Issue No 10, July 1998.

NOTICE: Hard copies of the Australian New Crops Newsletter are available from the publisher, Dr Rob Fletcher. Details of availability are included in the Advice on Publications Available.

23. The niche marketing of Australian TLC lentils: a model for other pulse crops

Peter Blair
Director
The Lentil Company
Horsham Victoria

[Please also refer to the accompanying article re The Lentil Company]

The farming sector is changing rapidly. No longer is farming just 'a way of life'. The grain grower of the 1990s is business-driven and highly focused. In Australia today, our top 20 per cent of broad-acre farm enterprises produce 54 per cent of the total product. They are not satisfied with being price-takers but are after the best market prices.

From the growers' point of view, pulses such as field peas, chickpeas or faba beans have been poorly marketed in the past. For example, if one grower's top-quality product is mixed with low-quality product in storage or during transport, there is little incentive to produce a quality product. The Lentil Company has developed a niche marketing model to overcome these problems.

The TLC niche marketing model is driven by a single-minded mission to supply premium lentils and other specialty crops to niche Australian and international markets, through a structured, multi-level marketing system. The ultimate objective is to maximise the financial returns to growers.

For TLC, the first step was to establish the company on the national and international scene as a marketer rather than a supplier and lentil as a product rather than a commodity. The commitment was made to supply only on a C&F (cost and freight) basis, to protect its markets. Then there was:

the development of strategic alliances with processors to enable value-adding;
the development of lentils into 20 different, value-adding product forms to meet import clients' demands;
a string of trade missions to pursue niche market opportunities, for example four overseas trips to research exact marketing requirements, in the past 18 months alone;
the establishment and maintenance of a strong brand image;
the cultivation of exceptional relationships with contracted growers;
profitable entry into new markets, including lentil producing countries such as the US, Canada and New Zealand, as well as profitable entry onto supermarket shelves;
coal-face work to lift international importer bans;
the development of envied distribution strategies;
the successful sale of new products, such as dehulled red lentils and split green lentils; and
the establishment of a major competitive advantage by embracing quality via the use of certified seed, QA testing at every stage, incentive payments for growers and the delivery of TLC products up to a quality rather than sold down to a price.

This list does not however include everything that The Lentil Company has done. For the first time, a company went out and asked what growers wanted; what buyers wanted; what the market wanted; and then developed strategies accordingly. Market voids were filled. Growers and lentils were treated with respect.

No longer was the common 'off-the-rack' product the only thing on offer. For those who wanted it, there was now 'designer-wear' lentils.

The ongoing process of looking for opportunities is a key element in the successful growth of TLC and will be well into the future.

In order to successfully niche-market, it is essential a product has features to distinguish it from the bulk-commodity market. The fundamental difference between bulk marketing and niche marketing is:

the segregation of varieties;
the segregation of quality;
the tailoring of product packaging according to market needs;
payment to growers on quality with assistance and support for them to produce the best; and
the marketing of each product on its attributes, involving the precise pin-pointing of niches.

In practice, The Lentil Company won the competitive tender for the three lentil varieties in 1993. Since then it has developed 20 different product forms from those varieties and marketed them to more than 30 countries:

RED LENTIL

1 Digger lentil dehulled - light oil polish
2 Digger lentil dehulled - medium oil polish
3 Digger lentil dehulled - heavy oil polish
4 Digger lentil supermarket quality
5 Digger lentil gravity graded
6 Digger lentil machine dressed
7 Digger lentil farmer dressed
8 Cobber lentil split - light oil polish
9 Cobber lentil split - medium oil polish
10 Cobber lentil split - heavy oil polish
11 Cobber lentil split supermarket quality
12 Cobber lentil gravity graded
13 Cobber lentil machine dressed
14 Cobber lentil farmer dressed
15 Cobber lentil sprouting quality

GREEN LENTIL

16 Matilda lentil split
17 Matilda lentil gravity graded sized (4 - 5.25mm)
18 Matilda lentil gravity graded sized (5.25mm+)
19 Matilda lentil machine dressed
20 Matilda lentil sprouting quality

In addition, within each product type, specifications can be tailored to customer requirements. For example, TLC exports red lentils with a standard export specification of admixture 0.25% (max) and 0.25% caps (max). A premium export red lentil (0% admixture and 0% caps) is also produced for the more discerning markets.

TLC has been able to niche-market Australian red lentils and return growers premium prices for their product, compared with Turkish red lentil prices.

Significant market development work has been behind this, as has been another critical factor: that of loop-marketing. In order to niche market product successfully, the Company believes vertical integration is essential and therefore it is vital that it loop-market the varieties.

In addition, the Company has never failed on a contract.

TLC's provision to growers of competitively priced certified seed has resulted in 80% of growers purchasing seed annually, compared with a general ratio in the pulse industry of 3 to 5 per cent.

TLC's research in the UK market shows another niche is in the supply of quality assured lentils.

To produce QA lentils, a quality program is necessary right along the supply chain, from grower to processor to market. TLC has fully embraced Pulse Australia's on-farm quality assurance program and a pilot group of eight growers will achieve quality assurance status this year. The Company is currently implementing ISO9002 and HACCP practices.

With niche marketing, The Lentil Company has been able to place a higher-value product on the market, growers are financially rewarded for their efforts and the market itself has its customer requirements on product-quality met and even exceeded.

Any claims made by authors in the Australian New Crops Newsletter are presented by the Editors in good faith. Readers would be wise to critically examine the circumstances associated with any claims to determine the applicability of such claims to their specific set of circumstances. This material can be reproduced, with the provision that the source and the author (or editors, if applicable) are acknowledged and the use is for information or educational purposes. Contact with the original author is probably wise since the material may require updating or amendment if used in other publications. Material sourced from the Australian New Crops Newsletter cannot be used out of context or for commercial purposes not related to its original purpose in the newsletter

Contact: Dr Rob Fletcher, School of Land and Food, The University of Queensland Gatton College, 4345; Telephone: 07 5460 1311 or 07 5460 1301; Facsimile: 07 5460 1112; International facsimile: 61 7 5460 1112; Email: r.fletcher@mailbox.uq.edu.au

[New Crops Home Page] [New Crops Program] [Australian New Crops Newsletter] [New Crops Publications] [Order Form] [People] [Crop Profiles] [Other Resources]

originally created by: GK; latest update 6 June 1999 by: RF