Case Study: Hemp Food in Tasmania


A few years ago I was hired for a vertically integrated hempseed food start-up in Tasmania, Australia. An old friend, Robert Connell Clarke, would grow the seed and I would get it into people’s stomachs, then we would move on and let the machine run without us. We were training a new generation of hemp agronomists and hemp food processors and marketers while also building a new hemp food business from the ground up.

We would use our hempseed grown, processed, and sold on the island off the southern Australia coast, next stop Antarctica. It lies at 42 south, perfect for growing photoperiod hempseed on poppy fields in a global market for natural-not-synthetic opioids dying as fast as hopeless young people in West Virginia. While regulators demand a fence and security around a hemp field, millions of poppies grow 5 meters from the road protected by only 3 strands of barb wire.

But first, it’s smart to figure out what grows best there for our uses. The first year was a 170-acre field trial, 17 varieties from around the world. While Rob and his team tended to the fields, I had to devise a plan for my end. We had no equipment yet for shelling, pressing, processing, or packing, just a warehouse and office with a small test kitchen. The relatively isolated Tasmania (pop. 540,000) would be our test market, then roll it out to the mainland once the business model was established.

It was a perfect storm of expertise on production of the seed + expertise in the processing + expertise on turning it into food and branding then marketing it, with good money backing it, an IPO down the road. But the project imploded when venture capitalists tried to steal it; lesson learned– they ain’t your Bro, no matter how many times they call you that. Don’t ignore red flags.

Until it went down, I sought co-packers locally, the Italian “0 km” approach; a small local food processor which makes foods into which I could easily incorporate shelled hempseed or oil. The Saturday street market delivered a plethora of possibilities: nondairy coconut frozen dessert, soy yogurt, tofu, tempeh, soymilk, aged vegan cheese, baked goods, pizza crusts, veggie burgers. Any one of them would work. I would check out their products and vibe then ask if they could make a product for us under our label; most said yes. Having my signed hemp cookbook as a calling card helped.

            A few hours north was an aseptic milk factory, we met for an afternoon to work out the details for a test run. (If you do that just know they don’t want to work with noobs; seriously, figure out the workaround such as hiring a consultant first. I already did it in 1997 and spent years in a food factory, so I knew what they wanted to hear.)

            I knew the visa issue could likely doom my stay (it did), so I had to work quickly. On my team was a brilliant young natural foods chef, I would show her how to run the aspects of the operation that she could, such as product development and interfacing with the co-packers, retailers, and consumers. A “vegan Tasmanian hempseed Rachael Ray,” the face of the company who could also assure quality and provide recipes. With a distinct local accent, she is a future video star.

            While working on the supply side, I also had to figure out the distribution scheme in a land down under where it felt like I was “walking on the ceiling” every day. Dry products are easier to manage, so the first ones would be a muesli, granola, pancake mix, and porridge (all in multiple flavors), a bar, shelled hempseed, hemp protein powder, and hempseed oil; then later aseptic milk. Subsequently we hoped to introduce the perishable products: cheese, burger, fresh milk for baristas, yogurt, soft-serve frozen dessert mix, bread, and pizza crusts. In an ideal world the co-packer would also put them into their distribution channels, but be careful the price at retail isn’t markedly different.

            Cultural flavor differences had me concerned, that my California palate would be wildly different than people tens of thousands of miles away on an island in the middle of nowhere. That’s why I wanted to do a “bush flavour” such as “dukkah,” a spicy nutty proud national favorite, and let the chef born a few miles away develop it.

            Talk to the buyers in your local health food stores to find out which distributors they use for your product category, and get buyer and contact info. Find out the sales broker situation for them; do they use them, do they like them, do they ever see them, etc? Retailers are likely your ultimate trade customer, so talk to them when they aren’t busy; make an appointment if possible. Don’t take up more than 10 minutes of their time.

            Since we were a start-up we didn’t have an existing sales and distribution network like I did in 1994. We weren’t yet even certain what the distribution chain would be, since there were many options including own delivery to the store or even direct to consumers. So without that trade muscle to push the product down to retailers, we would have to push it up instead, a consumer-driven effort.

