Five Factors contributing to the rise of the Farmpreneur

Working as international business consultants we are increasingly exposed to Farmpreneur businesses who are taking modern approaches to selling and marketing their valued added branded food and beverages, creating value from farm to table through direct marketing their produce from paddock to plate. So, what, this is not new I hear you say?  Been happening for some time, has it not? Ever heard of a farmers’ market? How does it affect me anyway, as a consumer or a customer (retailer or foodservice operator)?

The transformation of agricultural and food and beverage supply chains has been brought about by a multitude of factors colliding to create the perfect conditions for farmers to become Entrepreneurs or Farmpreneurs as we like to call them at Creatovate.  Value creators in the supply chain from inputs to outputs predominantly by direct selling and marketing their own “branded” products directly to customers (retail and foodservice) and in some cases direct to consumers as well.

Before we go dive deep into some of the factors contributing to the rise of the “farmpreneur” let us look at some live working examples of these new economy farm to table business models and how you might be able to apply this learning to your own farm, business, brand, customers and consumers.

Gladfield Malt

http://www.gladfieldmalt.co.nz/about-us/#our-history  

Doug & Gabi Michael are fifth generation malting barley growers and first-generation maltsters situated on prime agricultural land on the Canterbury Plains of New Zealand.  After many seasons growing and harvesting the best malting barley possible, they grew tired of working harder year after year to increase their barley yield only to have their farm gate price per Tonne of malting barley produced drop due to only having one real option to sell their malting barley – one very large multinational malting company. The Michael Family decided to take the challenge/opportunity head on and plunge into the malting industry on their own adding value to their premium quality barley by malting it on their farm and selling it directly to the rising tide of Kiwi craft brewers.  Over the next decade, and after a lot of blood, sweat and tears and significant capital investment in plant, equipment, laboratory and people and processes they are now very proud owners of one of Australasia’s leading malting companies with customers from New Zealand to Australia and China and a strong growing demand for their high quality premium craft malts from brewers and distillers worldwide.

Crosby Hops

https://crosbyhops.com/the-farm/about-us/ 

Transplant yourself 7,000 miles across the great Pacific Ocean to Oregon in the Willamette valley at the foot of the Cascade mountains in the Pacific Northwest of the United States and you will find 5th generation hop growers and first-generation hop merchants, dealers and processors of quality craft Hops – Crosby Hops.  Traditionally growing hops for large third-party merchants or grower co-operatives Crosby Hops and the Crosby Families took the brave decision 100 years on from first starting their hop farm to break away from the traditional grower only business model and started selling their hops directly to local craft brewers like Deschutes in Bend, Oregon. Starting initially with freshly dried whole hops Crosby Hops then moved quickly to design and install their own pellet mill with different processing dynamics suited specifically for the unique needs of the rising tide of craft brewers in the USA and the rest is history.  Again, after many years of significant investment in processing technology, capital, people, processes, laboratory and direct to brewer customer service Crosby Hops has not only retained their premium status as a grower of quality hops but is now also seen as a trusted merchant for sourcing from other farms and processing their hops and securing supply of unique hops to keep craft brewers abreast of the modern craft beer drinkers needs.

The Chia Co

https://thechiaco.com/au/our-story/ 

John Foss Founder and Chairman of the Chia Co set out in 2003 to sustainably grow process and market Chia Seeds and Chia based consumer products to the world to achieve the company mission to make a positive contribution to the health and wellness of the global community.  A fourth-generation wheat farmer in the Kimberly, John was not happy with two things from growing wheat – 1st – the returns and 2nd – seeing where his high-quality wheat was going and how it turned up on the kitchen table in overly processed sugar added breakfast cereals, baked goods and the like.

With a passion, for the land and the health and wellbeing of his community John saw a unique opportunity to grow and value add to an ancient Chia seed traditionally associated with Mayans and Incas and at the time only available in a sporadic supply from South America.  The unique microclimate of the Northern Kimberley region combined with the farming know how of John and his fellow farmers in the region enabled them to perfect growing a consistent quality clean and nutritious Chia seed that is now supplied to major food processors, retail customers, and foodservice operators globally.

The Chia Co in addition has launched their own range of premium plant nutrition products featuring Chia from whole cleaned Chia Seeds to Chia Pods® to Oats + Chia and Chia Breakfast and Salad Boosters and Chia Oil and Flour.  The Chia Co now boasts customers across the globe and has offices on three continents in Melbourne, New York and London. The Chia Co is a truly global enterprise exporting to over 35 countries with a vertically integrated and value adding business model every step of the way from the farm to the supermarket shelf and back again.

Heartland Potato Chips

http://www.heartlandchips.co.nz/

Raymond Bowan is not your average potato farmer – far from it he is the epitome of a farmpreneur from the young age of 18 growing his own potatoes and selling them direct to a local fish and chip shop!  Furious at a large multinational that purchased to scrap the local potato chip factory which Raymond was a key supplier, Raymond took it upon himself with the support of his family to purchase the remaining shell of a deserted factory, fly to the other side of the world and invest in the latest European frying technology and install a state of the art modern potato chip factory literally in the shell and remains of a multinational snack company’s throw away.

The Bowan family ability to grow their own quality potatoes and supply them to their own factory and have them processed in under 12 hours from picking using state of the art technology has given Heartland Potato chips a quality difference from day 1 and customers (retailers and foodservice) and consumers love them! The rest is history as they say, and the business continues to grow from strength to strength on the back of an authentic story, a proud and passionate family and workforce that looks after everything from farm to supermarket shelf and back again.  Heartland Potato Chips has an adoring tribe of customers and consumers on social media who cannot get enough of the chips from the Heart of the South Island, New Zealand.

Five Factors contributing to the rise of the Farmpreneur

1. Farmers’ Markets

Admit it! Who doesn’t love a trip to the market? Its in our DNA!  What do we do when we travel to far flung places or dare I say it the third world tourist destinations? Head to the market of course! Why? We love the dynamics of the marketplace, the hustle, bustle, banter, haggling and freshness of the produce and the direct interaction with growers and stall owners.  Well the good news for growers is the farmers market is on the rise again!

