Have you considered the meaning of provenance this morning? Maybe as you sipped your single origin coffee, or munched on your slow-fermented sourdough toast, with local raw honey!
And it doesn’t stop there. Sitting down for lunch it can take longer for the waiter to explain the local origin of all the ingredients on your plate, than it does to eat it!
Then you knock off for Friday drinks and find yourself in the local brewery drinking a raspberry pale ale. Yes its the latest collab between the brewer and the neighbouring barley farmer and raspberry grower.
The wine world has been banging on about this for decades, centuries even. Now terroir can be found in our butter and beef! That’s because there’s power and profit in provenance!
The Power of Provenance
Its been a growing trend for a while and it seems the consuming public continues to fall head over heels for this concept. Its a backlash to the homogenisation of not only our milk. The full food offering of the dominant supermarkets and big food chains has become so same same. The rapid growth in farmers markets, coffee vans and craft breweries (not to mention food reality TV and awareness of food miles) are testament to this movement. Yes the hipsters love it, but don’t blame them, this has much broader appeal.
I admit it, I’ve fallen for this movement hook, line and sinker (hmmm, line caught snapper…) It instills a sense of community and adds to the experience and enjoyment of food and drink shared with friends. Which to me is what this should all be about.
There is a global hunger in premium markets for authentic, high-quality product, particularly emanating from the clean, green shores of Australia.
The Business of Provenance
From a business perspective it presents incredible opportunities too. Getting noticed is one of the biggest challenges in the incredibly crowded world of food and beverage that we’re now playing in.
For small producers in Australia, competition on price is not an option, see my recent blog ‘Never Compete on Price Again’. Its also extremely difficult to be ahead of the innovation curve in terms of new products, packaging or product delivery when you don’t have a multi-million dollar R&D budget.
But, the one thing you have that Nestle and George Weston Foods don’t is a connection to place. An authenticity around not only product, but in action too. This is something that big food can never replicate. And its worth money!
So whilst a local, small scale, hand-made product might be expensive to make, premium pricing can be commanded, boosting margins and growing profitability. Of course, most businesses want to grow and to do so often means expanding into new markets. Does expansion outside your local area diminish the value of your product?
It doesn’t have to. The grassroots story is powerful and can resonate in new markets, even internationally. There is a global hunger in premium markets for authentic, high-quality product, particularly emanating from the clean, green shores of Australia.
And those big food companies are on the look out too. More and more buy-outs of small food and beverage businesses are occurring with multi-million dollar transactions hitting the headlines over the past few years.
Positioning for Provenance
So what business planning essentials do you need to have in place to ensure you’re positioned for growth as a purveyor of provenance?
- Branding is crucial to ensure you control your story. Know your story and tell it consistently
- A consistent marketing plan to manage how your story gets out to the market
- Product quality is paramount, its hard to sell a premium, boutique story of provenance with an inferior product
- Community engagement through local events is a powerful way to build your local following and provenance credentials
- And of course a business and finance strategy that aligns with your brand story and looks to a future of growth is essential for business survival and long term growth. As you grow you’ll need to invest in equipment, or in launching new markets or even exporting. There’ll be cashflow and production challenges along the way, its a reality of business. Planning for this with a smart business and finance strategy will enable you to take advantage of growth opportunities as your business develops.
With these things in place, you’ll be well positioned to take your story of provenance from your backyard to the rest of the country and even around the world. Whether its a handmade mango smoothie, a local chai tea, or a fresh craft beer from the nearest brewery, I’ll drink to that!
This commentary is general. Any any advice for your business would take in your specific needs and situation. If you’d like to discuss how to develop your business and finance strategy to set up for growth, please book a free initial consultation with our Chartered Accountant and Virtual CFO Andrew Terlich here.
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