Strategic Marketing Plan: Part A

Hemp Foods Australia

Kendall Herbert (s3782812) & Laura Priddle (s3810465)

Word Count: 1428 (excluding references and in-text tables)

1. Company's History, Development, and Growth

For almost 3000 years, Hemp has been the Earth’s largest agricultural crop,

creating a highly valued industry given its involvement in the production of fibre, paper,

clothing, fuel, medicine and all things essential in a civilised world. Beyond this, modern-day

advances have enabled various foods to be made from Hemp seeds. 

Hemp Foods Australia is one of the largest wholesalers, retailers, manufacturers and

exporters within this industry. To reach this status, however, the company faced many

holdbacks prior to its legalisation and societal acceptance in Australia. Paul Benhaim, current

HFA CEO, developed his first health-bar derived from Hungarian Hemp seeds in

1998. Otherwise referred to as ‘9bar’, the product was quick to become the best-selling snack

bar in Europe, with it considered illicit in Benhaim’s home market, Australia. This product

success inspired Benhaim to shortly found the company ‘Hemp Foods Australia’ in 1999 that

would retail internationally until a domestic market appeared. From 1999

onwards, Benhaim would submit an array of applications to the Australian Government

regarding the prohibition of Hemp food consumption and after 18 years of lobbying along

with other industry partners, HFA would be granted an Australian customer-base in 2017.

Finally, the industry would see changes to the FSANZ code (FSANZ, Standard 1.4.4:

Prohibits and Restricts Plants and Fungi in the Australia New Zealand Food Standards

Code) that deemed low THC Hemp foods as safe and dietarily valuable. Nowadays, industrial

hemp can only be grown under a license issued by Australian state governments. Regardless

of approved THC levels, industrial hemp is still classified as cannabis under the ‘Drugs,

Poisons and Controlled Substances Act 1981’ (Halsey 1997). Thus, HFA must have their

growing locations approved and monitored by the state government.

Though restrictions have eased, the constraints within this industry have pushed Benhaim to

innovate and diversify. For example, HFA implements hemp-fibre-based plastic practices, in

contrast to conventional petrochemicals, used in many of its commercial products. The

brand furthermore collaborates with eco-company Zelfo Australia to retail both recycled and

Hemp-derived paper. The company has now shifted from its original snack range to an

extensive household offering (i.e., flour, butter, milk) that will continue to grow with further

consumption. 

2. External Environment

PESTLE Analysis

Political Factors:

The extent of

government

intervention within

the economy 

Before 2017, Hemp Foods Australia purely exported given the

legal demand in overseas markets compared to Australia. 

Hemp growth and sales are now legalised but closely monitored by the

government. 

The Drugs, Poisons and Controlled Substances Act of

1981 classifies industrial hemp as cannabis. 

 The Australian Food Standards Code

(section 1.4.4) exempt Hemp from prohibition given the low THC-

concentrate, health benefits and minimal psychoactive effects. 

Economic

Conditions: The

general economic

climate 

As of 2018, global hemp sales hit USD$3.7 billion and are forecast to

reach USD$5.7 billion by next year (Ball 2019). 

The Australian Hemp market originally had a total of AUD$300,000

sales in 2012, it’s now forecast to reach AUD$3 million by 2023 (Ball

2019). 

The Cannabis industry is estimated to create 50,000 jobs in Australia

over this coming decade alone (Cannabis Jobs 2021). 

Sociocultural

Forces: The societal

values, attitudes,

beliefs, cultural

factors and

lifestyles that

impact businesses 

HFA is challenged with a short time to identify patterns of brand

recognition and loyalty among consumers given the everchanging

regulations surrounding Hemp. 

Companies operating within the Cannabis industry succumb to the

stigma surrounding its consumers as ‘desperate’ and ‘addictive’ in

nature. 

This attitude is shifting for the better as Hemp and general Cannabis

products become mainstream. 

