CAUTIOUS OPTIMISM.

Byline: Diane Dietz The Register-Guard

Eugene resident Lynn Jolly is making a giant leap into a new career at a time when the economic ground is shifting.

She spent three decades in Eugene commercial real estate - including nearly a decade as property manager for Arlie & Co. - and that wasn't so much fun anymore.

"Commercial buildings are losing occupancy. It's not really a positive industry. It's a difficult line to please owners and also to please tenants. It's a squeeze. The owners need more money," she said. "I just really wanted to do something different."

Last fall, Jolly, 54, and her son Jared Hyland, 26, learned from a broker that a Eugene pepper jelly, chutney and fruit butter maker was on the market.

Judi Dodson, owner of the Aloha From Oregon jelly manufacturer, was ready to retire after 17 years and turn the name, the recipes, the business contacts and the manufacturing plant on Railroad Boulevard in West Eugene over to a new owner.

But before the mother-son buyers put their money - a sum they declined to disclose - down, they investigated Dodson's products. They went to Market of Choice and bought jars of the pepper jellies and chutneys.

Without mentioning their interest in the jellies and chutneys as a possible business venture, they gave them to friends and waited for feedback, which was positive, Jolly said.

In December, for example, Jolly attended a Christmas party where she overheard a woman explaining that the reason her meatballs were so delicious was because they were prepared with Aloha from Oregon pepper jelly.

"I thought, `Wow that's wonderful,'" Jolly said.

"Everything opened up, so we knew it was the right thing to do. The financing went perfectly, the lease negotiations - everything went well. We just decided that's where we were supposed to be."

The deal closed on Dec. 31, and Jolly and Hyland became 12-hour-a-day business owner/operators on Jan. 1.

"We're all in, my son and I," Jolly said.

Although Jolly and her son are embarking on their business venture during what economists are calling the worst recession in decades, this isn't a bad time to be a pepper jelly maker in the small-batch, boutique specialty food corner of U.S. food manufacturing.

That niche grew 19 percent from 2005 to 2007 - or five times faster than food manufacturing as a whole, according to the New York-based National Association for the Specialty Food Trade.

Specialty food makers are estimating they experienced a 4 percent decline in retail sales in 2008, spokeswoman Louise Kramer said. And they expect no growth in 2009.

"Flat is fabulous," Kramer said. "We are extremely cautiously optimistic that it will not be extremely tough this year."

Aloha From Oregon is well positioned because 2008 brought $800,000 in sales - the company's best sales year ever, Dodson said.

The company ships directly to specialty shops in 35 states. Locally, the jellies, chutneys and fruit butters are available at Hartwick's, Pepperberries, Thistledown Farm, Made in Oregon, Capella's, Hirons Drug and the Daily Bagel.

The specialty food sector's advantage is its appeal to the highly prized 25 to 35-year-old consumers, who are sophisticated, well educated and who have been schooled by the Food Network and other cultural forces to consider themselves "foodies."

The recession may have dampened their enthusiasm for top-flight restaurant meals, but they're still in the market for products that can dress up a home cooked meal, Kramer said.

Pepper jelly is "exactly the kind of product people are going for," she said. "They may be trading down from filet mignon, but if they have a chicken leg and they've put pepper jelly on it or next to it, suddenly it's gourmet."

Dodson accompanied Jolly and Hyland to the annual Fancy Food Show in San Francisco in late January.

She said selling the business was akin to sending a beloved teenager off to college.

She hasn't scrubbed the word "we" out of her vocabulary since she sold the business, although it's been more than a month.

Dodson nursed the business to life in a tiny kitchen in Walton in 1991. She experimented with a line of chutneys but then watched the business take off three years later when she first sold the pepper jellies.

"Not everybody gets to do what they want to do, and I did - and I did it later (in life). I was 51 when I started the company," she said.

Dodson and her partner Dave Hubert poured their days into the business, and now they're venturing off to see what they missed in a series of trips to Florida, Spain and then around the United States.

"Basically, I'm just ready to retire. I'm 69 this year. It's time. Time to play," Dodson said.

Jolly and Hyland will succeed at Aloha, she predicts. "Their enthusiasm will overcome any obstacles. They're so enthused and so excited. I'm thrilled for them - and for me, too."

The new owners plan no immediate changes to the product line or the eight-employee manufacturing and shipping staff. They'll continue to add seasonal employees to gear up for fourth quarter holiday sales.

In the meantime, they'll look for ways to widen and deepen their markets.

Jolly is considering a summer-related line of products - barbecues and glazes - to keep the company humming steadily throughout the year. She hopes to find retailers in Canada to carry the company's goods.

She wants to set up electronic payment on the company's Web site to improve direct sales. She has ideas for gift packaging.

The company's pear butter will be featured in the April issue of Bon Apptit magazine, Jolly said.

Plus Oregon catalogue retailer Harry & David are interested in the products, she said. "They're talking about us doing some private labeling for them. Isn't that exciting?"

In the first month, Jolly and Hyland worked in all phases of the operation - cooking, labeling, shipping - on top of learning the market and the management ropes. At times, the found themselves exhausted and yet they were smiling, Jolly said.

"You have the stress of owning a business, but this business is so positive."

Aloha From Oregon

Founded: 1991

Location: 1471 Railroad Blvd. Eugene

Products: Pepper jellies, chutneys, fruit butters

2008 sales: $800,000