2. Family Matters!

No doubt you too can see in the shops or in your pantry some fantastic family owned farmpreneur brands that not only taste great but feel great to support.  After all what family doesn’t want to help another family in need.  It feels good to buy from a family you can empathize and connect with as a consumer and customer.  We all love brands, but it is a little harder to say we love corporations unless of course you are a shareholder in them!

3. Co-ops are Crumbling!

Farmer Co-operative business models are crumbling due to their relentless focus on highest volume lowest cost production vs. value adding branded differentiation business models which results in a price race to the bottom.  Many Co-ops grow over time and are committed to taking every litre of milk or grain or seed from their grower owners and will clear them at any cost and aim to process them at the lowest possible cost at all costs!  We need look no closer to home than a local dairy co-op now in family hands after a strategy that focused on scale and cost of production cutting at the expense of branded differentiation and value adding. Net result = fail = sale!

4. Consumer Trust Drops

Consumer trust with leading large food multinationals is at an all time low as they read about tax minimisation, restructuring or harsh treatment of growers on the land.  Consumers are reading labels more than before, they are finding things out on social media they never knew about that happen behind the scenes in the relentless drive to meet margins, or retailers demands.  Put simply the behaviour of the world’s largest companies on the supply and retail side doesn’t sit right with a lot of consumers today.  How can they react? Can they change the system? Probably not, but they can vote with their wallets and buy family or locally grown or owned where they can afford to and in many cases that starts in their grocery basket!

5. Going Direct to Customers and Consumers

Growers, producers and food manufacturers can go direct to customers and consumers like never.  Retailers are ready and actively sourcing local brands for local customers.  Farmers markets appear in abundance as a great way for growers and consumers to interact directly. Social media and internet marketplaces and platforms from Facebook to eBay to Amazon or Alibaba or TMall afford the opportunity for growers to grow, process, brand and ship directly to consumers from farm to table.  While distributors will also add value in terms of aggregation of many small customers or many small volume products dropped and delivered on a single truck to a seller or buyer there is more and more pressure than ever before to cut out the middleman and modern technology and tools of the trade like e-Commerce and hyper fast logistics are facilitating this transition faster than ever before.

In conclusion, simply put it feels good as consumers to support a farmer and family owned business no matter how small they are today or tall they become tomorrow.  If their values and the values of their branded products align with our own as consumers, we actively seek them out in preference to the brands of faceless corporations.  We take pride in sharing our latest pantry treasures at dinner parties, BBQs or with our friends on Facebook and Instagram.  We take it upon ourselves as consumers and upholders of social justice to help the farmers, other families fight against the behemoth corporations.  Five factors are strongly aiding those farmers and families to take ‘entrepreneurial risk’ and create new value adding business models.  Look out in years to come as we see many more cases in our own backyard or country rise from the soil and land on our supermarket shelves.

Dermott Dowling is Managing Director of Creatovate International and Innovation Consultancy.  Creatovate specialise in helping clients create value through the twin pillars of International Business Development and Innovation.  We believe in the power of sustainable organic growth and using choice-based strategy to clearly articulate where your business is going, how you will get there and when and what resources you will need to deploy to make it happen!  If you are interested in a no obligation face to face or telephone chat, please do not hesitate to reach out to us anytime.For more information on our learning and methodologies head over to our website at www.creatovate.com.au and sign-up for our blog at CreatoBlog

Bibliography & References:

ESTHER ASHBY-COVENTRY (2017) Heartland may employ more staff to cope with growing range of chips February 21, https://www.stuff.co.nz/timaru-herald/news/89630153/heartland-may-employ-more-staff-to-cope-with-growing-range-of-chips viewed on 9/02/2018.

Blake Crosby (2013) A Hop Farmer’s Diary: 30 days in the life of Oregon’s Crosby Hop Farm, Aug 19 https://www.craftbrewingbusiness.com/ingredients-supplies/a-hop-farmers-diary-30-days-in-the-life-of-oregons-crosby-hop-farm/ viewed on 09/02/2018.

Clare Dunn (2015) Is chia the next quinoa? Local growers are positioning themselves to be at the head of the next superfoods trend. The Sydney Morning Herald, May 25, http://www.smh.com.au/small-business/growing/is-chia-the-next-quinoa-20150514-gh1mb2.html viewed on 9/02/2017.

Keith Gribbins (2017) Hop insights: We discuss the rise of Oregon Comet, the slowing of Cascade, Crosby Hop Farm and rock bands with Blake Crosby  https://www.craftbrewingbusiness.com/featured/hops-insights-discuss-rise-oregon-comet-slowing-cascade-crosby-farm-rock-bands-blake-crosby/  April 24, viewed on 22/01/2018.

Abbie Napier (2014) Turning Risky Start-Up into Success The Press, Sep 7, http://www.stuff.co.nz/the-press/business/10467259/Turning-risky-start-up-into-success viewed on 09/02/2018.

Think Inside the Box

Think Inside the Box – Where is your Food Coming From?

Strolling the many beautiful aisles of BiG (Ben’s Independent Grocer) in Kuala Lumpur earlier in the year with an awesome Aussie food client I was suddenly struck by one product that jumped right off the shelf and slammed me in the face!  Amongst a sea of 50,000+ products (the average number of skus in a supermarket) and BiG is one of the best supermarkets I have ever visited and that’s quite a few in quite a few countries.

What captured my attention from One Degree Organic Foods was firstly a QR code front and centre of pack with a call to action to discover the ingredient story and what’s actually inside the box!  Funny you would think you could just read the ingredients panel for that information wouldn’t you?  You might also expect to see the usual blah blah blah statements that hide the truth on that same ingredient panel. Statements like “made from local and imported ingredients”, “sourced locally where possible”,…etc etc.  Not here, the family who own and operate One Degree Organic Foods are farmers themselves or as I like to call them farmpreneurs – the new breed of farmers who are entrepreneurs taking their value added brands and food products directly to consumers and baring their all in the name of authenticity and pride and passion!

We can not say it better than the owners so I will just quote what they say on their website: “We’re not a conglomerate, nor a big-box retailer, nor a chemical company with a food division. We’re a family who cares deeply about family farmers and the integrity of your food.” Does that resonate with you? It did with me in a busy brilliant independent grocer in KL, Malaysia in a cereals aisle that had local and imported options from the 4 corners of the globe to choose from.  I ended up standing at the shelf scanning QR codes and watching engaging YouTube videos of Pecan farmers in Peru, Buckwheat growers in central Canada and connecting with the passion these farmers showed to their land and the ingredients inside the box!

