Summary report: “Terms and development opportunities for small-scale food industries in the Danish rural areas”

Tuesday, June 13, 2017 - Published by Alfred Kazemier
Small-scale food producers in the Danish rural areas are alive and well. Their markets are growing and the customers like the products. The 46 small-scale food producers in this investigation cover a wide range of different businesses: They are located in rural areas all across the country and they cover a wide range of different products: From cheese, ice cream and other dairy products to meat and fish, bakery products, juices and jams, fruit and vegetables, and also wine, beer, liquor and candy. Many sell experiences, commitment and knowledge, and this is just as important as the food product itself. In size, the businesses range from very small producers, which have just gone beyond the hobby stage to companies employing more than 20 employees. The 46 businesses face challenges as everyone else, but the owners are optimistic. What they do is important for them and for the area they are located in.

Reasons for success

What turns small-scale food production into a success? That issue was a major reason for initiating this study. The answer can help make it easier to point out how food production can become an even stronger factor in development of rural areas and future contribution to employment, income, settlement and tourism. The following quite significant success factors were found:

Idea and passion

The entrepreneurs, business owners and employees are very passionate about taste, food development and food quality. Overall, they bring valuable knowledge and experience from many different previous occupations and industries, of which some are very far from the traditional food industries. The main drivers for them are the desire to help with freshness, authenticity, sustainability, transparency of ingredients and production processes, reduction of food waste etc.

Courage and pragmatism

The business owners are judiciously risk-oriented. Although most of them do not have a business plan and are ready to take chances, they do have goals for where they want to go. They are brave but not foolhardy, and pragmatism is reflected in the fact that they grow in line with earnings, and that they do not put everything on the line. Many have had a long start-up period with another job alongside. Some want growth and are working on it while others want to maintain a small scale.

Cooperation and openness

The companies are very collaborative. They create alliances with suppliers, dealers and customers not just in their local area, but also much broader in Denmark and abroad. It is particularly useful for product development and marketing to build mutually beneficial relationships with hip and media accustomed chefs and food intermediaries. Food networks are of great importance for some of the companies in the survey, but not for everyone.

Business models

Jobs, earnings and development can be created in many ways. The study identifies 11 business models, i.e. characteristics of the way in which a company creates value by using its available resources, through processing and changes of material and knowledge and through the use of contacts to the market.

The 11 identified business models are:

All food is experiences

- Where food and customer involvement is designed closely together in a unified concept

Recycling and upcycling

- Where sustainability and the environment is included actively and innovative.

Born “glocal”

- Where the small scale is not an obstacle in entering the export markets, but where the local brand is still important (Global and Local)

Strategic outsourcing and insourcing

- Where the company rethinks its role in the value chain and enters in new forms of co-operations

Old fashioned in the cool way

- Where authenticity is rethought

The brand

- Where the company places its products efficiently in customers' consciousness and subconsciousness

VIP club

- Where niche markets are serviced in close interaction with the customer

Symbiosis with social goals

- Where advantages are achieved through ethically based partnerships

Cooperation with the active “prosumer”

- Where the customer not just buys the product, but also works for the company (Producer and Consumer)

Growth by franchising

- Where growth is rolled out through strong, reproducible and scalable concepts.

The report (in Danish) can be downloaded at:

http://www.smagenafdanmark.dk/media/2700989/vilkaar-og-udviklingsmuligheder-for-smaaskala-foedevareerhverv-i-de-danske-landdistrikter-2016.pdf