            The strategy was to introduce and sell the products at popular festivals around the island, to build buzz and interest; find the early adopters and get them going. Hemp is unique that way; some people totally LOVE it and become vigorous supporters, verging on the cultish. Done right they’ll be your best salespeople ever, downright evangelical even. Give out stickers, coupons, and brochures so they can spread the love. Be sure your customers ask for you in stores, that creates a buzz with retailers themselves. Branded lip balm tubes are a great free giveaway for consumers or trade. In the ‘90s ours proved so popular we had to sell them in a 36-pack display box. I gave away 1,000 at the 2000 Burning Man, and got email requests even 10 years later.

            We planned to have a booth at the street market to keep the buzz going in the main city, Hobart, and perhaps outfit a street food truck or soft-serve ice cream wagon. Having actual products will get you in the local newspaper, they devour hemp stories. Chef’s trainings can get you into restaurants.

            Only after the requisite early street buzz is created should you go to the independent natural food stores and small local supermarket chains. Having none makes you like the other 99% of companies trying to shove new products down the retail buyers’ throats. Better to not be that. A few weeks before presenting your line to them, have friends put requests for your product in the store’s suggestion box.

            Start with just say a dozen or two stores at first, don’t go hog-wild yet. Be more than a little obsessive about this small test, it’s a make-or-break deal. This is where you prove your assumptions about the branding and marketing, find out what the retailer and consumer do and don’t like about it, if the price is an issue and why, how it looks on the shelf (can the words be seen, does it look right), if the shipping box works for the retailer including the exterior printing, if there any returns or spoilage and why, and tons more.

            And believe me, at some point someone will say something about the product that you never once considered, and you should re-think everything if they’re right. You have to be willing to start all over from scratch again if your underlying assumptions are wrong. Don’t believe in sunk costs, just try to figure out a way forward using the assets you already have if possible, but for your sake don’t ignore the implications of new information. Maybe it’s a small tweak, maybe it’s a total re-vamp, maybe you walk away completely. It could even trigger an idea which creates an entirely new huge business for you. This is that stage, where the rubber meets the road.

            Bias your efforts for success. Have a demo in each store the first week, put up coupons, shelf-talkers, signs, or whatever else you can get away with. Run an ad in their newsletter and put the product on introductory discount of at least 30% for the first month or three (you drop your margin for that, not them). Deliver direct if you need. Make sure they have enough back-stock so they don’t run out.

            Yes, marketing is expensive but the fastest way to get shelf placement is by giving away product. “First One’s Free.” It’s also the cheapest for you, as it costs you way less than the retail price they get for it. What’s $10 to them is only say $2-3 for you.

            After tweaking the line and marketing for many months of stable sales, we would then use that track record to bring it to other local chains, then the east coast of the mainland where most of the people in the continent/island/nation the size of the lower 48 with only the population of California (26 million) live.

            Hundreds of millions of people eat hempseed monthly in China, and always have, for millennia. So one product I considered was a packet of our hempseed as a souvenir for Chinese tourists. As many as 20,000 cruise ship passengers would flood Hobart on any day (1); they love Tassie and consider it a pristine place, especially for growing food (1). Thus, 1+1= 50 g packets of hempseed printed in Chinese under the Tasmania™ brand.

            We looked at food truck menus to see how they could incorporate our hempseed into them. We would give them the material for the first whatever, say a year, or a maximum amount total. They would put our brand name on the menu, and whatever we could do from there such as signs or posters or table tents. In addition, the other food processors in Australia would be offered a sweet deal to add a co-branded hemp line extension.

            The reason you want to give away the material to new food service and processing customers is that you want the chance at co-branding, you want to make sure they use the right (best) freshest material, you want to track sales of their hemp product, and you want your product to be specified, to lock them in. Later on you can start charging them a fair price for it but use discounts to get there, like a 10% co-branding discount and a 10% good customer discount and a 5% prompt payment discount, or whatever. Discounts are like magic, the net price could even be higher but the fact that you gave them all those discounts makes up for it psychologically. 

            Look around, see what foods people are making in your area. If I can do it while “walking on the ceiling,” so can you.

Richard Rose

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