Marketing Plan for the Tasmanian Vegetable Industry

Transcription

1 Marketing Plan for the Tasmanian Vegetable Industry November 2007 VOL 1 Marketing Plan Summary

2 Disclaimer This report is the work of McKINNA et al Pty Ltd (2007). The content is not necessarily reflective of the views of the Department of Primary Industries Tasmania or the Tasmanian Government. 1

3 INTRODUCTION This report is Volume 1 of the Marketing Plan for the Tasmanian Vegetable Industry. The total report series spans five volumes as follows: Volume 1: Marketing Plan Summary Volume 2: Implementation Plan Volume 3: Situation Analysis Volume 4: Consumer Insights Volume 5: Industry & Category Analysis The overarching goal of the Marketing Plan, in conjunction with the Tasmanian Vegetable Industry Strategy Plan, is to maintain or increase the value and prosperity of the Tasmanian Vegetable Industry. The plan outlines a pathway for industry to achieve this goal through the identification of six key marketing strategies. The plan has been designed to provide clear direction to industry (be it individuals, consortia or industry organisations, in close collaboration with government), as to how best to take advantage of the identified opportunities. Industry s willingness to take ownership of the Marketing Plan is a critical success factor in itself. The Marketing Plan has a five-year time horizon with all of the strategies and indicative outcomes achievable by The industry and consumer market research has identified the best prospects for the growth of the Tasmanian Vegetable Industry. These opportunities are based on a realistic assessment of Tasmania s areas of competitive advantage and are totally consistent with the Tasmanian Vegetable Industry Strategy Plan. 2

4 INDUSTRY OBJECTIVES CONTEXT Mission Capitalising on its unique environmental, regional and island characteristics, the Tasmanian Vegetable Industry delivers highly valued vegetable products to discerning markets using profitable supply chain models and sustainable production practices. The Marketing Plan for the Tasmanian Vegetable Industry, as a subcomponent of a larger state and industry plan, directly responds to the goals and actions articulated therein. Vision By 2012 the Tasmanian Vegetable Industry will be profitable, innovative and environmentally sustainable, while constantly striving to satisfy customers, expand markets and improve its global competitiveness. 1 1 TFGA, 2006, Tasmanian Vegetable Industry Strategy Plan 3

5 CHALLENGES OPPORTUNITIES The Australian vegetable industry is facing extreme competition in the global marketplace. Not only has its position in traditional global markets been eroded, producers are now increasingly facing competition from imports in the domestic market. Australia is now a net importer of vegetables. Within this context, the Tasmanian Vegetable Industry is under significant pressure. The value of farm gate production is declining. Competitiveness is currently limited by the scale of operations, the prevalence of mixed farms, over-capitalisation, particularly on equipment, high land prices forming a barrier to business expansion and growth, seasonality of key commodities and freight and logistical disadvantages. Increasingly, the availability and cost of water will become more important in determining enterprise mix choices. The Tasmanian Vegetable Industry s reliance on processing also presents a significant challenge. Of particular concern is that the current prices received by both farmers and processors are unsustainable. Supermarket private label programs and supermarket market power is putting severe downward pressure on prices whilst at the same time supermarkets increasingly demanding compliance requirements are putting upward pressure on costs. Moreover, vegetables are a mature and stagnant market category. Apart from a few new innovative sub-categories, consumption of vegetables in Australia is flat or declining on a per capita basis. Acknowledging the key challenges faced by industry, the Marketing Plan for the Tasmanian Vegetable Industry has identified a number of market opportunities, the most significant of which are the fresh and fresh-cut markets which have been showing growth both in volume and value terms. Premium fresh-cuts in particular are enjoying annual growth rates of 20% per annum and are expected to continue sustained growth for at least the next decade in line with overseas trends. Time-poor consumers are seeking convenience style, ready-to-serve meals and fresh vegetable meal solutions and are responding to branded prepackaged products that deliver on quality, freshness, convenience and flavour. For a growing sector of the population, origin, environmental sustainability, carbon/food miles, labour exploitation and ethics increasingly influence food choices. This creates significant opportunities for Tasmania, which is perceived to be a clean and environmentally responsible producer of vegetables. The food service market is growing on the back of demographic and social shifts, presenting opportunities to market premium vegetable products to high-end restaurants and time-saving, value-added products to food service establishments looking to reduce labour costs. Marketing strategies have been developed to capture these opportunities and are described herein. 4

