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Marketing and Profitability

 

Key Points

  • There is significant market potential for elderberry – globally and locally.

  • Value-added elder products are manufactured at different scales across the supply chain: by on-farm value-added producers, herbalists, specialty food entrepreneurs, and nutraceutical corporations.

  • Both processors and retailers express strong interest in California-grown elderberries, and 67% of elder processors surveyed said they did not find enough supply to meet their needs.

  • Prices for elderberry offer substantial opportunity for profitability, but vary significantly across market channels.

  • A multi-species hedgerow could potentially provide $2,000-$3,000 in net annual revenue within 3-5 years.

In April 2020, UC SAREP hosted a webinar “Understanding Opportunities for Elderberry Sales” which featured buyers within specialty food and herbal industries discussing what they look for when sourcing elderberry and/or flowers.

Marketing

Direct Market Channels

It is relatively uncommon for growers to sell fresh elderberries directly to consumers, due to rapid perishability and potential toxicity from cyanogenic glycoside in the berries. Chefs, bartenders, specialty food entrepreneurs, herbalists and other food processors are much more promising target customers for direct sales of elderberries and flowers. Typically, these buyers have greater flexibility than wholesale buyers in terms of volume, delivery timing and level of post-harvest processing. Some may prefer to receive the product fresh, others may be open to frozen and/or dried product, allowing growers to lengthen their sales window. Organic and sustainably-grown practices appear to be especially important to herbalists and home preservers. Alternatively, growers may wish to make their own value-added products such as jams and syrups to be sold directly to their customer base.

Resources for direct sales

Herb schools can be a resource for connecting with interested buyers in the form of graduates, current students or others in their networks:

Wholesale

Herbal wholesalers, specialty food entrepreneurs, natural food stores and nutraceuticals purchase elderberries and/or flowers to be resold to consumers or processed into end-products. This buyer segment is most interested in dried elderberries and/or elderflowers, though some processors desire or are able to accept frozen raw ingredients. Though there is interest in domestic and regional supply, this segment also has the greatest stringency around volume, pricing and food safety requirements. Among retailers surveyed by UC SAREP in 2019, consistency of supply and price were more important than organic certification. Growers wishing to do business with these types of buyers should make sure the buyers’ requirements and price points align with their own business needs. Cooperative marketing and aggregation among farmers can be an effective strategy to meet volume requirements of larger buyers.

Buyer perspective on selling into the wholesale herbal marketplace

Resources for selling wholesale & cooperative marketing

Price variability

Prices for elder products vary widely depending on the market channel, type of processing and quality attributes. In 2020, a West Coast mid-scale herb wholesaler reported purchasing certified organic dried elderberry on the global market at $6/LB while a Northern California herb marketing cooperative paid local farmers $24.80/LB (80% of the listed retail price) for non-certified dried elderberry. The Midwest Elderberry Cooperative retails frozen organic berries for $4.75 - $5.50/LB plus shipping. The dry down ratio of fresh to dry berries is approximately 5 to 1 (Doty webinar presentation, 2020) which can make it advantageous to sell berries “wet” if buyers are willing. Value-added products often capture a higher market price, but with greater associated costs. California-made elderberry syrups ranged in retail price from $8 - $24 per 8 fl oz. In order to achieve profitability, the product price must exceed the costs of harvesting, processing and marketing.

Profitability

Elderberry profitability is dependent on factors related to establishment, management, harvesting and marketing. A UC SAREP study in Sacramento Valley analyzed potential revenue from elderberry hedgerows planted in three different planting models: multispecies deep tillage, high-density shallow tillage, and low density no tillage. 