This is example is not only good social business its smart business and its smart marketing.  The best of the best in my mind.  Brilliantly efficient and transparent in a modern age where BIG is bad – who trusts large Multinational Profit Shifting Corporations anymore these days?  In fact in food, many have resorted to ‘faux branding’ creating cottage brands and hiding behind PO Box or Head Office Addresses with ABC Pty Ltd passing off a mass produced food item as something akin to a cottage industry startup family food brand.  If they are not creating ‘faux brands’ they are buying the genuine article and bringing them into their fold – founders and all to run alongside their mainstream food brands.  I have spoken  and written about this recent trend at Food&DrinkLive! in Sydney, Australia 2015 and in an earlier CreatoBlog Think, Act, Adapt and Innovate like a Startup!

Shoppers and consumers are asking nowadays – where is my money going? When I shop whether locally at an independent grocery store or with a major national supermarket chain they are already making a decision as to where they invest their hard earned $$$.  After get to the supermarket shelves or jump online you faced with 100s upon 100s of brands to chose from before you make another decision as to which company will you support. That support is being consciously or unconsciously driven more towards small, independent, family owned businesses more than ever before and there are many reasons for those choices.

Think about your own shopping decisions you take.  Of course price is important and as the famous jingle goes “everyone loves a bargain! ”  However do you also think of the following factors in your decisions at the shelf or when shopping online?

• How is this food grown? How are the animals treated? Is it sustainably farmed?
• Is this a genuine real article?  How much has my food been processed, added to, tampered with and packaged up?
• Where is this food from? What about the ingredients that go into making it? Is it safe to eat and feed to my family?
• Who am I supporting here? A large multinational or a family owned or small business?

Brands BIG and small need to start to think! act…and adapt to these fast changing times.  Technology is making it practical and cost effective for small to meet BIG and beat them on the playing field. Why? Because they come from a place of realness and not marketing puffery. Consumers connect with founders and their startup stories cooking on the stovetop, growing and processing their own farm produce and packaging up and telling their story in a way that is authentic and real.  You can not copy that if you are a large Corporate and it outpositions BIG as BAD and small is GOOD!

The examples we can list of brands that are doing this well is long and numerous but the list of brands NOT doing this is 100+ times longer.  Why not, take the opportunity to use technology to connect with consumers and customers and share your story? The time is now – there has never been a better time to be a farmpreneur or a small food producer. Here is a few other great examples you might like to explore and if you are interested in taking your own business to the next level of consumer connectivity give us a call or drop us a line.

• Cape Grim Beef
• Outback Organic Honey
• New Belgium Brewing

We love working with independent family owned fast growth businesses @Creatovate.  In fact, we have by accident or choice managed to specialise in it with a focus on the twin pillars of sustainable (profitable) growth – Innovation and International Business – what are you waiting for? Get out and tell your story – its real, it’s authentic and consumers and customers want to hear from you!

If you are interested to come and hear Dermott talk about creating value for consumers and customers in consumer packaged goods you might like to come to Changing the Landscape – The Flexible Packaging & Label Makers Association on 10-11 November 2016 in Melbourne, Australia.  Dermott will give a keynote talk on 11 November titled – Creating Value for your customers in the 21st Century for FMCG’s

Dermott Dowling is Managing Director @Creatovate, Innovation & International Business consultancy. Creatovate help businesses create, innovate and growth through sustainable innovation processes and spreading their wings outside their home base.

Bibliography & Additional Sources:

http://www.consumerreports.org/cro/magazine/2014/03/too-many-product-choices-in-supermarkets/index.htm viewed on 16/9/2016

The Big Group: http://thebiggroup.co/BIG/?p=about

Transperant Supply Chain https://www.onedegreeorganics.com/transparent-supply-chain and our team https://www.onedegreeorganics.com/our-team

 

 

 

Can BIG FoodCo Think! Act & Adapt like a Startup?

Concept of small business running fast!

Is it just us or does it seem today that the small food companies are moving faster than ever before and the big companies are moving more slowly when it comes to innovation in our local food industry?  Perhaps you and I are not alone in our thinking? The literature and newswires in the US have been awash with stories of “the war on big food” (Kowitt, 2015) with big bold claims like “big food is under attack from the rise of startup granola!”

Changes are not only taking place abroad in the US supermarket aisles where shoppers are cruising the periphery of the store seeking out new and trendy, authentic and unique chilled, fresh, natural and healthier food options.  The same trends are evident in Australia and plain as daylight for all to see on the high street where the Fast Food Evolution has seen global super brands like McDonalds, KFC, Subway, Pizza Hut and Burger King scrambling to reinvent themselves against the rising tide of ‘fast, casual dining chains’ like Grill’d, Nando’s and Mad Mex (Brown & Han, 2015).  Let’s not even start a conversation about the global food truck trend that could be today’s incumbent fast food operators tomorrow’s ‘disruptor’.

VIDEO: Can big food and beverage think like a startup?

16 Dec 2015 published at Food&Drink Business

Big food companies will need to rethink their business models if they want to innovate like startups, according to Dermott Dowling, managing director of innovation and international business consultancy Creatovate.

Speaking recently at the Food & Drink Business Disruptive Innovation LIVE forum, he explained why this is growing in importance, and how some of the world’s largest food and beverage companies are responding.

According to Dowling, the top 25 food businesses in the US lost at least $4bn in market share last year as consumers skipped the core food aisles in favour of the fresh segments, and increasingly sought out innovative products from smaller companies.

In this video clip, Dowling describes how some of the world’s largest companies, including Nestle and Coca-Cola, are responding to the movement, and he shares some examples of local companies that are having a go at digital disruption in the food space. See the full clip here.

Why is this happening all of a sudden?  Is it another off-shoot of the start-up tech trend finally finding its way into the food industry? Like most complex issues of business today it is a symptom of a number of factors and key influences colliding to create the perfect storm for “disruptive innovators” in the food industry.  Let us start with the trends underlying today’s shopping decisions consumers are making today with their wallets – after all is it not the shopper who ultimately controls the marketplace nowadays?

