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Target Market Strategy Study
Prepared for:
January 10, 2017
Prepared by:
1 | P a g e Target Market Strategy Study for Sidney, Neb.
Table of Contents
Final Deliverables………………………………………………………………………………....2
Freight Flow Analysis….…………………..…………………………………..………………………………………………4
SWOT Analysis..……………………………….……………………………………………………………………………….6
Benchmark Data.……………………………………………………………...……………………………………………....9
Target Industries and Companies…………………..……………...………………….....17
Agribusiness/Food processing/Specialty-Ancient grains………………………..17
Small light manufacturing/Fabricated metal………………………………….…69
Data centers………………………………………………………………….…102
Warehouse/Distribution/Transportation……………………………………..…119
Tourism………………………………………………………………...………123
Business Retention & Expansion………………………………………………………130
Recommendations……………………………………………………………………...133
Appendix: Additional information…………………………………………………………….134
2 | P a g e Target Market Strategy Study for Sidney, Neb.
FINAL DELIVERABLES
January 10, 2017
Mr. Ed Sadler
City Manager, City of Sidney, Nebraska
Sent via email to: [email protected]
Dear Ed,
In this document, we offer the City of Sidney a plan that will provide recommendations and
solutions on marketing, business development, business retention and expansion, as well as
business formation.
We came to Sidney to kick off the project and conduct off-the-record interviews with
stakeholders (no person or company was quoted) concerning the local labor market, financial
capital, existing and hoped for business clusters, transportation and access to markets, buildings
and sites, infrastructure and utilities, education and training, business climate and quality of life.
After this was completed, the Bass Pro merger was announced and additional elements have
unfolded and the picture of the future we know will be different but at this point it is not totally
clear. We are not in position to change the fact that Cabela’s and Bass Pro are merging. Our
mission is to identify ways and means by which new job creation has the potential to take place
in Sidney in such a way that will diversify the economy and improve the quality of life in the
city. This Target Market Strategy plan serves as a roadmap to make this happen.
Our foundational work began with a SWOT analysis, exploratory and investigative in nature, in
which we identified:
Strengths: Characteristics of the community that would give it an advantage over others
and attract new investment and jobs.
Weaknesses: Characteristics that place the community at a disadvantage relative to
others that need to be known and some mitigations implemented if possible.
Opportunities: Things that the community could exploit to its advantage.
Threats: Things in the environment that could potentially cause trouble but must be
understood for their impact on the future.
3 | P a g e Target Market Strategy Study for Sidney, Neb.
Our desk top research (benchmarking), interviews, freight flow analysis, and the SWOT analysis
led us to outline a list of target industries that would provide the highest opportunity to attract
capital and jobs.
The target industries are:
Agribusiness/Food processing/Specialty-Ancient grains
Small light manufacturing/Fabricated Metal
Data centers
Warehouse/Distribution/Transportation
Tourism
Our research identified many competitive advantages for Sidney by matching the strengths of its
location and workforce to these industry types which will be covered in our PowerPoint
presentation to you, the Mayor, and the City Council in January. The bulk of our report is to
provide listings of companies in these target sectors along with contact names, phone numbers,
some emails, and other appropriate data to allow the marketing attraction process to start
immediately in a focused approach achieving effective business attraction, retention and
expansion knowing there is a story to tell about the advantages of Sidney.
In the end, our recommendations point to a roadmap of activities that will give you and your
team the best chance of success in job creation via business retention, expansion, attraction, and
creation.
Thank you for the opportunity to work with you. Our final draft PDF presentation and report will
be delivered on January 10, 2017 to yourself, the City Clerk, and the entire City Council of Sidney.
If there are any revisions need after our January presentation, we will turn them around as quickly
as possible to generate final PDF documents including the Appendix of additional data, links and
files.
Respectfully,
Tim Feemster
Foremost Quality Logistics
6005 Calm Meadow Rd
Dallas, TX 75248
(214) 693-7689
Dean Barber
Barber Business Advisors
2736 Golfing Green Dr.
Dallas, Texas 75234
(972) 890-3733
John Hoover
Modalgistics
1200 Peachtree St. NE
Atlanta, GA 30309
(404) 962-5633
4 | P a g e Target Market Strategy for Sidney, Neb
OUR MISSION
We are not in position to change the fact that Cabela’s and Bass Pro are merging. Our mission is
to identify ways and means by which new job creation has the potential to take place in Sidney in
such a way that will diversify the economy and improve the quality of life in the city. This
Target Market Strategy plan serves as a roadmap to make this happen.
FREIGHT FLOW ANALYSIS
Our freight flow analysis summarized national freight data from the Freight Analysis Framework
(FAF) U.S. Department of Transportation database. These summaries focused on truck and rail
transportation as the largest source of movement consistent with the greatest opportunity to attract
the appropriate industries. These findings showed that most of the volume of freight was in the
agribusiness for both inbound and outbound movements. A complete listing of the data output of
the Freight Flows is shown in the Appendix.
5 | P a g e Target Market Strategy for Sidney, Neb
Based on this analysis, we focused on the agribusiness as the top target industry that existed both
in and out of Nebraska now. Therefore, it follows that it would be the top target for business
attraction by offering the opportunity to do further processing of the product to add value and
create jobs. The specialty grain business appears to be the best new bet to penetrate niche markets
needed to satisfy today’s organic foods movement while the existing grain/food processing
business can satisfy the need for expanded production/processing closer to the field to reduce
inbound transportation costs.
6 | P a g e Target Market Strategy for Sidney, Neb
SWOT ANALYSIS
Our SWOT analysis was driven by the freight flow, desktop market analysis, and personal
interviews conducted with over 40 leaders in business, education, and public officials from City
of Sidney, Cheyenne County, and the State of Nebraska. All these interviews were done one-on-
one and we have summarized our findings without identifying any specific individuals and/or
companies. Keeping this information confidential, as to its source, is critical to our getting folks
to be open and honest in their feedback. None of our notes have been shared with anyone outside
our FQL team. Here is a listing of interviews undertaken.