6 KEY MARKET RESEARCH FINDINGS The program of consumer market research highlighted the following key insights into vegetable purchase, usage and consumption trends: 1. Vegetables are a low involvement category, being purchased without much thought or emotion. 2. Because vegetables are not centre of plate they play a secondary role in meal planning. 3. Overwhelmingly, health and wellbeing is the key purchase driver for vegetables. 4. Vegetables fail to consistently deliver on quality and eating enjoyment. 5. Vegetables do not rate well on value for money, mainly because of inconsistency in quality. 6. Females are far more engaged with vegetables than males in terms of consumption levels, knowledge and attitude. 7. Consumers claim to be eating more fresh and fresh-cut vegetables and less processed although based on the sales data this appears to be overstated. 8. Frozen vegetables are perceived to be inferior to fresh; however, the research indicates that consumers will respond positively to messages about nutrition and convenience with respect to frozen vegetables. 9. Other things being equal, consumers would prefer to buy Australian but only a small percentage is prepared to pay a price premium. 10. Product origin and integrity values are becoming more important (e.g. safety, integrity and environmental friendliness). 11. Consumers responded very positively to the following product propositions: a. Vegetables selected and marketed on the basis of fitness for purpose (e.g. potatoes for mashing, roasting, etc.). b. Premium, branded vegetables that delivered superior eating quality. c. A premium range of vegetables produced with superior clean and green credentials. d. Ready to cook/serve convenience products. 12. Consumers are highly parochial; the vast majority of consumers would much prefer to purchase vegetables grown in their own state. 13. Tasmania is not spontaneously recognised as a leader in vegetable production. However, the research indicates that consumers will respond positively to messages about Tasmania s credentials to grow high quality vegetables. 14. Tasmania has an enviable market perception at a prompted level; consumers perceive that Tasmania could be well respected as a source of quality vegetables. 5

7 MARKET SEGMENTATION The market research identified five key market segments within the vegetable category, four of which are assessed as providing industry with the greatest opportunity when targeted by strategic marketing activity. The Disinterested (55%) Vegetables are vegetables, I don t really think much about them. Disinterested consumers purchase vegetables routinely and without much thought. They place greater weighting on price, are less concerned about origin and, in the main, are less knowledgeable about vegetables. This segment is unlikely to be responsive to targeted marketing activity. Traditional Vegetable Lover (41%) I love my vegetables, I couldn t live without them. The Traditional Vegetable Lovers prefer tried and true recipes and preparation styles and are quite knowledgeable about vegetables. They place a high priority on the quality and freshness of the vegetables they purchase and are more likely to shop at fruit shops and farmers markets. This segment is likely to be responsive to promotional activity but is not necessarily willing to pay a premium. Socially & Environmentally Aware (31%) I am concerned about safety, GMOs and the environment. This segment is responsive to products that have a sustainability and ethical platform, are more inclined to buy fresh over processed vegetables and have a greater awareness of social and environmental issues, e.g. food miles. 8% of this market are highly interested in organics. Buy Australian (21%) I only buy Australian grown. The Buy Australian segment present an important opportunity for targeted marketing activity. They are concerned about the livelihood of Australian farmers and are worried about the safety of imported product. The Vegetable Gourmets (10%) I want quality and new food experiences. The Vegetable Gourmets are interested in new preparation styles and varieties, seek gourmet vegetable options and want to bring the restaurant experience home. They buy on quality and freshness over price and prefer fresh to processed. This segment will respond well to recipe cards, are more brand conscious and are driven by taste and enjoyment. 6

8 MARKET SEGMENTATION MAP A conceptual segmentation model has been developed as a framework for analysis and strategy development. The two axes of the conceptual model are perceived value and level of commitment. Level of commitment reflects how strongly people feel about the issue. Perceived value is a measure of willingness to pay a premium. It is important to stress at the outset that there is crossover between the various segments; in other words, the segments are not mutually exclusive. The size and shape of the segment reflects both the relative size and the distribution of the segment. The consumer research indicates that the prime target audience for the identified projects is in the top right-hand segment as outlined by the circle. 7

9 MARKETING PLAN OVERVIEW The Marketing Plan is built around six key strategies: MISSION: CAPITALISING ON ITS UNIQUE ENVIRONMENTAL, REGIONAL AND ISLAND CHARACTERISTICS, THE TASMANIAN VEGETABLE INDUSTRY DELIVERS HIGHLY VALUED VEGETABLE PRODUCTS TO DISCERNING MARKETS USING PROFITABLE SUPPLY CHAIN MODELS AND SUSTAINABLE PRODUCTION PRACTICES GOAL: TO MAINTAIN OR INCREASE THE FARM GATE VALUE OF THE TASMANIAN VEGETABLE INDUSTRY 1 2 DEVELOP 3 MAXIMISE PROTECT THE PROCESSING INDUSTRY RAISE NATIONAL PROFILE OF TASMANIAN VEGETABLE INDUSTRY FRESH & MINIMALLY PROCESSED CATEGORIES OPPORTUNITIES IN THE LOCAL MARKET DEVELOP GREENHOUSE VEGETABLE INDUSTRY ENHANCE INDUSTRY MARKET ALIGNMENT 8

