Marketing 101. Wholesale buyers 9/28/2017. The final product should meet buyer specifications

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1 Marketing 101 Let s start at the point where we assume you have produced a high-quality product. Jeanine Davis All photos by J. Davis and staff unless noted otherwise. Center photo from WS Persons. You kept good records throughout the process, retained samples, and have lot numbers and dates on all package labels. The final product should meet buyer specifications Photo on left from phenternin.com Testing for heavy metals, microbes, pesticides, and active constituents are common now. Sometimes done by grower, other times by buyer. Know how you want to sell your herbs before you plant anything! Are you going to sell wholesale or retail? Find and develop your markets before you plant anything. Many options. Different risks. Different income potential. Wholesale buyers Wholesale=high volume but low prices Buy in large volumes, usually 500 pounds or more. Often referred to as dealers, raw botanical suppliers, or consolidators. They sell to manufacturers. Photo on left of Daniel Vickers with Herbal Ingenuity from journalpatriot.com 1

2 How do you find a wholesale buyer? Build relationships with the buyers These events are important! Natural Products Expo-East and West Supplyside East and West The Big Natural Visit with them at local, regional, and national events. Keep in touch with them. Keep them informed about your crop status. Photo from ranchlinenatural.com Most manufacturers don t buy directly from growers, but a few do! Herb Connection on Ncherb.org Common amounts purchased at one time: Gaia: 200 lbs or more Red Moon: 5 to 20 lbs. Dr. Kings: 1-5 lbs. But don t be calling these companies until you have something to show them. Before then, attend buyer events. 2

3 Local herbalists, herb schools, and natural health care practitioners Cottage businesses making herbal products Photos: Blue Ridge School of Herbal Medicine Photos: from website and blog of Mountain Farm in Madison Co. NC Agritourism and Education Tailgate/Farmers Markets Offer workshops, plant walks, and hands-on activities Photos: Jeanine Davis, NC HerbCrew, Asheville City Market Nursery-Plant Sales Festivals Photos: Red Root Native Nursery, Gardens of the Blue Ridge. Photos: Jeanine Davis, Asheville Herb Festival 3

4 Incorporate medicinal herbs into your CSA On-line businesses Easy to build a simple website or blog. Add Paypal or Square. Sell some products. Provide information. Photo on right from Cane Creek Asparagus Farm Sell through existing portals Make your own value-added products and sell direct to the consumer. Photo on left from herbhaven.com How much should you charge? How much does it cost to grow and process your herbs? What are the other costs associated with running your business? How do you find out what current prices are? Talk to buyers. Talk to other growers. Search the internet. Attend industry shows. 4

5 So how can you make a profit growing medicinal herbs? Why are you interested in growing medicinal herbs? From the beginning, treat it like a business! You just really love medicinal herbs. Thought it could be a big money maker. Thought it could help diversify your farm. This much is true But this is also true Most medicinal herbs are easy to grow. There are lots of herbal products for sale-the market is HUGE! US manufacturers want to buy US grown herbs. Growing herbs as a commercial crop is very different from growing them for personal use. In general, big buyers want to purchase large volumes at low prices. The herbs MUST meet all the state and federal guidelines for identity, cleanliness, etc. In reality Write a business plan Determine what kind of profit you want to make. Develop a plan to get there. This make take years. Include a description of what you want your herb business to be, SWOT*, market analysis, timeline, budgets, and financials. *Planning method for analyzing strengths, weaknesses, opportunities, and threats Many people try to grow herbs commercially. Most of them make very little money at it. But a few do really well with it. So let s look at what they do. Photo on right from businessplansoftware.com 5

6 Visit successful herb farms Attend every relevant conference, workshop and event Offer to pay a consulting fee; show you value their time. Offer to work in exchange for information. Visit at different times of the year. Network, network, network As with any new business, it could take 3 to 5 years to start making a profit. The raw bulk medicinal herb market is volatile Grow annuals and perennials Grow a diversity of herbs. Have multiple markets of different kinds. Develop close relationships with buyers. Have other related income streams besides selling herbs. 6

7 Budget for One Acre of Black Cohosh Grown Under Artificial Shade* Labor** 780 hr $8/hr $6,240 Planting stock 500 lb $1.30/lb $650 Total $10,040 Dried root sales 2,220 lb $4.75/lb $10,545 Net income $505 *Grower owns shade structure and drying facilities. **Site prep, planting, mulching, weeding, harvesting. Black Cohosh Budget with a Reasonable Price Adjustment Labor 780 hr $8/hr $6,240 Planting stock 500 lb $1.30/lb $650 Total $10,040 Dried root sales 2,220 lb $5.75/lb $12,765 Net income $2,725 Every $1 increase in price received per lb, increases net income by $2,220 per acre. Reduce production costs to improve the bottom line! Increase yields! Labor 780 hr $8/hr $6,240 Planting stock Produce your own 0 Total $9,390 Dried root sales 2,220 lb $5.75/lb $12,765 Net income $3,375 Black cohosh under artificial shade. Labor 780 hr $8/hr $6,240 Planting stock Produce your own Total $9,390 Dried root sales 3,800 lb $5.75/lb $21,850 Net income $12,460 Based on yields obtained in my research plots under artificial shade. Sell direct to users, online sales, etc. to obtain much higher prices Labor 780 hr $8/hr $6,240 Planting stock Produce your own Total $9,390 Dried root sales 3,800 lb $15/lb $57,000 Net income $47,610 From In addition These prices, yields, and costs are for demonstration purposes only! 7

8 Annual Review What made money and what didn t? If it was not profitable, get rid of it. Survey your customers. Are you taking care of yourself; can you keep doing this? Ask for, and pay for, help if you need it. Use a cpa or other business professional. Recommended Reading 8