• A battle of the big Vs the small, powerful Vs “weak”.• If we want to influence the current urban growth, we need to move now. • Change is a marketing & strategic challenge, but mostly one of leadership.
Coles/Woolworths55%
Independent 15%
Food service 30%
$ Share of consumers throat
• Competing against more than chains, also against out of home, & other uses for spending• Coles & Woolworths have 75% of FMCG, huge scale to woield.
Coles/WW
r
Power distribution in Supply chain
ConsumersWholesalers
producers
• Scale leads to uneven power.• Barriers to entry to chains high, to exit low.
Drive cost out of supply chain
Reduce shelf prices
Market to increase customer numbers
& Basket size
Leverage Volume to negotiate price
reductions
Supermarket marketing model
• Model: Walmart to Tesco to Coles.• Produce 35% of chains revenue, profitable so will aggressively defend.• Produce a consumer drawcard• Data driven.
Fewer suppliers, larger volumes
Reduced transaction & logistics costs
Lower cost /purchase unit
Increased grower scale & Capex to
compete
Closed supply chain
• suppliers get big or get out• Capital intensity increases•Management infrastructure & data capability required.
Poultry m
eat
Vegeta
bles
Nursery
Cut flowers
Mushro
omsEg
gs Turf
Fruit &
NutsBee
fPork
Milk0
20
40
60
80
100
120
140
160
180
200
0
10
20
30
40
50
60
70
80
90
Sydney Basin Agricultural produce
$ Millions% of NSW prodn
Source: 2006 census data, formatted to a graph
Typical Sydney basin supply chain
•“Old” model, price driven, competition at each point.• Consumer unrepresented.
PriceAppearance
“eatability”provenance
convenience
Value
Consumer purchase drivers
• Price dominates other components of value.•Movement at the fringes as some consumers take more interest in provenance, freshness, sustainability.• Growth potential
9
Sydney Harvest hypothesis
Retailers
logisticsproducers
Consumers
Sydney Harvest brand
• Put consumers into the centre of a collaboration between growers, specialist retailers, and a service provider. Create a “demand” chain
Consumer concerns and preferences
identified
Growers reflect concerns in practises
Retailers deliver to consumers
Sydney Harvest marketing model
• Expressed consumer preferences are reflected in on farm practises, and delivered via specialist retailers.• Specialist retailers have a close personal relationship with customers, they add value.
Growers receive 95%. Grow pick & pack to retailer order reflecting customer specs
Retailer orders from grower, pays SH agreed price Individual contact with consumers
Consumer pays retail
Sydney Harvest.Manages retailer/grower transactions & retains 5%.Funds logistics, overheads & marketing
Sydney Harvest business model
Farmer
S.H. branded produce
Nominated SH wholesaler
Participating retail
wholesaler retail
ConsumerSydney Harvest brand management
Information flow
Product flow
Business model flow chart
• Usual supply chain is just concerned with product flow, the bottom part.• SH has added information flow, the top part of the chart.
What we learned from the Pilot
• Communication and collaboration are twins, and both are vital.• Trust evolves with behaviour over time.• Setting price is a make or break challenge• You need a champion• Marketing activity vital.
Time to stop talking
• More of the same is pointless•Ag needs to become part of the urban landscape, so capital intensity must increase• Digital capability gap needs addressing• Data needs to be sourced, analysed, and made available ass the basis for decision making Existing Hawkesbury harvest umbrella should be leveraged.
15
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