Technological

Factors: The pace

of technological

Technological company developments include robotics, computerised

plant monitoring, plant cloning and hi-tech security systems. 

change and

development that

has potentially large

effects on society 

Specifically, technological consumer developments for HFA include an

extensive product range in which household necessities are derived by

Hemp. 

Environmental

Factors: Ecological

and environmental

forces 

Hemp has been grown in desolate areas such as woodlands which are

generally concealed from law enforcement,

causing forest fragmentation and erosion. 

Hemp has a lower ecological impact compared to other natural fibres but

still accounts for a large percentage of energy consumption (Schumacher

et al 2020). 

Legal Conditions:

The regulations and

laws with which

companies must

comply such as,

consumer laws,

labour laws,

antitrust laws and

OH&S laws 

HFA must abide to Australian food standards: legalised Hemp are low-

THC products that have no more than 1% THC within the leaves and

flowering heads of Hemp plants. 

Hemp seeds must retail on the basis that it produces hemp with no more

than 0.5% THC in the leaves/flowerings; a

licensee cannot supply hemp above 1% THC content. 

Table 1

Summary

The political climate of the Australian hemp industry continues to be often ever-changing and

divisive at times. Prior to 2017, HFA would export its product overseas given the legitimate

demand in European markets for example. Currently, the growth and retail of Australian

Hemp is legalised yet closely monitored by the state government. The Drugs, Poisons and

Controlled Substances Act of 1981 regulates ‘medicines and poisons’, which ultimately

categorises industrial hemp as cannabis regardless of approved THC levels. This means state

governments must approve of and frequently inspect growing locations of the company,

limiting HFA’s geographical flexibility. However, there has been positive government

intervention. The Australian Food Standards Code (section 1.4.4) recognise Hemp to be an

exception of prohibition given that they have low THC-concentrate, health benefits and no

psychoactive effects. Prior to Hemp legalisation, extensive research and large-scale clinical

trials were undertaken to ensure such benefits were proven. Fortunately, the now legal status

of hemp makes it less problematic for researchers to conduct such studies. 

The Hemp industry continues to experience exponential growth, with sales having globally

rocketed in recent years given changes to restrictions. As of 2018, global hemp sales hit

USD$3.7 billion and are forecast to reach USD$5.7 billion by next year (Ball 2019). On a

smaller scale, the Australian Hemp market and the dominating companies within it continue

to grow. From its AUD$300,000 sales in 2012, it’s forecast to reach AUD$3 million by 2023

(Ball 2019). This is an enormous growth of 900% over 12 years. The motherhood industry of

Hemp, Cannabis, is estimated to create 50,000 jobs in Australia over this coming decade

alone (Cannabis Jobs 2021). 

As more Hemp-based and Cannabis start-ups enter the marketplace, entrepreneurs are

confronted with obscure marketing challenges. It’s only been four years since Hemp has been

legalised in Australia, thus there’s only been a minimal period of time for brand recognition

and loyalty to form among consumers, particularly when product promotion is highly

regulated to ensure lawful advertising. Given the tones of addiction among consumers toward

Cannabis, there are concerns that companies operating in this industry may face

stigmatisation from ‘conventional’ pursuits (e.g., health, politics). Furthermore, Marijuana,

another Cannabis plant species commonly mistaken for Hemp, is reportedly the most-abused

drug in Australia, especially among youth (Chan & Hall 2020). This subsequently places a

negative connotation on the entire Cannabis industry. However, the stigma surrounding this

industry is fading as Cannabis rapidly gains mainstream acceptance (Furore 2018).  

There have been a range of technological developments affecting both companies and

consumers within the Cannabis industry. Company developments include robotics (drones,

automated weeding), computerised plant observation (lighting, temperature, irrigation), plant

duplication and intricate security systems (Wendee 2019). With this, modern technological

advances have enabled various consumer developments for HFA. The entire Cannabis

industry offers endless technological innovations however HFA specifically has extended its

product range to sell ‘necessary’ household foods (e.g., cheese, milk, flour) derived by

Hemp. 

