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Clear Creek Organics No Overnight Success – for Aug. 9, 2010

Clear Creek Organics sells commitment — commitment to customers, communities and a way of raising animals — wrapped up as fresh cut beef, beef freezer packs, processed beef products and, soon, a new deli line.

The message has hit home with consumers in Western Canada. A little more than two years after the company’s founding in February, 2008, sales were outpacing the processing capacity at the Saskatchewan Food Development Centre in Saskatoon and plans were in progress to move the custom processing to Thomson Meats at Melfort, Sask. this July.

Though the Clear Creek Organics brand seems to be one of those rare overnight success stories for its shareholders, it comes only after years of selling their organic stock into conventional markets and farm-gating organic beef from their deep freezers.

“It’s been a steep learning curve for producers,” says Clear Creek Organics CEO Gene Kessler of Pangman, Sask. He and his wife, Pat, have been certified grain producers since 1977 and went organic with their beef operation in 2002. As managing director when the company was first formed, he and other producers tried to tend to company business during the winter months when farming was slower. They soon realized they needed someone to keep the business moving ahead all 12 months of the year and created the CEO position. Due to his time commitment to the company, the Kesslers recently dispersed most of their herd.

Kessler became involved in the initiative to create a name brand for Saskatchewan-grown organic beef through his involvement with the Saskatchewan Organic Livestock Cooperative (SOL), a producer marketing organization founded in 2005 with the objective of educating consumers, promoting organic agriculture and serving as a marketing agent for organic beef producers.

About that same time, organic grain, livestock and feed producers in Manitoba got together to form the Manitoba Organic Marketplace Trade Association (MOMA). Their goal was to cut costs and increase returns for members by co-ordinating marketing, administration and transportation.

Both groups met with success identifying and supplying domestic and U. S. markets for live organic cattle. By 2007, the two groups had begun

discussing a Western Canada marketing scheme. Even though a business plan researched by students at the University of Saskatchewan showed that marketing a packaged product through a grocery chain wouldn’t be financially feasible, the two producer groups weren’t about to drop the idea.

They knew they had one kick at the can. Research continued looking at business structure, product development and marketing strategy. A call went out for a consumer-friendly brand name that would reflect organic values and represent Western Canada. The decision wasn’t made lightly, Kessler recalls. Only after a day-long workshop with a specialist was the name and logo selected as being the most representative of the image they wanted to portray — the pristine nature of organic production, a clean environment and ecological sustainability. Clear Creek Organics was in business with Lorne Schroeder of Leroy, Sask., as founding president, Bill Frykas of Gilbert Plains, Man. as vice-president, and Simone Jones of Cadillac, Sask. as secretary.

The company is run by A-class shareholders, who must be organic producers. All 20 of those shares have been taken up. B-class shares are still available for organic and conventional producers, business and industry associates and consumers.

The value-added angle for primary producers comes in the form of receiving a premium for their animals at the farm gate and dividends to producer shareholders as the company grows.

CLEAR CREEK ORGANICS

With a vision to be the number-one supplier of organic beef in Canada, the first step was to find a federally inspected abattoir so the beef products could cross provincial borders. The notion of exporting organic beef to the U. S. was put on the back burner because the plant here would have to be approved by the USDA, Kessler explains.

The search led to Canada Premium Meats at Lacombe, Alta., a European Union-certified abattoir that handles mostly organic beef and bison. The boxed beef is shipped from the plant at Lacombe to the storage facility and custom processor in Saskatchewan, where it is prepared, packaged and labelled for retail, or frozen to be sold as freezer packs.

A mutually beneficial business arrangement with Dad’s Nutritional Centre, owned and operated by Carl and Ann Dyck at Saskatoon, has been the foundation of Clear Creek’s retail success in fresh-cut organic beef since April, 2009. Clear Creek Organics has since become a partner in the fresh meat and deli section of Dad’s new branch store opened in Regina this past December.