1. Shoppers and consumers are looking for ‘authenticity’ and ‘realness’ more than ever before. Their trust in global multinationals is at an all-time low and most major food companies operating in Australia are global multinationals http://www.slideshare.net/dowlmott/going-global-in-food-grocery-retailing-business . With a smart phone in every shoppers pocket the truth is out there on Facebook, Instagram and Twitter and consumers trust their friends and followers and influencers’ more than super brands blasting the old mass media airwaves. Hirschberg (2015), founder of Stoneyfield Organic Farms sums it up when he says “There’s enormous doubt and scepticism about whether large companies can deliver naturality and authenticity.”  As a result consumers are more connected with small and medium size family owned or startup food businesses and brands.  They feel a closer affinity with the founders than the boardrooms and polished CEO communicators of “Big FoodCo”.  They connect through their social media accounts, love the storytelling of startup founders and the authenticity of the founder(s) stories up all night packing boxes in their garage or cooking new prototypes on their stovetop before racing to the local farmer’s market or grocery shop on their way to fame and fortune.

2. Mintel (2015) Trends report highlights front, bold and centre Trend #3 Less processed foods, more natural as consumers continue to be concerned with eating natural and ‘less processed’ food products.

3. Consumers and shoppers are more affluent than ever before and yet more sporadic in their shopping and buying behaviour. They fill their trolleys with private label staples and shop at Aldi and CostCo to save on essentials and then simultaneously splash out on their indulgent luxury food treats. They love sharing their discoveries at their local high end speciality independent grocery store or Asian specialty shops with friends and taking something a little unique and special over to their neighbours or friends place for dinner to start a ‘foodie’ conversation.  Again here the shopper leans towards the ‘smaller, more real, and authentic’ food brands.

There are also a few key influences in the background from broader business theory on innovation that are impacting the ability of the smaller and medium size companies to grow faster than ever before and hindering the larger elephants from dancing the same jig when it comes to innovation.

Customer Development Model (Blank & Dorf, 2012)

1. Small and medium size companies by their very nature are ‘searching for growth’ ‘new business models’ and ‘repeatable and scalable business models’ and most importantly they are actively seeking out ‘new customers’. As they seek out new growth pathways for their businesses they discover unmet customer needs and wants, gaps in the market and they scurry back to the lab or pilot plant or co-manufacturer and whip something up quickly in the ever desperate search for sales and a repeatable scalable business model. With those real sales comes learned experience what’s working, what’s not, what needs fixing and so the cycle continues at pace – Build, Measure, Learn or as we like to say @creatovate “earn & learn”.  Less time in research more time spent doing, making, talking to customers and consumers with real prototypes, failing, learning, earning, and eventually success! $:-)

Business Model Iteration (Blank & Dorf, 2012)

2. Being smaller by nature you are in fact at a strategic advantage when it comes to innovation. Less $/people/time makes you smarter in your choices, you look for fast hacks forward, cut corners and try to make more from less without the bureaucracy of Stages and Gates and internal meeting after internal meeting and research after research spending valuable $/people/time but earning nothing, spending a lot and often learning very little about real customer and consumer problems in the marketplace.

3. Small and medium size companies lack middle management aka ‘ the innovation police’ who are stringently guided and controlled by budgets, plans, processes, performance reviews and the need for ‘incremental’ over ‘transformational’ growth and innovation. The middle manager’s role is to shepherd the workforce on the annually set KPIs, Manage Budgets and stop people seeking out opportunities off the strategic plan no matter how promising those opportunities might look or feel to the front line.

Resource Dependency Model

 

4. Stakeholder dependency theory (Hillman, et al 2009) suggests any organisation is interdependent on its ecosystem and the biggest interdependencies on any organisation are its ‘customers’ and its ‘shareholders’. Think about who the dominant customers are of a small or medium size food enterprise in Australia vs. a large one? Think about what investors are seeking in small and medium size business? Fast growth? Exits? Vs. Large stable food businesses? Safe and consistent returns?

Technology and capital are influencers in the background and technology enables the small and medium companies to better connect with their consumers, levels the playing field in terms of ability to interact professionally with customers (retailers) and trade partners.  Capital seeks growth opportunities and will look for the opportunity to enter and exit as quickly as possible where the opportunity for disruption exists.  Are we likely to see the small and medium growth food companies grow faster into the future – most definitely Yes! Will the large incumbents sit back and watch the ants eat their cake?  That remains to be seen and we are in for an exciting food future ahead.

Dermott Dowling is Managing Director @Creatovate, Innovation & International Business consultancy. Creatovate help businesses create, innovate and growth through sustainable innovation processes and spreading their wings outside their home base.

References:

Blank, Steve & Dorf, Bob (2012) The Startup Owner’s Manual K&S Ranch Inc, California, US. First Edition.

Dowling, D (2015) Think! Act! Adapt & Innovate $ like a Startup! http://www.linkedin.com/pulse/think-act-adapt-innovate-like-startup-dermott-dowling?trk=prof-post LinkedIn, Aug 19, retrieved on 05-Nov-15.

Dowling, D (2015) Putting “I” first in Insight to Innovation http://www.linkedin.com/pulse/putting-i-first-insight-innovation-dermott-dowling?trk=prof-post LinkedIn, Feb 25, Retrieved on 5-Nov-15.

Dowling, D (2012) Globalisation of Food & Beverages http://www.slideshare.net/dowlmott/going-global-in-food-grocery-retailing-business Slideshare, Retrieved on 5-Nov-15

IRI Worldwide (2012) The Pacesetters Report http://www.iriworldwide.com/iri/media/iri-clients/4-17-13T_T%20April%202013%20NPP%20vFinal.pdf  viewed on 5-Nov-15.

Kowitt, Ben (2015) The War on Big Food http://fortune.com/2015/05/21/the-war-on-big-food/ Fortune Online 21 May, retrieved on 5 Nov. 15

Brown, R & Han, E (2015) Fast Food Evolution – Global Super brands are having to reinvent themselves to keep up The Sydney Morning Herald online 11 January   http://www.smh.com.au/nsw/fast-food-evolution–global-superbrands-are-having-to-reinvent-themselves-to-keep-up-20150106-12j7mc.html  retrieved on 05-Nov-15

Australian Food News (2015) Top Global Food and Drink Trends for 2015 http://ausfoodnews.com.au/2015/10/21/top-global-food-and-drink-trends-for-2016.html October 21, retrieved on 05-Nov-15.

