Volume 4, Issue 19, Winter 2002, ISSN 1498-8135
Part II: Hemp Marketing
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To Certify or Not to Certify?
By Kevin Ablett
Hemp companies in Canada are facing some tough moral marketing questions these days.
Will we be able to find US distribution for our products?
There's been a lot of talk and activity surrounding new hemp food standards in the USA these past few months. The New DEA rules (as published in the Federal Register in October), whether they actually ban our products or not, has made many US vendors flinch and withdraw their hemp food products (or threaten to withdraw) regardless of whether they legally must. According to the DEA, hemp foods must contain non-detectable amounts of THC. According to Canadian Law, we abide by this absolutely, yet many hemp companies have been feeling powerless by these new rules. That is until Kenex from Chatham, Ontario announced plans to sue the US Government for violating NAFTA rules as a result of the DEA's actions. It's unclear how this will pan out, but it's a great step for the Canadian Hemp Industry, and we all owe Kenex a big thank you for taking a stand. Good Luck, Kenex. Personally, I think they'll win, because let's face it; the argument the DEA is putting up against hemp is weak and unjust, and our rights to trade freely are definitely being violated.
Candi Penn, Hemp Industries Association Executive Director, based in California comments: "Hemp Foods are expanding despite DEA efforts to curtail them. The industry has to spend more time and money to do the testing required, but retailers are willing to work with companies that show proper documentation from a lab and sign an affidavit that says they only use the documented oil or seed. The burden has fallen on the producers of hemp oil and nut, so that those along the manufacturing chain do not have to repeat the tests."
I urge everyone to call, write, fax or email the DEA, the media and every politician you can think of, to describe how good hemp is and how much you believe that the DEA's decision violates our NAFTA rights.
A lot of people have criticized NAFTA in the past. Isn't it ironic that it may just be the very thing that sends this industry into the spotlight, and the mainstream, once and for all?
But for the remainder of this article, I will not waste any more paper and ink on the DEA. I will focus instead on another pressing issue; one that is as much about marketing as it is about morals, and one that will inevitably affect every hemp business, large or small.
(Editor's Note: please check in regularly at the Hemp Report's Hemp News Page to follow the latest on the availability of Hemp Food Products in the US)
To Certify or not To Certify?
That is the question. It is not an easy or straightforward one to answer. If being an eco-friendly alternative is one of the key aspects of a company's marketing approach, than the long term effects need to be considered.
Presuming that the industry takes off and the now small-to-medium-sized firms in the industry continue to experience increased growth, it won't be long before very large corporations step into the arena in a big way. If the industry chooses to use this time to set a benchmark with certified organic production across the board, it will put up a temporary barrier to entry into non-organic territory. The industry as a whole will be able to use leveraged defensive marketing strategies to hold their position as the premium quality, "only-way-to-go" producers and processors.
On the other hand, if the industry chooses to sacrifice marketing and production morals and for example, use loads of chemical fertilizers and supplemental herbicides and ignore wise soil stewardship, the growth prospects will be much different. In this version the large multinational firms will still join in when they see the enormous potential. The difference here is that their move will in all probability turn hemp, our "miracle" plant, into just another genetically modified organism ridden with chemicals that increase yields, but also pollute water systems, degrade ecosystems, and otherwise contribute to the damaging of our planet. Now you must ask yourself, do you want to market that? (See Counter Argument, continued below)
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To Certify or not to Certify continued...
Counter arguments against CO production
There are counter arguments: A) The large firms will do that anyway, regardless of whether the rest of the industry does and B) Producing only certified organic will raise the price significantly and reduce the demand for the products.
Both are valid arguments. But I submit that the hemp industry was reborn by people who want to see it become the world's most widely used plant, enrich the lives of millions of people, earn a handsome profit, and wait, here's the best part about it - It's Good For The Environment. So, as valid as those counter arguments are, I think that they are not the best long-term road for us to walk down.
Of course, the savvy hemp entrepreneur will look at both sides of the coin before making a decision. So here are the objective indicators:
Disadvantages to Industry-Wide Certified Organic Production
a) Higher Initial Costs
We would, in the short-run, be looking at an easy increase of 20-30% in the retail cost of the goods that were originally non-organic being converted into organic.
However, the idea here is that if everybody does it, it will encourage more organic farming, open the door for seed buying pools, and lead to virtual economies of scale by virtue of the collective actions of the business leaders in the industry, and thereby reduce the costs of producing hemp organically. This would put the organic cost lower that it is today and thereby create an increase in demand for organic hemp products.
