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From nowhere to being a market leader in less than 10 years

From nowhere to being a market leader in less than 10 years

Substantial early investment in branding, marketing, and intentionally Australian packaging, catapulted Candy Abalone into a very discerning Chinese market.

One casualty of Japan’s March 2011 tsunami and earthquake was its 600-year old dried abalone industry. The natural disasters wiped out its kippin abalone stocks, while the long-term radiation of the water following the related Fukushima nuclear accident killed health-conscious Asia’s appetite for the prized delicacy.

Mike Vecchione and James Polanowski saw an opportunity to fill the gap in the market. James is a second-generation abalone diver with a deep understanding of Tasmania’s abalone industry and its people, while Mike, originally a timber engineer, had learnt the basics of drying abalone while working on timber marinas in Japan. The two skills – sourcing the wild-caught abalone and drying it using Japan’s methodology – were essential to opening a business with longevity, says Mike Vecchione, Director, at Candy Abalone.

Mike thinks that Candy Abalone was encouraged to enter the 2019 Australian Export Awards because of its innovative marketing and branding. “We believe we are pretty revolutionary in branding,” he says. “Dried abalone had never been branded.”

Nimble in a changing market

Candy Abalone’s entry to the key mainland China market was shaped by Chinese distributors. “He said, what you need is the right product. If you produce very good quality, people will find you,” recalls Mike.

Within two months of opening in September 2011, it had a contract to supply five times more than it could produce. But in early 2012 Chinese regulations changed. It became almost impossible to import luxury products such as the big abalone that were beautifully packaged as gifts or highlights of wedding and banquet menus.

Through a connection to an early casino operator in Macau, Candy Abalone pivoted to the Macau market and, through word-of-mouth, to Hong Kong. Next, China’s middle class emerged and, once again, Candy Abalone found its produce in high demand in mainland China. This time though, the market was for small abalone sold in simply branded plastic bags for consumption in restaurants and homes.

Chinese demand now far outstrips that of Hong Kong and Macau. Supporting that is the Candy Abalone Experience Centre in Guangzhou’s ritzy Western Street area. The centre has retail and wholesale outlets, two restaurants and a facility where people learn how to cook abalone and hear Candy Abalone’s story.

What’s next?

After five years establishing its product and market, Candy Abalone’s only concern is supply. All its produce is wild-caught and subject to government quotas determined by scientists. Next year there is a 19% reduction in how much abalone can be harvested. Although Tasmania has 25% of the world’s wild-caught resource, Candy Abalone has been supplementing its supply with stock from Western Australia and South Australia for the past 18 months.

The other supply consideration is that while demand can move from gift market large abalone to banquet-size small ones quickly, reaction to the changing market is difficult as the drying process takes months. Fortunately, abalone have unlimited shelf life. Like red wine, they get better – and more valuable – with age. Hence Candy Abalone accumulates large stocks, although Mike notes this requires “deep pockets”.

The strategy for the future goes back to the early advice from experienced Chinese dried abalone distributors. “Our market is there, our packaging is done. We can just concentrate on making sure our product is the best product, with the best service, in the world,” says Mike. “That is the only strategy we have. We know the more people who eat it, the more people who want it.”

This information is published solely for information purposes. As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on the information, consider its appropriateness to your circumstances. Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian credit licence 234945.