Amy J. Hillman, Michael C. Withers and Brian J. Collins R (2009) Resource Dependency Theory: A Review Journal of Management 2009 35: 1404 originally published online 23 September 2009 https://www.unifr.ch/intman/assets/files/Teaching/Network_2014/Additional%20Readings/Hillman-Withers-Collins%202009%20-%20Resource%20Dependence%20Theory.pdf retrieved on 5-nov-15

Sue Mitchell (2015) Here’s Why Consumers are Choosing Aldi over Woolworths and Coles http://www.smh.com.au/business/heres-why-consumers-are-choosing-aldi-over-woolworths-and-coles-20150714-gicgix.html July 15 retrieved on 04-Jan-16.

KIISS : Keep it “Insanely Simple”

 

Why do businesses make it so complicated for themselves, their customers and you and me as consumers? How come some businesses get it and keep it simple making more money as a result?  These were two questions I was interested to find answers to @VECCI Business Leaders lunch with Ken Segall, Ad Man and New York Times Best Selling Author of “Insanely Simple” oh, and he’s also the guy that put the “i” in front of iMac, that lead to the iPhone and iPad that lead to a lot of other ‘i…s’ out there.

The ‘Simplicity Principle” is just that – think minimal – less is more! For example minimise and humanise the words in your advertising.  Think Different.  Have less people at your meetings. “Use common words to explain uncommon things” as Di Vinci said.  Recent examples shared by Ken of ‘simplicity’ include McDonald’s new $1 for every cup of coffee (all sizes) in the US, recently extended to soft drinks.

Sounds simple doesn’t it?  So why don’t more businesses KIISS you once rather than confuse us multiple times with the evil twin of “complexity”?  Let’s look at two more examples of ‘simplicity’ triumphing over ‘complexity’ or is that ‘stupidity’? iTunes @99c a song is pretty simple right? So why did Microsoft invent Zunes with Xbox like points that translated to odd numbers that resulted in customers being in credit despite the fact their points to cents to songs conversion was the same as Apple iTunes @99c

Brains plus common sense = Simplicity.  The important piece is the upfront thinking and brains at the start.  In pursuit of inclusion, everyone puts their mark on things and business gets more complicated.  As business grow so does complexity.  It took a lot nerve for Steve Jobs to kill all 28 products existing in the Apple portfolio in 1999 when they literally had only 90 days cash to burn before bankruptcy. The resulting iMac, 2 new products + 1 to come more than made up for the lost complexity.

Being authentic, striving for perfection and achieving it only when there is nothing left to remove is what simplicity is all about.  Its sounds simple doesn’t it but just give it a go and watch complexity creep in around you.  If that happens revert to Simplicity principle #1 “no compromise”.  As Ken confesses himself in writing his very own book on simplicity he made it overly complex by adding 10 principles. Less is more – time to sign off!

Dermott Dowling is founding Director @Creatovate, Innovation & International Business consultancy.  Creatovate help businesses create innovate and grow through innovation and spreading their wings outside their home base.  Contact Dermott if your business needs help simplifying your idea-to-innovation process or expanding internationally.

Sail the 7Cs and Grow your International Business

Sail the Seven Cs

Dermott Dowling, Founding Director @Creatovate and Patrick Tully, Partner @Fusion Learning share some insight into their 7Cs ‘critical thinking’ framework to break down the challenge of where, when and how to create, grow and sustain an International Business.

INTRODUCTION

For many businesses and business owners change can feel both exciting and challenging, and for some it feels downright daunting. However, what is universally true is that business growth without change is impossible to achieve and for many businesses the most effective form of growth and change is expansion into new markets or geographies.

The journey to extend into other markets can, in its infancy, seem overwhelming particularly for small and medium sized businesses that are highly dependent on their domestic success. However, like any journey, the provision of a route-map and a travel guide can both shed light on the destination and map out the pathway to getting there. This is the purpose of our 7Cs framework, is to help structure, plan and build a rock solid foundations for a strategy of expansion into Asia and beyond.  Think of it like planning a journey across the Seven Seas from the safety and security of your home port before setting sail into the unknown beyond your borders.

1.     Challenge

The 7Cs framework includes a wide range of processes and tools that enable us to strive for the extra-ordinary. Our ability to deliver, however, is founded on the first, critical step – setting ourselves an extra-ordinary challenge.

The purpose of the challenge statement is to help us set course for the journey ahead, in essence the challenge must act as our compass – providing direction without forcing a path on us.  Ultimately the challenge statement set’s out the end in mind, what are you specifically trying to achieve? It helps provide us with a clear purpose around which to focus our data and information search and around which to align the entire organisation.

Experience shows that there are 3 crucial characteristics of a great challenge statement. These challenges are:

Prioritised: They focus on something that has significant implications for the people on the team and decision makers MUST care about what’s at stake if the outcomes are to come alive.

Provocative: If the solution is easy or obvious, just do it. What we need are unreasonable challenges we can rise to and measure.

Precise: they spell out very clearly what it is that the team need to do to create the future we want.

There is one final aspects to creating the perfect challenge.  The first is getting the scope right. Too narrow a challenge is constraining and leads to obvious, well-trodden territories. Too wide a challenge can be dizzying and disorientating and leads to generalised thoughts that lack depth or profoundness

2.     Country

Once you have set your business challenge and aligned your company and leaders internally around the opportunity to internationalise your business your attention immediately turns to the where? question.  Where? to go first.  Most businesses by default enter international markets through either a direct approach from an overseas based importer or a locally based consolidator.  Some also are taken internationally by their existing customers as they grow and spread their wings across the Seven Seas.  Whilst others may be dragged into International Business through the people in their businesses, from past experience, networks and explorer mindsets.  Smart businesses start by creating a strategy with “Where?” front and centre in their minds and rank and decide which Countries are best to go to first, second and third…for their business.  A practical and easy to use Country sorting tool is the PESTEL for macro-country data.