7 | P a g e Target Market Strategy for Sidney, Neb
There were many common elements identified in these interviews as well as some divergent views.
The following is a summary of our SWOT findings.
Strengths:
Locational opportunities due to the road and rail infrastructure in and around Sidney-
Interstate 80 & U.S. Highway 385, both the UP and BNSF railroads serve the area
Valuable cluster of existing retail operations along I-80 as well as expansion potential
within the downtown City of Sidney- hotels, car dealerships, restaurants, and Cabela’s
flagship store
Significant dry ground agriculture exists in the local area providing the raw materials for
potential further processing operations
Manufacturing culture continues in the area with Pennington Seed, Bell Pole, The Egging
Company, Progress Rail Services, and others
Lots of developable land exists for both industrial and residential use- City industrial park,
Adams Industries business park, Sioux Meadows Industrial Park, as well as City/County
land currently being farmed
City has certain quality of life amenities of a much larger city – walking/biking trails, sports
complexes, five banks, a new hospital, and new Sidney Aquatic Center
Expandable water supply to support business growth and/or expansion
Weaknesses: There are still many unknowns from the merger with Bass Pro
The downtown is old, expansive, underutilized, and in need of repairs, with Finney’s
Hardware/Appliance, Steffens, and a few other serious establishments
While having a presence in Sidney, Western Nebraska Community College does not have
the demand for local workforce training beyond aviation and nursing. Other courses are
offered via video conferencing and/or at classes in Scottsbluff
Wastewater treatment appears to loom as a large area of concern for the attraction of a
food/ag processor
Economic development team is limited in size
Opportunities:
Adams Industries provides a mature business park with significant rail and 3PL capabilities
ready for expansion and to support smaller new entrants to the market with space and/or
manpower
Available vacant industrial/manufacturing building totaling about 400,000 square feet in
Sidney proper as well as additional buildings at Adams outside of town. Old Tyco building
is in good shape but ceiling height may limit efficient operations
City owned business park has access to services and is available for a build to suit
Downtown has lots of available space for new businesses as well as to support expansion
of existing operations
Utilization of many of the infrastructure assets, talented workforce, and quality of life
elements that exist in Sidney and Cheyenne County to attract new opportunities in the
targeted industries
8 | P a g e Target Market Strategy for Sidney, Neb
Threats: Despite being somewhat of a regional hub in the Nebraska Panhandle, population has been
flat for years, small population base within a 50/100-mile radius, and the Bass Pro merger
could reduce it further
Local economy is depressed, particularly the farm commodities, retail sales, and housing.
All these elements will probably will not get better in the next few years
It is a 2 ½ hour drive to the closest airport with significant passenger and/or freight
service
Business tax structure of NE vs CO and WY is somewhat negative for business attraction
and expansion
9 | P a g e Target Market Strategy for Sidney, Neb
BENCHMARK DATA
Education levels figure into the socio-economic status of an area. Because income increases with
advancing educational attainment, many retailers focus on income level rather than education.
There are some exceptions Bookstores are often cited by developers as a business whose success is
directly correlated with the number of college educated individuals in the trade area. Similarly,
computer and software stores are often located in areas with high levels of education. In general,
areas with high levels of educational attainment tend to prefer “the finer things.” That is, they may
have a preference for shopping at smaller, non-chain specialty retail stores located in their
downtowns. They also tend to visit cultural establishments like museums and theaters at a frequency
over three times greater than those without a college degree. On the other hand, less-educated
populations generally have lower incomes and thus tend to prefer shopping at discount retail outlets
and chain stores. This group also spends more money on car maintenance and tobacco products
than those with a college degree.
Sidney’s key young adult demographic is especially well educated as over a third of Sidney’s 25 to
44 year olds have a college degree. Median earnings for population 25 years averaged $37,813 for
Sidney making this population the highest paid between the comparative cities.
Educational Attainment Comparison:
Household income data is a good indicator of residents’ spending power. Household income
positively correlates with retail expenditures in many product categories. When evaluating a market,
companies look at the median or average household income in a trade area and will seek a minimum
number of households within a certain income range before establishing a business or setting prices.
Another common practice is to analyze the distribution of household incomes. Discount stores may
avoid extremely high or low-income areas. Some specialty fashion stores target incomes above
$100,000. A few store categories, such as auto parts, are more commonly found in areas with lower
household incomes.
Education and Earning by Age Sidney, NE Cheyenne, WY Fort Collins, CO North Platte, NE Scottsbluff, NE
Population 18 to 24 years 443 5,845 33,622 2,002 1,502
High school graduate (or equivalency) 35% 31% 15% 29% 36%
Bachelor's degree or higher 15% 8% 13% 2% 7%
Population 25 to 44 years 1,793 17,287 42,204 6,307 3,575
High school graduate or higher 98% 97% 96% 92% 86%
Bachelor's degree or higher 38% 28% 55% 20% 25%
Population 45 to 64 years 1,906 14,815 30,996 6,217 3,489
High school graduate or higher 96% 94% 97% 89% 84%
Bachelor's degree or higher 21% 28% 52% 20% 23%
Population 25 years and over with $ 37,813 $ 37,352 $ 36,801 $ 31,263 $ 27,887
Less than high school graduate $ 11,860 $ 21,658 $ 17,023 $ 20,726 $ 17,336
High school graduate (or equivalency) $ 29,921 $ 27,416 $ 26,988 $ 26,268 $ 22,235
Some college or associate's $ 37,696 $ 36,428 $ 29,977 $ 29,191 $ 29,587
Bachelor's degree $ 44,688 $ 48,028 $ 40,894 $ 50,334 $ 39,242
Graduate or professional degree $ 67,625 $ 60,849 $ 54,543 $ 59,128 $ 57,019
MEDIAN EARNINGS IN THE PAST 12 MONTHS (IN 2014 INFLATION-ADJUSTED DOLLARS)
10 | P a g e Target Market Strategy for Sidney, Neb
Sidney’s median household income ranked 2nd
highest amongst the comparison cities with less than
a $700 difference with the highest city.
