2016 ANNUAL REPORT

Cultivating the Entrepreneurial Landscape FROM THE DIRECTOR

To Our Stakeholders: In last year’s annual report, Chris Peterson bid you farewell as he My deep and sincere thanks to each and every one of you! anticipated stepping down as the founding director of the MSU Product Center. He said that he hoped he had laid a foundation In this year’s report, you will find the details of the activities that for the continued growth and success of the Center. As the new underlie our success, including: director, I can attest to the fact that he has done exactly that. He • Our venture development, specialized services, accelerated growth has left behind an excellent staff, a fiscally sound organization, and cooperative development service lines; highly effective and supportive connections with stakeholders • The further development of the Food Processing and Innovation Center, inside and outside of MSU, and a path to a very bright future. culminating in its construction in 2017; • Our strategic research services, including those of the Center for While I, personally, can take absolutely no credit for any of it (I Economic Analysis; assumed my role as director on September 1), the Product Center • The Making It In Michigan Conference and Trade Show; and had yet another very impressive year of accomplishments • Our award-winning clients. and impact in Fiscal Year 2015-16. We assisted 437 clients in developing their business concepts, helped 270 to start their Having the opportunity to lead this extraordinary organization is an honor ventures and provided specialized services to 370, all through over 4,000 and a privilege. It is my aspiration to maintain the great strengths of the one-on-one counseling sessions. Sixty-two ventures were launched that Product Center and leverage those to achieve even greater impact in the created economic activity. Since our inception, we have launched 543 future. We will strive to be as persistent, resilient and innovative as the new ventures, with impressive cumulative economic impacts, as detailed entrepreneurs we serve. We look forward to our continued partnership in the accompanying table. All of this gives testimony to the power of with all of you as we pursue these goals. entrepreneurship to transform lives and economies and to the dedication of our staff and our partners to fostering that entrepreneurship.

Our success, as always, hinges on the contributions of: Thomas S. Lyons, Ph.D. • Our campus staff, which helps clients with feasibility studies, food safety, Director, MSU Product Center Food-Ag-Bio labeling, market analysis, monitoring & evaluation, product testing, research, and scaling larger enterprises as well as staging major events such as Making It In Michigan; Summary of Counseling and Technical Services Provided: • The Innovation Counselors, who work in the field with agricultural and SERVICES PROVIDED SINCE 2004 FISCAL YEAR 2015-16 food product businesses throughout Michigan; One-on-one client counseling sessions 47,104 sessions 4,168 sessions • The many MSU faculty, who assist our clients with addressing a host of needs; Assistance with business concept development 4,455 clients 437 clients • Our many external stakeholders, who foster entrepreneurs and the Venture start-ups (based on a commencement 2,269 clients 270 clients Product Center; and continuation of planning for a new business or an expansion for an existing business) • Our long-term MSU funders and partners: AgBioResearch, College of Specialized services (including product testing, 2,546 clients 370 clients Agriculture and Natural Resources, Department of Agricultural, Food market analysis, and feasibility studies) and Resource Economics, MSU Extension, Project Green, and the Venture launches (commencement of economic 543 ventures 62 ventures university itself; and activity for new or existing businesses through new sales, investment, or employment) • Our external funders and partners: Center for Regional Food Systems, Michigan Department of Agriculture and Rural Development, Michigan The Product Center’s assistance in launching 543 known new businesses and business Economic Development Corporation, Michigan Farm Bureau, Michigan expansions since its inception has had the following estimated economic impacts: • Increased annual sales: $378.4 million (cumulative first year sales only) Integrated Food and Farming Systems, U. S. Department of Commerce • Value of increased investment: $371.9 million Economic Development Administration, USDA Rural Development, and • Jobs created: 1,534; Jobs retained: 786 our many other large and small friends and partners. VENTURE DEVELOPMENT COOPERATIVE DEVELOPMENT