As hemp companies improve their efficiencies and operating procedures and move along the experience curve, production costs will naturally come down. The question then becomes: How long will that take? It's hard to say, but I can guarantee you that by working together as an industry it will happen much faster than if we all try to do it ourselves.
b) Possible Decrease in Demand
It is entirely possible that those people who currently buy non-organic versions of hemp may find it difficult to continue buying if all products were to switch to organic. The counterpoint here is that by increasing our organic production, the costs there will come down, and hence the demand will go up. When we combine that with the fact that organic foods are the fastest growing department at most grocery stores, the potential negative impact from the decrease in demand of non-organic hemp is greatly reduced. After all, why do people buy hemp? Originally, it was novelty, but more often it has been attributed to hemp's health benefits and its environmental benefits, the latter two being what will propel hemp sales into the future.
Greg Harriot, from Hempola, has this to say on the subject: "Hemp Food today is exactly like what we had with Yoghurt in Canada in 1968. 2 or 3% of the total population knew what it was and how good it was for you. Nowadays, everybody knows what yoghurt is, and almost everybody has some in their fridge. That's where hemp will be, too."
Advantages to Industry Wide Certified Organic Production
a) Send a Message and Set the Tone
Each company, and the Industry as a whole, will send out the message that the Canadian Hemp Industry produces only top quality, ecologically sound industrial hemp products. And since Canada is one of the most progressive hemp nations this move will go a long way in setting the tone and establishing a benchmark for the rest of the world to follow.
b) There is Strength in Numbers
By working together on this initiative, it will truly become self-propelling, a marketers dream, and will actually be more difficult, from a marketing perspective, to go back to conventional.
By acting together, the industry can effectively market it this way. In doing so, the industry will clearly decide and let the rest of the world know exactly where its place in the future of this great plant shall be.
c) Export Opportunities
By becoming globally synonymous with the highest quality hemp, Canadian businesses will create more export opportunities for themselves. When competing against developing countries, Canada is unlikely to rank in as the cheapest supply source, so its best long-term competitive opportunity is to become the world's #1 source for high volume and high quality. I submit that both are entirely possible because we have the land and the brains to do it.
d) Marketing Benefits
Marketers love to get their hands on high quality products. They also love products that don't harm the environment, and they absolutely adore products with big potential. It gives them something to truly cheer about in their campaigns.
Egg farmers unite, dairy farmers pool funds, and yet the hemp industry remains isolated. Each company, each farm, operates primarily in its own bubble, marketing its wares on an individual basis. Thankfully, organizations like the Ontario Hemp Alliance and the Hemp Industries Association are helping to change that, but their main focuses have been with helping the industry to gain recognition and acceptance. A Hemp Marketing Board that brings together everyone in the industry could accomplish this as well, and could also pool advertising dollars to promote the industry and the certified organic ethic. It would be an unprecedented show of commitment to producing a world-class product, and it would undoubtedly receive worldwide attention. Again, it's a marketers dream.
e) Environmental Benefits
The world is searching for a product like hemp. There are so few crops out there that can actually be considered good for the environment, let alone one that's good for your health and has thousands of practical applications.
Greg Herriott comments that: "The certification issue today doesn't mean a whole lot, because most people still don't know what hemp food is. Five years from now though, it will mean a lot. It is the natural evolution of where the industry will go and it's not a question of if, it's a question of when. To make it happen, the work in the field needs to be dealt with first, get a few more harvests behind it. Then we can get some more organic acreage when we know more about how the plant behaves and education is a big part of that. It's a much easier crop to work into a rotation, because farmers don't need to factor in all the pest issues that are common with other commodity crops."
The general feeling in the Industry, as Herriott pointed out, is not a question of if certified organic will be the benchmark, it's a question of when. And the only thing stalling its natural progression is consumer acceptance. We need to get the products in their mouths, get people eating it every chance we can. So spread the word, get out in the public, do demos, do trade shows, send samples, build alliances, write news releases, hold media events, get local restaurants involved, and most importantly --- talk to your customers.
If you are a hemp business and determined to become successful in the future of the industry you will need to consider the things I have just mentioned. They are a good starting point for your marketing efforts. The decision whether to certify or not is a tough one. Ultimately, it is an individual decision, but I strongly urge you to consider the long-term effects, from both an ecological and marketing perspective, before picking a side.
Trade laws will have an effect on the future of hemp, but ultimately it is the choices we make as an industry in the production and consequently the marketing side that will make a difference in our future.