Income comparison between Communities:
Demographic statistics are especially useful if they are presented in comparison with other places.
Comparing your city with other cities allows demographic baselines to be established. These
baselines will help determine whether the city has low, median, or high values in each demographic
category. Comparison data between Sidney, Cheyenne, Fort Collins, Scottsbluff and Sterling are
detailed in the table below.
Demographic data is available through the U.S. Bureau of Census at http://www.census.gov. The
U.S. Census website includes a link to its data-filled website called American Fact Finder at
http://factfinder2.census.gov. Although the American Community Survey (ACS) produces
population, demographic and housing unit estimates, it is the Census Bureau's Population
Estimates Program that produces and disseminates the official estimates of the population for the
nation, states, counties, cities and towns and estimates of housing units for states and counties.
11 | P a g e Target Market Strategy for Sidney, Neb
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7,0
08
(X)
37
,74
0(X
)3
7,7
99
(X)
(X)
28
,34
7(X
)3
1,3
71
(X)
6,6
93
6,6
93
59
,78
35
9,7
83
14
7,8
31
14
,75
61
4,7
56
14
,24
21
4,2
42
6,1
08
91
.30
%5
2,6
47
88
.10
%8
9.8
0%
12
,31
58
3.5
0%
11
,16
67
8.4
0%
4,9
58
74
.10
%4
2,9
05
71
.80
%7
9.0
0%
8,4
69
57
.40
%7
,51
95
2.8
0%
1,9
03
28
.40
%1
8,0
31
30
.20
%1
9.2
0%
5,6
16
38
.10
%5
,39
23
7.9
0%
58
58
.70
%7
,13
61
1.9
0%
10
.20
%2
,44
11
6.5
0%
3,0
76
21
.60
%
11
6,7
68
28
,43
41
5,1
40
51
,31
24
0,5
31
14
7,8
31
13
2,6
91
22
,25
1
3,2
46
3,6
11
7,7
85
29
,67
7
1,3
17
9,3
67
1,1
09
73
,43
7
48
,57
87
0,7
65
10
,44
11
6,3
41
9,7
31
7,5
47
7,3
45
3,1
65
2,3
91
53
,77
5
57
,14
64
,67
02
,98
46
,02
95
,02
88
,25
6
59
,46
31
5,2
87
4,3
90
12
3
10
,67
63
,78
42
,77
0
79
,26
3
9,4
96
1,9
74
1,6
14
4,1
66
10
,38
62
1,6
26
79
,26
31
,27
03
,43
36
,43
11
,63
7
35
,60
71
4,8
19
19
,13
64
,48
65
,21
5
4,8
67
19
.5
79
,26
3
77
,46
25
6,5
63
6,3
98
1,1
23
2,6
90
5,8
21
22
33
7,2
55
86
,03
67
9,2
63
6,7
73
Sub
ject
Ster
lin
g, C
olo
rad
oSi
dn
ey, N
ebra
ska
Ch
eyen
ne,
Wyo
min
gSc
ott
sblu
ff, N
ebra
ska
Fort
Co
llin
s, C
olo
rad
o
EMP
LOYM
ENT
STA
TUS
P
op
ula
tio
n 1
6 y
ears
an
d o
ver
In l
ab
or
forc
e
Esti
ma
te
12
3,5
14
Civ
ilia
n l
ab
or
forc
e
Em
plo
yed
U
nem
plo
yed
Arm
ed F
orc
es
N
ot
in l
ab
or
forc
e
CO
MM
UTI
NG
TO
WO
RK
W
ork
ers
16
yea
rs a
nd
ove
r
C
ar,
tru
ck, o
r va
n -
- d
rove
alo
ne
Ca
r, t
ruck
, or
van
--
carp
oo
led
Pu
bli
c tr
an
spo
rta
tio
n (
excl
ud
ing
taxi
cab
)
W
alk
ed
O
ther
mea
ns
Wo
rked
at
ho
me
Mea
n t
rave
l ti
me
to w
ork
(m
inu
tes)
OC
CU
PA
TIO
N
Civ
ilia
n e
mp
loye
d p
op
ula
tio
n 1
6 y
ears
an
d o
ver
Ma
na
gem
ent,
bu
sin
ess,
sci
ence
, an
d a
rts
occ
up
ati
on
s
Se
rvic
e o
ccu
pa
tio
ns
Sale
s a
nd
off
ice
occ
up
ati
on
s
N
atu
ral
reso
urc
es, c
on
stru
ctio
n, a
nd
ma
inte
na
nce
P
rod
uct
ion
, tra
nsp
ort
ati
on
, an
d m
ate
ria
l m
ovi
ng
IND
UST
RY
C
ivil
ian
em
plo
yed
po
pu
lati
on
16
yea
rs a
nd
ove
r
A
gric
ult
ure
, fo
rest
ry, f
ish
ing
an
d h
un
tin
g, a
nd
min
ing
Co
nst
ruct
ion
Ma
nu
fact
uri
ng
Wh
ole
sale
tra
de
Ret
ail
tra
de
Tra
nsp
ort
ati
on
an
d w
are
ho
usi
ng,
an
d u
tili
ties
Info
rma
tio
n
Fi
na
nce
an
d i
nsu
ran
ce, a
nd
rea
l es
tate
an
d r
enta
l a
nd
P
rofe
ssio