■        Political situation – stability, trade agreements?

■        Economic situation – present & future wealth of consumers?

■        Socio-cultural – business culture adaptability?

■        Technology – Infrastructure considerations, transfer of technology issues?

■        Environmental – considerations?

■        Legal? Regulatory environment? IP protection? Claims & Registration requirements?

One way to do a quick sort and ranking might be through use of a scorecard on each dimension using forced choice 0, 4, 7 or 10 with 0 being No, 4 is Low, 7 is good and 10 is High for attractiveness on each dimension of the PESTEL giving and overall score out of 60 enabling fast sorting and ranking of countries for market entry.

A quick and easy to use matrix like the one below can be used by a food company to sort 5 different countries in Asia for possible market entry using P.E.S.T.E.L analysis and available country data to hand.

PESTEL	Japan	China	Malaysia	Singapore	Indonesia
Political (0,4,7,10)
Economic
Sociodemographics
Technology
Environmental
Legal
Total  (out of 60)
Ranking (1-5)

Additional market data maybe built into your Country ranking and prioritisation files including market attractiveness, competitive intensity or dispersion, barriers and openness to trade and innovation intensity.  Creatovate & Fusion Learning have a suite of tools they use to help their clients make these seemingly ‘massive’ tasks logical swift and easy to understand.

3.     Category

Having decided on the country or countries we are aiming to enter we need to understand the category or categories from which we want to source our business.  The category is the consumer’s understanding of the group of products or brands with which ours competes.  In other words, its competitive set. To help define it we ask:  what is our product one of? Or what could it be a replacement for?

1. Needless to see that categories vary significantly by geography and although in your mind your product may be very clearly defined in its domestic market you can be assured that it may well sit in quite a different space in a new geography.  There are several fundamental reasons for building a clear understanding of the category in which you want to play, which are:The category will have certain product and pack codes that will be expected and challenging these can sometimes be disastrous
2. The category you target will have a significant impact on the benefits you communicated and the competitive advantage you choose to leverage. Imagine you’re the producers of premium dried fruits. If you chose to target fresh fruit you’d probably leverage your convenience or perhaps sweetness. If, on the other hand, you targeted confectionery you’d be likely to major on your naturalness or heath properties

3. In most markets data is available around the size and growth trajectories for categories – so making choices around category can help you understand the potential for your product today and in the future

4. Finally, most categories have clearly defined barriers and drivers. Understanding what these are can provide you with both a clear point of difference and competitive advantage based on either addressing a barrier or amplifying a driver – see below

4.     Competition or Collaboration

Competition in the new market(s) your business enters is highly likely to be different to your home market.  There maybe a few of the multinational companies you see at home but there is also most likely to be local or regional players to consider.  With their local knowledge, networks and understanding local and regional players can be formidable competitors.  Understanding your own external Threats and Weaknesses and your internal Strengths and Weaknesses can help you work out where to compete and where to collaborate.  SWOT analyses of the Competition will also help understand if their Weaknesses are your Threats and whether this might throw up opportunities to collaborate or compete.  Likewise similar SWOT analyses of competitors at home might highlight the opportunity to collaborate internationally.  This is commonly done in some industries like brewing where fierce competitors in one market collaborate in other markets by brewing, marketing and selling each other’s brands under licence at another brewery abroad.

Our suggestion is to pick the top 2-3 competitors in your Category and do a fast and simple SWOT on each of them in your new market.  Do not ignore pulling out SWOTs on your home market competition as well in this exercise.   TOWS matrix analysis on your own business can also be used in to see what opportunities are presented to ‘work together’ or ‘partner’ with businesses that need you as much as you need them.

Tools that might help in these exercises are shared below and an abundance of useful templates and how to… guide exist in textbooks, online or in your own business to assist this process.  An excellent source article on SWOT and TOWS analysis can be found at:

http://www.mindtools.com/pages/article/newSTR_89.htm

Clients find the exercise is easy to do when facilitated by good partners like Creatovate and Fusion Learning taking ‘what you know’ and addressing ‘what you don’t know’ with concrete actions and go forward plans to communicate and possibly collaborate with competition in new markets before entry.

5.     Consumer

The ultimate custodian of success or failure in any geography is the consumer of our product or service – if they don’t connect with and continue to consumer our offer then we are doomed to failure.  The importance of deeply understanding who you want to target and why they should be interested in your offer is a crucial stage on the journey to successful expansion.

THE WHO

The first thing we must establish is who do we believe our offer will appeal. Although this may seem obvious it is all too often left at the level of unhelpful generalities such as MGBs (Main Grocery Buyers) or Mums with young families! As we become more globalised and categories become ever more fragmented the need to deeply understand your target becomes ever more important and this is very difficult to do unless we have a clear handle on who they are.  For most brands and businesses the sentiment should be target narrow, yet reach deep.  The point being that the more specific you are in your targeting the more likely you are to build an enduring relationship with your consumers.

Fusion Learning have developed a fingerprinting^© tool that aims to help develop an improved understanding of the people in our market by searching for patterns and discordances between key communities of consumers. Fingerprinting© is particularly useful when drilling for insights and understanding in seemingly divergent targets. It is also a powerful way to ‘walk in the shoes’ of your
consumers.

It achieves this by focusing on the key questions that help us segment our consumer base – see below:

THE WHY

Having understood who we want to target the challenge is now to dig below the surface of their behaviours to understand the beliefs and attitudes that are driving them – in others words consumer insight. Fundamental to delivering this level of understanding is the thought that true insights are rarely found lying on the surface – they are all about what lies below.

There is a clear relationship between a human’s observable behaviour and the deep-seated belief system which has been developed over time in both the conscious and unconscious mind. In other words, behaviours unlock potential but beliefs are often key.

Behaviours are the things we can observe, interrogate, compare, model and measure. They are also ultimately what we want to influence.

Beliefs force us not to take the obvious for granted. They allow us to link apparently different behaviours and help us find emotional and functional levers to change behaviours.

As insight hunters, a key part of our role is to observe consumer behaviour – what they say and do – but then to dig down below to understand why they do it. What are the beliefs and attitudes that make them respond the way they do?

