Does the Australian agricultural sector need a common national brand to promote its products in international and domestic markets?
Peter Elliott - Manager, Strategy & Market Analysis
Does every sub-sector of agriculture in Australia, no matter how tenuously related, “need” a single, standardised brand to meet emerging competitive pressures both at home and abroad?
If the question was “Does the fruit industry need a common brand?” or “Does Australian livestock need a common brand?” my answer would be a qualified “yes”. For each individual sub-sector, as part of a broader, comprehensive strategic plan, branding could be an effective way to drive perceptions or communicate key marketing messages to customers.
However, this is the problem with the idea of an all-encompassing brand for Australian agriculture. In order to reach the conclusion that yes, a common brand is the right conversation to be having in light of increasing competition for our agricultural commodities, several assumptions are required.
Firstly, you must assume that each sector has its own overarching strategic plan, which enjoys broad consensus support, and that there is a clear understanding regarding the role a common brand would play as part of this plan. Branding is part of, but not a substitute for, a comprehensive strategic plan. Like buying a horse for its cart-pushing ability, sure, you could implement a branding strategy before deciding on a strategic plan. But in both cases, there’s a better way.
Even more fundamentally, the notion of a common brand for Australian “agriculture” (however you choose to define this sometimes nebulous term) appears to rest on the assumption that there is homogeneity across the vast range of crops, horticultural products, dairy and livestock that are considered as “agricultural” in origin. As an example, in terms of target market and ultimate utility, a vessel laden with 55,000 mt of canola bound for a European oil crushing plant has more in common with a tanker full of aviation jet fuel than it does with olive oil produced at a ramshackle hobby farm just outside of Nuriootpa
In order to explain why this is the case, we first need to examine what a brand actually is and then look at where branding could fit within a broader strategy aimed at securing the future of Australia’s agricultural sector in the face of emerging competitive threats.
A brand is a “mental shortcut”
A brand is often referred to as a “promise”; meaning that via the brand, a company is promising certain things such as value for money, flavour, quality or even a particular ethical position. Put another way, a brand is like a heuristic; a kind of cognitive shortcut that helps minimise the number of micro-decisions we would otherwise make each day. When I see the distinctive three-pointed Mercedes Benz logo, for me it is a heuristic for “A well-built, expensive car I can only dream about buying”. Or when I see the Bonds brand while shopping in Target, it is a heuristic for “Undies I can afford because they are sold in a 7-pack”.
When you create a brand, you typically want it to convey certain specific attributes so that it triggers favourable purchasing behaviour either directly or in the longer term. However, when there is a considerable degree of product diversity sitting underneath a brand, the effects become diluted. Herein lies one of the main problems associated with creating a single brand for Australian agricultural commodities. By virtue of its climatic and agricultural diversity, Australia produces a wide and heterogeneous range of agricultural products often derived from very different production processes. How can such diverse products and processes be represented by a single brand? The authors of Brand: It Ain’t the Logo believe that
“…a brand is the personality of an organisation, product or service…”
How can livestock, feed grain, cotton, sugar, organic produce or premium dairy products all have the same personality?
This is why, when a company produces a large range of seemingly unrelated products, they create clearly differentiated brands for each category. For example, Ansell, who is Australia’s largest manufacturer of rubber products, makes everything from industrial safety gloves to condoms. So, for their safety glove segment, they heavily focus on the “Ansell” brand itself, whereas their condoms are sold under the “Lifestyles” brand (or so I am told). Due to the fact that a common brand for condoms and industrial safety gloves would be pointless at best and counterproductive at worst, they are separately branded. They each have a discreet web presence, with independent web addresses. Some may claim that a requirement for safety and impenetrability could be a unifying theme, however “anecdotal” evidence suggests that, in terms of factors driving condom purchasing decisions, safety comes a distant third or fourth to other drivers such as <redacted by CEO - this is a family blog>. As it happens, Ansell’s industrial safety glove website features a range of hands in various types of robust-looking rubber and latex gloves, so it is not difficult to see the problems that could emerge if the condoms were marketed from the same website. I would have thought that nothing quite discourages condom purchasing quite like the sight of a hand in a rubber glove.
Brand management guru Jean-Noel Kapferer says that -
“Brand management starts with the product and service as the prime vector of perceived value, while communication is there to structure, to orient tangible perceptions and to add intangible ones”.