na
l, s
cien
tifi
c, a
nd
ma
na
gem
ent,
an
d
Edu
cati
on
al
serv
ices
, an
d h
ealt
h c
are
an
d s
oci
al
Art
s, e
nte
rta
inm
ent,
an
d r
ecre
ati
on
, an
d
Oth
er s
ervi
ces,
exc
ept
pu
bli
c a
dm
inis
tra
tio
n
P
ub
lic
ad
min
istr
ati
on
CLA
SS O
F W
OR
KER
C
ivil
ian
em
plo
yed
po
pu
lati
on
16
yea
rs a
nd
ove
r
P
riva
te w
age
an
d s
ala
ry w
ork
ers
Go
vern
men
t w
ork
ers
Self
-em
plo
yed
in
ow
n n
ot
inco
rpo
rate
d b
usi
nes
s
U
np
aid
fa
mil
y w
ork
ers
INC
OM
E A
ND
BEN
EFIT
S (I
N 2
01
4 I
NFL
ATI
ON
-AD
JUST
ED
T
ota
l h
ou
seh
old
s
Le
ss t
ha
n $
10
,00
0
$
10
,00
0 t
o $
14
,99
9
$
15
,00
0 t
o $
24
,99
9
$
25
,00
0 t
o $
34
,99
9
$
35
,00
0 t
o $
49
,99
9
$
50
,00
0 t
o $
74
,99
9
$
75
,00
0 t
o $
99
,99
9
$
10
0,0
00
to
$1
49
,99
9
$
15
0,0
00
to
$1
99
,99
9
$
20
0,0
00
or
mo
re
M
edia
n h
ou
seh
old
in
com
e (d
oll
ars
)
M
ean
ho
use
ho
ld i
nco
me
(do
lla
rs)
Wit
h e
arn
ings
Mea
n e
arn
ings
(d
oll
ars
)
W
ith
So
cia
l Se
curi
ty
M
ean
So
cia
l Se
curi
ty i
nco
me
(do
lla
rs)
Wit
h r
etir
emen
t in
com
e
M
ean
ret
irem
ent
inco
me
(do
lla
rs)
Wit
h S
up
ple
men
tal
Secu
rity
In
com
e
M
ean
Su
pp
lem
enta
l Se
curi
ty I
nco
me
(do
lla
rs)
Wit
h c
ash
pu
bli
c a
ssis
tan
ce i
nco
me
Mea
n c
ash
pu
bli
c a
ssis
tan
ce i
nco
me
(do
lla
rs)
Wit
h F
oo
d S
tam
p/S
NA
P b
enef
its
in t
he
pa
st 1
2 m
on
ths
M
edia
n e
arn
ings
fo
r w
ork
ers
(do
lla
rs)
M
edia
n e
arn
ings
fo
r m
ale
fu
ll-t
ime,
yea
r-ro
un
d
M
edia
n e
arn
ings
fo
r fe
ma
le f
ull
-tim
e, y
ear-
rou
nd
HEA
LTH
IN
SUR
AN
CE
CO
VER
AG
E
Civ
ilia
n n
on
inst
itu
tio
na
lize
d p
op
ula
tio
n
W
ith
hea
lth
in
sura
nce
co
vera
ge
W
ith
pri
vate
hea
lth
in
sura
nce
Wit
h p
ub
lic
cove
rage
No
hea
lth
in
sura
nce
co
vera
ge
86
,25
9
12 | P a g e Target Market Strategy for Sidney, Neb
Demographics comparison data:s p2
Estim
ate
Perc
ent
Estim
ate
Perc
ent
Perc
ent
Estim
ate
Perc
ent
Estim
ate
Perc
ent
5,30
45,
304
48,1
4248
,142
123,
514
11,5
4211
,542
12,2
1412
,214
3,88
773
.30%
32,7
2468
.00%
69.8
0%7,
640
66.2
0%7,
664
62.7
0%3,
887
73.3
0%31
,694
65.8
0%69
.70%
7,64
066
.20%
7,63
762
.50%
3,79
971
.60%
29,8
6062
.00%
64.2
0%6,
952
60.2
0%6,
426
52.6
0%88
1.70
%1,
834
3.80
%5.
50%
688
6.00
%1,
211
9.90
%0
0.00
%1,
030
2.10
%0.
20%
00.
00%
270.
20%
1,41
726
.70%
15,4
1832
.00%
30.2
0%3,
902
33.8
0%4,
550
37.3
0%
3,70
03,
700
30,5
7930
,579
77,4
626,
781
6,78
16,
382
6,38
23,
115
84.2
0%25
,412
83.1
0%73
.00%
5,42
380
.00%
4,80
675
.30%
424
11.5
0%2,
835
9.30
%8.
30%
927
13.7
0%1,
106
17.3
0%0
0.00
%19
40.
60%
1.40
%30
0.40
%21
0.30
%44
1.20
%73
62.
40%
3.50
%11
31.
70%
194
3.00
%46
1.20
%58
41.
90%
7.50
%11
31.
70%
360.
60%
711.
90%
818
2.70
%6.
30%
175
2.60
%21
93.
40%
9.6
(X)
13.2
(X)
(X)
12.1
(X)
15.6
(X)
3,79
93,
799
29,8
6029
,860
79,2
636,
952
6,95
26,
426
6,42
61,
366
36.0
0%11
,259
37.7
0%44
.90%
1,86
126
.80%
1,37
821
.40%
717
18.9
0%5,
379
18.0
0%18
.70%
1,26
618
.20%
1,74
527
.20%
1,06
528
.00%
7,20
024
.10%
24.1
0%1,
850
26.6
0%1,
669
26.0
0%25
76.
80%
2,98
410
.00%
5.70
%87
312
.60%
613
9.50
%39
410
.40%
3,03
810
.20%
6.60
%1,
102
15.9
0%1,
021
15.9
0%
3,79
93,
799
29,8
6029
,860
79,2
636,
952
6,95
26,
426
6,42
610
62.
80%
655
2.20
%1.
60%
195
2.80
%23
23.
60%
982.
60%
2,10
27.
00%
4.30
%47
66.
80%
170
2.60
%30
68.
10%
1,02
93.
40%
8.10
%55
17.
90%
428
6.70
%42
1.10
%46
71.
60%
2.10
%17
82.
60%
400.
