Citation
Daniere, S. (2003), "New Zealand Wasabi Limited", British Food Journal, Vol. 105 No. 1/2. https://doi.org/10.1108/bfj.2003.070105aab.002
Publisher
:Emerald Group Publishing Limited
Copyright © 2003, MCB UP Limited
New Zealand Wasabi Limited
Situation summary
The story starts in 1990 when Jenny and Michel move their family from Palmerston North to Auckland in the hope to getting more work for their engineering consultancy. They find a home, a lifestyle block in Warkworth, approximately one hour north of Auckland. This property consists of a large house and five acres of land, originally a Nashi pear orchard.
It seems inefficient not to use such a large piece of land, when clearly some money could be made of making it productive. Michel and Jenny are eager to work for themselves and become self-sufficient. After looking at a wide variety of alternative uses of their land, the couple decides to farm Kunekune pigs (a rare breed of vegetarian pig in New Zealand, an animal which keep the grass down by eating almost anything without being as destructive as sheep, cattle and goats, therefore ideal for "lifestylers").
Not such a good idea! The pig business does not work. They start thinking once again of other alternatives; a product that would produce a good return on investment and that is legal!
Faith strikes! A TV programme on rural life provides the vision: a product called wasabi is presently being grown in Canterbury, New Zealand and it commands a price in the region of NZ$100.00 per kilo in Japan.
Not knowing anything about the product apart from the fact that it is traditionally grown in Japan, Jenny and Michel embark on some serious research. What does Wasabi look like? Is there really a market for it and where? How can you grow it, is it economically and geographically feasible? They will need a business plan.
Wasabi
Wasabi is traditionally used as a condiment with Japanese dishes such as sushi, sushimi, soba dishes, and raw fish. For these uses it is ground up into a paste.
Wasabi (Wasabia japonica) is a member of the cruciferae family (or mustard family) and is related to cabbages. It is a native perennial of the Sakhalin Island north of Japan. Wasabi is traditionally grown on man-made growing beds, irrigated by the pristine water of diverted streams. The wasabi plant grows 10cm long and 1-2cm in diameter. The stem, or rhizome, grows in a similar way to that of a small Brussels sprout. As the stem grows, the lower leaves fall off. The stem is the most sought after part of the plant. The leaves, which can be pickled, are kidney shaped and toothed and. White flowers occur on the 40cm flowering stems. After planting, the crop is grown for 18-24 months until the stems are a harvestable size. This plant has a very pungent smell and flavour due to its high sulphur content. Wasabi japonica is the cultivated variety but there is another wild variety called Wasabi aenius. The most popular variety of Wasabi is the Daruma, the Mazuma variety is also produced, but is somewhat less attractive in appearance and is hotter than the Daruma.
Why would Japan import wasabi?
The first question that comes to mind is why? Why would Japan that has the plants, the environment, the knowledge, the know how and the market, want to import New Zealand grown wasabi? Because wasabi is labour-intensive and relatively difficult to grow. In addition, there is increasing pressure on agricultural land in Japan partly due to an ever increasing pollution. The local production of about 5,000 tonnes (calculation by Bendigo Research) is therefore declining, but the demand is still there.
Wasabi is an integral part of the Japanese culture. It is found in many of Japanese traditional dishes. Elizabeth Andoh, a US journalist and business consultant who lives in Tokyo, specializing in Japanese fo.od, points out that food is "the best window through which to view any culture".
New Zealand Wasabi Ltd
The initial research conducted for Jenny and Michel shows that there is a market for wasabi in Japan, and that there appeared to be a worldwide shortage of it. There is, however, a shortage of information on how to grow it. The only information available refers to the way wasabi is grown in Japan's native mountain streams, on growing beds built out of rocks in these streams. Wasabi can, however, be produced both as a ground grown or water grown plant. The water grown plants produce a higher quality product highly regarded by the Japanese market.
The couple also finds out that the NZ Crop and Food Research Institute is running a trial in Canterbury at a trout hatchery, which indicates that while the original Japanese conditions could not be replicated in NZ, other methods could be looked at, particularly the hydroponic method, although most Japanese "experts" on the subject tend to argue otherwise.
Jenny and Michel decide to give it a go. They get some plants from the NZ Crop and Food Research and set up their own trials, in their front garden, following the method prescribed by NZ Crop and Food Research. All goes very well until after the ninth month, and almost overnight the whole crop dies. The couple do not despair, and decide to try again, using another method. Once again the Wasabi starts dying almost at the same point in their growing cycle, showing similar signs of stress as during the first trial. Half of the plants are removed to another trial growing system. The transplanted plants survive, but those left in the original trial die.
It seems like Jenny and Michel have made a breakthrough. The exercise is, however, costly and they decide that further market research should be undertaken before proceeding further. The results are not as good as they had hoped for: the original market for fresh wasabi in Japan has vanished, and the majority of restaurants and other users now use wasabi paste and powder (the fake stuff) rather than fresh wasabi. Some more market research is needed to ascertain the market for both wasabi paste and powder.