An accomplished and resourceful creative thinker, Kevin Ablett started his first business when he was just 20 years old. He used the skills and knowledge learned from that experience and applied them to his studies at the University of Victoria's world-renowned Entrepreneurship Program. Now in his final year of academics Kevin plans on pursuing a career in ecologically sustainable business development. He has worked in the promotion of the hemp industry as a whole, as a freelance writer on hemp industry issues, as well as with HEMPFOOD.CA for a term. To view an archived article by Kevin A. Ablett, click here
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Hemp Marketing: success is 10% inspiration and 90% perspiration
By Ruth Shamai
When Arthur asked me to write on marketing hemp products, I was a little dismayed. What do I know about marketing hemp? But then remembered: I have the most extensive line of hemp food available. It consists of hemp tortilla chips, salad dressings, energy bars, wraps, oil, pasta and more. Although they're available only in Canada, they are sold in channels from convenience to health food to grocery, and quite successfully. I have also won several awards for the products.
But all I really know about marketing hemp is best encapsulated by Mark Twain, who said, "Success is 10% inspiration and 90% perspiration." And we're sweatin'!
I have followed a different path than virtually every other hemp company in that I have no investors. Everything here happens from the ground up, with just a small line of credit as a safety net. I live in Ontario, which is one of Canada's wealthiest province. Whereas companies in less fortunate provinces can get money from their provincial governments to market, I cannot. I heard that a well-known Manitoba hemp company received $120,000 for marketing efforts like producing their slick and expensive pamphlets. When I hopefully approached the Ontario government, they just laughed, saying that Ontario is the land of opportunity and if you can't succeed at what you're doing, then do something else. (This didn't work for Toronto's homeless, but that's another story.)
I am mentioning these things by way of saying that 90% perspiration is no exaggeration.
(Left: Finding hemp products can be a challenge for shoppers)
So how are my products marketed? When I started the company, I signed a one year contract to advertise in a widely read health food magazine. Eight months later I was struggling to make the payments, and not seeing any results from it. I don't fault the magazine for this: readers could have been responding, but getting frustrated because the products just weren't widely available. Print ads are most effective when someone can read an ad and find that article in the next store they walk into. Few people will persist to the point of asking a store to get a product in, or calling the company to find out where it can be found. I think a print ad campaign can be effective to twig people to a product that is readily available, and perhaps describe its benefits.
Let's not confuse marketing with distribution. I have distributors both east and west in Canada. I have distributors for the convenience channel, the specialty food stores, the health food stores and the grocery stores. But believe me, the distributors won't get it into stores for you. I get along well with my distributors, but it took me a long time to figure it out: they're not salespeople. They're order takers, or as one of them candidly put it, schleppers. If a store wants something, they'll schlep it in, but getting the store to want it remains the marketing challenge.
The answer I believe is turning on one person at a time: putting it in their hands. That's why almost every weekend, you can find me in some store somewhere, standing at my little table and greeting everyone brightly, "Try some hemp food today?". The response is by now predictable: in health food stores, many people know the benefit, and about half have tried it, some are big fans. (My picture is on most of the packaging, and people are astounded that I am standing right in front of them, as if I'm some kind of celebrity. I used to be very embarrassed by this, now I just smile, shake hands and autograph when asked.) In grocery and specialty stores, many people are not aware that you can eat hemp, but most are willing to try. Most commonly asked question: "Will I get high from this?". If they're serious, I give them a serious answer, (NO!), but many times they're just kidding and I do too (it's hard, because the chips rip the rolling papers).
And this scenario is repeated throughout the country, where I have trained a few people to know my products and their benefits and to be able to answer hemp questions.
I now try to list all stores carrying my product on the web-page, so that people who want the product can easily find one near them. I also list the distributors, so stores can find out how to get it in.
Then there are the shows. Consumer shows, trade shows, folk festivals, you name it, Ruth's Hemp is there. What else would you do with a weekend than drag shelves, signs, products and your best mood out to meet thousands of people. Without counting, I would say that 80% of my weekends throughout the year are either at shows, or at demos. Educating the public, giving out free samples and trying to make back the cost of it.
But it pays off. I will never forget the day that the purchaser from Loblaws phoned me in my tiny office and said that people have been asking for the product so they'd like to get it into their stores. Looks like Mark Twain was right again.
Ruth Shamai is President of Ruth's Hemp Foods. Her products may be in a store near you (if you're Canadian). For more information and store locations, please visit www. ruthsfoods.ca.
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Things all hemp marketers should know
by Kevin Ablett
1. Be Market Driven
There's no point developing a product if there's nobody to buy it. Make sure that people will buy the products you want to develop, and make sure that they will pay the prices you wish to charge for them. How do you do that? By developing the products that your customers want, not necessarily what you want.
