In 2012, Jarrod Milani and Marcus Brown founded Forbidden Foods with an aim to take on the Australian rice market armed with a single product — a 500 gram bag of black rice.
Astonished at the gap in the Australian market for specialised grains such as black rice, given the country’s proximity to Asia, the founders left their jobs in marketing and insurance on a mission to break up the country’s rice “monopoly”.
Today the business boasts annual turnover of more than $1 million, and is projecting to hit the $5 million revenue mark during this financial year. It has also expanded its product range into classic white rice, along with green and red varieties.
Brown spoke to SmartCompany about the struggle for consumer acceptance, and the eventual goal of turning the business entirely vertical.
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We started Forbidden Foods back in 2012 with one product — a 500 gram bag of black rice.
We saw an opportunity to take the product to market in Australia as at that time it hadn’t really been westernised yet. The popularity of quinoa and chia seeds were taking off, and black rice is much easier to cook and healthier in a lot of ways.
Overall it’s a more approachable product compared to the fancier grains.
I was in corporate finance in the insurance and reinsurance space, and Jarrod was a marketing manager at Coles. Having different skillsets was a great thing for our partnership, as Jarrod handled the sales and marketing side, and I’m on the finance and product development side.
I lived and studied in the US for over 12 months and while I was there I tried a lot of different foods and grain products. When I came back to Australia I saw the rice shelf at the supermarket was so bare — just white and brown rice.
This didn’t seem right for a country with such easy access to Asia.
Jarrod and I had always wanted to start a business together and we’d assess all market ideas based on their merit. The rice market was a mature area with a monopoly, and the industry was ripe for innovation.
We saw it as an opportunity to come in and shake things up.
It was 100% learning on the job for the first while, and we found out bringing rice or any other sort of seed into this country through customs is an absolute nightmare. There was so much work to do in getting to know the procedure and supply chain at each step.
This never really held up the business and was more of just something to get through and work around. It was more of a process change rather than anything else.
Getting working capital together was the hardest part of the business early on. When you first start, banks won’t give you anything.
We still had our jobs at that time so it was actually easier to get high limit credit cards than a business loan.
But it wasn’t long until the business was up and running smoothly, and about 18 months in we released another two products, red rice and green rice.
At that time we realised we really needed to start searching for capital partners to keep ourselves scaling. So we found some investors for a small seed round, which allowed us to put out more products and build more professionalism into the supply chain to help serve bigger customers.
It’s tough to break into this sort of market because everywhere already had well-established suppliers. To beat this we found we had to approach customers with the idea that rice was more than just a commodity.
We showed people how to use it in their lives with the best way to prepare it; we were showcasing the product range and offering us as a service rather than just a commodity. That’s what allowed us to take some business away from the incumbents.
I think it’s just as challenging to break into a highly saturated and competitive market, but with so many industries out there with only one or two big players who aren’t innovating, there’s no reason why they can’t be disrupted.
Monopolies and heavily dominated industries are very much ripe for innovation as long as you can stick it out and be persistent.
At the start, it was a bit hard to convince consumers about the benefits of black rice. It looks different, but it’s not as much as a hard sell as other grain products — there are no special fancy dishes, it’s still just rice.
Working with Zambrero has been huge for the business, and we got on board at the early stage when they were still young themselves. Being their partner with them for rice products really allowed us to professionalise our supply chain and get system processes in place to help handle the volume.
The supply chain side of our business is so critical because we have to be able to fill massive volumes to distributors all around the country and overseas.
Our partnerships have let us build on our supply chain and make it much leaner.
It got to a stage where Jarrod and I were doing a lot of online orders to restaurants in Melbourne CBD and metro locations, and it was taking away our time from working on bigger deals.
That’s when we hired our first staff member.
They were a delivery driver with a dedicated Forbidden Foods van, and that gave us much more time to work on the business and our finances. From there we started to identify what were the areas taking the biggest percentage of our time, and we started delegating and splitting those into roles.
We had all our products manufactured overseas and we were getting it packed overseas, but the ultimate goal for the business is to become as vertical as possible.
That’s why we brought our packing back into Australia. We wanted the right partner to pack our products and we identified the Endeavour Foundation as a fantastic partner as we admired their work as a hirer of people with disabilities.
They have a great spirit, and as a small business, it’s a great way to add some corporate responsibility.
A lot of the time in this sort of startup world, everyone’s obsessed with instant gratification. But if you’re starting a business you have to think long term.
It has to be about building value into the business with things that will pay off in five to seven years. If you think too short term, you’ll be chasing sales but not long-term profitability.
How can you build strong and valuable assets that benefit the category you’re in?
We’ve now started to get into other parts of rice manufacturing and we’re moving towards producing rice products in-house. We see the value in building a vertical business, so we’re wanting that to be something we can offer.
We export to New Zealand, Singapore, and weirdly Belfast in Ireland. We went into international markets straight off the bat.
I don’t think any business can just sit around and say they’ll get around to it.