2017 Marketing 101 (Woodland Botanicals)
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9/28/2017 1 Marketing 101 Jeanine Davis All photos by J. Davis and staff unless noted otherwise. Center photo from WS Persons. You kept good records throughout the process, retained samples, and have lot numbers and dates on all package labels. Let’s start at the point where we assume you have produced a high-quality product. The final product should meet buyer specifications Photo on left from phenternin.com Testing for heavy metals, microbes, pesticides, and active constituents are common now. Sometimes done by grower, other times by buyer. Know how you want to sell your herbs before you plant anything! • Are you going to sell wholesale or retail? • Find and develop your markets before you plant anything. • Many options. • Different risks. • Different income potential. Wholesale buyers • Buy in large volumes, usually 500 pounds or more. • Often referred to as dealers, raw botanical suppliers, or consolidators. • They sell to manufacturers. Wholesale=high volume but low prices Photo on left of Daniel Vickers with Herbal Ingenuity from journalpatriot.com
Transcript of 2017 Marketing 101 (Woodland Botanicals)
9/28/2017
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Marketing 101
Jeanine Davis
All photos by J. Davis and staff unless noted otherwise. Center photo from WS Persons.
You kept good records throughout the process, retained samples, and have lot
numbers and dates on all package labels.
Let’s start at the point where we assume you have produced a
high-quality product.
The final product should meet buyer specifications
Photo on left from phenternin.com
Testing for heavy metals, microbes, pesticides, and active constituents are common now. Sometimes done by grower, other times by buyer.
Know how you want to sell your herbs before you plant anything!
• Are you going to sell wholesale or retail?
• Find and develop your markets before you plant anything.
• Many options.• Different risks.• Different income
potential.
Wholesale buyers
• Buy in large volumes, usually 500 pounds or more.• Often referred to as dealers, raw botanical suppliers,
or consolidators.• They sell to manufacturers.
Wholesale=high volume but low prices
Photo on left of Daniel Vickers with Herbal Ingenuity from journalpatriot.com
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How do you find a wholesale buyer?
Build relationships with the buyers
• Visit with them at local, regional, and national events.• Keep in touch with them. • Keep them informed about your crop status.
These events are important!
• Natural Products Expo-East and West
• Supplyside East and West
• The Big Natural
Photo from ranchlinenatural.com
Most manufacturers don’t buy directly from growers, but a few do!
Common amounts purchased at one time:• Gaia: 200 lbs or more• Red Moon: 5 to 20 lbs.• Dr. Kings: 1-5 lbs.
But don’t be calling these companies until you have something to show them. Before then, attend buyer events.
Herb Connection on Ncherb.org
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Local herbalists, herb schools, and natural health care practitioners
Photos: Blue Ridge School of Herbal Medicine
Cottage businesses making herbal products
Photos: from website and blog of Mountain Farm in Madison Co. NC
Agritourism and Education
Offer workshops, plant walks, and
hands-on activities
Tailgate/Farmers’ Markets
Photos: Jeanine Davis, NC HerbCrew, Asheville City Market
Nursery-Plant Sales
Photos: Red Root Native Nursery, Gardens of the Blue Ridge.
Festivals
Photos: Jeanine Davis, Asheville Herb Festival
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Incorporate medicinal herbs into your CSA
Photo on right from Cane Creek Asparagus Farm
On-line businesses
• Easy to build a simple website or blog.
• Add Paypal or Square.
• Sell some products.
• Provide information.
Sell through existing portals Make your own value-added products and sell direct to the consumer.
Photo on left from herbhaven.com
How much should you charge?• How much does it cost to grow and
process your herbs?• What are the other costs associated
with running your business?
How do you find out what current prices are?
• Talk to buyers.• Talk to other growers.• Search the internet.• Attend industry shows.
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So how can you make a profit growing medicinal herbs?
From the beginning, treat it like a business!
Why are you interested in growing medicinal herbs?
• You just really love medicinal herbs.• Thought it could be a big money maker.• Thought it could help diversify your farm.