“This is one of the first times in Western Canada that an organic label has had a fresh-meat service counter at the retail level. In the past, organic meat has mostly been sold as frozen product,” Kessler explains. With a butcher on location, the beef can be cut to customer specifications and the face-to- face communication and feedback from consumers will be invaluable for future growth and success.

Kessler says the company realized from the outset that it would have to develop products to create value from the trim. The Food Development Centre assisted with recipes and taste testing for the line of pure-beef patties, jerky, sticks, smokies and frankfurters that was successfully launched in March of this year. The products are 100 per cent beef from the inside (no pork or offal added), to the outside with beef collagen casings, he adds. They have been selling so well that middle cuts are being processed to keep up with demand.

Clear Creek was the first company in Canada to apply to the Canadian Food Inspection Agency (CFIA) for approval of a meat-curing process utilizing a natural vegetable treatment instead of sodium nitrate. The company can now promote its products as being sodium nitrate-free, gluten-free, phosphate-free and MSG-free.

On the heels of the success with the processed line, Clear Creek is looking forward to the launch of its deli line of sandwich meats this fall, pending approval of the label, which was applied for in June.

Clear Creek supplies retail outlets in major and mid-sized centres in Saskatchewan and Manitoba. McLean’s Organic Foods at Burnaby, B. C. handles Clear Creek’s distribution to growing list of 25 stores in B. C. and 10 in Alberta. Though the company’s main focus is Western Canada, it has branched out into Ontario with product in three retail locations and plans are in the works to attend trade shows and expand there throughout the upcoming year.

Price point has been a major consideration. “The product has to be affordable for consumers and yet cost-effective for the company and the stores,” Kessler explains. “Introducing a new product helps the stores get going and helps us because we can share in their growth potential.”

KEEPING THE BEEF MOVING

Part of Kessler’s job as CEO is managing the balancing act of matching supply with demand to ensure that there’s enough product at retail without overextending the company. He first looks to Clear Creek shareholders when procuring animals, but has purchased organic stock from outside the group depending on the circumstances. Clear Creek doesn’t import animals or beef for its products — that’s one of the company’s commitments to community.

There has been renewed interest from producers in establishing finishing stations, which will be a vital link in maintaining the flow from the farm to the processor to retail as the company grows. Feeding the correct rations at the correct time is key to producing a uniform, consistent product for consumers.

The company’s main emphasis right now is beef, mainly because there is already an adequate supply at the farm level, Kessler comments. A growth area will be expansion into other species once the primary supplies become better established.

FROM PRODUCER TO CEO

Coming from a professional background in recreation, Kessler could have never imagined that he would one day be a CEO of a beef company. Now, having taken that huge leap from beef producer to beef retailer, he can offer a few tips for others who are trying to create value chains.

“One thing is the time it takes to do something because you need approval at every level,” Kessler says, using the example of developing the label with the nutritional information, package sizing and French translation. It took two years. That’s done through the CFIA and the company’s organic certifying body, EcoCert Canada, has an almost parallel approach to verify that all of the ingredients and spices that go into in the processed products are organic and that’s almost a parallel approach.

“It’s not cheap to do — every time you turn around there is another cost for something. The bar codes on the packages, for example,” he comments, “there’s a licensing fee to use them each year.”

Clear Creek was able to secure some grants and, or cost-share type funding from the Saskatchewan Ministry of Agriculture, the Beef Information Centre, the Saskatchewan Organic Directorate and the Saskatchewan Food Processors Association to help with expenses such as product and label development, trade-show promotions and in-store demonstrations.

“A little seed money goes a long way,” Kessler adds. “Those organizations can also be good sources of information. We received excellent help from Saskatchewan Agriculture — Leroy Bader in business development and livestock specialist Tracy Evans — we really leaned on them for technical and general advice because they are at arm’s length and can see things from a different angle than those of us who are directly involved.”

“There’s a lot of competition out there. Make sure there is a market — a niche for you or that you have something that stands out from the rest and grow within that marketplace,” he suggests. “Above all probably, is it takes commitment.”

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