Awash in sauce.
Byline: JOE HARWOOD The Register-GuardFROM ORGANIC pasta sauce, pesto and tofu pate to wacky garbanzo bean concoctions, dressings and salsas, Eugene is awash in locally owned companies that produce an unorthodox mix of sauces, dips and spreads.
About 15 Eugene firms make foods with a bent toward the wholesome and healthy, and 10 of those produce a sauce, salsa, spread, dressing or dip. Perhaps the abundance can be explained by the enterprising spirit that smolders in Eugene's counterculture hotbed.
But the local sauce industry isn't just a place where food aficionados with an independent and creative streak can eke out a living. It's a place where there's big money to be made, thanks to the nation's growing interest in health-oriented foods.
Two months ago, Eugene-based Emerald Valley Kitchen, a maker of organic salsa, hummus and dips, set the financial bar for the local industry. Emerald Valley sold itself to publicly traded California-based Monterey Pasta Co. for a spicy $5.5 million. The sale was a big payoff for nearly two decades of hard work by Emerald Valley founder and majority owner Mel Bankoff. For Bankoff, who is staying with Monterey as head of its Emerald Valley unit, the sale was chance to cash out while keeping Emerald Valley on its steep upward trajectory.
Will Eugene see more of these deals? That's uncertain.
It's clear, though, that Eugene is thick with sauce makers.
Why? Maybe it's the city's larger-than-average number of specialty natural food stores that welcome local products and provide a retail launching pad for fledgling food makers. Or it could be the consumer demand created by a conscientious population that early on embraced organic and whole foods. Another factor may be the large contingent of local consumers who believe it's important to support local firms.
Whatever the reasons - all of the above probably apply to a degree - Eugene natural food companies are increasingly finding acceptance not only locally, but in the region and nationally, too.
However, making the jump from supplying local specialty stores to regional and then national retailers often strains the capital resources, manufacturing, distribution and marketing capabilities of small companies.
Firms on the cusp of going big often have to make the choice between slow growth, taking on financial partners or selling to larger companies with deeper pockets.
Tofu Palace Products Inc., the Eugene maker of Toby's Tofu pate and Toby's salad dressings, has taken the slow-growth route.
Launched in 1984 by Toby Alves with a $200 loan from O.U.R. Federal Credit Union in Eugene, the company now has annual sales of roughly $1.5 million. The organic tofu pate once only found in health food stores is now distributed in specialty and mass-market grocery outlets across Oregon and in the Seattle area.
The firm, owned by Toby Alves and her two sons, Jonah and Olem, has turned down a few purchase offers and has not solicited venture capital. A 1996 expansion was funded by a $250,000 U.S. Small Business Administration loan.
"I think it's been a blessing that we've had manageable growth," said company President Jonah Alves.
Instead of giving up family control in order to expand regionally and beyond, Alves said one possibility might be to grow to the point that the company could do a limited public offering to raise capital. But that would be years down the road, Alves said.
"This business employs my mother, my brother and pays for my sister's college," he said. "I'd really like to keep the family and local aspects."
Finding a buyer
Other local food companies have taken a different route. One option is to sell to a larger company.
"Success breeds vulnerability and risk," said Bankoff, owner of Emerald Valley. "I wasn't willing to rachet it up to the next level and take on that risk. I thought if I could find a partner that respects ... and values our expertise in organics, then it would be advantageous."
Emerald became a subsidiary of Monterey and its manufacturing facility will remain in Eugene. Bankoff will remain with the company as director of Monterey's organic product development.
Bankoff required that the purchaser of his company respect the culture and values of Emerald. That's a common theme in small, personality-driven businesses started on a shoestring, and in the case of food makers, often in the family kitchen.
Rising Moon Organics, for example, is now the largest supplier of organic ravioli on the West Coast, said company co-owner Kirk Giudici. The Eugene company sells 10 styles of frozen ravioli, five types of pasta sauce and recently introduced a pair of pesto sauces.
Giudici and partner Jade Elms launched the business in 1991 as a way to help cover the tuition and living expenses while attending the University of Oregon.
Living in a house with six roommates, the two were able to use the kitchen only between 2 a.m. and 8 a.m. to make their ravioli and sauces - hence the Rising Moon name. Giudici sold his car for $300 to start up the company, and then delivered products by bicycle.
"At that time, we weren't even keeping books," he said. The company is expecting to sell 500,000 pounds of ravioli and pasta sauce this year. Giudici said ravioli makes up about 70 percent of sales.
Do he and Elms ever think about selling out?
"Yes, we do," he said.
"The further I get into this the more I realize how deep it goes. There are people and companies that have been around a lot longer and have more resources than I do," he said. "Do I play the game and then (eventually) pass the baton?"
Giudici said the company, even though it distributes its products to more than 500 (mostly specialty) stores across the country, is "marginally profitable." The big bucks are reaped by megaproducers that can achieve lower per-unit costs by manufacturing huge volumes.
Edible ethics
Yet Giudici, like Bankoff and Alves, has always seen the business not just as a way to make a living, but as a tool to promote sustainability and greater respect for the environment. That philosophy impacts many of their business practices, including where they buy their ingredients and what type of packaging they pick for the finished product.
