The multi award-winning Tasmanian company Tas-Saff shows why it pays innovators to be persistent - and ready to try anything.
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Entrepreneur: Nicky and Terry Noonan, saffron farmers and co-directors
Company: Tasmanian Saffron Pty Ltd, trading as Tas-Saff
Business type: Saffron growers and marketers
Founded: 1991
Employees: 2 full-time, 8 casuals; network of 40 grower-suppliers
Turnover: (2003 - 2004) $250,000
Head office: Glaziers Bay, Huon Valley, Tasmania
Contact details: +61 3 6295 1921
Web site: www.tas-saff.com.au
The Tas-Saff Story
"It was really bad," Nicky Noonan says, her voice faltering. “Terrible. Four years' work, and back to scratch again.” In 1996, Nicky and Terry Noonan’s fledgling saffron business, Tas-Saff, based in Tasmania’s idyllic Huon Valley, was hit by the region’s worst floods in a hundred years. The couple had to destroy 90% of their saffron corms.
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Key learning points:
- Risk - For crucial business inputs, do not depend on one source of supply. If the supply is disrupted, the business could fail.
- Supplier networks - It is essential to maintain ongoing training and contact.
- Imported competitors - When faced with low-cost foreign imports, move upmarket and sell on quality.
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Tas-Saff was in a parlous state: it lacked sufficient stock to supply its existing markets. So what did the Noonans do? They expanded. It was a brave move - but typical of how they got into saffron farming in Tasmania in the first place.
Nicky and Terry had moved to Tasmania from Sydney in 1989, tired of a hectic big-city existence. They had a hazy notion of becoming farmers. In late 1989, Terry bought some Spanish saffron - the precious spice that delicately flavours food and colours it a deep orange-red - at $14.50 for one-eighth of a gram. The Noonans saw an unlikely farming opportunity: grow saffron in Tasmania. They imported their own corms and began the painstaking process of getting them to reproduce. Nicky, 47, says: “It took us two and half years just to get one flower.”
Apart from Tasmania’s weather, the Noonans’ main problem has been low-cost competitors. Last year, Australia imported about $15 million of saffron, mainly low-cost, poor-quality product from Iran that retails for as little as $5 for five grams. Tas-Saff sells one gram for $35, reflecting the higher labour costs in Australia. It takes 600 hours to harvest a kilo of the flowers’ three-pronged, blood-red saffron stigmas.
The Noonans have concentrated on producing premium saffron that is cheaper than imported Spanish saffron but superior to the Iranian variety. Iranian saffron may only cost about 15% of the Tas-Saff product but it is far less potent. Terry Noonan, 50, says that 100mg of Tas-Saff saffron is equivalent in potency to about a gram of the cheap stuff. “Buying cheap saffron is a bit like buying watered down whiskey.”
When the flood hit, the Noonan’s cottage industry had an annual turnover of about $5,000 a year. The flood forced them to start again and they decided to go commercial.
They needed to spread their risk and develop more suppliers. Fortunately, news of their saffron venture had spread and other farmers had contacted them about growing it. So, in late 1996, they sold 40,000 corms - 90% of their remaining stock - to three other Tasmanian farmers. It took the Noonans three years to make the network function properly.
Now, each January, the growers negotiate an exclusive marketing agreement with Tas-Saff. In return, they are guaranteed a price for the upcoming harvest, provided their saffron passes as “extra category one” This year, Tas-Saff will pay the growers $28,000 a kilo. Established growers can produce four kilos an acre. Tas-Saff charges a 15% packaging fee to ensure premium quality.
Tas-Saff’s network of suppliers has expanded to 40 farms around Australia and in 2003-04, annual turnover reached about $250,000. But the network requires constant communication. Nicky says: “Terry spends most of his time guiding the growers. We have a training video, growers’ manual, newsletter, an annual meeting, and there’s constant emails and phone calls.”
With the help of a consultant marketer and mentor, Kim Newstead - a former head of Tourism Tasmania, whom the Noonans met in 1999 - Tas-Saff received a Tasmanian Government Innovations grant of $60,000 in 1999 and a Jaguar Award for Excellence in primary. Nicky says: “It was such a boost for us, both personally and financially.” The money enabled them to build proper commercial premises and buy a packaging machine.
Tas-Saff was the official supplier of saffron for the 2000 Sydney Olympics, the section winner of the Weekly Times Farmer of the Year in 2001, and the 2003 Telstra Tasmanian Small Business of the Year.