Rowan McMonnies Australian Eggs Consumer engagement keeping production decisions ahead of consumer
ROWAN MCMONNIES: The one thing that comes out very, very strongly-- I spoke about it this morning and again in these sessions-- is the rise of the conscious consumer. Much more than ever before, they're very interested in their food. My nutritionist tells me that food is all about me. That's the consumer perspective. And I saw Ian's reference to one size fits one, which seems to be another expression of it.
That means there's no escaping greater transparency, ultimately. The farming sector is going to be scrutinised much, much more. We need to embrace that and work with that, or we'll be left behind pretty quickly.
But the key risk arising from that process, if we're not nimble enough, responsive enough, and don't work those processes, is ultimately the basic stranded infrastructure problem, that we make a move, we zig, and the consumer zags, even when they promised they would zig. And we're just left explaining to bankers why it all went wrong. And while that's a bit of a downer, it is a relevant challenge, and one that needs to be engaged with.
As I say, that engagement involves working out how you're going to place your bets. And I thought it would be worth trying to bring to life a couple of different scenarios, that showed the way in which this could play out in practise. I call that the tale of two farmers.
So we have the first, who decides to go high spec. I've stuck with eggs, but I'm trying to make these comments generalised to the whole of agriculture. But looking at these omega-3 eggs, they're organic. They're grain-fed, pasture raised. They're anything that we've heard that consumers are interested in.
And its part of a clearly thought-out business strategy-- diversified and segment focused. It's also supported by a lot of marketing that will continue to remind customers the wonders of these products. But there are still risks that go along with this strategy. It might be hitting on what's hip right now, what consumers have told us through marketing surveys that they want.
And, how do we know they're going to stick with it? And whether its vertical farms or small, nimble entry, infrastructure still cost money. So, what does this farmer do to protect themselves? Well, I'd propose that they're going to-- similar to the way that Rachel and Emma were setting out, engage with consumers in a much more formalised way, a much more extensive way, a more resourced way, and ensure that those consumers continue to understand the perception of value of the product offering, and demonstrate that they're going to get what they pay for, and that they should trust the supply chain.
And there's some very interesting comments about-- that consumers don't want to know every little detail. And they'll get by with a descriptor into which they can pack their own values. But when I heard that, I thought, yes. But that narrative that you develop around it mustn't have any cracks. It must be genuine and authentic.
And it must not leave you exposed to not being able to withstand that scrutiny. Ultimately, this farmer is successful, even in the terrifying world painted by Ian. By continuing to engage with the consumer, they're able to have a successful farming business and be part of the picture that we're trying to paint in 2030, 2035.
Our second farmer goes the other way. They have a perspective that affordable, fresh protein will always be in style. And they go with a low spec, fantastic, quality product. They focus on consolidation, and scale, and efficiency. And as it relates to innovation, they're constantly innovating but that is ultimately process innovation to come up with even more affordable products going into the future.
So, what's the risk that they face? The risk is, of course, that consumers move on. And it's not just consumers. It's the community as well. And I would say, more importantly, it is the community. So you might have a good, solid segment of the market of consumers.
Let's say 50% think this is the product for them. This is the product for all time. They like affordability. They don't have a lot of money. But they're not the only ones with a relevant voice. And the rest of the community is going to have a perspective on whether the production system that underpins this accords with their values.
And, obviously, their values-- they're 50% of the market-- sorry, of the consumers-- is a very significant voice and will carry sway with people like regulators and governments that set standards. So there is a considerable vulnerability with respect to this business, even though they're doing exactly what their consumers want.
So, what do they do about it? Oddly enough, they do exactly the same thing. They have to engage with consumers and work out what makes them tick. They might just ask them what they want. They understand why it is that they want this.
And they have to demonstrate transparency and build trust. They need to be constantly engaging with consumers, and assuring them, and providing them the transparency and information required, so that consumers provide the acceptance, and the community provides its acceptance of this production system.
Now, in this case, no one's smart, and no one's dumb. We had two very different strategies, but two winners. And, of course, the question is then asked, well, what's the common theme? And the common theme really flows from all of the presentations that you've heard.
And it's an increased focus on community engagement. We have to move on from what the community or consumers might think, which I think is highly relevant, but a little one-dimensional. Tell us what you want, and we'll give it to you.
Even Ian's terrifying presentation is really useful in that regard, because it shows it's too dynamic for that. We can't rest on our laurels and think, oh, we did the survey. We got the info. We can be confident this will be the case into the future. We need to understand why. And Rachel spoke about her discipline that she brings to bear in that regard.
And I do feel in a way that I've come today to basically run an ad for Rachel's business. Because it's that discipline that's going to be enormously valuable to the agricultural sector into the future in my view.
I should say this is not pioneering talk. These concepts have been around for many, many years. And there are industries and individual farming businesses that are doing this. They're absolutely doing it. In many cases, they're ahead of Australia. In eggs, we're learning a lot from them, but we're catching up. My prediction is that-- or my perspective is, actually, they're not doing enough. We're not doing enough.
Everyone that's list their game and for anyone who thinks, oh, this is silly, this will blow over-- I think they're the ones that are really at risk of being left behind on this front. I'll make a point here about industry focus, because it is difficult to do this, or more difficult, I think, on an independent company basis. And there are good reasons to do it at an industry level.
It's very difficult to have competing narratives out there, which have the risk of cutting each other down and leaving either the sector and the consumer with not much to work with. So using the industry as a single voice to demonstrate the traceability and the trust that the consumers need has value.
It's also a really expensive process. And if it's done properly, and full scale, and well, and it's constant-- it's not something you're going to do and then say, oh, I'm confident now. I've managed my risk. I'm going to move on. It's just going to be part of the way in which we do business.
And I think that efficiency can be brought to the process by using research development corporations, such as Australian Eggs, also industry representative bodies, and other farmer groups, and the research organisations, of course, to contribute to the process in the most efficient way.
That will also lead to a wonderful cross-pollination of ideas, because you're going to see the same values popping up across different supply chains. I don't believe that these issues are all industry specific and can be localised.
That's all I was going to bring to bear at first instance. Some of those perspectives are common to the other speakers. Some are slightly different. I fear the poll that Nikolai will now run, to work out whether I'm right or wrong, but I'll submit myself to the process.
Thank you.