The importance of leverage

The world is full of exciting facts and understanding how humans’ brains work can be fascinating, but often that’s the trap.

Consumer information in its own right has no value – unless it is analysed, manipulated, interrogated and extrapolated it remains simply a pile of facts, judgements and observations. Our role is to search for the right information, develop a deep understanding of the consumer and then to turn it into leverage or active insights.

We need our insight to be leverage in 2 senses:

1. Fit to challenge – does it create opportunities we can use for our challenge?
2. Fit to brand – are the insights and resulting opportunities appropriate for our brand?

Falling in love with an elegantly articulated insight that has no bearing on your brand or business is an all too common trap to fall into. We call these insights FASCINATORS, they’re often deeply interesting and astoundingly astute but exceedingly difficult to attach a commercial or brand opportunity to.

The insights we want are LIBERATORS, these have a depth of belief-based understanding that’s matched by their relevance to our challenge or brand.  Based on these key dimensions, we will define an insight as:

“A profound understanding of consumer beliefs and behaviours that provide inspiring springboards for exciting new brand building opportunities.”

6.     Customer

Overlooked in so many case studies in the race to understand the preceding 5Cs and get your product or service out the door, many businesses miss the opportunity to get an early ‘Voice of the Customer’ in their International Business strategy creation and implementation.   Rather than leave this to importers or people in the new market, our recommendation is to prepare a plan for a constructive conversation with your new potential customers (retailers) who will be the gateway to your consumers.    Without an engaged customer (retail partner) supporting your products, services and proposition you cannot delight consumers of your finished goods.  Customers have needs and a wealth of information and learning at their fingertips that more often than not they are only too happy to share with new market entrants.  Time and time again we read, hear and sometimes see businesses waltz into a new market only to find out at the eleventh hour that the Customer is not aligned with the launch plan, has other priorities or is simply upset that they were not consulted before arrival in the new market.  Early conversations with customers build relationships, engage them more and empowers them to share what they know to your advantage.

Constructive conversations start with a fast preparation and we recommend a simple plan is put together before you visit the customer based on the following checklists as a guide, including some simple Stop! Start J Go… traffic light symbols or colours if more attention is needed in any areas:

Relevance

Does our Category opportunity and impact, reflect our

• “Customer’s agenda”
• Customer’s level of sophistication
• Channel thinking
• Customer’s data
• Resources available to support customers’ needs

Credible

Is our offer to the customer based on a sound?

• Consumer and shopper insight
• Consumer and shopper proposition
• Customer commercial proposition with evidence and assumptions

Simple

Is our first Customer conversation

• Easy to understand? Try it on someone from another country in the office or a customer at home first.
• Easy to implement? Can we talk with/out technology as an aid? Language?
• Simple, clear actions? What do we need to take away as a Must, Intent or Wish from our first meeting with potential customers?
• 4Ps considered for the category & customer (not just your products)

Take note that not all customers and channels in your new market of choice will be appropriate for your product or service.  One of the most important outcomes of your “Voice of Customer” excursions will be making a choice on where to focus your effort and where not to go initially on market entry.  The last thing you want to do is spread your efforts too broadly and thinly not satisfying any customers or engaging shoppers.  Do make the tough choices and focus on a key channel and customers in that channel before your spread your efforts too broadly.

An example output of a simple Channel/Customer Choice template for a consumer good into Indonesia from a Voice of Customer exercise might look like the following chart:

7.     Competencies

Having spent time looking at the external context in the preceding 6Cs the time has now come to start looking inwardly to identify the strengths and opportunities you can leverage to guarantee your success. Having clearly understood all the external context you will be in an excellent position to understand the competencies you have that may enable you to deliver a compelling competitive advantage. The first thing to do is to start by listing all the tangible and intangible competencies you might have.

This process starts by identifying what we can excel in from a brand, product and technology / manufacturing perspective – what can we do better than anyone else. By understanding all our tangible and intangible assets can provide platforms for opportunity and competitive advantage. Having listed our competencies we should rank them based on:

1. what can we own
2. what do we own
3. 
   

   what do we own exclusively

    

If we can focus on what we own exclusively we are able to:

• play to our strengths and thereby
• reinforces brand or product credibility
• minimises risk
• provides benefit or to RTB for our consumer
• leverage what made us famous in the first place

There are many sources of competency from the tangible (like unique ingredients) to the intangible (like a brand personality trait) but to kick you off here is a list of some places you van start to look:

Brand asset – an element of the brand like the colour purple for Cadbury

Ingredient – a unique ingredient or an ingredient you’ve become famous for like Cherry Ripe

Technology – this can be product or pack based like high pressure processing or steam technology

Target – this is about owning a specific audience or expert segment like Tresemme (salons)

Packaging – this could be a shape or type of packaging like Absolut or Orangina

Manufacturing – a unique way of making your product like Cadbury Bubbly

Feature – something you offer that others might not (natural energy Boca Lupo)

Benefit – something that you do for the consumer better than others (Olay: 7 signs of aging)

Occasion – own an occasion like Easter: Cadbury Crème Eggs

Critical thinking frameworks like the 7Cs above help you break down seemingly overwhelmingly complex challenges and business opportunities into a sequence of manageable steps and processes where your team take heart as they see concrete go forward actions to implement.  The 7Cs do not need to be executed in sequence and you may find you start with one C before moving back to another or jumping forward a few steps.  We recommend an alignment on Challenge is fundamental to guiding your business through the 7Cs framework.  Our recommendation is that you also partner with outside experts like Fusion Learning and / or Creatovate to hold yourselves accountable to a project timeline, participate in the process rather than facilitate it and get the benefits of continuous learning from past and future clients doing this process.

7Cs Model

Dermott Dowling is founding Director @Creatovate, International Business & Innovation consultancy. Creatovate help businesses grow through spreading their wings outside their home base.

Patrick Tully is Partner @Fusion Learning. Fusion Learning is a global marketing capability consultancy that unleashes the potential of brands and businesses by unleashing the potential of the people that look after them.

Patrick & Dermott can help you and your business grow internationally using the 7Cs critical thinking tools.  If you are interested to build both your capability and dive deep into each C using action learning and critical thinking, please register your interest in the form below for further information.

