report said.

As consumers are growing increasingly health-conscious and aware of environmental and ethical practices of the food beverage and lifestyle products they purchase, the demand for organic and artisanal goods stands to further increase in coming years, to the benefit of Sonoma’s producers.

Though organic produce, dairy, meat and snack foods tend to be more expensive than conventional offerings, organic purchases are on the rise across income levels. According to the Organic Trade Association, eight in 10 shoppers purchased organic food products at least once in the past year, a marked increase from the start of the decade. U.S. sales of organic foods surged 11 percent in 2015 to $40 billion, or nearly 5 percent of total domestic food and beverage sales.

According to the U.S. Department of Agriculture, sales of organic produce, dairy and meat will increase at a double-digit pace over the next two years, and consumers’ willingness to pay a premium for organic and artisanal products will safeguard profits despite the county’s high business and labor costs.

A tight labor market and rising labor costs will compress margins, though profits for food, beverage and lifestyle products makers will continue to hold firm, the board report report said. Though competition in the organic foods segment is heating up, robust demand will drive revenue growth and preserve county firms’ pricing power.

Cynthia Sweeney covers health care, hospitality, residential real estate, education, employment and business insurance. Reach her at Cynthia.Sweeney@busjrnl.com or call 707-521-4259.

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