The glass pasta sauce jars of Rising Moon are easily recyclable. Early on, Rising Moon sold its ravioli in biodegradable cellulose bags. But the bags grew rigid in the freezer and often ripped open. Giudici is still working on a more environmentally friendly way to package the ravioli.
"Packaging is my next frontier," he said.
Giudici said if Rising Moon were sold, it would have to be to someone "who shared our vision."
Mary Ann and Mark Beauchamp, on the other hand, hope to grow to the point that they attract the notice of a large company.
The Beauchamps, who own the three Cafe Yumm! restaurants in Eugene and sell their Cafe Yumm! sauces and dressings to about 20 stores in Oregon, one in northern California and four in New York, see a national presence as their mission.
"We want to get delicious, nutritious food out to as much of the general public as we can," said Mark Beauchamp.
The couple, both with restaurant and food service backgrounds, stumbled into the retail sauce business.
Soon after the couple started operating the Wild Rose Deli and Cafe at the Friendly Street Market in 1991, customers started asking for a brown rice, homemade lemon-garlic sauce, bean and salsa dish that Mary Ann frequently made for herself, but wasn't on the menu.
"People ate it, said 'yum' and kept asking for it," Mary Ann said. "So we put it on the menu."
After moving to the Fifth Street Public Market in 1993, the dish became the most popular menu item. And customers started asking for the nondairy creamy sauce with the lemon-garlic flavor to take home. Mary Ann Beauchamp started making the sauce for take-out, one gallon at a time in a blender.
"People would get mad when they couldn't get it," she said. "We couldn't always meet demand, so we started having people order in advance."
By 1995, the sauce's popularity had grown to the point that the Beauchamps struggled to make enough for take-out and also operate their restaurant.
"Mary Ann's shoulders and wrists were hurting because she was making so much," Mark Beauchamp said. "That's when we had to make a decision: Do we go into the food manufacturing business or stay in the cafe business?"
Not wanting to invest the time and money into setting up a manufacturing line, they started looking for a company they trusted to make the sauce. They flirted with well-known food producers such as Yoshida's and the maker of Litehouse salad dressings.
They finally found a good fit with Rising Sun Farms, an organic farm and food production company just south of Medford.
"Driving down there, I felt physically ill thinking about giving away a recipe that took years to develop," Mary Ann Beauchamp said.
But Rising Sun co-owner Elizabeth Fujas loved the sauce, put the couple at ease and agreed to make it for the Beauchamps to sell at their restaurants.
Distribution dilemmas
In 1997, Fujas asked if they had ever considered retailing the sauce. "No, we hadn't," Mark Beauchamp said.
Distribution is a huge component in the food retailing business, and he recognized the challenges of trying to market and then distribute a product.
"We had another decision to make: Do we become food distributors or do we stay in the cafe business," Mark Beauchamp said.
Giudici, of Rising Moon, said it's not only tough to get food onto retail shelves, it's a challenge to keep it there. And getting the product to markets is a constant challenge.
"You'll go to distributors, and they will say the product looks great and to call when you get it into a certain number of stores," Giudici said. "The stores will say the product looks great and to call when you find a distributor."
Jonah Alves, of Tofu Palace, said his company took a less-traveled route. The company distributes its tofu pate and salad dressings itself.
"That's gone well for us," he said. But it also limits growth because of the transportation costs.
The shelf-life of the tofu pate is another factor. With no preservatives, the product must remain refrigerated and stays fresh for only about 18 days.
"Because of that, anything more than a day's drive is tough for us," Alves said.
The Beauchamps have thus far been able to skate around the difficulties of distributing their sauce by using Fujas' established distribution system.
But the Cafe Yumm sauce isn't yet flying off store shelves.
"People don't know what to think about it because it's so different than anything else," Mary Ann Beauchamp said. "It has no predecessor."
Mark Beauchamp said the business is likely to grow in two ways: Either a large company will want to buy rights to produce and distribute the sauce, or they will start franchising Cafe Yumm! restaurants, where they will also sell the sauce for take-out.
"It will catch on, it's just a question of when," he said.
CAFE YUMM!
Products: Cafe Yumm! sauces, salad dressings and vinagrettes
Founded: 1995 in Eugene
Owners: Mark and Mary Ann Beauchamp
RISING MOON ORGANICS
Products: Organic ravioli, pasta sauces and pesto
Founded: 1991 in Eugene
Owners: Kirk Giudici and Jade Elms
TOFU PALACE PRODUCTS INC.
Products: Organic tofu pates and salad dressings
Founded: 1984 in Eugene
Owners: Toby, Jonah and Olem Alves
CAPTION(S):
Employee C.T. Bybee packs boxes of tofu pate at Tofu Palace Products in Eugene. The business is one of more than a dozen that help make up the area's successful and growing organic and sauce industry.
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| Title Annotation: | Eugene-Springfield area is hotbed of organic spreads and dressings; Business |
|---|---|
| Publication: | The Register-Guard (Eugene, OR) |
| Date: | Oct 6, 2002 |
| Words: | 1962 |
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