Seeds of suc­cess

For­mer wheat farmer John Foss is build­ing a global brand around a tiny, nu­tri­tion-packed an­cient grain

The Australian - The Deal - - Front Page - Story by: Glenda Korporaal Pho­to­graph by: Lyn­ton Crabb

Surf champ Kelly Slater helps sell Ord River chia to the world

WORLD cham­pion surfer Kelly Slater was com­pet­ing at Bells Beach in Vic­to­ria last year when he was con­tacted by an ex­ec­u­tive from The Chia Company. For­mer West Aus­tralian farmer John Foss, who founded the company just over a decade ago, con­vinced of the seed’s health prop­er­ties, was re­act­ing to a mes­sage on so­cial me­dia by the 41-year-old Amer­i­can about how chia seeds were part of his daily break­fast rou­tine.

Foss, who now lives in New York, where he runs the world’s largest chia pro­duc­ing company, sent one of his team to see Slater at the com­pe­ti­tion, armed with the company’s prod­ucts – pack­aged chia seeds and the company’s new chia-based break­fast foods. The health-con­scious Slater, 11 times world cham­pion, would go on to visit the company’s chia farms in the Kim­ber­ley re­gion, in the far north-east­ern cor­ner of Western Aus­tralia, and be­come the company’s brand am­bas­sador.

“We saw an In­sta­gram of him say­ing he ate chia seeds with al­mond milk for break­fast,” says 45-year-old Foss dur­ing a trip to Ku­nunurra, in the Ord River Val­ley, to visit the farms he con­tracts to grow his seeds. “We were look­ing for a po­ten­tial brand am­bas­sador for our prod­ucts. We wanted some­one who was gen­uine and au­then­tic. When we saw he was al­ready a chia eater, it made great sense for us to show him our prod­ucts.”

Few Aus­tralians had ever heard of chia when Foss de­cided to base a business on the seed in 2003. Orig­i­nally grown in Cen­tral and South Amer­ica, chia seeds are rich in omega-3 acids, di­etary fi­bre and pro­tein. De­mand for chia and other “an­cient grains” such as quinoa has taken off in re­cent years to meet in­creas­ing de­mand for health­ier foods, par­tic­u­larly prod­ucts that are gluten free and dairy free. The seeds are gen­er­ally added to food and drinks to boost their nu­tri­tional value.

The Chia Company sells its prod­ucts to some of the big­gest food re­tail­ers in the world and is on track to turn over more than $100 mil­lion next year. “Ten years ago chia was rel­a­tively un­known and my vi­sion of turn­ing it into a con­sumer prod­uct was laughed at,” says Foss. “Now, par­tic­u­larly in Aus­tralia, we are start­ing to touch the main­stream mar­ket.” The US mar­ket alone has grown from about $21m in 2011 to more than $70m in 2013. It is es­ti­mated to grow to about $370m next year. Nu­tri­tion

Business Jour­nal of the US es­ti­mates that at the rate the business is grow­ing it could be worth as much as $US1.1 bil­lion by 2020.

A fourth-gen­er­a­tion farmer, Foss grew up on his fam­ily’s wheat farm in WA. His stud­ies in mar­ket­ing and business saw him dis­con­tented at the prospect of life as a wheat farmer, sub­ject to the fluc­tu­a­tions of world prices. Awarded a Nuffield farm­ing schol­ar­ship in 2001, he trav­elled the world look­ing at food pro­duc­tion trends and for a seg­ment of the mar­ket that could be de­vel­oped as a prod­uct rather than just a com­mod­ity. One of his early men­tors, the late Wes­farm­ers chair­man Harry Perkins, had en­cour­aged him to look beyond com­mod­ity-based farm­ing.

The trip con­vinced him that the next big thing would be in more health-con­scious foods as ill­nesses like obe­sity and di­a­betes were reach­ing se­ri­ous proportions. Back in Aus­tralia, he saw a doc­u­men­tary about Mex­i­cans liv­ing near the US bor­der with high rates of obe­sity, di­a­betes and choles­terol. The health­i­est were those who had a daily drink of le­mon juice and chia seeds. He went to Cen­tral Amer­ica to see where the seeds of the flow­er­ing plant from the mint fam­ily were grown. He found they grew best around 15 de­grees from the equa­tor.

“I re­alised pretty quickly that the is­sue was sup­ply,” Foss says. “The rea­son food com­pa­nies hadn’t in­cluded it in their prod­ucts and the rea­son it wasn’t on the shelves of ma­jor re­tail­ers was that no one had grown chia on enough scale, with con­sis­tent qual­ity and a sta­ble pric­ing struc­ture.” He con­vinced sev­eral farm­ers in the Ord ir­ri­ga­tion area to start grow­ing chia and he be­gan ex­port­ing to the US, Canada and South Korea where there was an early aware­ness of the health prop­er­ties. In 2010 he struck a deal with bak­ery chain Bak­ers De­light to of­fer chia-seed bread. “We had done a lot of work with the Bread Re­search In­sti­tute, so we knew how chia would per­form in bread and we knew the nu­tri­tion would per­form post bak­ing,” he said.

