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Show The National Enterprise, June 8, 1977 Page nineteen Storage Continued from page one has grown from the times when pioneers would pack away a few sacks of wheat in a n dugout, to a Dried-foodollar business. multi-millio- d drummers peddle their cans in every town and in many Mormon church meetings. Relies on ehurch for stability Inc., a Vacu-Dr- y, Bay-Are- a dried food manufacturer, recently bought Utahs Perma-paa veteran dried-foo- d retailer and one of the few oldtimers in the business. President Kenneth P. Hill says food storage is a good long-terbusiness bet because it relies on the stability of the Mormon church for its market. Hill, a points out over half the Mormon population is concentrated in three western states: in Utah live 851,000 (33 percent of the U.S. LDS population); in Idaho live another k, 20-ye- ar m non-Mormo- n, 213,000 and in California, The church claims 380,000. a growth rate of 10 percent per year, which means it will double in population every seven years, Hill points out. What kind of businessman ant I to turn down a free marketing system like that? the Mormon church lends the industry long-terstability, it also is responsible for short-termarket gyrations that have created headaches for regulators and left a few consumers wishing they had stored money instead. While giants sell by the carload to firms distributor-packager- s, such as Rainy Day Foods, Noahs Ark, Inc., Ready Reserve Foods and other well known brand names, at what is described as a very slim markup. At this level, the packagers can convert the material into additional private brands for smaller companies, also at a very slim markup. At this point the ward coun- selor, or anybody else who wishes, becomes involved, signing up with one of the major packagers or a smaller branch as an independent He or she buys contractor. the sales kit and fills orders on a basis, apply40 pera standard ing fairly cent markup. A few comcash-and-car- ry such as Foods (formerly Cornucopia), use a multi-levdistributor system, the name slapped on the legal remains of the pyramid marketing Horn-of-Plen- ty panies, el y will scheme. offer its distributors the stanHorn-of-Plent- dard 40 percent discount, and those dealers can turn around and sell the product to 2nd-lcvdistributors at a discount of, say, 20 percent, pocketing the difference. el m m Also responsible for plunge At a session of the semi-annu- down April 2nd is an under- Salt Lake City, Utah 84106 Phone (801) V 485-105- 3 J packagers and wholesalers occasionally stray into institutional food sales and grocery supplies, but say most sales come from their own and other chains of independent retailers. Protection for wholesalers al church conference in April of 1976, for example. Bishop Vaughn Featherstone challenged church members to have a years supply of food laid away by April 1, 1977. To say our business was statement, Dried-foo- d says founder George Murdock of Rainy Day Business has hit rock Foods. bottom after a year of exceptional sales and growth. I'm afraid people in this industry who arent prepared for that are going to go under. Monthly sales of $1 million are not uncommon among the bigger outfits during good times, Murdock says. His Provo, Utah packaging plant was running three shifts a day one year ago, and is now down to one. Disaster can be good news for the food storage business, too. Several distributors report a noticeable impact in 1974 and 75 from eastern markets when gas supplies and traditional food distribution systems were threatened. Part of marketing program The ward counselor who knocks on your door with his dried-foo- d sales kit is the end product of a complex marketing pyramid. At the top are relatively few manufacturers of dried food. Companies California such as Vegetable Concentrates, Inc., a division of General Goods, Inc., represent millions of dollars in sales and investment. These Therein lies part of the protection wholesalers need to stay in business between the booms. As in the case of Rainy Day Foods, management can simply reduce production to equal demand, letting part of the chain of independent distributors go dormant until the next boom comes along. Diversity provides the rest of the protection. Both Rainy Day and Horn-of-Plen- ty dis- tribute health foods and vitamins, the demand for which has been growing steadily since 1969, according to Horn president Ken Moody, and isnt subject to the cycles of the food storage business. Manufacturers such as Vacu-Dr- y rely on customers outside the food storage market, such as food processing firms, institutions and grocery chains for the bulk of their market, according to Gill, and don't give a second thought to the eccentricities of food storage. Protection has a price, however. Rainy Day was taken for thousands of dollars by an independent distributor in Texas who took cash in advance from customers and then disappeared. Murdock is slowly making the losses good to customers, as is Horns Moody trying to take over Cornucopias bad accounts. Its an inherent disadvantage from having to deal strictly in cash due to our small profit margin, says Murdock. |