• 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

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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.

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