Great Southern Truffles Case study

Great Southern Truffles – from Australia to the World

Great Southern Truffles is a West Australian business founded some ten years ago by Adam Wilson, employing only four full time people including an expert truffle maker, while punching well above its weight in terms of its diversity of products and the volume of truffle offerings that it sends to market.

Truffles are are an extraordinary culinary delicacy, they are a form of edible fungus that grow next to the roots of specific types of trees and the West Australian truffle industry has grown substantially over the past ten years. While truffles usually take five years to grow on average, these very valuable foodstuffs can be considered as ‘gourmet mushrooms’ and they have a highly attractive fragrance and taste, for which many consumers are prepared to pay high prices. Truffles occur naturally in the northern hemisphere, where over 70 species have been identified in European countries such as France, Italy and Spain. In Europe, truffles grow naturally in woodland groves of oak, poplar, willow and hazelnut trees. However, it has been noted that in recent years, the amounts of naturally occurring truffles have been decreasing in France and Italy, possible due to climate change, urbanisation and pollution.

Since the 1970s there has been a push to cultivate truffles both in Europe and elsewhere in the world in order to counter this shortfall. Outside of Europe, black winter truffles have been cultivated in and around specially prepared trees in the USA, both in Oregon and Texas, and an industry was initiated in New Zealand over 20 years ago. Major developments have also taken place in Australia in recent years. The first West Australian truffles were planted in 1997, with the first harvest occurring in 2005. Truffles have also been cultivated in Tasmania since 1999.

Black winter truffles are typically the size of a golf ball or perhaps a tennis ball, and weigh anywhere between 10g and 300g; however, some are much larger, and can be almost up to the size of a soccer ball. While black truffles are generally round in shape, they often display various ‘knobs’ and ‘crevices’ that make them unique. The outside of the truffle is quite thick and tough, since it has to withstand harsh growing conditions. When cut, a ripe black truffle exhibits a dense black interior which is streaked with white veins. Harvesting of truffles used to be done by pigs; however, trained dogs can pick up the scent and identify where truffles are, from a distance of up to 30 metres from the truffle. Truffles ripen and are harvested during the winter months – usually between June and August each year in Autralia.

Processing of truffles includes washing, sorting, grading and quality assuring. Truffles come in various grade classes and are best stored under chilled conditions. As the owner of the Great Southern Truffle Company, operating a processing facility from its Perth base, Adam Wilson has been highly innovative in developing a wide range of truffle based and truffle flavoured products ranging from honey, aioli, butter, mustard, truffle sauce, salsa, and oils and these are attractively packaged in jars, bottles, and gift packs. Of the approximately one tonne of truffles that Great Southern Truffles produces in an annual season, some are resold as fresh truffles, but the bulk of them are value added into products of which 14 different products are sold into retail markets and 7 different products are sold into food service markets. Of the 8 major species of truffles, Great Southern Truffles specializes in black winter truffles, known as Tuber melanosporum Vitt. Great Southern Truffles has been highly innovative in its product development; for example, in recent times it has developed a uniquely favored truffle product for McDonalds in Australia.

Exports

The company exports truffles to 14 countries and while truffles are not particularly differentiated as a food ingredient there is a provenance story which is linked to Australia. European truffle products do indeed have a strong provenance story which commands a premium price. The Great Southern Truffles brand represents Australian truffles and Adam Wilson has worked hard on branding and marketing to further his brand’s imprint as being Australian in nature. The term ‘Great Southern Truffles’ is used outside Australia to denote its Australian origin, even though Adam only buys and processes some 12% of the Australian crop and sells 40% of those truffles in their fresh state all over the world, while 60% are processed into his range of products. Destination markets for Great Southern Truffles products include Hong Kong and Singapore as well as the USA, which is currently being trialled as a direct-to-store supply chain with a major department store chain in the USA. The US truffle products will be packaged and specially branded as Aussie Truffle Company rather than Great Southern Truffles, which would not have the same meaning in the US market as the Aussie brand.

Supply Chain into Asia

Mr. Wilson has found it challenging to establish the right types of partnerships into Asian markets, especially as his time is a key constraint on his business’ growth and development, given the small size of his company. Yet partners in those Asian markets are key to successful distribution and marketing. He seeks a culture fit with customers and distributors and a partner whose business is the right size. He believes that if his customer/partner is too big, then his products will get no attention. On the other hand, if his partner/customer is too small, then they will not have distribution and market power in those Asian destination markets. Indeed, the issue of fit is critical.

Great Southern Truffles has Australia as its first market focus, yet is investing in markets such as China where demand is growing from a small base. Mr. Wilson attends trade shows, for example in Hong Kong, and is looking actively for partners in those markets. He splits his time and that of his employees between their retail operations, their manufacturing operations, their online sales via their website and Facebook pages, their food service business and their product development and market development businesses. However, he does believe that the Australian market should be their first focus for the next few years, from which they can form a base for establishing their export markets.

Key success factors in this business involve relationships, both up and down the supply chain, with both truffle suppliers and with customers and distributors. Mr. Wilson also carefully leads and manages his small but growing company and keeps a keen eye on cash flow and financial projections. He is looking to increase his direct sales channel to about 15% of his business and he has the flexibility to produce to order, including to supply potentially large customers such as McDonalds with a differentiated offer. Mr. Wilson started in the truffle business in 2007 having previously been an entrepreneurial innovator in a number of businesses as diverse as photography and the production of live sites for the Sydney Olympics. His truffle business was recently included in Food Innovation Australia Ltd.’s book on the 50 most innovative companies currently in the Australian food sector. As a producer of premium quality fresh and processed truffle products, Great Southern Truffles seems destined for a successful journey from primarily domestic distribution and sales to be able to take advantage of the growing middle and wealthy class of consumers in Southeast Asia and China.