What many would call “branding” is simply the way that the brand is finally communicated to the market, after a cohesive and effective strategy is formulated and executed. How could a common national brand convey the unique value proposition of each and every agricultural product produced?
There is a tendency to think that producers can wave a magic branding wand and the world will beat a path to our door. The brand must be consistent with the product or the business model. As Kapferer says, “…branding decisions are determined by the business model and cannot be understood without this perspective.” If the branding decisions for Australian agriculture are determined by the business model and there are clearly a virtual cornucopia of various models operating under the “agriculture” umbrella, it seems illogical to suggest that a single brand could be an appropriate tactic for all sub-sectors. As branding is a means of communicating what is often a nuanced message, much “branding Kool Aid” would need to be imbibed before you could think that a single, common brand could convey the diverse range of nuances seen in Australian agriculture.
Is branding a tactical or strategic activity?
In strategic planning, a common mistake is to confuse strategies and tactics. A good way of explaining this difference is that a strategy is usually the “what” and a tactic is the “how”. However even this definition misses a key starting point – the “why”. Too often, the “what” is decided on without elucidating the “why”, through empirical rigour and direct experience. The “why” for Australian agriculture could be the emergence of low cost overseas competitors. Based on this scenario, a strategy could be to position Australia as a high-quality producer of differentiated agricultural commodities and one of the tactics could be to create a single national brand, if this was determined to be an effective way of realising the overarching strategy.
The semantics here can often become blurred between tactics and strategies. Many would contend that Mercedes Benz’s branding is its strategy. However, my point is that the question of branding needs to be addressed after you know what kind of product you have and how you wish to influence perceptions. If Mercedes Benz produced cars with a similar driving experience to my 2006 Mitsubishi Outlander, their branding strategy would need to be different. A single brand for Australian agriculture is equivalent to creating a single brand for Bentley, Kia, BMW, Mazda and even Lada Niva. This is the very reason that Toyota created Lexus.
Therefore, the question as to whether Australian agriculture requires a single brand is a tactic which cannot be evaluated until there is a clear idea of an overarching strategy. And this is where we again run into the issue of heterogeneity, because the probability that each segment of the agricultural industry will have the exact same competitive pressures and the exact same strategy is vanishingly low.
What would the agricultural sector be hoping to achieve by establishing a single brand for agricultural commodities?
Clearly, the thinking around the creation of a common national brand is directed towards triggering downstream benefits such as increasing or protecting their share of the pie or increasing profits. Companies don’t create brands because it makes them feel warm and fuzzy. However, depending on which sub-sector of Australian agriculture being referred to, there are large variations in the ability to extract tangible benefits from any such brand.
For example, tangible benefits could come from placing small stickers on organic produce to guide consumer behaviour. However, is this feasible for a bulk commodity like wheat? The buying decisions of a typical flour or feed mill are highly prescriptive, so telling their purchasing managers that Australian agricultural products are “clean and green” or using an adorable logo featuring a grain of wheat with arms, legs and a smiling face (pictured to the left) is unlikely to influence buying behaviour. Does your wheat make good quality noodles? Does your wheat give me high milling yield? These are the questions that drive decision making in this context. According to branding expert Craig Davis “Logos, tag lines and campaigns are the very last thing that Australian agribusiness needs. I think what it needs is a plan.”
Furthermore, in the context of commoditised grain trade, it could be argued that the grade is a significantly more powerful brand than any all-encompassing umbrella brand could ever hope to be. The brand “Australian Prime Hard” (APH) conveys the various promises expected of a powerful brand. It tells a flour mill that not only is it the crème de la crème of Australian high protein hard wheat, but also that the wheat sold under this “brand” will make the world’s best ramen noodles. A brand needs to talk the language of its target market and the world of commoditised trade talks the language of grades; not stickers, logos and glossy brochures.
This story is going to be completely different for each sub-sector of Australian agriculture, ranging from environments where a branding strategy is vital, to environments where the focus needs to be directed elsewhere if in order to deal with any emerging adverse trends.
Perhaps at this juncture, a branding devotee might suggest that, through judicious branding, it may be possible to gain market share in a market where another country holds incumbency. However, in response to this I would counter that the best way to take market share in the agricultural commodities space is to first show the customer why you are better, rather than just telling them. As Jeff Bezos, founder of Amazon says – “Advertising is the price you pay for having an unremarkable product”.
