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June 6th 2004 >> Source: Press
Democrat Nationally, natural foods are a $13 billion industry. While that is only a fraction of the total food market, it is the fastest growing sector -- as much as 20 percent a year, according to the National Nutritional Foods Association, based in San Diego. All this translates into higher sales for local companies making natural foods. "The sector is growing rapidly," said Ben Stone, coordinator of the Sonoma County Economic Development Board. But as local food processors are seeing sales growth of as much as 20 percent or more a year, they are facing high workers' compensation, energy and development fees that are driving them to consider cheaper out-of-state locales. Stone said that although food processors constitute a small portion of the local economy, their influence is greater than their size because they tend to be labor intensive with higher than average wages. The industry is also important in supporting local agriculture, which in turn helps maintain the county's open space and the lifestyle that draws people to live and work here, Stone said. Many Sonoma County food processors make natural foods, including Amy's Kitchen, Barbara's Bakery, La Tortilla Factory, Spectrum Organic Products Inc., Traditional Medicinals and Randal Nutritional Products. While companies such as Alvarado Street Bakery have been making natural and organic food since their inception, others, such as La Tortilla Factory, moved into the lucrative market more recently. "After sales were flat in the 1990s, we reinvented ourselves with low-fat, low-carb products," said Carlos Tamayo. Now the Tamayo family's low-carb tortillas account for more than 50 percent of their sales, and they expect to expand the organic line they started in 2002. Despite the growth, food processors still struggle to stay competitive with companies doing business in areas with lower operating costs outside of the county or the state. Amy's Kitchen found itself at the center of a political storm over the state's business climate earlier this year when Gov. Arnold Schwarzenegger called owners Andy and Rachel Berliner to try to persuade them to stay in California, telling them he was determined to lower the costs of doing business here. Like other California businesses, Amy's Kitchen has been considering expanding out of state. With sales expected to reach $100 million this year, Amy's is the largest natural frozen food processor nationally, and is growing 25 percent a year. With 750 employees, the company also is a significant local employer. The Berliners want to expand at the current location in Santa Rosa, but they say they could save $4 million a year in lower workers' compensation costs and lower utility costs by expanding in Medford, Ore. Tamayo, who founded La Tortilla Factory with his parents in 1977, shares the concerns of the Berliners. His company, which long ago expanded beyond its original corn and flour tortillas, doubled its sales from $10 million to $20 million in the past two years. Tamayo says he has been flooded with requests to relocate from other states with enticing business offers, including Texas and Nevada. But the Tamayos reflect the dilemma of other business owners
who started here many years ago: They are reluctant to leave
because of their deep roots in the area. They are planning a 75,000-square-foot facility in the Westwind Business Park near the Charles M. Schulz-Sonoma County Airport. Currently, La Tortilla Factory makes its tortillas, chips and wraps at its 60,000-square-foot facility off Standish Avenue. Tamayo says the expansion will allow the company to increase annual revenues over the next decade to about $100 million. Employment could more than double from 170 to at least 400, he said. Many other local food processors face the same predicament. They started out as either family-run businesses or small-scale endeavors among friends when the cultural revolution of the 1960s and '70s included a new consciousness about food and health. They have now laid down decades of roots in the community. Amy's Kitchen started with the Berliners' making vegetarian pot pies in the barn of their Petaluma ranch in 1988. They have said that even if they expand the business elsewhere they will keep their headquarters here because their daughter Amy is in high school and they don't want to leave the area. Alvarado Street Bakery is a workers' cooperative that grew out of the heady days of the "food-for-people movement," says Joseph Tuck, the chief executive officer. Based in Rohnert Park, the organic bakery has 116 workers and had $19 million in sales last year. Tuck estimates company sales are growing about $2 million a year. Traditional Medicinals of Sebastopol grew from a table in the corner of a health foods store 30 years ago to the largest medicinal herbal tea company in the country. Last year, revenues of the 72-employee company hit $16 million. Even companies no longer run by their founders are reluctant to relocate completely. Spectrum Organic Products Inc., which makes cooking oils and condiments, is growing nearly 20 percent a year, with sales that should top $50 million in 2004. It is moving a small part of its operations to Iowa -- closer to where the seeds for its products are grown -- and where the costs of operating are about a third of what they are here, said company President Neil Blomquist. Still, there are no plans to move the rest of the business because top management wants to stay here. G&G Specialty Foods co-owner Chris Glab doesn't like
the high costs of doing business here but wouldn't consider
leaving either. "We've made a choice to be here," said
Glab, who started the salsa, dip and hummus company in 1990
with Rick Goldberg. Sonoma County has rich agricultural resources
and food-consious clientele, Glab said. "It makes sense
to stay here even with higher costs. + Read Full Article | << Back to 2004
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