60%
1,26
833
.40%
3,74
312
.50%
12.0
0%1,
018
14.6
0%1,
117
17.4
0%26
46.
90%
1,85
06.
20%
2.50
%45
16.
50%
261
4.10
%18
0.50
%85
22.
90%
2.00
%11
21.
60%
143
2.20
%15
03.
90%
1,35
04.
50%
5.30
%37
85.
40%
107
1.70
%22
15.
80%
2,75
19.
20%
13.1
0%38
65.
60%
468
7.30
%80
321
.10%
6,30
221
.10%
27.3
0%1,
799
25.9
0%1,
166
18.1
0%34
79.
10%
2,95
09.
90%
13.5
0%48
06.
90%
1,16
118
.10%
109
2.90
%1,
152
3.90
%4.
80%
509
7.30
%45
97.
10%
671.
80%
4,65
715
.60%
3.50
%41
96.
00%
674
10.5
0%
3,79
93,
799
29,8
6029
,860
79,2
636,
952
6,95
26,
426
6,42
63,
163
83.3
0%20
,444
68.5
0%75
.00%
5,54
379
.70%
4,92
376
.60%
431
11.3
0%8,
167
27.4
0%19
.30%
1,04
115
.00%
1,21
819
.00%
205
5.40
%1,
185
4.00
%5.
50%
368
5.30
%28
54.
40%
00.
00%
640.
20%
0.20
%0
0.00
%0
0.00
%
3,06
43,
064
25,0
0725
,007
57,1
466,
028
6,02
85,
081
5,08
174
2.40
%1,
018
4.10
%8.
20%
635
10.5
0%50
710
.00%
166
5.40
%1,
437
5.70
%5.
20%
379
6.30
%49
79.
80%
467
15.2
0%2,
573
10.3
0%10
.60%
969
16.1
0%71
014
.00%
357
11.7
0%2,
776
11.1
0%8.
80%
837
13.9
0%70
813
.90%
312
10.2
0%3,
665
14.7
0%14
.40%
860
14.3
0%92
718
.20%
581
19.0
0%4,
494
18.0
0%17
.00%
1,03
817
.20%
818
16.1
0%50
316
.40%
3,41
013
.60%
13.2
0%73
812
.20%
500
9.80
%40
113
.10%
3,92
815
.70%
12.9
0%47
87.
90%
255
5.00
%14
34.
70%
1,09
14.
40%
5.50
%65
1.10
%74
1.50
%60
2.00
%61
52.
50%
4.20
%29
0.50
%85
1.70
%54
,175
(X)
54,8
45(X
)(X
)37
,813
(X)
36,2
04(X
)65
,861
(X)
68,1
96(X
)(X
)49
,069
(X)
47,9
74(X
)
2,57
884
.10%
20,1
0680
.40%
85.0
0%4,
670
77.5
0%3,
932
77.4
0%65
,719
(X)
65,0
35(X
)(X
)49
,292
(X)
47,7
59(X
)83
127
.10%
6,90
727
.60%
18.3
0%2,
011
33.4
0%1,
683
33.1
0%19
,032
(X)
18,4
75(X
)(X
)16
,415
(X)
14,9
52(X
)38
112
.40%
5,69
622
.80%
13.6
0%68
911
.40%
753
14.8
0%11
,553
(X)
26,1
01(X
)(X
)14
,873
(X)
19,6
25(X
)
852.
80%
998
4.00
%2.
30%
372
6.20
%25
95.
10%
10,5
26(X
)9,
180
(X)
(X)
9,47
2(X
)8,
514
(X)
421.
40%
392
1.60
%1.
90%
134
2.20
%16
93.
30%
5,95
0(X
)4,
392
(X)
(X)
3,80
3(X
)2,
646
(X)
230
7.50
%2,
397
9.60
%6.
30%
978
16.2
0%79
015
.50%
33,3
90(X
)32
,753
(X)
(X)
22,9
83(X
)19
,686
(X)
51,1
77(X
)50
,019
(X)
(X)
38,2
39(X
)37
,008
(X)
37,7
40(X
)37
,799
(X)
(X)
28,3
47(X
)31
,371
(X)
6,69
36,
693
59,7
8359
,783
147,
831
14,7
5614
,756
14,2
4214
,242
6,10
891
.30%
52,6
4788
.10%
89.8
0%12
,315
83.5
0%11
,166
78.4
0%4,
958
74.1
0%42
,905
71.8
0%79
.00%
8,46
957
.40%
7,51
952
.80%
1,90
328
.40%
18,0
3130
.20%
19.2
0%5,
616
38.1
0%5,
392
37.9
0%58
58.
70%
7,13
611
.90%
10.2
0%2,
441
16.5
0%3,
076
21.6
0%
116,
768
28,4
3415
,140
51,3
1240
,531
147,
831
132,
691
22,2
51
3,24
63,
611
7,78
529
,677
1,31
79,
367
1,10
9
73,4
37
48,5
7870
,765
10,4
4116
,341
9,73
17,
547
7,34
53,
165
2,39
153
,775
57,1
464,
670
2,98
46,
029
5,02
88,
256
59,4
6315
,287
4,39
012
3
10,6
763,
784
2,77
0
79,2
63
9,49
61,
974
1,61
44,
166
10,3
8621
,626
79,2
631,
270
3,43
36,
431
1,63
7
35,6
0714
,819
19,1
364,
486
5,21
5
4,86
7
19.5
79,2
63
77,4
6256
,563
6,39
81,
123
2,69
05,
821
223
37,2
55
86,0
3679
,263
6,77
3
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59
13 | P a g e Target Market Strategy for Sidney, Neb
In Sidney, Nebraska, 73 percent of the population 16 and over were employed; 27 percent were
not currently in the labor force. The highest employment for population between comparison
cities.
Commuting refers to a worker’s travel from home to work. Place of work refers to the geographic
location of the worker’s job. Work at home refers to a worker who does not commute to a different
geographic area from work, meaning their place of work is their home. Daytime population refers
to the estimated number of people who are residing and working in an area during the “daytime”
working hours.