10 MARKETING STRATEGIES & PROJECTS STRATEGY PROJECT STRATEGY PROJECT 1 PROTECT THE PROCESSING INDUSTRY 1.1 Generic promotional program for frozen vegetables 4 MAXIMISE OPPORTUNITIES IN THE LOCAL MARKET 4.1 Seek opportunities to replace fresh imports 2 5 DEVELOP RAISE NATIONAL PROFILE OF TASMANIAN VEGETABLE INDUSTRY 2.1 Seasonal promotion with independent retailers and supermarkets 2.2 Public relations program to build Tasmania s profile GREENHOUSE VEGETABLE INDUSTRY 5.1 CEA prospectus development and road show 3 DEVELOP 6 ENHANCE FRESH & MINIMALLY PROCESSED CATEGORIES 3.1 Branded vegetable products marketed in terms of fitness for purpose 3.2 A range of premium quality branded fresh vegetables 3.3 A range of functionally and/or nutritionally enhanced branded vegetables 3.4 A range of branded vegetables promoted on a platform of minimal chemical and more environmentally friendly INDUSTRY MARKET ALIGNMENT 6.1 Development of an enhanced market intelligence capability 6.2 Implementation of a change management strategy 6.3 Processing industry round table & communication program 9

11 Marketing Strategy 1 PROTECT THE PROCESSING INDUSTRY Objective: To maintain the processing industry at its current value of $123 million at farm gate until at least Context: Relationship to Tasmanian Vegetable Industry Strategic Plan The opportunity: The processing sector accounts for around 75% of total industry value. In recent years, Tasmanian frozen vegetables have shown declines of between 9% and 20% per annum depending on the category as a result of import replacement. Year 1 Foundation Action: Develop and implement a marketing and public relations strategy to promote Tasmanian vegetables. Goal 3: Innovative market development, marketing and public relations. The market research indicates that there is an opportunity to promote processed vegetables in order to build demand in the face of strong global competition. A significant segment of mainland customers will respond to positive messages about processed vegetables. Value to industry: The opportunity to save a potential loss estimated to be $9.2 million per annum at farm gate ($46 million over 5 years). 2 2 Based on preventing a 7.5% annual loss at current processing farm gate level. 10

12 Project Project Deliverables Target Market KPIs number 1.1 Generic promotional program for frozen vegetables An ongoing, generic promotional program, jointly funded by processors and processor-growers and managed by a board with representatives of processorgrowers, processors and the Tasmanian government, to promote the quality, nutritional value and product integrity of Australian frozen vegetables. Traditional Vegetable Lovers, Buy Australian and Socially and Environmentally Aware 1. Processor and processor-grower willingness to commit. 2. Level of funds contributed. 3. Desired change in consumer attitude:! Advertising reach.! Message recall.! Change in desired behaviour on key attributes.! Tracking research, using Omnibus. 4. Sales results for Tasmanian processed vegetables (sales figures). 5. Intake of raw processed vegetables (processor returns). 11

13 Marketing Strategy 2 RAISE NATIONAL PROFILE OF TASMANIAN VEGETABLE INDUSTRY Objective: Context: To build awareness among consumers and the commercial sector of Tasmania s leadership position as best practice growers of quality, clean and green vegetables. The market research overwhelmingly found that Tasmania is not well recognised as a vegetable growing state. However, the research also found that at a prompted level, Tasmania rates very highly on favourable attributes as a producer of vegetables, including its profile as a clean and green producer associated with organic and low chemical usage, cool climate and smaller farms with product grown with great care and pride. This indicates that mainland consumers would be highly receptive to a message supporting Tasmania s leading position as a vegetable growing state. A third significant piece of insight is that consumers are very parochial when it comes to sourcing vegetables, preferring to buy products grown in their own state unless there is a good reason not to. The central intent of this strategy is to give them a reason to prefer Tasmanian vegetables based on a strong marketing program explaining why Tasmanian products are superior. Relationship to Tasmanian Vegetable Industry Strategic Plan Year 1 Foundation Action: Identify domestic and export market opportunities for Tasmanian vegetable products. Year 1 Foundation Action: Develop and implement a marketing and public relations strategy to promote Tasmanian vegetables. Year 1 Foundation Action: Develop and implement a business case outlining the benefits of branding Tasmanian vegetables in retail outlets and implement an ongoing campaign to gain the support of retailers. Goal 3: Innovative market development, marketing and public relations. The opportunity: To build awareness of Tasmania as a key vegetable producer and build demand for Tasmanian vegetable products. Value to industry: The value of this strategy is intangible but nevertheless significant. 12

