Choosing a monopolised market to enter with a new business idea is tough, most people find industries with a major dominant players and high barriers for entry an instant turn off.
For instance, the NSW rice industry is the last remaining government controlled monopoly in Australia, meaning rice farmers don’t have control over where their crop goes.
But that wasn’t a deterrent for my business partner and I, nor should something like that discourage others in other markets. We saw it as an opportunity, where we could turn the mature and dull rice industry into something exciting.
The industry was stale and ripe for innovation, perfect for a shake-up with fresh ideas and new products.
Here’s why more people should take on monopoly industries in Australia, and the best way to do it.
Look for industries that are ripe for innovation
Accepting complacency in an established industry is playing into the hands of the big guys, and it won’t do any good for consumers or the economy.
Helping to encourage innovation in the Australian food sector is big for us and we wanted to play our part in contributing to the wider economy.
When identifying business opportunities, I have looked for stale industry sectors or product categories dominated by a few large companies, as these are often ripe for innovation, re-branding and transformation.
The old big guys can’t move quick enough and the smaller nimbler competitors can snap-up market share with better quality products that are more reflective of what people are looking for in the present day.
Change your perception of a product category entirely
It might be easier said than done, but changing an old established industry is needed to offer customers more choice through competition.
Monopolies, like the rice industry, don’t create or innovate, they often only stay with what’s worked for them over the decades.
It really involves looking at things differently and being innovative.
One way to do it is by changing perceptions of the product category entirely.
Our brand looks to educate consumers on the different varieties and elevate rice into the more premium, organic, health segment, rather than just viewing it as a food staple.
For instance, we have introduced new manufacturing techniques and adapted rice into ways not previously done before which has led to our customers creating new products that they not been able to do with existing market offerings.
Build a solid reputation in the early stages
Persistence is key when entering a challenging or highly competitive industry.
We’ve seen so many businesses and founders with fantastic products, that could be successful against the status quo, give up within 2-3 years. This is even though they’re seeing growth.
It takes time to challenge the big guys properly so use the initial years to build a solid reputation, achievable financial results and plan your supply chain to be ready for large volumes.
Raising capital is also something that takes hard work, but can’t be ignored.
Your reputation and capital are important in maximising credit options, to help with cash flow and ultimately to keep you scaling sustainably in the longer term.
Never underestimate how valuable time spent raising capital from private investors is for your business. For us, their investment has allowed us to expand our product range and international supply chain and hopefully they’ll continue to support our business as we grow.
I’d be lying if I said it was all plain sailing. But don’t be put off.
It has been daunting at times, but we were young, full of new food ideas and thought the industry in Australia needed to change, so gave it a crack.
Challenging a monopoly is definitely something I see worthwhile doing again.
But it’s important to remember, your short-term goal shouldn’t be to overtake the big player in market share.
Instead, focus on making a dent in it, creating change and offering the industry something people didn’t know they needed.
About the author
Marcus Brown is the co-founder of Forbidden Foods, Australia’s leading supplier of organic rice. He has a Bachelor of Business (International Trade) and holds experience working in Corporate Risk Management.