There are several surveys conducted by the Census Bureau that ask questions related to commuting
including means of transportation, time of departure, mean travel time to work, vehicles available,
distance traveled, and expenses associated with commuting.
Sidney maintains the shortest commute time with 9.6 minute drive. Scottsbluff is second with a
12.1 minute commute time.
Industry Sectors: The Retail Trade sector comprises establishments engaged in retailing
merchandise, generally without transformation, and rendering services incidental to the sale of
merchandise.
The retailing process is the final step in the distribution of merchandise; retailers are, therefore,
organized to sell merchandise in small quantities to the general public. This sector comprises two
main types of retailers: store and nonstore retailers.
14 | P a g e Target Market Strategy for Sidney, Neb
-North American Industry Classification System
Over 30% of Sidney workers are employed in the retail trade sector.
Occupation. A set of activities or tasks that employees are paid to perform. Employees that
perform essentially the same tasks are in the same occupation, whether or not they work in the
same industry. Some occupations are concentrated in a few particular industries; other occupations
are found in many industries. The May 2012 OES data use the 2010 Standard Occupational
Classification (SOC) system to classify jobs into occupations.
Employment Percentage by Industry:
Percent of Employment by Occupation:
15 | P a g e Target Market Strategy for Sidney, Neb
Household income data is a good indicator of residents’ spending power. Household income
positively correlates with retail expenditures in many product categories. When evaluating a
market, companies look at the median or average household income in a trade area and will seek
a minimum number of households within a certain income range before establishing a business or
setting prices.
Another common practice is to analyze the distribution of household incomes. Discount stores
may avoid extremely high or low-income areas. Some specialty fashion stores target incomes
above $100,000. A few store categories, such as auto parts, are more commonly found in areas
with lower household incomes.
Sidney’s median household income ranked 2nd highest amongst the comparison cities with less
than a $700 difference with the highest city.
Health insurance is a means for financing a person’s health care expenses. While the majority of
people have private health insurance, primarily through an employer, many others obtain coverage
through programs offered by the government. Over time, changes in the rate of health insurance
coverage and the distribution of coverage types may reflect economic trends, shifts in the
demographic composition of the population, and policy changes that impact access to care.
Sidney’s has the highest amount of health insurance coverage amongst the comparison cities at
91%.
Population with health insurance coverage:
The poverty rate measures the percentage of people whose income fell below their assigned
poverty threshold. Poverty thresholds are assigned to individuals or families based on family size
and composition. Planners and policy makers often use poverty rates as a key economic indicator
to evaluate trends and current economic conditions within communities and to make
comparisons between sectors of the population. Federal and state governments frequently use
poverty rate estimates to allocate funds to local communities. Furthermore, government agencies
16 | P a g e Target Market Strategy for Sidney, Neb
and local organizations use these estimates to identify the number of individuals and families
eligible for various programs.
Poverty status is determined by comparing annual income to a set of dollar values, called poverty
thresholds, which vary by family size, number of children, and the age of the householder.
If a family’s before-tax money income is less than the dollar value of their threshold, then that
family and every individual in it are considered to be in poverty. For people not living in families,
poverty status is determined by comparing the individual’s income to his or her poverty threshold.
The poverty thresholds are updated annually to account for changes in the cost of living using the
Consumer Price Index (CPI-U). They do not vary geographically. Sidney’s poverty level for all
families was estimated at 13% which was mid-range between the comparison cities.
Percent of Families Below the Poverty Level:
17 | P a g e Target Market Strategy for Sidney, Neb
TARGET INDUSTRIES
AGRIBUSINESS
Agribusiness refers to the business of farming, although, oddly, the term is not often used in
correlation with actual farms. Instead, the term agribusiness most commonly means an
agriculturally-related business that supplies farm inputs, such as farm machinery and seed supply.
The term "agribusiness" is also used to describe businesses that are involved in the marketing of
farm products, such as warehouses, wholesalers, processors, retailers and more.
Use of the term agribusiness by critics of corporate farming has created an aura of negativity
around the term, although the true definition simply provides a nice shorthand way of saying a
business is agriculture-related.
"Agribusiness" has come to be synonymous with large corporations and companies that produce
environmentally questionable, non-organic products while ensuring that smaller, potentially
sustainable farms fail to turn a profit. Normally we would expand on this utilizing multiple
resources but we found the following McKinsey Company piece that was very appropriate to the
Sidney project and very broad spectrum and have included it in its entirety in addition.
Pursuing the global opportunity in food and agribusiness
Food and agribusiness have a massive economic, social, and environmental footprint—the $5
trillion industry represents 10 percent of global consumer spending, 40 percent of employment,
and 30 percent of greenhouse-gas emissions. Although sizable productivity improvements over
the past 50 years have enabled an abundant food supply in many parts of the world, feeding the
global population has reemerged as a critical issue.
If current trends continue, by 2050, caloric demand will increase by 70 percent, and crop demand
for human consumption and animal feed will increase by at least 100 percent. At the same time,
more resource constraints will emerge: for example, 40 percent of water demand in 2030 is
unlikely to be met. Already, more than 20 percent of arable land is degraded. Moreover, food and
energy production are competing, as corn and sugar are increasingly important for both. Such
resource scarcity could lead to political unrest on a large scale if left unaddressed. Agricultural
technologies that raise productivity even in difficult conditions and the addition of land for
cultivation in Africa, Eastern Europe, and South America may ease the burden, but meeting the
entire demand will require disruption of the current trend.
Sensing an opportunity, strategic and financial investors are racing to capture value from
technological innovation and discontinuities in food and agriculture. Since 2004, global
investments in the food-and-agribusiness sector have grown threefold, to more than $100 billion
in 2013, according to McKinsey analysis. Food-and-agribusiness companies on average have
demonstrated higher total returns to shareholders (TRS) than many other sectors: the TRS of more
than 100 publicly traded food-and-agribusiness companies around the world increased an average
18 | P a g e Target Market Strategy for Sidney, Neb
of 17 percent annually between 2004 and 2013, compared with 13 percent for energy and 10
percent for information technology.
