In search of a sector

GROWTH PLAN: RI Mushroom Co. co-owners Michael  Hallock, left, and Bob  DiPietro started selling organic mushrooms in 2013. The company now produces more than 5,000 pounds of mushroom a week. / PBN PHOTO/ MICHAEL SALERNO
GROWTH PLAN: RI Mushroom Co. co-owners Michael Hallock, left, and Bob DiPietro started selling organic mushrooms in 2013. The company now produces more than 5,000 pounds of mushroom a week. / PBN PHOTO/ MICHAEL SALERNO

(Updated, 1:30 p.m., June 14)
In the tightly packed production room of Warwick Ice Cream a frozen dessert moving through the line wasn’t something to sample on a tour.

A treat for dogs, manufactured for another label, moved from a massive pair of 1,000-gallon pasteurization tanks to a mix-chiller machine, dropping from 170 degrees Fahrenheit to 35 degrees in minutes. After leaving a pair of refrigerated storage tanks, painted with spots to resemble Holstein cows, the whey-based mix received the slight-mint flavoring that dogs prefer.

At a rate of 200 cups a minute, the still-creamy dessert filled the yogurt-sized cups, then sped down the conveyor to production employees who guided the 3.5-ounce cups into boxes for freezing and shipment.

The business, which produces 20,000 gallons of product each week, was started in the 1950s by the grandfather of current President and CEO Gerard Bucci Jr., an Italian immigrant who first purchased a dairy, then opened a restaurant that served homemade ice cream. Over time, ice cream became the business.

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Bucci said the key to survival in his tenure has been finding new markets and pursuing partnerships in manufacturing and transporting product. The dessert for dogs, for example, is a market that didn’t exist 15 years ago.

“How do we survive? We survive by being more creative,” he said.

IN SEARCH OF A SECTOR

If the goal for small business is to innovate and adapt to new markets, the larger challenge in Rhode Island is how to magnify these individual food-business success stories into something more significant for the state’s economy.

Although often touted as a foodie state, it is not clear how quantifiable an economic engine the collection of food producers, farms, restaurateurs and entrepreneurs in the state is. That question is not purely academic, as Rhode Island economic and business officials look to local industries with the potential to make an impact on the state’s job scene.

“We are trying to define the sectors that are most promising,” said Commerce Secretary Stefan Pryor. “It is our strong intuition that food is an important cluster within our economy. And that true economic growth will emerge from the food sector.”

The well-known reputation of Providence and the larger state as a culinary destination has potential for increased tourism activity, officials believe.

Food and beverage spending by tourists is a $201 billion industry in the United States, according to a report prepared by the Ontario Culinary Tourism Alliance, which singled out the effort of the Providence Warwick Convention & Visitors Bureau to create and promote a food tourism brand, emphasizing the state’s fresh seafood, produce and creative chefs, as well as the culinary program of Johnson & Wales University.

In 2013, Providence was chosen as the top city in the U.S. for food, according to Travel & Leisure magazine. But is that enough to make a major impact on the state’s economy?

IT’S A BUSINESS

Quantifying the size of the food -industry sector is challenging. Aspects of the food economy fall into different market segments, including agriculture, manufacturing and hospitality.

An initial tally of the impact of the food and agriculture business in Rhode Island, prepared by the Providence Plan on behalf of the Rhode Island Food Policy Council, estimated the industry accounted for 65,000 jobs in 2013. But 80 percent of those jobs were in retail distribution, including jobs in restaurants and supermarkets.

By this measure, the Ocean State placed second to last among six New England states, with slightly more jobs in the food sector than Vermont.

The Providence Plan, an organization that provides data analysis for government agencies, put the number of food establishments in Rhode Island at 7,023, including 284 farms and 1,243 food-production businesses. That was about half the number of the next-largest state, New Hampshire, which had 4,391 food-production facilities and 728 farms.

By another measure, more than 300 companies in Rhode Island are creating consumable products, according to a list compiled by Farm Fresh RI, which promotes locally made and grown foods. The companies run the gamut from Greencore Group, an Irish food company that employs nearly 400 people at its production facility at the Quonset Business Park, to two-person family operations. Greencore, which began operations last month, cited the Quonset facility and geographic location of Rhode Island in its relocation of production from Massachusetts.

One of the more recent startup food businesses in Rhode Island, Fox Point Pickling, was launched within the past year.

Owner Ziggy Goldfarb, who operates out of Hope & Main, a Warren incubator for food entrepreneurs, sold his first jar of artisan pickles last November. Now he’s producing 350 to 700 jars a week, and the pickles are in 50 stores in five states.

He’s just had the product accepted by Whole Foods, which will feature the pickles in a few stores. This creates an opportunity for expanded sales.

Goldfarb, who just hired a fourth part-time employee, started the business after he was laid-off from a position in public relations. His background has helped, he said, in that he knows how to create a brand.

In Rhode Island, he said, people support local products and good foods. But nationally, he said, there are multiple companies doing the same thing that he does. The network of artisan pickle companies is collegial, not competitive, he said. It leads to sharing of information and ideas. “The guy selling pickles in Chicago is not selling pickles here,” he said.

Another young company, RI Mushroom Co. LLC, started selling exotic mushrooms in April 2013. Its greenhouses in South Kingstown now produce 5,000 to 6,000 pounds of mushrooms a week. Whole Foods is carrying its mushrooms throughout New England and as far south as New Jersey, said Mike Hallock, a co-CEO of the company.