A new partnership was developed in the US (CHS) and representatives The venture development with Crain’s Detroit business to help The Michigan Cooperative from dairy marketing cooperatives in services offered are the cornerstone sponsor the Crain’s Food Summit Development Program (MCDP), Michigan and Ontario (Michigan Milk of business development for and Investor Forum in Detroit. housed in the MSU Product Center, Producers Cooperative and Dairylea). emerging businesses. Over 4,000 This successful event connected has had a successful year. In January counseling sessions took place entrepreneurs from across the local 2016, the program once again hosted he MCDP continues to be the during the year with sessions food system with educational and the Michigan Cooperative Executives T leading source for cooperative tailored to meet the needs of the financial opportunities. and Managers Conference at the client. Eight extention educators, MSU Henry Center for Executive development services and programs trained as innovation councelors, Development. Dr. Chris Peterson in Michigan. MCDP partnered with are located in MSU Extention offices The Product Center was kicked off the event service providers across the state and delivered the recognized with a national award with an excellent to provide legal services. Many clients were assisted by Greenstone Farm Credit presentation on counsel and advice with concept development to for exceptional outreach with strategic management to developing determine if their concept can result MichiganMarketMaker an online for cooperatives. and existing in a viable business. Developing resource that connects buyers and Attendees this year cooperatives, a business plan, navigating the sellers across the food system. represented a wide marketing services regulatory maze, and range of cooperative for new products accessing retail markets types in Michigan, Ohio produced by a were key services that and Ontario, including major Michigan were provided. a student housing based fruit cooperative from the processor, and The innovation MSU campus, Michigan ongoing board counselors also assisted based members of management clients in accessing the largest agricultural cooperative support through consulting and specialized services advisement services. offered by campus staff and faculty like feasibility studies, product classification and process In September the MCDP hosted a authority review, nutritional labeling, conference to educate professionals food science, food processing about worker cooperatives and and packaging assistance. Three Employee Stock Ownership hundred seventy clients received Programs (ESOPs). This was the first these advanced services. such program hosted by the MCDP and grew out of continued interest and excitement about worker ownership and succession planning. The MCDP partnered with a Detroit based legal team and the Center for Employee Ownership at Kent State University in Ohio. Advanced Growth Services (AGS) Food Processing and Innovation Center (FPIC) address to achieve results. Working Advanced Growth Services (AGS) with Safie’s Pickles, this process has engaged in a number of diverse discovered new sales opportunities projects over the last year, including in creating a line of organic pickled strategic planning, plant safety, and products using existing production and compliance along with high-level management capabilities for growing business management and consulting. US and export markets.

With an improving economy, and AGS was also involved in developing a increase in sales forecast some of the market launch strategy for an existing more established ‘Stage2’ clients have company in the United Kingdom been involved in facilitated ‘Think Tank’ looking to establish itself in the US. or strategic planning sessions looking Newby Tea based in London selling to achieve the next level of competitive fine teas in leading supermarkets, he Product Center continues to T 100 companies and food industry advantage or expansion in sales or engaged AGS to look at its overall plan work confidently towards establishing professionals discovering the full services. Providing these sessions in breaking into the US retail market. this newest component of the center potential of this unique processing allows a company to discover and work Identifying stores based on consumer to serve industry. Originally scheduled facility. This resulted in commitments through the critical issues it needs to trends, plus mission and vision of the to be up and running by November from 12 companies for over 250 company allowed Newby Tea to focus 2016, the project was faced with some days of use. The FPIC is designed to on developing a sales team to capture financial constraints in the spring that be Michigan’s leading independent these opportunities. Newby Tea has caused a delay for the construction commercial food development, now opened their headquarters for the start date. A return to the drawing processing, packaging and research United States in East Lansing. board was made to make some facility. It will provide a ‘real time’ changes to bring the project in line production environment to support the within grant and partner funding. With lso managed by AGS was a new creation of vibrant new food products, A these and other issues addressed, product line for retail. Earthly Delights, servicing the needs of both Michigan- the FPIC is looking toward a spring based in Okemos MI which provides based existing food businesses or construction start with completion high-end and foraged ingredients to larger scale startups in Michigan and in the fall of 2017. On a bright note chefs and restaurants in the US, looked the Great Lakes region. The FPIC’s in June, an open house and industry to AGS to develop and create a new unique advantage is it will be a fully intent day allowed companies to line to expand its brand and sales licensed USDA/FDA certified food understand the capabilities of the FPIC. diversity. Launching ‘Foraged Fare’ processing facility capable of creating This was a ‘sold out’ event with over with a Faro Pasta and Wild Mushroom new products or processes, and product, AGS worked in providing have the ability to produce full scale product development, brand creation, medium size production runs for the packaging, and distribution solutions to retail marketplace. provide a turnkey opportunity. STRATEGIC RESEARCH GROUP (SRG)