However, finding the right investment opportunity is not easy. Food-and-agribusiness investing
requires a deep understanding of specific crops, geographies, and complex value chains that
encompass seeds and other inputs, production, processing, and retailing. Many of the relevant
investment opportunities are in geographies unfamiliar to some investors, and their profitability
rests not only on crop yields but also on how different parts of the value chain perform (Exhibit
1). In this article, we examine the main trends that will likely influence the future of food and
agribusiness, identify promising investment opportunities, and offer a view of how players might
successfully pursue them.
Major trends in food and agribusiness
The food-and-agribusiness value chain comprises a wide range of companies, from suppliers of
agricultural machinery, seeds, chemicals, animal-health tests and vaccines, and packaged foods to
data providers for precision agriculture.2Filling the global gap between supply and demand
requires more resources—technical, human, and financial—for the majority of these companies.
Investors have a critical role to play in meeting this challenge—and opportunities to benefit.
Population growth, urbanization, and increased income in emerging markets
By 2020, more than half of global GDP growth is expected to come from countries outside of the
Organization for Economic Co-operation and Development; over half the world’s urban
population also will be in emerging economies. Not only is demand for food in emerging markets
expected to rise dramatically because of population and income growth, but also these regions are
likely to adopt a rich-country diet—more calories, protein, and processed foods.
A projected surge in demand for protein in emerging markets, especially pork in China, would
create opportunities for companies to grow in core production and supporting industries such as
breeding, animal-health testing, feed, and vaccines. For example, beef and other livestock
production in Argentina and Brazil is expected to grow strongly to meet global demand. Making
feed conversion more efficient so that animals produce more meat while consuming the same
amount of feed as they do now could be profitable for companies with unique intellectual property
in additives such as probiotics, enzymes, and acidifiers.
With opportunity come risks. Rising protein prices in emerging markets, government intervention,
and environmental concerns could slow demand. Moreover, not every part of the protein value
chain is doing well; livestock producers are struggling because of a poor feed-to-meat/dairy price
ratio, and primary processors are suffering from high feedstock costs and low capacity utilization.
Also, consumer behavior and preferences can change faster than many companies and investors
can handle. Successful investment strategies will address the risks by finding opportunities to
capture value (for example, technology or processing that improves feed performance or reduces
feed-production cost) or by mitigating the risks (for example, vertical integration within the protein
value chain).
19 | P a g e Target Market Strategy for Sidney, Neb
Demographic and behavioral change in mature markets
In addition to greater demand for protein, we anticipate a trend toward healthier diets. Consumers
are increasingly health conscious and place greater importance on environmental sustainability,
most visibly in developed countries but more and more in emerging markets. In response,
governments are tightening standards for food production. As a result, demand is rising for
healthier functional foods (those that offer benefits beyond basic nutrition, such as lowering
cholesterol) and for traceable and certified foods that are guaranteed to meet a certain level of
safety and environmental or corporate social responsibility.
Producers and food companies that embrace more stringent environmental and social standards,
organic-certification requirements, and traceability standards should be able to better position
themselves in the face of evolving regulation and continue to grow to take advantage of this trend.
For example, in 2010 Unilever announced plans to source 100 percent of its agricultural raw
materials sustainably by 2020, and, as of the end of 2014, had reached 55 percent. Food-and-
beverage companies can also profit from products with specific fortifications and nutrients to
appeal to the health-conscious segment (for example, omega-3–fortified milk).
The productivity imperative
Depletion of natural resources, the impact of climate volatility on crops, and declining productivity
gains in agriculture are expected to hinder growth in the world food supply, forcing countries to
produce more with less. By 2030, for example, the gap between expected water withdrawals and
existing supply may reach 40 percent. The pressure on water, land, energy, and labor resources
will necessitate innovation to enhance agriculture productivity. Indeed, productivity gains have
slowed in recent years; productivity of major crop yields is now growing by only 1 percent a year
compared with twice that rate in the 1960s and 1970s. This has big implications: a 2 percent
increase in wheat yields would generate enough calories (about 150 kilocalories per day) to give
an extra piece of bread to the nearly 900 million people living in the least-developed countries.
To take advantage of the need for higher productivity, input companies, distributors, and logistics
enterprises can expand into new geographies as well as provide a wider range of products and
services (for example, high-yield seeds, fertilizer, and resource-optimization techniques) to help
farmers increase crop yields. Offering innovative technologies (for example, seeds requiring less
water for similar yields) is important, but so is their distribution in emerging markets.
The other way to get more from less is to reduce food waste. An estimated 30 percent of
agricultural production in Africa and Asia is lost in postharvest processes. Accurate data on waste
are difficult to come by, especially in emerging markets, but we know that logistics, trade, and
processing infrastructure are critical bottlenecks. In developed markets, most food waste happens
downstream, at the retailer or in consumers’ homes, resulting also in around 30 percent
consumption loss. Economics drive waste: margins and transport costs determine how much effort
to put into waste reduction while consumer behavior is slow to change.
Reducing food waste in emerging markets is a big value-creating investment opportunity,
particularly in logistics and distribution. In China alone, the cold-storage-and-transportation
market generates $12 billion to $18 billion in revenues and is expected to grow 10 to 15 percent
20 | P a g e Target Market Strategy for Sidney, Neb
annually to meet the country’s expanding meat, dairy, and vegetable demand. Some local
companies are already seeking capital to promote this growth. In developed markets, there are
opportunities for innovation in extending food shelf life and in packaging to reduce waste
downstream.
