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Knoxville co-op eyeing Johnson City for second location

Nathan Baker • Updated Nov 13, 2015 at 7:21 PM

An established Knoxville food cooperative is considering expansion to Johnson City, aided by an interested group of local residents.

On Friday, the Johnson City Development Authority unanimously agreed to contribute $4,000 for a market study to help Three Rivers Market determine the viability of a food co-op, a private grocery store owned by dues-paying members, in the downtown area.

Jacqueline Arthur, Three Rivers’ general manager, told the development authority the Knoxville business’ board of directors unanimously confirmed this week its interest in growing into Johnson City. She said a second location would strengthen the co-op’s mission of supplying affordable, locally grown and produced food to East Tennessee residents.

“We picture creating a corridor, where products could go back and forth between the two markets,” Arthur said. “No one is doing distribution right now, so it’s hard for people who grow to get their products into other markets. We would facilitate that.”

Three Rivers’ involvement, and the push in general to create a food co-op in Johnson City, grew from the efforts of the Johnson City Food Co-op Interest Group, an organization of residents off-shooting from the Livable Communities group.

Jodi Jones, chair of the food co-op interest group, visited the JCDA in the summer to outline the need for a co-op in the city and to detail the group’s early conversations with Three Rivers. Having a food cooperative would help nearby farmers get their goods to customers, would put local residents to work, would improve heath and wellness in the area and would address a food desert in the downtown area, a place without a nearby grocery store, she said.

On Friday, Audrey Depelteau, another co-op interest group member, filled in for Jones, answering questions from the development authority members as they considered the contribution.

The full market study will cost $16,000. Three Rivers pledged to pay half of the cost, and Depelteau said AccelNow, an entrepreneurs group in Northeast Tennessee, offered $1,500. Other groups and individuals are considering making donations, putting the effort within reach of the full sum.

Arthur said she believes a co-op store is viable in Johnson City, but the study will show how large it can be and how much borrowing and investment it will need to get started.

In Knoxville, the Three Rivers Market in the Downtown North neighborhood is 10,000 square feet, a size Arthur said is “the sweet spot,” maybe a little larger if a community meeting space is included. A Johnson City co-op would also need plenty of parking, a loading dock and an easy access point for large trucks.

It’s been the interest group’s intention to build the co-op downtown, and Arthur specifically mentioned the corridor between the downtown core and East Tennessee State University as a well-suited location.

A food co-op operates on membership buy-ins, which help pay suppliers. Once a member buys into the co-op, he or she is considered an owner, and receives discounts at the store.

Three Rivers in Knoxville has 7,000 owners, Arthur said, and brings in $6.7 million in sales annually for a margin of 2 percent, above average for the grocery industry. Approximately 61 percent of those sales are to members, the rest to non-members. About 30 percent of the sales are of local products, the most coming from meat.

Co-ops aren’t nonprofit organizations, but they aren’t technically for-profit corporations either — they exist in a tax category all on their own, Arthur said.

In its Knoxville neighborhood, Three Rivers is an anchor, employing 50, half being full-time workers.

City economic development leaders have long wished for a downtown anchor, a grocery store and development along West Walnut Street. If the co-op settles in the area, it could satisfy all three.

Johnson City’s geography may have given it a fortunate edge over other municipalities.

Arthur said Nashville was interested in courting a Three Rivers expansion, but, for now, the market wanted to stay within its cultural area.

“Nashville already did a market study, but Johnson City just feels like the perfect place for a second store,” she said.

Email Nathan Baker at [email protected]. Follow him on Twitter at @jcpressbaker or on Facebook at facebook.com/jcpressbaker.

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