Though it’s difficult to accurately measure environmental impacts of the Hemp and

Cannabis industry given the secrecy of farming practices prior to legislation, this agriculture

has proven damage to nearby ecosystems (Wang et al 2017). Given its previously illegal

status, Hemp has been grown in desolate areas such as woodlands which are

generally concealed from law enforcement. This has caused fragmentation and erosion within

farmed terrains (Wang et al 2017). Furthermore, the high-electricity and water demand for

Cannabis agriculture provides the industry with a high ecological impact. Though in relation

to all-natural fibre production, Hemp holds a lower impact, yet in the grand scheme of

ecological impact, it accounts for a large percentage of energy consumption (Schumacher et

al 2020). 

Currently, HFA and other industry companies must abide to Australian food standards. This

labels legalised Hemp as low-THC products that have no more than 1% THC within the

leaves and flowering heads of Hemp plants, in which are cultivated under licence. Hemp

seeds must retail on the basis that it produces hemp with no more than 0.5% THC in the

leaves/flowerings, and a licensee mustn't retail hemp beyond 1% THC content. 

Porter’s Five Forces Analysis

Threat of New

Entrants 

Threat of new entrants refers to how simple or challenging it may be for

new entrants to enter a specific industry (Business-to-you 2016). 

According to Grand View Research 2020 industry report, the global

industrial hemp market size was estimated at USD 4.71 billion in 2019. 

Hemp foods Australia are in the industry of crops and agriculture. This

industry and more specifically the hemp industry, has many barriers for

new entrants (Gordon 2018).

Developing new crops is considered to be very expensive, time consuming

and has a high risk of failure (Gordon 2018). This industry also requires

several years of experience, which new entrants are yet to obtain. 

Another major barrier to new entrants is the Australian government laws

in relation to hemp. Industrial hemp can only be grown in Australia, under

a license issued by a state government (AgriFutures Australia 2017). 

Therefore, the threat of new entrants to Hemp Foods Australia is

considered to be relatively low to medium due to the aforementioned

barriers for new entrants. 

Bargaining Power

of Suppliers 

Bargaining Power of Suppliers analyses “how much control a company’s

supplier has over the potential to raise its prices, or to reduce the quality of

purchased goods or services” (Business-to-you 2016, para 4). 

The bargaining power in the hemp industry could be considered extremely

high, as there are several inputs that a hemp company requires. This may

result in Hemp Foods Australia demanding more for their products.

Further, charging more for their products would lead to a decrease in

revenue, due to the expenses of the supplies. 

As Hemp Foods Australia are an Australia Certified Organic (ACO)

company, they ensure they are sourcing high quality ingredients (Hemp

Foods Australia n.d.). Hemp Foods Australia producing several, unique

product that differentiate from their competitors, will reduce their

suppliers bargaining power. 

Due to Hemps Foods Australia sourcing locally (Hemp Foods Australia

n.d.), it is likely they have built a strong relationship with their suppliers.

Therefore, it can be assumed that Hemp Foods Australia, would not accept

an increase in costs or a decrease in quality. 

Bargaining Power

of Buyers 

Bargaining power of buyers analyses the extent to which customers are

able to have an impact on a business. (Business-to-you 2016). Customers

have a significant amount of power when there are not many buyers. 

A powerful bargaining power has a major impact on a business. It can

result in either loss of profit, or an increase in production costs

(Chae & Heidheus 2015). 

At the start of the 2020 financial year, Hemp Foods Australia gained $1.3

million in profit (Simcock 2020).  Due to this high revenue, it indicates

that there is a significant demand for Hemp Foods Australia’s’ products,

and it is highly unlikely that their customers have a strong bargaining

power. 