Product Center analysts work regularly of rural regional development and with the MSU Center for Sustainable A hallmark of the MSU Product with various Michigan commodity entrepreneurship. CEA researchers Food Systems in understanding food Center, the Strategic Research Group groups. Analysts helped the tart cherry collaborate with both MSU and non-MSU justice implications of local food systems. (SRG) served a broad and diverse client industry successfully secure bonus researcher and program administrators CEA researchers contribute to program base. The activities range from projects purchases of tart cherries of more than to better understand economic and outcomes around small business with national/global stakeholders, in- $40 million from the federal government. social issues around agricultural development. Currently, CEA researchers state stakeholders and the support of A second year of activity with Mondelez production, economic development, are working with the USDA to improve MSU research and teaching endeavors. International focused on the collaborative business formation and entrepreneurship, business access to Small Business Last year’s integration of The Center effort with member growers from the and human health and nutrition. Innovation Research (SBIR) grants for Economic Analysis (CEA) within the Michigan organization Co-Op Elevator to and to evaluate grant outcomes. CEA department of Agricultural Food and evaluate their agronomic practices in the EA researchers have developed researchers are engaged along many Resource Economics (AFRE) to the SRG context of environmental sustainability. C proprietary tools for measuring the value dimensions, for example, developing has proven to be an extremely important The positive response to the output from of food system productions that has been and promoting educational materials addition given their significant research these efforts has led Mondelez to fund particularly effective in understanding for private firms and university faculty, and analytical skills. the project for a third year. the underlying structure and value bridging program gaps between other The Product Center in collaboration with of local food systems. This approach relevant stakeholder groups such as the The SRG maintains a blend of ongoing the MSU Department of Agriculture, recognizes the interchangeability American Farm Bureau Federation and and short-term research and outreach Food and Resource Economics has between conventional the Michigan Small Business activities. Select examples of short- developed a program for emerging food channels and local Development Center (MI-SBDC), term projects conducted by the SRG store leaders/managers within the food channels, providing and conducting research on the were providing written testimony on Kroger company’s Michigan region. This policy makers a more impacts of the USDA managed the proposed changes to the USDA program will be implemented in 2017. robust interpretation program on underserved Organic Egg Regulation, research for the of the value of agri- communities and businesses. Michigan Wheat Growers Association food systems. The n extensive strategic planning The SBIR program is a key and a feasibility study for the potential for A CEA also collaborates process in the last year with the conduit to advancing university soybean processing plant in the state. with the Michigan Pokagon Band of Potawatomi in and private technological advances in the marketplace. Staff members correspondingly Dowagiac, MI consicered the nexus of continue to track the state of the farm food/land/health and how they might One of the key objectives and food system through the Michigan develop new business ventures. The of the CEA is to facilitate Agri-Food Index. This semi-annual Product Center is partnering with the MSU economic and program survey of Michigan’s agri-food leaders Native American Institute on this effort. evaluations to MSU research indicates their degree of optimism As a component of the Product Center and MSU Extension programs. concerning the current and future Strategic Research Services, the Center One project completed this status of the industry, additionally, the for Economic Analysis (CEA) research year was the evaluation of SRG estimates and tracks the annual effort focuses on broader economic the MSU Integrated Pest economic impact for the entire Michigan analysis for understanding policy, Farmers Market Association (MIFMA) Management (IPM) Program. Work has agri-food system. industry and environmental implications to develop system-wide approaches also begun on an extensive evaluation of of agricultural systems. The CEA also to estimating the economic value of Project GREEEN (Generating Research collaborates with the USDA-supported Michigan’s many farmers’ markets and and Extension to meet Economic and North Central Regional Center for Rural Environmental Needs). Development in addressing issues Making It In Michigan Conference Product Center Client Awards Each year the Product Center recognizes clients with special awards at the annual Making It In Michigan Conference. The Making It In Michigan Conference and Tradeshow is the signature, annual event sponsored Entrepreneur Start-up to by the Product Center. The theme for this year’s of the Year Watch Award event was Taste the Future, Cultivating Forward Thinking Strategies for Long-term Success and was held at the Lansing Center. Participants heard from The Gluten Free Bar was Dave’s Sweet Tooth was Mike and Denise Busley, owners of Grand