Establishment costs (see Table 1) for an elderberry hedgerow vary depending on planting style and range from $2,050 to $3,481 for 1,000 feet.2

Table 1. Establishment costs of elderberry hedgerows (per 1,000 feet)

 

Hedgerow 1

(multispecies deep-tillage)

Hedgerow 2

(high-density shallow tillage)

Hedgerow 3

(low-density no tillage)

Long and Anderson 20103

Site analysis and design

$253

$253

$253

$253

Field preparation

$246

$89

$76

$262

Grass seed and planting

$291

$291

$0

$291

Forb seed and planting

$200

$200

$0

$200

Elderberry seedlings, planting, tree tubes, fertilizer

$580

$1559

$474

$832

Weed control (initial mulching plus 3 yrs hand weeding)

$1,413

$99

$197

$1,065

Irrigation (3 yrs)

$498

$894

$1,050

$715

Vertebrate pest control

$0

$0

$0

$229
(tree tubes)

TOTAL

$3,481

$3,385

$2,050

$3,847

Harvest and destemming are important steps prior to selling elderberry. Based on data collected in 2018-2019, labor was calculated at $1.65 per pound labor cost for hand harvesting and destemming elderberries. To calculate the revenue potential of the three hedgerow production models, we used a conservative price of $5.00/pound, coupled with $1.65/pound hand harvest and destemming costs, and average yields. We then applied a 5% discount rate per year, to account for the changing value of money and opportunity cost over time.

At these rates, Hedgerow 1 could earn net revenue of $3,429 for a 1,000-foot hedgerow in the second growing season, with similar revenue levels in the fifth growing season, after recovering from drought stress (Table 2). The year 2 revenue alone was almost enough to cover establishment costs. Hedgerow 2, with lower yields, could earn $1,171 in the second growing season, and $1,976 in the third season, for a 1,000-foot hedgerow. The combined year 2 and year 3 revenues would come to within about $200 of covering establishment costs. Hedgerow 3 had the lowest establishment costs, but also very low initial yields, providing revenue that would only cover approximately 10% of establishment costs. However, this hedgerow also experienced the largest increase in average per-plant yield from the second to the third season of all three sites. This suggests the possibility that yields could catch up and allow for a positive net return over a longer timeframe.

Table 2. Potential revenue for a 1,000-foot hedgerow from sale of elderberries as frozen berries over first several years*

Growing season since planting season (season 1)

Gross revenue1

Hand harvesting and destemming cost2

Net revenue (net of harvest and destemming costs only)

Net revenue with 5% discount rate applied each year

Hedgerow 1

2

$5,381

$1,780

$3,601

$3,429

3

$4,224

$1,398

$2,826

$2,564

4

$1,008

$334

$674

$583

5

$5,808

$1,922

$3,886

$3,197

Hedgerow 2
2

$1,837

$608

$1,229

$1,171

3

$3,257

$1,077

$2,179

$1,976

Hedgerow 3

2

$61

$20

$41

$39

3

$288

$95

$193

$175

*These figures do not include costs of freezing, transport of berries from hedgerow to freezer, or any other costs, not do the include potential increases in labor costs or elderberry prices over the 3 years. Freezing costs are estimated at approximately $0.05/lb, depending on electricity rates.

1Farmgate price of $5/lb of frozen, destemmed berries.

2Labor costs of $17.82/hr.

Read Brodt et al., Native blue elderberry in hedgerows bridges revenue and conservation goals for a detailed description of the study and revenue analysis.

Resources to assess profitability

Value-added products often capture a higher market price, but with greater associated costs. California-made elderberry syrups ranged in retail price from $8 - $24 per 8 fl oz. In order to achieve profitability, the product price must exceed the costs of harvesting, processing and marketing. Merrilee Olson, founder of Preserve Farm Kitchens, a specialty food co-packer in Northern California, estimates start-up costs can range from $3,000 to $25,000. Cottage Food Law allows farmers and food entrepreneurs to start small and test market demand for their products before scaling up.

 

References

  1. Avery, B. J. 2020. Understanding opportunities for elderberry sales: Webinar presentation. UC Sustainable Agriculture Research and Education Program.
  2. Brodt, S., Engelskirchen, G. and Fyhrie, K., 2024. Native blue elderberry in hedgerows bridges revenue and conservation goals. California Agriculture, February. https://doi.org/10.3733/001c.94461.
  3. Long, R. and Anderson, J., 2010. Establishing hedgerows on farms in California. University of California Agriculture and Natural Resources.

Updated November 2024