This much is true
• Most medicinal herbs are easy to grow.• There are lots of herbal products for sale-the
market is HUGE!• US manufacturers want to buy US grown herbs.
But this is also true
• Growing herbs as a commercial crop is very different from growing them for personal use.
• In general, big buyers want to purchase large volumes at low prices.
• The herbs MUST meet all the state and federal guidelines for identity, cleanliness, etc.
In reality
• Many people try to grow herbs commercially.• Most of them make very little money at it.• But a few do really well with it. So let’s look at
what they do.
Write a business plan
• Determine what kind of profit you want to make.• Develop a plan to get there. This make take years.• Include a description of what you want your herb
business to be, SWOT*, market analysis, timeline, budgets, and financials.
• *Planning method for analyzing strengths, weaknesses, opportunities, and threats
Photo on right from businessplansoftware.com
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Visit successful herb farms
• Offer to pay a consulting fee; show you value their time.
• Offer to work in exchange for information.• Visit at different times of the year.
Attend every relevant conference, workshop and event
Network, network, network As with any new business, it could take 3 to 5 years to start making a profit.
The raw bulk medicinal herb market is volatile
• Grow a diversity of herbs.• Have multiple markets of
different kinds.• Develop close relationships
with buyers.• Have other related income
streams besides selling herbs.
Grow annuals and perennials
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Budget for One Acre of Black Cohosh Grown Under Artificial Shade*
Operating expenses
Quantity Price per unit 3 year totals
Labor** 780 hr $8/hr $6,240
Planting stock 500 lb $1.30/lb $650
Fertilizer & lime $150
Plant protection $200
Fuel, oil, lube $100
Mulch $2,000
Utilities $200
Packaging $500
Total expenses $10,040
Dried root sales 2,220 lb $4.75/lb $10,545
Net income $505
*Grower owns shade structure and drying facilities.**Site prep, planting, mulching, weeding, harvesting.
Operating expenses
Quantity Price per unit 3 year totals
Labor 780 hr $8/hr $6,240
Planting stock 500 lb $1.30/lb $650
Fertilizer & lime $150
Plant protection $200
Fuel, oil, lube $100
Mulch $2,000
Utilities $200
Packaging $500
Total expenses $10,040
Dried root sales 2,220 lb $5.75/lb $12,765
Net income $2,725
Black Cohosh Budget with a Reasonable Price Adjustment
Every $1 increase in price received per lb, increases net income by $2,220 per acre.
Reduce production costs to improve the bottom line!
Operating expenses
Quantity Price per unit 3 year totals
Labor 780 hr $8/hr $6,240
Planting stock Produce your own 0
Fertilizer & lime $150
Plant protection $200
Fuel, oil, lube $100
Mulch $2,000
Utilities $200
Packaging $500
Total expenses $9,390
Dried root sales 2,220 lb $5.75/lb $12,765
Net income $3,375
Black cohosh under artificial shade.
Increase yields!
Operating expenses
Quantity Price per unit 3 year totals
Labor 780 hr $8/hr $6,240
Planting stock Produce your own
Fertilizer & lime $150
Plant protection $200
Fuel, oil, lube $100
Mulch $2,000
Utilities $200
Packaging $500
Total expenses $9,390
Dried root sales 3,800 lb $5.75/lb $21,850
Net income $12,460
Based on yields obtained in my research plots under artificial shade.
Sell direct to users, online sales, etc. to obtain much higher prices
Operating expenses
Quantity Price per unit 3 year totals
Labor 780 hr $8/hr $6,240
Planting stock Produce your own
Fertilizer & lime $150
Plant protection $200
Fuel, oil, lube $100
Mulch $2,000
Utilities $200
Packaging $500
Total expenses $9,390
Dried root sales 3,800 lb $15/lb $57,000
Net income $47,610
These prices, yields, and costs are for demonstration purposes only!
In addition
From www.agmrc.org
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Annual Review
• What made money and what didn’t?
• If it was not profitable, get rid of it.
• Survey your customers.• Are you taking care of yourself;
can you keep doing this?• Ask for, and pay for, help if you
need it.• Use a cpa or other business
professional.•
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