14 Project number Project Deliverables Target Market KPIs 2.1 Seasonal Promote Tasmania s icon vegetable Vegetable Lovers, 1. Participation level by retailers and promotion with products (the products Tasmania is best Vegetable Gourmets and restaurants. independent known for, e.g. potatoes, carrots, onions, 2. Level of favourable publicity Buy Australian retailers & lettuce and Brassica vegetables) in their received for Tasmanian vegetables. supermarkets peak season through in-store promotional 3. Willingness of industry to continue activities with mainland independent and fund the program beyond the supermarket groups, other independent initial test program. retailers and restaurants. 2.2 Public relations program to build Tasmania s profile Full-scale public relations program to build the profile of Tasmanian vegetables on the mainland and locally. The intention will be to conduct this as a 12-month trial and to demonstrate or prove the effectiveness of the concept, with the intention that industry would eventually take on the ongoing operation and funding of the program themselves. Vegetable Lovers, Vegetable Gourmets and Buy Australian 13

15 Marketing Strategy 3 DEVELOP FRESH & MINIMALLY PROCESSED CATEGORIES Objective: Context: Relationship to Tasmanian Vegetable Industry Strategic Plan The opportunity: To capitalise on the sustained and expected future growth of the fresh and minimally processed category. The category data and consumer market research clearly indicate that the fresh and minimally processed industry is the fastest growing segment within the relatively flat vegetable category. There is a strong and sustained consumer shift towards fresh and fresh-cut vegetables and away from heavily processed forms. Year 1 Foundation Action: Identify domestic and export market opportunities for Tasmanian vegetable products. Year 1 Foundation Action: Develop and implement a marketing and public relations strategy to promote Tasmanian vegetables. Goal 2: Innovative products and services. Goal 3: Innovative market development, marketing and public relations. Goal 5: Innovative production practices and sustainable natural resource management. The national fresh vegetable industry is estimated to be valued at $3 billion at retail and the national fresh-cut industry to be valued at $160 million at retail. There is a significant opportunity for Tasmania to increase its share of these markets. In addition to domestic opportunities, it would be feasible to explore selling higher value premium packaged products into markets such as Singapore, Malaysia, Hong Kong and Dubai. Value to industry: Projects 3.1 to 3.4 have the potential to add $50 million to industry value at the farm gate level by

16 Project Project Deliverables Target Market KPIs number 3.1 Branded vegetable products marketed in terms of fitness for A range of premium vegetable products that have superior performance in terms of fitness for purpose (e.g. potatoes for Traditional Vegetable Lovers and Vegetable Gourmets purpose mashing, roasting, etc.) and eating quality. 3.2 A range of premium quality branded fresh vegetables 3.3 A range of functionally and/or nutritionally enhanced branded vegetables 3.4 A range of branded vegetables promoted on a platform of minimal chemical and more environmentally friendly A range of premium quality branded vegetables supported by a money back guarantee through boutique retail outlets and high-end food service, supported by first rate Tasmanian product, professional brand development and marketing program. A range of vegetables with enhanced levels of bioactive chemicals (i.e. above the naturally occurring levels). This is achieved through germplasm selection, agronomic practices, grading and post-harvest handling. The market research clearly and comprehensively demonstrates the consumer interest and propensity to purchase vegetable products that have superior nutritional and functional qualities. A range of branded vegetables that are positioned on the basis of clean & green but falling short of having organic accreditation. The products would be presented in environmentally friendly packaging to provide protection, increase optimum shelf freshness and quality and provide a strong, differentiated market presence. Traditional Vegetable Lovers, Vegetable Gourmets and Buy Australian Vegetable Lovers segment, older people, mothers of young children and consumers with a family history of the most common life-threatening diseases, various forms of cancer, heart disease, diabetes & obesity Buy Australian, Socially and Environmentally Aware and Vegetable Gourmets 1. An interested group of parties who are prepared to commit to the project. 2. The number of products successfully launched within two years. 3. The sales generated by the project. 4. Industry capability development. 15

