If one can make difficult products with success, then they can prepare anything else below that level.
I am often hired as a consultant to create difficult, specialty products for young animals such as piglets, broilers and even calves. I have done this for so long, it feels natural to me now. But, I am still amazed when I ask my customers why they want to include such difficult products in their existing portfolio. The most common answer is because they bring about such huge perceived margins. There is nothing further from the truth. Let me explain.
Yes, the difference between ingredient cost and ticket price can be double or more, but this is only half the story. In order to make and sell such products, it requires an immense investment in know-how, logistics of specialty ingredients, dedicated equipment, and knowledgeable staff – not to mention the mind-boggling cost of marketing such products in a highly competitive market. When one considers the relatively tiny volume (per animal) of such products consumed, then it makes no real sense to expect a company to survive on selling only such products. In fact, there are a handful of firms that manage to do so, and for that they must be international entities.
In my experience, where nutrition suppliers become successful is when they use such specialty products as specialty keys to open the armored door of a prospective customer. The thinking is quite simple: If one can make such difficult products with success, then they can prepare anything else below that level.
I recall one of my first customers who tried one such product we made specifically for him. Not only did he become a loyal customer, but he kept asking us to make more products for him – even products we did not want to get into. The same happens with all of my consulting customers who understand how to properly position such specialty key products. Those who expect to make money from them have a better chance selling commodities.