The market
It seems there is a market for both the fresh product and the paste and powdered-based product in Japan. But more interestingly, Japanese food becomes widespread out of Japan and there is an increasing international market demand for both products. Even in Japan, prices are very sensitive to supply so it is difficult to estimate the potential of the market. New Zealand in particular appears to be a growing market.
Research on wasabi highlights a few more interesting uses for the plant: it has great potential as a medicinal herb, and as a component for pharmaceutical products. These exciting applications are only just beginning to be investigated, most likely because of the plant's high commercial value and its scarcity. This is certain to lead to an increase in both demand and funds for research into wasabi. Cultivation of wasabi both within and outside of Japan seems likely to increase in the future
Uses of wasabi
Wasabia japonica medicinal uses have been documented in Japan since the tenth century and Western scientists are getting interested in it. Research highlights the following points:
- 1.
Wasabi contains a considerable amount of potassium and fair amounts of calcium and vitamin C.
- 2.
Some of its chemical components are linked to killing microbes and preventing food poisoning; this would explain its use as an accompaniment to raw fish.
- 3.
Research in Japan has highlighted that wasabi stops the multiplication of human stomach cancer cells, in some cases killing them. Researchers believe wasabi could help prevent cancer because it helps the body to eliminate excess hormones such as estrogen, thus reducing the risk of hormone-related cancers such as breast and prostate cancer.
- 4.
Wasabi also has anticoagulative properties.
- 5.
Wasabi could help prevent tooth decay according to Dr Hideki Masuda, a research director of Ogawa and Company of Japan. Wasabi kills bacteria in food, it could therefore kill bacteria in the mouth. Wasabi toothpaste might appear on our supermarket shelves.
- 6.
Wasabi may be effective as:
- 7.
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an antiasthmatic;
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an anti-inflammatory;
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an antibiotic;
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a fungicide and a wood preservative.
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"A spoonful of wasabi a day could keep both the doctor and the dentist away".
The market for wasabi is promising. Jenny and Michel's new trial growing system is working well and within 15 months the plants exceeded over a half kilo in weight, a result similar to the best possible yield so far documented.
The system is based on an hydroponic method and is continuously refined. Research information indicated that wasabi flowered once per year with two growing flushes. With Jenny and Michel's system the plants flower three times within the first 12 months, and produce five growth flushes. The flavour and pungency of the plant is also enhanced.
It is now time to move from the trial phase to the commercial phase. Transforming the five-acre Nashi orchard into a wasabi hydroponic farm is not easy, but after a few setbacks, the farm is ready to operate at the commercial level.
In the meantime, numerous New Zealand research centres are getting interested in Wasabi. The Ruakura Agricultural Research Centre is undertaking research in Waikato. The New Zealand Journal of Crop and Horticultural reports research and trials done at Lincoln (Canterbury).
The interest in wasabi grows worldwide
New Zealand is not the only country to recognise the market potential that wasabi represents.
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Pacific Farms, located in Florence, Oregon, USA, also grows fresh wasabi and markets wasabi products under the Pacific Farms brand name. Pacific farms started in the wasabi business in 1991, importing fresh wasabi plants from Japan. They too saw the opportunity of growing wasabi in their own country. Like Jenny and Michel, Pacific Farms tried different methods of production before they were eventually successful and achieved good results in 1995. The method utilised is a re-circulating hydroponics system. Much of Pacific Farms' fresh wasabi is currently marketed in the USA where the size of the domestic market is sufficient to support the entire business.
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Smaller wasabi operations start to spread. In Seattle, Washington, USA The frogfarm sells wasabi plants for consumers to produce their own crop of fresh wasabi. The frogfarm provides seeds and ground growing instructions for home grown style fresh wasabi.
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Trial work is also currently being undertaken in Australia, particularly in Tasmania. The Bendigo Farm Diversification Information Centre has initiated a easabi crop-growing programme based on the New Zealand research.
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Canada has also investigated the potential of wasabi production. Pacific Coast Wasabi Ltd, located in British Columbia, is successfully growing a semi-aquatic wasabi. Pacific Coast Wasabi produces GMO-free and genetically differentiated Daruma and Mazuma varieties.
The list of other companies interested in growing wasabi is by no means exhaustive.
Back in New Zealand, Crops for Southland, which is an incorporated society supported by the Southland District Council, refers to wasabi culture as an opportunity for the economic boost of the region.
From producer to market
The next stage of the wasabi project led by New Zealand Wasabi Limited is about production. Selling their wasabi crop as a commodity and therefore going through middle men would eat into their profit. Jenny and Michel therefore decide that in order to achieve a good return on investment, they need to be able to sell a fully processed product, direct to the public. The Namida range of products is sold via the company's Web site, through mail order, and to a small extent direct from the owners property.
