How I cornered an untapped market in agriculture
Back in 2008, Jan Vydra and William Pham started Australian Fresh Leaf Herbs, which grows and distributes herbs to supermarkets, retailers and food and catering companies. It was an underserviced market and the pair found success with revenue tipped to reach $4.1 million this year.
But it was hard. Neither of the two had much agricultural experience and growing crops was a completely new challenge – they even lost a few crops on the way. But Vydra says all that was necessary to achieve success.
So how’s the business been going?
It’s been pretty good. Demand has been solid and although we’ve had a few production hiccups as we’ve expanded and grown, the markets have been quite good and demand is still outstripping supply.
However, I don’t think that’s necessarily a good thing all the time.
Has the turmoil in the supermarket industry affected you?
We serve the major supermarkets, so we’re in that space and doing business with them. But, to be honest, we’re not affected by what’s going on. We haven’t had any problems and they’ve been really good.
When you step up to their level and you understand what they’re trying to achieve, you have to play it at their game. And it’s been stable for us and that’s been great.
Your revenue was $3.8 million in September, has that improved?
We have, and we’re probably going to hit $4.1 million for the year 2011-12.
So tell me about the start of your business
It was a very interesting time. I was working for Yarra Valley Farms, as a wholesale distributor for produce. After some time I noticed the purchasing guys saying “you can’t buy herbs anywhere”. And so I took the idea of getting involved in a herbs business of my own.
The global financial crisis came around, I looked at the market I was in and just thought to myself there was an opportunity. This was before Masterchef, but there was still a push towards healthy heating and home-cooked meals as people started saving money.
And we thought that would be a significant growth market.
And then the financial crisis hit.
I think when you come into a financial crisis, food is the last thing to go, but the aspect of dining or going out for dinner cuts down a bit. And yet, through all of that, people love to still eat and cook well in their homes.
So what did starting the business require, especially when you’re moving into a new industry?
A huge amount of education: persistence was the key. Most agricultural business is built up over a couple of decades, so us coming in aggressively the way we did was always going to come with a lot of pain.
I left a desk job where I was an Excel man. I plug everything into spreadsheets and figure out how everything comes out on the other end. I’m trying really hard to put in calculations like the water, the sun, the soil, and so on, and you just can’t. It’s completely different.
Were there any major setbacks?
We started growing basil, which is one of the hardest crops. And when we stepped in, it was absolute hell.
What made it so hard?
Two reasons. We didn’t know how to grow it, you’re not dealing with normal manufacturing of a pen or something, where you have your components, build it and sell it. The second is that it’s a living thing you’re dealing with that depends on whether there’s sun or not. It’s extremely hard.
You have to put this into your spreadsheets. And I’m just trying to deliver value and that becomes more difficult when there are more variables.
It sounds like you had quite a few setbacks
Those first few years were all about getting it wrong to understand how to get it right.
It was hard on a personal level, too. I had about $75,000 in savings, invested it all into the business and it was about a year before I started seeing money coming back in.
I was starting an MBA, wasn’t in a relationship so I was running in circles through work, management school and the new business. But I got through it.
So how did you get through it?
You’ve just got to create a buffer for yourself to make mistakes. Businesses invest but they often don’t save for a rainy day, and that’s what we did. And then I’ll wait for a while to invest back in, to perhaps try a new herb. I just need to get it wrong so I can get it right.
The transition was okay, but I’d been groomed in a general management role so I bounced around a lot of areas. But I was a fish out of water when I walked out of my job. The hardest thing was moving through some of the emotions and pressure in the new responsibilities.
So, persistence is the key
Coming up with great products, that’s not the hard part. The hard part is getting it right. And we did plenty of things wrong in the start to eventually get it right.