Further, after researching Hemp Foods Australia website we identified

their mission statement. This stated: “To create value and positively

impact the lives of our customers, employees and our communities”.

Therefore, abiding by their mission and ensuring they are positively

impacting their customers, it is highly unlikely that customers will choose

to purchase from another company. 

Threat of

Substitutes 

Threat of substitutes refers to the already existing products that can

increase the risk of customers switching to alternative companies

(Business-to-you 2016). 

However, one of Hemp Foods Australia biggest competitor “Shop

Naturally” stock hemp products that are significantly cheaper than Hemp

foods Australia. This company could be a threat to Hemp Foods Australia,

as they may be providing what customers are looking for, for a better

price. 

However, by Hemp Foods Australia providing bundles, discount codes

and free shipping over a certain amount, customers may be more inclined

to choose this over their competitors (Chae & Heidheus 2015). 

Rivalry among

existing

competitors 

Rivalry among existing competitors analyses how intense the current

competition is in the market (Business-to-you 2016). Rivalry is considered

high when there is a range of competitors that are similar in size and

power (Business-to-you 2016). 

The market size value for the cannabis market in 2020 was USD 235.7

million (Grand View Research 2020). 

Hemp Foods Australia has many competitors such as AusCann Group

Holdings Pty Ltd and Bod Australia. 

The key players in the hemp industry’s’ market share vary from both local

and international companies. 

It is imperative that Hemp Foods Australia continue to introduce products

that are unique and differentiate from their competitors. In doing this, it

will assist Hemp Foods Australia to gain a large portion of the market

share. 

Hemp Foods Australia will need to ensure they are aware of price wars. If

their competitors are advertising products for a lower price, they may have

to make some changes to their prices. 

Further, in order to progress as a business, it is recommended that Hemp

Foods Australia invest a significant amount into advertising. Ensuring

their business is the first Hemp business that consumers choose to

purchase from, will inevitably reduce the rivalry amongst existing

competitors (Ritz, Wolf & McQuitty 2019).

Table 2 

Summary

Porters Five Forces analysis is a structure that assists with examining the level of competition

within a specific industry (Business-to-you 2016). As demonstrated in Table

2, we’ve analysed both opportunities and threats over the next 3-5 years for Hemp Foods

Australia. We conclusively found many opportunities for HFA to increase market share,

however with these opportunities several threats were identified. Firstly, we examined the

threat of new entrants. As mentioned, the Hemp industry has many barriers for new entrants

(Gordan 2018). The main barrier identified was in relation to Australian Government Laws.

As industrial hemp can only be grown in Australia under a license issued by state

governments, it can be difficult for new entrants to obtain permits (AgriFutures Australia

2017). Therefore, the threat of new entrants was relatively low-to-medium.  

We then identified the bargaining power of suppliers. HFA’s bargaining power can be high

due to supply/input expenses. However, due to HFA’s local sources, these nearby suppliers

have low bargaining power (Hemp Foods Australia n.d.). This is due to not being as well-

established as large multifunctional suppliers. Given the popularity of

HFA, supplier bargaining power was considered relatively low given an easy supplier change

if unsatisfied. 

Pursing further, we examined their bargaining power of buyers. It was recorded at the start of

the 2020 financial year, Hemp Foods Australia gained $1.3 million in profit

(Simcock 2020). We concluded that it’s unlikely that customers have strong bargaining

power given their products are in high demand.  

HFA’s threat of substitutes were identified as relatively low. HFA stock a product range that

are reasonably priced and differentiate from their competitors. Therefore, this decreases the

threat of substitutes as customers are likely to find what they need for a competitive price

at HFA. 

Lastly, we examined the rivalry among existing competitors. HFA’s biggest rivals are

international companies, given they “invest in local companies to strengthen their market

positioning” (Grand View Research 2020, para 10). This increasing competition is expected

to produce growth opportunities for the dominant players in the near future (Grand View

Research 2020).  

References

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