Traverse selected for this prestigious award. recognized with this award for an Pie Company, in the keynote presentation where The Gluten up and coming company with great they talked about how their family has influenced Free Bar potential. Andrew Chmielewski began decisions and played a role in the company. launched in working with the Product Center Participants were able to take advantage of eleven workshop sessions. The 2010 with in 2011 to produce the irresistible Marketplace Trade Show showcased 200 vendors of locally made products brothers chocolate covered toffee which was a to buyers representing retailers from across the state. New this year to the Marshall and Elliott Radar and two family recipe developed by his father. trade show was Michigan made beer and wine products. partners, Ben Wahl and Jeremy Sher They have achieved 100% growth in sales with a goal of producing a great each year for the last four years and are tasting protein bar line made from on target to exceed $750,000 in 2016. high quality ingredients. Today they offer six flavors of bars and six flavors uture sales of snack-sized bites. F forecasts look In 2013, the company was recognized bright has they by the Product Center with the Start-up have been to Watch Award and has been growing picked up by ever since. The business has expanded the TJX group to new production facilities and now of businesses, including Home Goods, has 25 full-time employees. Sales have Marshalls, and TJ Maxx. These three store compounded at a 300% increase with chains combined have almost 2,800 distribution in 8,000 stores in US and stores across the US. The toffee can be Canada, including Meijer, SpartanNash, found in 124 Kroger stores in Michigan Whole Foods, CVS, Stop & Shop, Giant, and was accepted by Amazon to sell on Sprouts, The Fresh Market, Heinen’s, their site as a prime vendor. They are numerous independent specialty stores, currently completing SQF certification coffee shops, and over 40 distributors. to become a private label producer for some nationwide companies who want to feature their unique confection. Value-added Barrier Director’s Agricultural Buster Award Award Producer Award The Barrier Buster Award is given to The Director’s Award was presented Dan and Bonnie Blackledge of a client who has overcome a significant to Westborn Market for their B & B Farms were selected for this barrier to ongoing support of Making It In award that recognizes agricultural take the Michigan and commitment to providing producers who have created or business opportunities for captured value outside of traditional to the next entrepreneurs to gain commodity production. B & B Farms level. Caledonia Packing owned access to valuable produces cold pressed canola oil from by Mike and Barb DeVries is a custom shelf space. Their canola grown on slaughter facility, where they process Next SKU Could their farm in beef, swine, lamb and goat as Federally Be You contest Clare County. Inspected or Custom Exempt product. conducted each Dan is an year at Making It In Michigan has helped Caledonia Packing faced many innovative, many entrepreneurs break into the retail challenges in obtaining their Federal forward-thinking entrepreneur, and business. Westborn Market is seen as Grant of Inspection. They spent countless leader in the canola industry and a leader in providing consumers with hours and dollars upgrading the began growing canola in 2007. locally made products in their four stores slaughter facility they had purchased to Initially bio-diesel processing options across southeastern Michigan. meet the standards of FSIS regulations. were first explored but it was later In July of 2015, they were able to run determined that there was more Innovation their first day as a federally inspected opportunity in the culinary oil market. Counselor of facility. In July 2016, Mike suffered an the Year aortic valve rupture which almost claimed Since 2013 they have been pressing his life. Not deterred by the work ahead, oil in their on-farm licensed kitchen. Barb took on all of the responsibilities of Each year the Product Center With approximately 100 acres in the plant moving ahead with construction recognizes an innovation counselor production on the third generation projects and improvements. who has demonstrated outstanding farm, B & B Farms remains one of two work. Becky DeYoung received the There have been rewards along the canola producers in Michigan. They have recognition as the 2016 Innovation way - the facility increased sales by outgrown their pressing facility and Counselor of the Year. Becky serves 77% between 2014 to 2015. Sales for are now under construction with a new southeastern and mid-Michigan the first and second quarters of 2016 facility for expanded processing. Their entrepreneurs. She joined the Product have increased 55% over 2015. In 2015, product is available in specialty and retail Center as an innovation counselor in Caledonia Packing had three full-time outlets across Michigan. 2010 and is well known for her assistance and five part-time employees. Today in helping clients access retail markets. they have four full-time and eight part- Her practical, no-nonsense approach to time employees. Caledonia Packing business development is welcomed by has been able to overcome significant clients along with her commitment to business and personal health challenges help them succeed. and is contributing to the west Michigan economy. Productcenter.msu.edu (517) 432-4608

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