Jenny and Michel are now producers and marketers of wasabi products: fresh wasabi, wasabi paste and wasabi based sauces. They give their product a brand name that represents well the essence of wasabi: Namida is the Japanese nickname for wasabi and rightfully means "tears".
By undertaking both production and marketing tasks, Jenny and Michel have not only been able to enjoy good financial results, they have also been able to retain total control of the distribution channels, and therefore total control over the quality of their product and their business. Their dream of independence and self-sufficiency has come true.
Ten years of trials and research have borne their fruit and Michel and Jenny have developed a passion for the product and now aim at starting a new industry in New Zealand that produces the best wasabi in the world.
The business offer
Research and development of the growing system is ongoing. This results in a system which enables the increasingly efficient and competitive production of a high quality product. The actual system produces a yield of 22 tonne per hectare, which Jenny and Michel believe could grow to a yield of 50 tonne per hectare with additional refinement. So far the entire wasabi production is sold on the NZ market and only a small percentage sold in Australasia through e-commerce. This provides Jenny and Michel with the lifestyle they were looking for.
They are now looking at "establishing an international presence for the New Zealand wasabi industry" and offer to become facilitators by "selling the intellectual property associated with the growing, processing, storage and marketing of wasabi on a worldwide exclusive basis".
Jenny and Michel have achieved their goal and now lead the lifestyle they were hoping for thanks to their wasabi venture. They are keen to grow their business and in order to do so they must expand their geographical span. While the NZ market is still growing, they do not see why Wasabi NZ Limited should be locally restricted when wasabi products are in great demand worldwide. Internationalising their business by the means of overseas subsidiaries or joint venture would, however, be capital intensive and would also mean the loss of the lifestyle the owners so enjoy and worked towards.
The solution to the internationalisation of Wasabi NZ Limited and its product brand name Namida therefore lies in the franchising option. This option will allow Jenny and Michel's business to grow while allowing them to retain full control of their "baby" and grab a nice part of the profit without sacrificing their lifestyle.
The most valuable asset of Jenny and Michel's business is their human capital, and more particularly, the technical knowledge and practical know-how about wasabi growing they have acquired over the years. The growing system is patented. They have also established a brand name which is recognised in New Zealand.
Through franchising Jenny and Michel offer wasabi adepts and entrepreneurs the opportunity to make a living out of growing wasabi. They propose to exchange their intellectual property and consulting services on the production, processing and marketing of wasabi-based products, in exchange of a proportion of their franchisee's income.
The franchising option offers Jenny and Michel a palatable opportunity to reach new markets without having to go through the trouble or costs normally associated with internationalisation. The franchisee assumes responsibility for the market research in the new marketplace and will be more inclined to know this market and its specifics than the franchiser would. Similarly, it can be assumed that the franchisee will have a better knowledge of the new countries' requirements and restrictions. Last but not least, the start up costs normally associated with the overseas implantation can be quite high. The franchiser is also responsible for these costs, shifting the financial risk from the franchiser to the franchisee.
On the other hand, the franchising option can offer the franchisee a number of interesting opportunities. The franchisee can enjoy the benefits of a tested system and the technical knowledge associated with the wasabi growing, processing and marketing business. This would ideally allow the franchisee's operation to be successful and efficient within a short time frame, therefore allowing for a faster return on investment.
Sylvie Daniere University of Canterbury, Christchurch, New Zealand
Further readingAndoh, E., "Wasabi, nicknamed namida ("tears"), this fiery condiment brings joy to Sushi-lovers everywhere", Mangajin Magazine, No. 23, available at: www.mangajin.com/mangajin/samplemj/Wasabi/Wasabi.htmDepartment of Natural Resources and Environment, Melbourne, available at: www.nre.vic.gov.auDouglas, J., "Wasabi or Japanese horse radish – Wasabi japonica", Ruakura Agricultural Research Centre, Hamilton, available at: www.crop.cri.nz/psp/broadshe/Wasabi.htmFletcher, G. (1997), FMS Commentaries, Newstalk ZB Southland, 864 AM, broadcast 27 August, available at: home.clear.net.nz/fms/webaccess/comment/1997/comment_970827.htm(The) Frogfarm, available at: http://japanesefood.about.com/gi/dynamic/offsite.htm?site=http://www.Wasabifarm.comMartin, R and Deo, B., "Preliminary assessment of the performance of soil-grown Wasabi (Wasabia japonica (Miq.) Matsum.) in New Zealand conditions", New Zealand Journal of Crop and Horticultural.Morgan, L. (2000), "Is it possible to grow Wasabi organically in a hydroponic system?", 30 September, available at: www.growingedge.com/community/archive/read.php3?c=OH&q=42New Zealand Institute for Crop and Food Research, available at: www.crop.cri.co.nz/New Zealand Wasabi Limited, available at: www.wasabi.co.nzPacific Coast Wasabi Ltd, available at: www.Wasabia.caPacific Farm Ltd, available at: www.freshWasabi.com