Marketing guru Jack Trout also appears to bristle at this kind of thinking, where companies think they can simply create a brand by unilaterally telling consumers what to think. According to Trout, “…ultimately the products and services must face the realities of the marketplace…” where consumers ask “What do you have on offer? How are you different from others in the category? How are you better? Do you represent values to me that are valuable to me and make me feel valued? How are you differentiated from the others?”
Your brand emerges organically from your efforts to answer these kinds of questions, rather than being created artificially in an ad agency laboratory. The final communication of this brand is one of the last pieces of the puzzle, not the first.
Branding is not pure upside
There is also a tendency to see branding as having no downsides. By choosing one, single, national brand, there would have to be losers, unless there was confidence in the ability to create a brand that was consistent with each sub-sector. Someone may hold up the Germans as a beacon of strong national branding. After all, when people think of efficiency or build-quality, Germany is often the first country to spring to mind and this has had massive benefits for their automobile industry. But what about products where you are selling passion or romance? There is a reason why my bottle of “Blue Seduction by Antonio Banderas” says “Eau de Toilette” instead of “Toilettenwasser”. Are there agricultural products which are marketed based on functionality or pure utility, as opposed to romance?
Not only does Australia not “need” a common brand for agriculture, it would quite likely be counterproductive. By posing the question, there is a danger that the considerable branding (and quasi-branding) work already occurring at the sub-sector level in Australia by organisations such as Meat & Livestock Australia, GrainGrowers, AEGIC and Dairy Australia could be undervalued or go unacknowledged. Then, when you move down one level further, there is considerable branding work occurring at the individual product level. For example, there is the Australian Fresh Stone Fruit Growers’ Association diligently marketing various stone-fruits. I for one am glad to know that peaches, plums, nectarines and apricots have their own voice in a crowded marketplace. By overlaying a common national brand onto the branding and marketing work already in motion via each of these industry bodies, surely there is the risk that existing branding efforts will become confused.
Similarly, there is a need to examine whether it would be rational for individual companies or even each sub-sector to agree to being lumped into one, single brand with every other company in every sub-sector of the agricultural industry. If industry went down the path of a common brand, essentially what they are asking each of these companies and sub-sectors is – Would it be rational for you to allow yourself to come under a common brand, with a range of unrelated companies over whom you have no control? So, imagine for a moment that everyone has agreed to come under the same common brand and then one particular company engages in behaviour which damages the brand. For example, this company may have supplied a product inadvertently laced with a chemical which resulted in the death of a consumer. Or perhaps this company was secretly filmed engaging in cruelty to animals. If everybody else has constructed their strategy around the same common brand and all it could take to destroy this brand could be a single rogue operator, how sensible would it be for individual participants to agree to a common branding strategy? They are exposing themselves to risks over which they have no control. This scenario is the very definition of the “rotten apple” analogy. All it takes is one.
What would be the potential alternatives to a common brand for agriculture?
After spending several thousand words explaining why I believe that it would impossible to create a single brand (or even a single strategy) for the entire Australian agricultural sector, it would be hypocritical of me to now suggest specific alternatives that would be consistent across all sectors and sub-sectors. I am just a low-level grains industry type who buys his undies from Target in a pack of seven, so it would be presumptuous of me to try to capture all the pressures and challenges facing a range of markets I have no understanding of. I can barely tell my Pink Lady from my Granny Smith, let alone know how to best face the competitive threats facing our apple producers. However, what I do know is that Granny Smiths apples, cage eggs, GM Canola, Wagyu beef and the other countless agricultural products produced in Australia are, undeniably, rather different products. Despite the fact that I could never hope to become an expert on each of these sub-sectors and products, what I can endeavour to do is outline what I believe would be a logical starting point for any strategic planning. I can do this by detailing the kinds of questions that each sector of the agricultural industry needs to answer in order to formulate an effective competitive strategy.
