Virtual Entrepreneur

Creating A Niche

September 16th, 2006 | Author: MrMoney

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MontereyHerald.com:
‘Money changes people,’ said Dr. Lowell Catlett, a wiry, self-deprecating futurist, as he pulled a wad of cash from his pocket during his keynote address at Friday’s Salute to Agriculture luncheon.

An obvious axiom, his point was not about personal attitudes, but the business ability to capitalize on consumer trends. The simple phrase could be used to describe Salinas orchid grower Andy Matsui, who has amassed a fortune only to give away his money through scholarships. Matsui was named Friday as the 2006 Agriculture Leadership recipient at the National Steinbeck Center luncheon.

Catlett, a full-time professor at New Mexico State University, injected humor into a lecture that focused on the theme of innovation, consumerism and convenience in the market place. ‘I’m just weird as hell, folks,’ he said after taking the podium, immediately eliciting laughter from the crowd.

As a futurist, he seeks to understand evolving technology and its wide range of implications on daily life, though he wasn’t afraid to poke fun at himself by explaining his title as a tenured professor as really being a ‘dumb ass.’ His lecture began with the quick understanding that the luxury of one generation becomes the necessity of the next. Food, he explained, is no longer what we strive to put on the table, but instead consumers want premium foods such as nice steaks, healthy salads and Starbucks coffee. The switch from necessity to luxury is the result of the transformation of a production-oriented culture to a consumer culture, specifically one that craves convenience. Businesses must recognize that the sooner customers are segmented into niche markets and served, the better the bottom line.

Matsui, he said, was an example of this.

A classic American tale of a rags-to-riches immigrant, he left his family’s small village in Japan when he was 26 for California, where he became one of the largest cut-flower producers in the county. But free market trade led to global competition with countries that undercut his sales. So Matsui transformed his business into a potted-orchids specialty farm that is now the major supplier to Trader Joe’s and accounts for a quarter of the nation’s potted-orchid sales.

Matsui, 71, told the audience that at a cost of $250,000 per acre of production, his annual net sales are $25 million with a $5 million net profit. That 20% net profit from his business is a sales margin that is high but achievable, Matsui said, in other local agriculture businesses such as wine.

But if all growers could earn 20% net profit from Salinas Valley crops, Matsui said, those profits could in turn be used to solve the valley’s problems, such as housing, water, traffic, education and gangs. ‘My orchard business is a small business compared to the vegetable business of this valley,’ he said.

10% of Matsui’s annual profits go into Matsui Foundation Scholarships, which grant $40,000 to local college-bound high school students. Matsui’s calculated shift from mass to specialty production, Catlett said, is emblematic of businesses’ need to adapt to the constant changes in convenience-driven consumer culture. ‘If I truly give you what you want and when you want it, what does price matter?’ he asked.

To drive his point home, Catlett return to his mantra of ‘calories are free.’ The production of food – calories – is no longer a problem, he said. Now, consumers can expect a meal but, given the financial opportunity, want the choices to fulfill their desire. ‘Calories are free. A fun-filled life is not. Food is free. Choice isn’t. Safety isn’t. Traceability isn’t,’ he said, noting Thursday’s announcement of an E. coli outbreak.

Matsui’s example as the businessman who capitalized on the changes of his market, Catlett said, is a testament and example for all businesses in the valley.

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