Where there’s muck, there’s money. Just ask Angus Irwin, founder and managing director of South Australian fertiliser company Neutrog Australia, which is one of Australia’s largest producers of organic fertiliser, turning over more than $11 million a year.
Since starting the business at the age of 23, Irwin has built the company using a very clever community-based marketing program, where he has leveraged relationships with gardening societies and groups to build a loyal, grassroots customer base.
Today he talks to us about the secrets of that model, breeding super bugs and international expansion.
How did you come to be in the fertiliser business? Do you have a farming background?
My family came from a farming background. I was from the southeast of South Australia and I went to boarding school, which I didn’t overly enjoy. I came from a strange background of belief where the “eldest-son-got-the-farm” type scenario, so I left school and went into selling insurance, funnily enough, mainly because it was very good sales training back then; I was probably the youngest person they had in that field.
I ended up selling some years later, at Dun & Bradstreet, selling credit control. My original manager from when I was selling insurance ended up working alongside me and he came across a little place that went horribly broke that was manufacturing organic fertilisers. And it really went from there. My company has no relationship to that company at all, it was really just where the concept came from.
We put together a bit of a syndicate and borrowed a horrendous amount of money from the banks, over half a million dollars back in the late 1980s. We churned over $68,000 in our first year and our interest bill was over $100,000. So we lost a lot of money, we lost over $400,000 in our first year. It was an absolute disaster.
You were just 23, that’s very young to launch into what was a pretty big business.
Yes, it was amazing. I can still remember when I left school I was looking at the buy a business section in the paper when I was 17 and my dad thought I was crazy. And I don’t even know why – that was just the way it started.
What was the “organic” products area like back then? It is very in vogue now.
I wouldn’t even say it is in vouge now to be totally honest. It is in vouge in a very surface area but the reality is that back in the 1980s, in the farming community, organics was very much snake oil and it was really hard work, and I must say it still remains hard work today. To some degree we have just been lucky. This may sound bizarre but we produce across three different countries about 70,000 tonnes a year of fertiliser, and less than 0.5% of that would go off to what we call certified organic. So I think in broader terms we have been really successful providing that link between organics and conventional farming. We are not going into a farm and getting them to turn totally organic, more that they are using some of our products in the transition through into it.
Were you able to convince your family to use the product?
Funny you mention that. One part of the family has and one part of it hasn’t. The part that hasn’t, I understand their mentality, which is that they tend to do what the generations did before. That is a strange mentality for most people but that is just the farming way and it is as slow as it goes.
I gather you have got a very different marketing model on the retail side. Can you talk us through that?
Many years ago, and I must admit I thought it was a fair bit of crap, I got directed by one of my mentors to do some market research. It was back in the days just prior to cash for comments, and we wanted to enter the retail market and really the only model that was working back then and to some degree even now, was to literally pay media personalities in the garden market. But because most of the media personalities were taken and taken in similar products to ours, we needed to look at it differently.
So we asked people why they seemed to be making decisions based on media personalities and they said because there is no higher authority, nobody else giving us that advice. So we asked what sort of people would you listen to, and 100% of them came out in favour of the botanic gardens.
Now, I don’t know if that was because there was a botanic gardens advice line that was running out of the South Australian Botanic Gardens, which was taking something like 30,000 calls a year and it grew so much that they had to get rid of it because they couldn’t afford to keep it – typical government type arrangement. But from that we actually ended up approaching the Botanic Gardens in South Australia and they ended up endorsing our product, which was just unheard of ever for a government. They did cancel that sometime later when they realised what they had done but by then we had set ourselves up on a community-based marketing model.
The next thing that happened was we were approached by the Rose Society in 1997 to develop a product with them. I just thought it was a bit of a hobby thing that I would do, but then when I looked into it further the Rose Society had in South Australia alone 1,000 members, in Victoria 1,000, in New South Wales 1,000, and then when you put in the various other forms of the Rose Society, there was something like 7,000 or 8,000 people involved in Rose Societies nationally.
So I went back to the Rose Society and suggested to them to take a bit of ownership in the product and what I would do is give them a royalty on all sales given that they were intricately involved in the development. It did take three years to develop this product. And so we ended up giving them a royalty and we launched this product in 2001 and did no advertising and we brought this product out which was a 10 kilo pail which we called Sudden Impact for Roses, and within the first week we had sold 5,000 units in South Australia. It was four times more expensive than any other product we had ever brought out, it was in a bucket which was completely new and we had done no advertising whatsoever.
That is when I really caught on to community based marketing, so I then signed up all the rose societies around Australia and that product has gone on to become the single biggest selling individual fertiliser on the market. In my line you just never see products like that, so we then used that model with an orchid fertiliser and we just launched a competition to develop a name for a product for the Stephanie Alexander Kitchen Garden Foundation using exactly the same model.
And the proof is the fact that our retail sales in Bunnings last year grew at something like 56% against the industry at 30% so it demonstrates the power of it.
Are there more groups out there that you would like to do deals with?
I tell you James, I go home and think about it. But it’s funny, the schools’ one that we have just launched with Stephanie is going to be massive.
That type of marketing is very different. Is it difficult to plan for?
It is funny you should say that. I had a meeting with the Education Minister here last week. He said “what do you want to do?”, and I said “I just want to give some fertiliser to all the schools”. He looked at me funny and he said “how are you going to make money out of that?,” and I said “well, it is just funny it just sort of happens.” I can only describe it as bizarre. You just have to have faith in the system.
So it is a bit hard to plan, but having said that our growth has been spectacular and not only the loyalty towards our brand and the ownership in our company. Something only has to go funny in the market and I get phone calls from all sorts of old people out supporting us.
What I like about it is a position that would be very hard for someone to steal from us. Secondly, it is a fantastically feel good scenario – we spend most of our time giving to people. And finally, it is great for my staff. I employ people literally to give away products.
Of course, as nice as it is to give, if we don’t get back more than we give then we go broke. And most people realise that concept if you don’t try and hide it or shy away from it.
One of the things we just did was to develop the Poo Bah Foundation, which is on our website and has been set up specifically to give to or to fund or supply product to any garden related community organisation, anything from a community garden or school or whatever. What we ask is that people put in an application to us and they put down the names and the email addresses in support of the application and that then allows us to put them on the database. And really the only thing that we ask them to do is spread the word – it makes it very powerful.