Sales increased 500 percent in 2014 and are on track to balloon another 400 percent this year, he said. The company employs about 12 people. But even with its fast success, RI Mushroom is finding it difficult to finance an expansion that would allow it to increase production. In part, Hallock said, it is the young age of the company.

The most difficult part of growing the company, he said, is “finding the way to get the money together.”

The next step for the company would be to produce its own hay, which it uses in a chopped format to grow the cultivated mushrooms. “It’s going to require 40,000 to 50,000 square feet of space and the equipment to do all that,” he said. “Now that we have the sales, it’s time to start talking about that. Our goal is to sell mushrooms on the whole East Coast, and we’re getting there.”

TAKING ITS MEASURE

How can Rhode Island help grow its food businesses?

For the past several months, the R.I. Commerce Corporation has been working with the Greater Providence Chamber of Commerce, food-industry associations and other participants to define what segments could make up a viable food cluster with potential for growth.

The state has existing and proposed incentives that can help companies expand their facilities and business operations, Pryor said, including small-business loans, job-creation tax credits and real estate tax credits. “We are already known for it,” he said of the food economy. “It helps that we are already prominently on the map. We need to build upon that and create the right environment and the right incentives.”

One major resource not available to many other locales is Johnson & Wales University, which has a national reputation for culinary education and innovation, said Laurie White, Chamber president. Initial thoughts are that the intersection of food and health could be a growth industry, she said.

“Food has many tentacles,” she said. “What you’re seeing now emerge quite simply is food as medicine.”

White said efforts are being undertaken to get a more precise count on the food economy. By fall, she said, the state and Chamber will issue a report that will define the state’s food cluster and determine, based on data, whether it’s viable.

“In cluster development, you have to identify aspects of that cluster. Right now it’s fragmented,” she said.

Johnson & Wales does not survey its alumni on a regular basis and has not issued an economic-impact report that has focused on how its programs have affected the food industry, according to a spokeswoman.

But the influence of the university, which has four campuses in the United States, is reflected in the culture and national rankings of Providence and other host cities as “food capitals,” according to an address made in October 2013 by Providence Campus President and University Chief Operating Officer Mim L. Runey.

The university programs emphasize all of the business components of the food cluster, she said, including marketing, entrepreneurship and new-business development.

Miriam Weinstein, a spokeswoman for the university, said graduates are moving on with culinary skills, but also business acumen and management skills. “It’s a broader education. It’s not just knife skills,” she said.

John Robitaille, executive director of the university’s Larry Friedman International Center for Entrepreneurship, said his students want to form their own companies, not necessarily restaurants, but new products that relate to food. One student team is working on an app that would connect farmers and fishing captains to restaurants, for example.

“The best way to describe the food ecosystem in Rhode Island is it is organic and it’s morphing,” he said.

A NEW VISION

One concept for pulling the disparate food producers in Rhode Island together under a single roof comes from David Dadekian, president of Eat Drink Rhode Island, a marketing company that promotes the local food and beverage makers.

In 2014, Dadekian received a three-year innovation grant of $300,000 from the Rhode Island Foundation to design a central marketplace for food products and culinary experiences. He’s looking at properties in Providence that could provide 30,000 to 35,000 square feet of space. Financing is contingent on him finding a location, he said, but he is confident enough food-related businesses will want to participate in the market.

He envisions the Eat Drink Rhode Island Central Market as a one-stop shop for all that Rhode Island offers. It would be similar to Pike Place Market in Seattle, or Chelsea Market in New York.

In any of this, is Rhode Island unique? Not even the food advocates, such as Dadekian, think the Ocean State will be the only destination for food companies relying on locally grown products, or food tourism.

But it has the potential to be a top location, Dadekian said, in part because of its small size. The capital city, although densely populated, is within 12 miles of free-range farms, he said.

Rhode Islanders seem to appreciate locally raised or produced foods, said Davide Dukcevich, a co-owner of Daniele Inc., a third-generation family-owned charcuterie. The company, which has headquarters in Burrillville, recently won a national award for its local line, which uses meats raised on farms in Coventry and Smithfield. And it has started production at its recently expanded facility.

“Here, there is a huge grassroots appreciation for local food, which gives you a critical mass,” Dukcevich said.

At Warwick Ice Cream, the local label is found in school cafeterias and convenience stores throughout the state. But the business has succeeded through diversification. In addition to manufacturing its own products, Warwick Ice Cream is a distributor for brands such as Dove ice cream.

It also manufactures ice cream for other labels, providing the production facility for other companies. It is certified to produce organic ice creams, for example, a market that has grown in strength in the past 10 years.

It operates out of the art-deco manufacturing facility that has been its home since the 1950s. But its products now have international reach. In a deal struck this year, the company will begin shipping 3-gallon tubs of its ice cream to China, where it be sold in commercial institutions, including cafeterias, near Shanghai.

“You’re going to find our ice cream there. But the labels are in Mandarin,” said Bucci, the president and CEO. “It’s a growing market. We’re excited to be there.”

The expanded horizon for the small business brings new meaning to the sign posted on its production room door: “Through These Portals Pass the Best Ice Cream Makers in the World.”

The company could expand significantly if it increased the size of its production facility, which hasn’t been expanded since the building was constructed, originally as a restaurant. Bucci is cautious about a move. The company owns its existing building. The business environment is difficult, he said.

For new food companies starting out, the challenge is significant, he said. “A lot of these little guys have started up,” he said, of the independent companies. “To get to the next level, it’s very difficult.” •

Initial versions of this story incorrectly said that Rhode Island had the second most jobs in the food sector in New England. Rhode Island is second to last, ahead of Vermont.

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