In one sense, competition in the marketplace can be distilled down to one key concept – differentiation. A producer must typically choose whether to focus on a differentiated price, a differentiated product or a differentiated service. If a sector of the agricultural industry is facing the emergence of a competitor with a lower cost base, by default it must typically provide a better service or a better product if it wishes to remain a viable player in the market in question. In recent years there has been the emergence of corporate ethics and the humane treatment of animals as a point of differentiation. This allows me to bask in a kind of self-congratulating warm glow each time I spend an extra few bucks to buy free-range eggs.
So each sub-sector of Australian agriculture must first determine what their point of differentiation is. If our grains industry is competing with Black Sea countries, should they focus on stable supply as our point of differentiation, to take advantage of end-users’ concerns around sudden export bans or geopolitical risk in these countries? If our fruit industry is competing with cheap South American product, should they focus on organic or our ability to control pesticide residues?
When trying to formulate a commercial strategy, I have always found it helpful to use military analogies to create simple pictures in my mind, as they tend to be practical and relatively jargon free and therefore easy to conceptualise. This is not due to any particular fondness for actual, real world battle. In fact, if they bring back conscription at some point, I will point out my dodgy shoulder and my tendency to break out in psoriasis when I become unduly stressed. Rather, the large body of discourse on military strategy that has built up over time provides us with tried and tested principles with obvious applications in commercial life. From Musashi’s Book of Five Rings to Sun Tzu’s The Art of War to the various strategies of Helmuth von Moltke, there are a range of military concepts which mirror the same challenges faced in commercial strategy. So, let’s now apply some basic military strategies to deal with competitive threats. Again, I will use grain as the example, as I am dealing with this very issue on a daily basis, allowing me to speak with at least some authority.
Firstly, let’s define each segment (either geographic or functional) as a “hill” on a battlefield. Is there currently another army located on top of the hill or are we on top of the hill? If we wanted to attack a new market, we would be at the bottom of the hill and would therefore face serious handicap. Using this analogy, it is helpful to answer some basic questions to ensure that we have a considered and cohesive strategy before any attack or defensive manoeuvre is launched. As attack typically requires a numerical advantage over defence, should we focus on defending existing markets or attacking new markets? Where is our best “bang for buck”?
Which hills should we attack? If we attack heavily fortified hills (such as the Japanese bread market) or we spread our army too thinly by trying to attack too many hills at once (focusing all of our breeding efforts and physical segregations on general purpose grains with no specific point of strength), we risk failure. Linked closely to this, the issue of specialisation versus diversification is a key topic that needs to be considered. The distance between these two points is a continuum. At the “specialisation” end of the spectrum, we focus on areas of strength and abandon the idea of capturing the whole market. However, this then exposes us to concentration risk if this “all or nothing” strategy fails. At the other end of the spectrum, we retain the goal of targeting a wide range of markets, thereby spreading our risk but creating the possibility that we succeed in none of the markets we target.
How do we strengthen our army before we attack or defend? For example, do we attack the Vietnamese baguette market with our existing wheat varieties or do we hold fire while we breed for the qualities this market requires? Do we split the Australian Prime Hard (APH) grade into two grades (One containing varieties suitable for bread and one containing varieties suitable for ramen noodles) to enable us to both defend one position and attack another simultaneously?
If we decide to attack, where is the army’s weak point? Rather than take the North Americans head-on in the overall bread market, could we target the sponge and dough or rapid dough niche to claim a beachhead in the market? What are our competitors’ weak points? As mentioned earlier, it just so happens that Russia’s weak point (a recent history of sudden government export restrictions) is Australia’s major reputational strength in grain, due to our government’s lack of interference in grain exports. However, could the live cattle export industry also use a lack of government bans as a strategic advantage?
Are there other hills that are unoccupied or only lightly defended? Many years ago, some clever breeders with foresight decided to breed specifically for the Japanese Udon noodle market, giving us a powerful first mover advantage. This has created an interesting strategic situation which could be studied as a potential blueprint. The Japanese Udon noodle market takes around 850,000mt of wheat from WA each year. As this is a finite, niche market, already occupied by WA wheat, it is of little attractiveness for our competitors to target as there’s really only room for one player, considering the resources required for breeding efforts and the like.