A polarized industry structure: Toward bigger and smaller
We anticipate continued consolidation of firms across the agribusiness value chain as well as the
emergence of smaller niche players. Large-scale commercial farming has taken off in places such
as Brazil, where commercial farms can top 100,000 acres. In addition, smaller- and medium-size
family farms are increasing their purchasing (for example, seeds, crop protection, fertilizer, and
machinery) and selling grains, sugar, and ethanol through cooperatives, lowering transaction costs
significantly. There is also emerging interest in Africa as a production basin: major agribusiness
companies are increasingly integrating vertically as more traders extend into production and
processing, while retailers are moving into production and sourcing of key input commodities.
At the same time, there are rising numbers of specialized players, especially on the input side,
where technology and intellectual property play a critical role. Small microbial-fertilizer
companies are an example. In addition, the millions of smallholder farmers around the world are
gradually integrating into commercial value chains; among them are coffee farmers in Ghana and
cotton farmers in India.
Consolidated, integrated farming creates an opportunity for equipment manufacturers, distributors,
and technology companies to offer more sophisticated and automated products and services.
Smaller, specialized players could grow and perhaps wind up in the hands of strategic investors
(as, for example, in BASF’s 2012 acquisition of Becker Underwood, a seed-treatment technology
company).
Unprecedented price swings
We expect continued volatility in agricultural input and output prices. Wider swings in agricultural
prices in recent years are similar to what happened with other commodities, such as oil and metal.
In addition, there is increasing evidence of tighter linkages among commodity prices. With the
spike in food prices and the economic downturn in 2008, the number of undernourished people
around the world increased to more than 1 billion, from 850 million in 2005. Food-price peaks in
2011 and 2013 had a similar though less severe effect, while we are seeing a continuous price
decline over the past 12 months.
The politics and technology advancements of biofuels will be an important factor in price levels
and volatility. Meanwhile, other contributing factors to volatility—adverse weather, rising oil
prices, export restrictions, civil strife—will most likely persist. Risk management and hedging
mechanisms such as weather insurance will therefore be an important component of doing business
in parts of the food-and-agribusiness value chain.
Big data and information
Expanded access to and more sophisticated use of information will play an increasingly important
role in agriculture. There is exciting potential to use more granular data (for example, data for
every ten-meter-by-ten-meter square of a field) and analytical capability to integrate various
21 | P a g e Target Market Strategy for Sidney, Neb
sources of information (such as weather, soil, and market prices) with the goal of increasing crop
yield and optimizing resource usage, thus lowering cost.
In our view, however, there is still significant progress to be made on figuring out a business model
that captures value from data at scale. In part, that is because the data are captured by disparate
players in different parts of the value chain (for example, seed companies, equipment
manufacturers, traders, and software developers). Managing and capitalizing on the critical data
points is likely to require strategic partnerships and acquisitions, and potentially a reshaping of the
industry structure.
Monsanto’s $930 million acquisition of The Climate Corporation in 2013 was one of several
moves by an agriculture giant; other companies, like Deere & Company, have announced
partnerships on data with input firms. More opportunities could arise in adjacent areas once
integrated, comprehensive data become available.
Meanwhile, emerging markets still lack high-quality, reliable data on production and demand.
Establishing a systematic mechanism to capture the data could offer additional value-creating
opportunities. In particular, rapid expansion of mobile technologies in rural populations could
allow farmers in these areas to greatly improve productivity based on access to better information.
Making it happen
Simply identifying potential hot spots will not guarantee success. Winning will require a
thoughtful approach and sector-specific capabilities. To create and capture value in food and
agribusiness, investors should consider the following moves:
Deepen value-chain understanding. Investors should develop a granular understanding of each
step of the value chain and identify where opportunities may lie, since variations across each sector
are significant. For example, sugarcane production value grew almost 80 percent in China and 120
percent in Brazil from 2000 to 2012 (although in the last three years, the market has become much
tougher for Brazilian sugarcane players), compared with a 23 percent decline in the United States
during that same time period. Investors should be selective—food and agribusiness often comprise
a small number of large companies (especially inputs and primary commodity processing),
businesses that are part of a large conglomerates, and many small farmers and businesses.
Increasingly, there are firms specializing in the food-and-agribusiness sector that are attractive to
investors because of their strong understanding of the sector.
Recognize the importance of emerging markets. Strengthening activities in emerging markets
will be essential, as much of the growth in supply and demand will come from there. Investors
must build relationships and capabilities and be willing to manage social and political uncertainty.
For example, we have seen investors struggle to find opportunities in Brazil, where many family-
owned companies have strong, relationship-based businesses. Investors should be aware that social
and political constraints have a large impact in this sector and that success will often require active
collaboration with social and public entities.
Take a through-cycle approach. Investors must maintain a through-cycle mentality in
recognition of the underlying volatility of food and agribusiness (and the impact of the volatility
22 | P a g e Target Market Strategy for Sidney, Neb
in other sectors, such as oil and gas). This could lead to an investment horizon of more than seven
years—longer than that of private equity. Some investments may be more suited to investors with
longer time horizons, such as pension and sovereign-wealth funds.
Develop commercial relationships. Investors should not ignore the importance of building
relationships with suppliers, major multinational companies, and strategic investors. Instead, they
should view these players as potential partners that can help execute investments, mitigate risks,
and provide exit options.
Develop operational capabilities in agribusiness. Investors should be prepared to build the
capabilities needed to operate successfully in the agribusiness sector. Many of the capital-intensive
segments of the value chain, such as production and processing, will require investors and owners
to understand how to achieve best-in-class operations to capture their full value.
The food-and-agribusiness sector has demonstrated strong performance but is complex and
idiosyncratic. Within this space, we have identified 24 hot spots likely to prove interesting for
investment consideration over the next five to ten years. Our experience shows that pursuing due
diligence in relevant subsectors and following the five approaches we have described increases the
chance that investors can capture attractive returns while addressing some of the most significant
needs of the global population.
About the author(s)
Lutz Goedde is a principal in McKinsey’s Denver office; Maya Horii is a principal in the
Washington, DC, office; and Sunil Sanghvi is a director in the Chicago office.
