The expression “build a better mousetrap and the world will beat a path to your door” is nothing but a myth, according to Markus Schmülgen.
Start-up companies in the food industry spend too much money and time on the product and not enough on promotion, said Schmülgen, former business development manager at the Food Development Centre (FDC) in Portage la Prairie, Man., for 12 years.
“I saw many, many products go through that development centre, (but) very few that actually made it as a large-scale success in the market,” said Schmülgen.
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“Development costs are expensive, production costs are fairly expensive, but all of these pale in comparison in what you have to invest in terms of marketing. If a product costs you $50,000 to develop, there’s a minimum of $500,000, or even a million, to introduce it to the marketplace.”
Schmülgen’s market-first philosophy is being put to the test in his current role as chief executive officer of Farm Genesis, a co-operative of 32 farmers in Waskada, Man., 130 kilometres southwest of Brandon.
Farm Genesis, a producer of hemp products, evolved from a breakfast meeting three years ago of 13 Waskada farmers seeking a way to re-energize the community’s economy.
The initial idea of the group was to start a biodiesel plant. But after a feasibility study and an in-depth look at the potential of biofuel, the group decided to take the co-op in a different direction: hemp.
The co-op has distributors in Germany and Canada for its hemp oil, hemp seeds and proteins powder, which are available at grocery stores in Brandon, Portage la Prairie and Winnipeg. It is also close to a deal with a U.S. distributor.
Schmülgen said the group settled on hemp through a process of elimination. The group wanted a product that was distinct, a nutriceutical and something that could be grown in the Waskada area.
And whenever they compared the merits of potential products, hemp was consistently at the top the list.
“We think the hemp is now in the position of entering the mainstream,” said Schmülgen. “We have introduced HempMoo, which is a milk type non-dairy beverage made out of hemp seeds…. The milk replacement market last year in the U.S. was $1 billion.”
Producers in the co-op grew 500 acres of hemp last year, but Schmülgen said the goal is 5,000 acres within a few years. He expects expanding demand for Farm Genesis products will pull in more acres.
For now, the Waskada hemp is processed at another company’s facility in Manitoba because Farm Genesis lacks a processing plant.
“As of today, we don’t have any bricks and mortar,” said Schmülgen, but he hopes to have 50 employees working in Waskada in a few years. “Once you have the market established, that’s when you build your own facility.”
While the focus for now is developing its market, Farm Genesis has bigger plans than hemp.
“We’re a value-added company,” said Keith Hannah, president of Farm Genesis and a local farmer. “We’re not going to be stuck on hemp … (it’s) something we expect to get this company on good footing.”
The long-term goal, said Schmülgen, is to become a brand owner.
He defined that phrase with the example of Manitoba’s Peak of the Market, a grower-owned company that sells vegetables and soups.
“What they do is market and promote their own name,” he said, and then introduce new products under the umbrella of the brand.
Develop brand
Similarly, Farm Genesis wants to create a brand of Manitoba grown and processed food products and sell that identity to the world.
“At the end of the day, (we) want to have a Farm Genesis product in every aisle of the grocery store,” he said.
To achieve that lofty goal and build the brand, Schmülgen and others have travelled to trade shows in Europe, Mexico and across the U.S.
“I have participated with them in trade shows,” said Alphonsus Utioh, manager of product and process development at the FDC. “It is a very progressive company.”
The FDC has worked with Farm Genesis for more than a year, assisting with research and development, and is now working on several new products for the co-op.
“We’re working with them… on hemp protein extraction,” Utioh said. “And we also have done some work in developing nutritional bars.”
Although a diverse product line and a brand identity will benefit Farm Genesis in the long run, Hannah said it’s simply a means to an end. The ultimate goal is re-building the economy and the community of Waskada.
“We only have a population of 200 people and our goal is to grow that back to 500.”
