Post on 11-Aug-2020
Value Adding
Closer to the Consumer
“The shop window of farm
products directly available to the
consumer”
Free State Agri Congress
10 – 11 August 2017
“The ultimate goal of farming is not
the growing of crops, but the
cultivation and perfection of
human beings.”
― Masanobu Fukuoka, The
One-Straw Revolution
• To Clarify
• Product Development
• Value Chain
• Trends
• Retail
• Opportunities
• Case Studies
• Conclusion
AGENDA
PRODUCT DEVELOPMENT &
VALUE CHAIN
?WHAT IS PRODUCT
DEVELOPMENT
TO CLARIFY:
Product Development
This process is how someone takes a
new concept, such as a new
type of food, or a new flavor of
existing food, and brings it to
the consumer.
• Consumer
– End consumer of the product
• E.g.. Baby consuming baby cereal
• Customer
– Purchaser of products
• E.g. mother, purchasing baby cereal
• LSM – Groups
TO CLARIFY:
Nutrition Variety Quality Convenience Transparency Sustainability
High LSM
Med LSM
Low LSM
TO CLARIFY
• Product Development Basics– Who:
• For Consumer & Customer
• By the Producer, processor, retailer
– What:• Finished product / Raw Material
– When:• Before trending / Demand from the customer
– Why:• Innovation / Trends / Sales
– Where: • Retail space vs Food services vs Market
– How: • Product Development
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PRODUCT DEVELOPMENT
Value Chain
Farmer/ Producer
Tertiary Processor
Secondary Processor
Primary Processor
Retailer Consumer
PRODUCT DEVELOPMENT
• Product development executed by:1. Producer
• Final/Finished Product– Tertiary/Secondary Supplier– E.g. Fruit/Veg for retail
• Ingredient/Component for products– Supply to secondary supplier– E.g. flour, butternut
2. Processor• Secondary/Primary supplier
• “Final” product
3. Retailer
VALUE CHAIN
• Optimization
– Common practice in food industry
• Spend on packaging than ingredients
• E.g. bottled water and cereal
– Capture farm-to-fork market
• Emphasis needs to change
• Not just new product development
• Shift attention to the value chain
– ID promising, natural ingredients
– Finding new ways& occasions
VALUE CHAIN
Value Chain Optimisation:
1. Reducing Links in chain
2. Financial Benefit
• Producer &/or consumer
3. Reducing food waste
4. Focus on Local production
5. Linking farmer to the fork user
• Easy of implementing/translating trends
6. Understanding additional use of product
• Off cuts
• Waste usage
TRENDS
• Health
– High LSM - No longer a trend behaviour
– Lower LSM – Becoming more and more aware
• Healthy Fast Food
– Meal solutions
• Slow Food
– High involvement (scratch cook)
– Low Involvement (ready to eat)
– Juicing & Soup
– Food Waste in Food
TRENDS
– Quality
– Farm to Fork:
• Values quality over ease and accessibility.
• Idea that food is best when fresh,
• Encourages consumer to swop over-processed foods
• More: local, natural and unaltered Foods
– Product Trends
• Seeds Oils
• Nuts Butters
• Dairy Fermentation
• Fruits & Vegetables Health Behaviour
• Venison Health Behaviour
TRENDS
• Ingredient Lists
– Clean
– Clear
• Consumers Demand
– Raw/unprocessed
– Organic
– Non-GMO
– Consumers not always sure what the difference is
TRENDS
Sustainability
“The soil is the great connector of
lives, the source and destination of all…
… Without proper care for it we can have no
community, because without proper care for
it we can have no life.”
― Wendell Berry, The Unsettling of America:
Culture and Agriculture
TRENDS
Consumer Perception of LOCAL farms:
– Maintain food's natural health benefits
– Nutritional quality
– economic vitality of small/local farms
– Safety of our food supply
– Avoid the use of genetically modified foods
– Diversity in the types of foods available
– Environmental impact
– Carbon footprint
– $ point
PERCEPTIONS
• Reduce Links in Chain
• Coordinate across growing regions.
• Pursue propriety varietals.
• Offer innovative products.
• Build the brand.
• Partner for Scale.
VALUE OPTIMISATION
RETAIL & FARMER
• Farm-to-fork principles
– x fit naturally within major food companies,
– Focus attention: downstream operations & end-products.
• Farmer determines where he wants to retail
– Own Brand / Bulk
– Supplier to a brand / Processor
– Retailer
• Farmer and the retailer
– Farmer (new varieties, markets)
– Processor (ingredients as part of end product)
RETAIL AND THE FARMER
• Consumer you have in mind
– High LSM – retail
• More cost added
– Secondary: Margin
– Primary: Margin
– Retailer: Margin
– Packaging $
• Often benefit for producer
– Low LSM – market
• Directly to consumer
• Fewer margins
• Often no packaging
RETAIL VS MARKET
OPPORTUNITIES
OPPORTUNITIES
• “Own Brand”– Farmer: Primary Supplier
– Farmer does own processing
– Sells products without processing
– Eg. vegetables
• Processors– Farmer: Supplies to processor
– Vegetables, grains, meats
– Produced goods used as ingredients in NPD
• Retailer– Supplies to a retailer directly (vegetables & fruit)
– Suplies to a retailer via a processor / own processing
• Producer own Brand
– Processing Facilities
– Food Safety Certification
– Audit: FSA/HACCP/ISO 22000
– Selling: Deli’s, small markets, local food markets, Spar
• Woolworths:
– Local Food Heroes
• Farmers / producers with own brands in store
• E.g. Prince Albert Olive Oil, Visuvio, Wines, Clemengold
– Minimum Criteria for supply
OPPORTUNITIES
OPPORTUNITIES
• Entering retail
– Question:
• Who do I want to sell my product to?
• Do I want to innovate?
• Am I willing to produce according to specifications?
• Am I willing to get audited?
• Above is NB, as they all have a cost.
– Entering retail with lowest risk:
• Via processor
– Selling volumes
– Fixed price / certainty in income
– Facility/Infrastructure
CASE
STUDIES
Case Studies
• Pet Food
• Butternut
• Fit Chef
• Wellness Warehouse
• Restaurants: Waste
• Vegetable Crisps & Juices
CONCLUSION
FARM TO FORK?
• Get to know the consumer
– Wants & needs
– Trends
• Farm to Fork = Supporting Local Producers
• NPD = window of opportunity
– Retail / processor
– Get involved with a retailer/Processor that has a growth plan
• Do full risk analysis
• Product must be grown/produced with end use in mind