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Our Food Future: How to Create Value from Commodities

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Our Food Future: How to Create Value from Commodities case study from Creatovate

Looking out to 2050 what are some of the mega-trends that will impact on our food and beverage landscape as growers, processors, manufacturers and marketers of consumer packaged goods.

Global population growth past 9b by 2050 combined with increased urbanisation, changing diet patterns in the developing world and water shortages and climate change will impact detrimentally on food supply and exacerbate demand for protein and sugar and other soft commodities.

Food manufacturers will continue to consolidate as they attempt to extract efficiency from farm to shelf and retailers will grow globally, albeit with greater changes due to localisation challenges in global retail.

Fonterra case study on how an integrated supply chain from farm to shelf has increased returns to shareholder returns from cow to shelf using highly segmented nutritional products marketed to life stage needs segments.

A case study on reinvention and growth: Swisse is not selling vitamins, its selling wellness.

Published on anthillonline September 12, 2013 By Dermott Dowling

http://anthillonline.com/a-case-study-on-reinvention-and-growth-swisse-is-not-selling-vitamins-its-selling-wellness/

We have all heard of the 4Ps of marketing but at Swisse they are different.

At Swisse, the 4Ps stand for in order of priority:
1) People,
2) Passion, and
3) Products before 4) Profits

Putting values first and Strategy second, Radek Sali and his co-owners at Swisse Wellness, set about revolutionising the Wellness industry and taking it out of traditional health stores and pharmacies into the mainstream mass market.

In just under five years, revenues have increased from $15 million to a forecast $250 million for FY2013. The brand has been taken into 30,000 stores in the US. And, the company has created an army of celebrity ambassadors, all hitting different target markets.

All of this has helped propel Swisse from a “vitamins only brand” into the mainstream “wellness” market. The result is a lift in brand awareness from 20 per cent to 95 per cent.

All this in just under five years.

Radek Sali, smart dressing and constantly smiling CEO of Swisse Wellness recently shared some insights and lessons about creating exceptional growth to a packed VECCI luncheon.

1. Building strategic partnerships

Without a doubt, the strategic partnerships the company built in the 1990s helped build credibility that underpinned the company’s growth.

Most doctors will only spend one day in their University course on wellness. Yet, there are already over 15,000 published studies on the benefits of healthy life and diet on maintaining and prolonging your health and wellbeing.

To concentrate on the promotion of wellness in the market, Swisse created a host of partnerships. It invested one per cent of revenue ($7 million over the past 3 years) into R&D in this area. This R&D investment was more than the company profits during that period.

These partnerships have helped to build Swisse credentials in an industry previously tarnished with the ‘alternative’ medicine tag, a categorisation which Radek prefers to call ‘complementary medicine’.  Sali also noted that this category now accounts for 14 per cent of consumers spending on health and wellness.

2. Ambassadors

Today, it is very hard to avoid the constant barrage of Swisse celebrities selling new remedies to a healthy life, wellbeing and happiness. There is the original ambassador Ricky Ponting, other sports stars and now, more recently, the heavy hitters of Ellen DeGeneres and Nicole Kidman who were a key part of the US market launch.

Sali pointed out that Ponting had been a long time Swisse advocate and user of their products during his playing career. He explained that asking if people would become an ambassador often costs less or, no more, than hiring an actor for their commercials.

But, it hasn’t been all epic wins. In the case of Geoff Huegill, Swisse were approached when he was 139kg and committed to reinventing himself as a medal winning swimmer. Sali turned him down. But, he ate some humble pie later when the company went back to Huegill to ask him on board after his gold medal haul at the Commonwealth Games.

Sali considers it a “learn, grow and improve” moment, which underpins the next fundamental lesson.

3. Values and positive culture

We have seen and heard it several times before in successful businesses: the importance of creating a positive culture and having core values for guiding the company.

Sali noted his own personal ‘reinvention’ from that of the standard Aussie bloke with three suits on rotation, to forcing himself to ‘dress up different’ every day, to be more creative, to consciously smile, say hello to everyone and, create a positive ‘can do’ attitude at Swisse.

An example of how this culture has materialised at Swisse is the “health & happiness” day for employees to take an extra day off anytime in the year to ‘recharge’. This immediately resulted in reduced sick leave and absenteeism.

Another example was the ‘gift’ of ‘feedback’ and embracing the ‘thanks’ that goes with receiving feedback when there is opportunity to improve. Using a sports analogy, Sali pointed out you should not be surprised, or hurt, to receive feedback to improve, just as a coach goes on at quarter and half time giving players advice to lift their game on field.

Some of the perks of working as Swisse include having access to a personal trainer, a masseuse, free organic breakfasts and lunches and, a healthy workplace lifestyle. These elements of the work culture were noted and commented on by Ellen DeGeneres when she visited their Collingwood offices.

4. Use cash flow forecasts rather than ROI for innovation

Last but not least, Sali spoke about his preference to forecast with cash flows. He believes you should only ‘bet what you are willing and can afford to lose’, rather than chasing illusive ROIs. This is especially true when it comes to innovating in terms of new products, new categories and new markets.

Sali believes it is human nature is to make the numbers work and hit the hurdle rate ROI. However, if you can take the approach of determining what are you prepared and able to bet (and possibly lose) and deciding how bold to be, a business is going to achieve a different outcome.

Sali and the Swisse team have serious and lofty ambition: $1.5 billion in sales in five years’ time. This translates into a massive lift from the $250 million in sales today.

The company has plans to expand into more countries, including Europe and Asia, to create a truly global brand with Aussie roots.

Sali knows it is ambitious and, not without its challenges.

He admits, like everyone he has his ‘oh S**T’ moments and fears but, pointed to the fact everyone is in control of their own destiny and, without asking you will never receive.

Sali’s six tips to grow your business

In closing Sali, shared the following tips to creating exceptional business growth:

1. Create a positive culture & values
2. Work out the ad formula for how to make an impact
3. Grow into new areas
4. Get the best team and keep them
5. Innovate, reinvent and change as needed
6. You are in control of your destiny

Dermott Dowling is founding Director @Creatovate, Innovation & International Business consultancy. Creatovate help businesses create,  innovate and grow through sustainable innovation processes and spreading their wings outside their home base.