17 Marketing Strategy 4 MAXIMISE OPPORTUNITIES IN THE LOCAL MARKET Objective: Context: Relationship to Tasmanian Vegetable Industry Strategic Plan The opportunity: Value to industry: To replace 50% of the fresh vegetable products being imported from the mainland into the Tasmanian market with locally grown product. Supermarket buyers have indicated that they would prefer to purchase local product if possible because of cost savings, improved quality, a strong preference by Tasmanian shoppers to consume local product and a desire by supermarkets to support local communities. Year 1 Foundation Action: Identify domestic and export market opportunities for Tasmanian vegetable products. This strategy has the potential to assist fresh growers in developing stronger relationships with the major supermarkets, which could then be leveraged into mainland markets, creating an export opportunity. While difficult to quantify, given seasonal issues with respect to mainland import replacement, the size of this opportunity is considered to be in the range of $3.5 million per annum. Project Project Deliverables KPIs number 4.1 Seek opportunities to replace fresh imports The proposal involves closely collaborating with the major supermarkets and assessing the potential to supply the local market. 1. The willingness of the Tasmanian supermarkets to participate in the project. 2. The dollar value of import replacement. 3. The sustainability of import replacement. 16

18 Marketing Strategy 5 DEVELOP GREENHOUSE VEGETABLE INDUSTRY Objective: Context: Relationship to Tasmanian Vegetable Industry Strategic Plan The opportunity: Value to industry: To triple the size of the greenhouse vegetable industry in Tasmania. It is considered that Tasmania s climate is well suited to Controlled Environment Agriculture (CEA), particularly in the coastal bands across the north of the state in the East Devonport and Spreyton areas by virtue of: 1. A mild and uniform temperature profile throughout the year. 2. Good radiation levels. 3. Relative humidity below 60%. Year 1 Foundation Action: Identify domestic and export market opportunities for Tasmanian vegetable products. Goal 4: Innovative & profitable businesses and supply chain models. Goal 5: Innovative production practices and sustainable natural resource management. Various studies have indicated that market demand for CEA vegetables is growing rapidly. Market research shows the demand for greenhouse vegetables, particularly tomatoes, is exceeding supply and that consumers are prepared to pay up to twice as much for the same product. A potential annual revenue increase of $9 million plus per annum. Project Project Deliverables KPIs number 5.1 CEA prospectus In conjunction with the Department of Economic Development (DED), 1. Level of investment attracted. development develop a prospectus and canvass interest from commercial parties to 2. Value of the incremental sales and road show generated. invest in CEA in Tasmania. 17

19 Marketing Strategy 6 ENHANCE INDUSTRY MARKET ALIGNMENT Objectives: Context: Relationship to Tasmanian Vegetable Industry Strategic Plan The opportunity: 1. To ensure that all stakeholders in the Tasmanian Vegetable Industry have access to comprehensive, relevant, timely and objective market intelligence as a basis for sound decision-making. 2. To develop a strong culture based on:! Collaboration.! Cohesion.! Confidence and optimism.! Willingness to embrace change.! Acknowledgement of the need for innovation and continuous improvement. Historically the Tasmanian Vegetable Industry has been heavily reliant on processing and, whilst the processing industry is likely to continue for a long time into the future, it is unlikely to be an area of growth. If the industry is to move forward it must embrace change and build a strong industry culture. Year 1 Foundation Action: Develop and implement an education and training plan for the Tasmanian Vegetable Industry. Goal 1: Supportive culture, people, leadership and industry structures. Goal 6: Innovative policy and government relations. The industry research indicates that the best prospects for the Tasmanian Vegetable Industry lie in the fresh/minimallyprocessed sector. To fulfill this opportunity many processor-growers will need to convert to fresh. To achieve this will require building new capabilities and changing the culture. Value to industry: This is intangible and impossible to estimate but is nevertheless very significant. 18

20 Project Project Deliverables KPIs number 6.1 Development of Development of a market intelligence capability whereby the latest 1. Improvement in performance of the an enhanced market data, information and knowledge is collected and Tasmanian Vegetable Industry. market disseminated to industry to enable heightened awareness and 2. Net gains in global competitiveness. intelligence capability sound, informed decision-making. 6.2 Implementation of a change management strategy 6.3 Processing industry round table & communication program A structured change management strategy and infrastructure to enable change including: 1. Market intelligence. 2. Leadership program. 3. Overseas study tours. 4. Benchmarking study and competitor analysis. The establishment of an open and transparent forum which facilitates frank exchange of information across the key stakeholder groups within the Tasmanian vegetable processing industry, with the aim of achieving mutual understanding and recognition of the need for a collaborative rather than adversarial approach. 19