Any AU business that wants to be successful in China willonly succeed if it has the appropriate scale of production, the appropriateproducts and a clear set of reasons (within its marketing message) why itsproducts are superior to the existing lot. And a large scale established distributionnetwork within the key provinces.
The LON marketing message still remains undeveloped. So LONinvestors should be thankful that the MD hasn’t charged into China with acompany still developing its product range to suit and appeal to the Chinese.The days of filling cans with dry milk goods and identifying it as a product ofAU are long gone as a simple way to succeed.
Locally in AU, the dairy market for quality niche productsis very competitive. Just look at the huge number of white cheese products availableto the AU consumer to understand that scale of any significance (in thissector) must come from a long termstrategy. Even biodynamic products which ought to command a higherprice still need to compete in this market with a compelling story that shouldbe uniquely Australian in its vision, passion and ethos. Unfortunately, lookingat the Paris Creek Farm website, while I see hints of this type of narrative,the visual presentation is at best average and the tone of the written textfeels incomplete and folksy in its emotional appeal and most importantly, thenarrative fails to sell the biodynamic message as a significant determinant ofthe products high quality taste and feel.
Where is that mouth-watering message which ought to temptme to give their milk a date with my taste buds? Also the visual image (of aparty platter) lacks temptation too and surly it is marketing naivety 101 toplace a premium cheese (at $40/kilo) next to a bowl of potato chips. The latteris a cheap food item and the former a celebratory food for a memorableoccasion.
I hope LON investors have a management team that has conductedextensive research in China to establish how they intend to create a market for biodynamic milk products viable?
The Chinese love and demand fresh produce. If LON candevelop a fast to market system of supply and distribution then it may achievea creditable place for its various fresh produce in years to come. And that isthe reality that most LON investors fail to grasp. LON is an over the horizon decade long investment andnot a simple set it up and make profits adventure.
Just look at BFC to get an understanding of how tough it isfor an AU company to freshly establish a profitable business from scratch inthe Chinese market.While much is being made of the Maggie Bear purchase thereality is that PCF must be the driver of profit. If PCF continues tounderperform then LON will not provide its much anticipated profits.
Broosta
LON Price at posting:
19.0¢ Sentiment: None Disclosure: Held