2. Talk to Your Customers
All of the best companies in the world know exactly who their customers are, how they feel about you, what they want, why they want it, and what they are willing to pay for it. If you're serious about maintaining your competitive edge (or getting it for the first time) as the hemp industry continues to heat up, you'll make it a point to the follow their example and get to know your customer. Talk to end users, distributors, salespeople, and suppliers. Get the pulse of what's happening and respond to it --- fast. One of the best ways is simple conversation. It's cheap, quick, and easy and you can get some incredible information. But if you really want to know what your customers are thinking, the best thing to do is to get professional market research surveys done, either on location in a test market, by Internet, or by telephone.
A word to the pennywise: Market research companies can be expensive. To save a buck, give your local community college or University's business faculty a call. They often have market research courses whereby students need to conduct and analyze a market research survey as part of their course requirement. The tradeoffs here are as follows: There is a risk that you will get substandard work. However, the upside it's free (except for paper costs) and professional services can cost thousands, the work is usually quite good, and often you may find that the students who choose your project are genuinely interested in it, providing you with some great new employee prospects.
3. Build a Great Website
Your web site is often a customer's first close experience with your company. They've seen your product on the shelves, or they've heard about it from a friend, or they were looking for a hemp product on the net, and there you were.
So make sure that your first impression is a good one. Choose a solid brand name and slogan and use it consistently. Once your pick it, don't change it. Take a little more time to select it if necessary, get some feedback before making your final decision, and make sure that you stick with it once you decide. Balance the four pillars of Internet success:
4. Build Alliances
We all love a little friendly competition. However, there is much to be gained from working closely with your competitors either in joint marketing campaigns, complementary product launches, or something as simple as educational seminars for the general public. Whatever the situation may be, I urge you to cooperate with your fellow industry members, because we will all need support keeping our heads above water when the major multinationals decide to join in. As Hempola's Greg Herriot mentioned in my other article , To Certify or Not to Certify, it's less a question of IF the majors will join in, but rather a question of WHEN. The big boys (and girls) are going to be here sooner than you might think, so get marketing!
The OHA display at The Guelph Show 2002
By Louise Hollingsworth
A 2-Day Organic Trade Show and 3 day conference held at The University of Guelph.
Saturday January 26 6:30 am to 6:00pm and Sunday 8:00am to 4:30pm January 27, 2002.
The Guelph show is my favorite show to do. It is where I feel in my element of like-minded souls. This overlap between Industrial hemp and the support of the organic sector is shared so fully within the membership that our first official Ontario Hemp Alliance (OHA) event was attending the 2000 show. Duly impressed we booked booth space for 2001.
Last year, 2001, the OHA hosted a very busy, yet purely information/education, booth. We had a full display with handouts on hemp farming and the OHA. There were experts on hand to answer the hundreds of questions about farming hemp and hemp in general. This year - on the insistence of our vice president - we "sold and told". The good advice not only benefited the impact of our display but also produced much needed OHA revenue.
The full size black display borrowed from Enterprise Brant lent a professional backdrop to a simple interpretive display including 14-foot tall stalks of industrial hemp donated by Claude Pinsonneault at Kenex down to processed food. Samples of raw long fibre, chips, and grain laid out for touching acted like magnets to passing fingers and the professional looking retail product supplied helped put an equal sign on most questions. I bet I spoke to 300 faces myself over the two days! Volunteers included Larry Duprey, James Enkin, Dave Marcus, Cool hempsters and Chris Dancey from the hemp clay blocks and the Lake Lisgar Youth Cultural Centre project.
Our first major retail effort was well supported and rewarded. Member Spirit Stream put together a consignment sales package for us and Cool Hemp showed up with some excellent photo cards and cosmetic type product, while Fast Fuel donated 5 boxes of fuel for us to sell.
The people we spoke to will make a difference in the market development of certified organic hemp food in Ontario. Presenting a professional front using the borrowed display helps make their impression a good one. A simple self-explanatory display with sample opportunities to touch or sample for cheap (no one complains about a small sample cost) provides an opportunity to truly experience the possibilities of industrial hemp. Your local provincial association (and anyone can join the OHA) can provide you with other member samples like raw fibre to use in your display as well informative newsletters printed on hemp paper which serve as a sample in themselves.
I will make sure we get our space for next year booked and paid for as soon as possible and then try to get on the agenda for the 2003 conference, even doing cooking demonstrations. The organic sector fits the niche that hemp has fallen into so well that it is imperative the OHA continue to participate in the Guelph Organic show.
So some general advice for doing shows like Guelph:
Louise Hollingsworth is Executive Director of the Ontario Hemp Alliance,www.ontariohempalliance.org a vertically integrated provincial association of producers, processors and marketers.
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