Don’t choose a hill to take simply based on its size. This is where it is vital that any strategy decided by a sub-sector of the agricultural industry is cohesive and consistent. For example, a common mistake is to choose a high-quality, differentiated product strategy and then target a market which is inconsistent with this strategy simply because it appears large and potentially lucrative. For example, countries such as China and Saudi Arabia have an unwavering focus on food security and have therefore put in place policies focused on ensuring that their people remain fed at an economically sensible price. So, for example, Saudi Arabia has established wheat tender specifications aimed at ensuring a geographically diverse range of suppliers can compete vigorously for the business. In these government tender-style markets there is little scope to push a high-value, differentiated product. Some people are excited about the partial deregulation underway in Saudi Arabia, as it appears to create an opening for high value, niche wheats. However, it must be realised that these privately imported wheats will need to compete against heavily subsidised wheat coming in via the government tender, so expectations of a bonanza here would appear misguided. Alternatively, there may be smaller niche markets with demanding quality requirements that may suit the functionality (or potential future functionality) of Australian product. The markets each sub-sector chooses must be commensurate with the strategy chosen.
Branding has its place
I am hopeful that this doesn’t appear to be a treatise against the power of branding. There is a piece of paper somewhere in my filing cabinet which reliably informs me that I am the proud owner of a marketing degree from an institution that doesn’t have “.com” or “Trump” as part of its name. If there is one thing I remember from the occasional marketing class I squeezed in between attending toga parties and drinking attractively priced port wine through a funnel, it was the undeniable power of branding. Branding, when deployed correctly, can be powerful stuff. It can create an enduring advantage for your commoditised, homogeneous product where there would have otherwise been none.
However, evaluating any option, in any scenario, is typically not a question of whether something is a good option in absolute terms, but in relative terms. Let’s pretend for a moment that a large-scale, homogenised branding effort for Australian agriculture could generate some, as yet unconfirmed benefit. Is that where efforts should be focused? Or, put another way, is that the best use of time and resources relative to the other areas that could be focused on?
To again return to my previous military analogy, by posing the question as to whether a common brand is needed to deal with a range of competitive pressures in the agricultural sector, the question being asked is “Can we win this battle by using AK-47s?” Sure, the AK-47s may help, but you need to know the answer to questions such as - How many soldiers do we have? Have they been trained to use the AK-47s? How many soldiers does the enemy have? Where are we fighting? The idea that the same gun will be the best possible weapon in each situation is highly improbable. Or, to use examples specific to the task at hand, our overall strategy needs to account for issues such as –
Organisational innovation – What is the best organisational structure for Australian agricultural producers?
Talent development – How does the agricultural sector attract the best and brightest into agriculture? How do they then train these people? How do we progress the current situation, where everyone loves to namecheck “skills shortages” and “career opportunities” in any planning document you could care to name, yet this never seems to translate into any meaningful, real-world responses?
Foreign Ownership – What degree of foreign ownership (either farmland or companies in the sector) is the industry comfortable with?
Competitive advantage – What are the industry’s competitive advantages and how do they foster and develop them? Are these competitive advantages different for different sectors? What are the competitive threats and how should they be mitigated?
Competitor reaction – What will be the reaction of competitors? (Any strategy must also account for the likely competitor reaction to our own tactics.)
Technology and innovation – How can an environment that incentivises investment into agriculture be cultivated?
Government involvement – What does the government need to do to create a policy framework which fosters sustainable success in agriculture?
These huge and sometimes amorphous topics are just a handful of the longer list of factors that need to be addressed, so it becomes clear just how small a part a common national brand would play in the overall scheme of things. Then, and only then, could each sub-sector of the agricultural sector start thinking about how they wish to brand their product domestically and internationally.
Rather than wasting precious time and resources on a common national brand for agriculture, let’s focus on offering products and services that meet market expectations better than our competitors, in the most profitable possible economic environment, so that agriculture as a whole becomes stronger than it is today. Then, when this is done, each sub-sector can start to use marketing tools such as branding to change perceptions and then, hopefully, influence buying decisions.
There is an old and possibly overused analogy of the drunkard looking for his car keys under a street light. When asked where he left the keys, he points over towards the darkened area away from the light. Then, when asked why he was looking under the street light, he replies “Because the light is better over here”. By advocating “a common brand for agriculture” as a panacea, is the agricultural sector simply like the drunkard, looking where the light is convenient? I contend that to look in the right place first requires a tailored, rigorously tested and forward-looking strategic plan for each sub-sector; only then could a possible role for branding be revealed.
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 And the processed consumer goods they often become.