While Foss was ex­port­ing his seeds to com­pa­nies that repack­aged them for sale, he knew that the big business would be in his own brand. “I al­ways wanted to have a brand which would be talk­ing di­rectly to con­sumers,” he said. About the same time

as the Bak­ers De­light deal, he launched The Chia Company re­tail range of seeds and pow­dered seeds, in dis­tinc­tive orange pack­ag­ing. Not only did it help de­velop the brand, but it al­lowed him to pro­mote the company as be­ing able to trace its prod­ucts through the sup­ply chain from the Ord River Val­ley.

Ac­cep­tance in the US, where he was sell­ing to chains such as Whole Foods Mar­ket and Costco, en­cour­aged him to think big­ger. His goal was to sell chia-based prod­ucts, par­tic­u­larly ready-to-eat break­fast foods. How­ever, this would re­quire a step up in fund­ing. Un­able to find fund­ing in Aus­tralia, he turned to the US, where he was able to find pri­vate-eq­uity in­vestors who could cope with the po­ten­tial risks of his ex­pan­sion plans.

This al­lowed him to go ahead pro­duc­ing break­fast foods with chia in pack­ag­ing, which he called Chia Pods. Made of chia, co­conut milk and fruit, they are pack­aged in small plas­tic bowls. “It was a sig­nif­i­cant cash in­jec­tion to build the bal­ance sheet of the company so we could go for­ward, not only to support our brand but to de­velop the Chia Pod. We could see an op­por­tu­nity in the healthy break­fast, healthy snack­ing space to de­velop a prod­uct that was clearly la­belled and ap­pealed to the con­ve­nience trend.” Chia Pods were launched two years ago in the US and Aus­tralia. “In the first 90 days in the US with one re­tailer we sold a mil­lion units,” he says. “It gave us the con­fi­dence that we had a prod­uct which had ap­peal.” The company has since ex­panded into other break­fast food prod­ucts in­clud­ing Chia Pod oats and Chia Pod bircher muesli.

Foss moved to New York with his fam­ily in 2012 to be closer to his US in­vestors and to step up mar­ket­ing to food re­tail­ers in Bri­tain and the US. Ear­lier this year, he re­ceived a call from US mega-re­tailer Wal-Mart, which wanted to do a deal to sell Chia Company prod­ucts. “They took a lot of time talk­ing to us about how we grow chia, our farm­ing and our sup­ply chain,” he said. “They re­ally took a lot of time un­der­stand­ing us as a company. They were keen to work with us to get chia on the shelves.” A big or­der from Wal-Mart, as both sides knew, could swamp the company. It was agreed on both sides to grad­u­ally de­velop the re­la­tion­ship. A few months later it started sup­ply­ing the company with prod­ucts, in­clud­ing Chia Pods. “We are start­ing with them in a mea­sured way so we can scale up with them,” he says.

Foss also sells Chia Company prod­ucts in Bri­tain through su­per­mar­ket chain Tesco and other out­lets and has won ap­proval to sell through dis­trib­u­tors in China. “We will take a mea­sured ap­proach to China,” says Foss. “We are al­ready in Hong Kong, Tai­wan, South Korea and Ja­pan but China is a big mar­ket.”

The link with Slater has proved a suc­cess. A TV com­mer­cial aired in Aus­tralia this year fea­tur­ing Slater on his visit to the Ord helped to pro­mote the brand. “Kelly Slater is in his for­ties,” says Foss. “His per­for­mances are still as good as many guys who are 20 years younger. He is su­perbly fit ... he at­tributes his longevity and per­for­mance to what he eats.” Last month the company did a deal to sup­ply its prod­ucts to the Colling­wood AFL team. The company will sup­ply Chia Pods in the club’s kitchen and the chia seeds will be in­cluded in play­ers’ break­fasts and smooth­ies.

Foss says there are more prod­ucts “in our in­no­va­tion pipe­line”. He is keen to see chia move from the spe­cial­ist sec­tion to the break­fast and healthy snack sec­tion of su­per­mar­kets. He says the main chal­lenge in grow­ing the company has been match­ing sup­ply with de­mand. “We have had pe­ri­ods when we have been ex­pand­ing pro­duc­tion quickly and, maybe, the mar­ket hasn’t grown quickly. But then, as a new cus­tomer or a new op­por­tu­nity hap­pens, the de­mand quickly starts to grow faster than our abil­ity to scale sup­ply. It has been a con­stant chal­lenge to match the two.” Foss will not re­veal too much about the company’s fig­ures, in­clud­ing the size of the an­nual chia crop un­der con­tract. But he is look­ing at new sources of sup­ply in­clud­ing Kenya. The company has also be­gun pro­duc­ing some chia seeds on a small scale in the North­ern Ter­ri­tory and he is eye­ing the sec­ond stage of the Ord River ir­ri­ga­tion project for fur­ther pro­duc­tion. He is wary of the mar­ket see­ing chia, which is some­times de­scribed as a “su­per food” be­cause of the nu­tri­tion avail­able in a small serv­ing, as another food fad. “We set up the business with a long-run strat­egy and made sure we didn’t pro­mote it as a short-term won­der food,” he says. His goal is to con­tinue to work with ma­jor food com­pa­nies and food-re­tail­ing chains and to de­velop more chia-based prod­ucts. “There’s a lot of growth ahead of us, sim­ply be­cause of the size and scale of the cus­tomers we are work­ing with.”

Kelly Slater, left, and John Foss ex­am­ine a chia crop dur­ing the Amer­i­can surf­ing star’s visit to the Ord River Val­ley

Glenda Korporaal vis­ited the Ord River Val­ley as a guest of The Chia Company.

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