BioCycle February 2006, Vol. 47, No. 2, p. 51
Survey data reinforces need for composters in Scotland and the United Kingdom to aggressively educate prospects on replacing conventional products now being applied.
A REGIONAL market development organization – Remade Scotland – wanted to quantify the current use of green compost as well as determine replacement markets that would bring higher values. Geographical focus was the Glasgow and Clyde Valley region of Scotland which has a significant population base generating large quantities of organic residuals. Prospective compost users from eight local authorities were interviewed: Glasgow, Inverclyde, East and West Dunbartonshire, North and South Lanarkshire, Renfrewshire and East Renfrewshire.
The goal was to contact approximately 10 percent of each of the targeted market segment using mail and telephone surveys. Remade Scotland contracted R. Alexander Associates, Inc. to conduct research, using standard surveys to tally use of existing compost products and replacements, and what barriers had to be overcome to increase sales of green compost. Each potential market sector was surveyed to determine what products were currently used for soil or media amending, or as a stand-alone soil-type product. Both suppliers and end users of these products were surveyed. Information regarding competing product quantities and pricing was also obtained, with the primary focus being on the quantity of materials used. This information was used in quantifying and qualifying the market, as well as better providing a picture of current and potential market volumes for compost.
Due to time and budget constraints, potential end users of compost within the agricultural and land reclamation sectors were not surveyed. Further, schools/universities were not surveyed in a quantitative manner. However, information related to their potential utilization of compost was obtained and provided within the report. The primary database used during the project was purchased from the “yellow book.” Although no database is perfect, it is used to provide a “population” for which a quantitative analysis can be completed. The target market segment demographics are listed in Table 1. Once the market data was obtained, it was tabulated and analyzed.
A great deal of detailed information was obtained during the research on each of the primary market segments. However, because of space constraints, only highlights of this data are listed:
Regional Councils (North Lanarkshire and Renfrewshire) are already large end users of green compost that they produce themselves (13,000 m3). There is also a fairly significant demand for compost within the Councils, as a replacement for traditional products such as topsoil. Seven of the Councils reported using a variety of “soil” products, with topsoil being the single largest material currently being used. None of the Council contacts had any significant objections to use of green compost, provided that it was consistent, weed free, odor free and reasonably priced. Aside from the green compost currently being used, compost has a great potential to replace topsoil (estimated at almost 25,000 tons per year) in this market segment.
Garden centers have the ability to supply both the home gardener and professional landscapers. The locally owned garden centers sell a wide variety of packaged products, and also a limited amount of bulk products. These products include topsoil, mulch, growing media, and peat based composts. Thirty percent of the garden centers stated that they sell green compost products and 83 percent stated that they sell product primarily in bagged form. This illustrates the importance of packaging in order to reach the retail sector. Twenty-five percent stated that they possess very little knowledge about green compost or its availability. Various concerns about compost use included product quality issues (overall, weeds, disease), limited customer demand (probably due to a lack of knowledge about green compost benefits, or the poor quality of past products), lack of research (which is untrue) and pricing issues. The potential upside for expansion into this market is significant. Whereas compost currently possesses a market penetration of only 21 percent, peat (68 percent) and peat-reduced (88 percent) products have a much greater penetration level. It is estimated that over 51,000 cubic meters of peat-based products are currently being marketed by this market segment, yet less than 1,000 cubic meters of green compost is now being sold.
Golf courses and sports pitch managers both handle large areas of turf grass and can use compost in a similar fashion. The project database identified 131 golf courses and 269 sports clubs (of course there are many more sports pitches than clubs). It should be further noted that market research has shown that much of the maintenance completed on sports pitches is completed by the Councils and their contractors. Interestingly, none of the 10 sports clubs contacted had any experience with green compost, but 80% of them knew that topdressing is used as a maintenance practice on their pitches. Therefore, there is an innate market for compost derived products, once product is available and education about the use of it has been completed. In most cases, they use sand-based mixes (as do many golf courses) in topdressing. The regional golf course market, on the other hand, had a much greater experience level with green composts (43 percent), and in fact two of them were actually composting at their courses.
Historically, landscape contractors have proven to possess the capacity to purchase and use the largest quantity of compost over a sustained period of time. Prior UK market research has identified landscapers as the largest users of soil ameliorants. It is estimated that approximately 400 businesses list themselves as landscapers within the Glasgow and Clyde regions. Landscapers are a varied lot. Some complete strictly maintenance activities, while others primarily do landscape construction. Twenty-two percent of those contacted stated that they had experience with green compost, while 53 percent stated that they use “other” composts (e.g., mushroom, horse manure, forestry waste). Therefore, an excellent innate market exists for green compost within this sector, as landscapers are already using similar products.
Market research figures also identify landscapers as the most knowledgeable market segment concerning the use of compost (and similar soil ameliorants). Further, 78 percent of landscapers stated that they purchase topsoil and over 50 percent use peat and peat-reduced products. Currently, it is estimated landscapers purchase over 14,500 cubic meters of compost, but less than half of this figure is green compost. This market segment purchase directly from compost producers, as well as from resellers such as topsoil suppliers and garden centers. Landscapers are sensitive to product quality and price, and may also be accessed through landscape architects specifications.
Turf and soil suppliers, and landscape materials suppliers, are known in most regions to market compost and other related products. In many geographical regions, this market has illustrated the ability to absorb significant quantities of compost. This market segment can also often accept compost on almost a year around basis, which is important to compost producers who cannot always rely on seasonal markets to meet their production surpluses. There were only 14 companies identified in this market segment, but the majority of them were identified as rolled turf producers (which do not typically buy compost).
Further, it was surprising that additional topsoil suppliers could not be identified. Of the companies surveyed, none use any green compost and only two (18 percent) sell topsoil. This market could hold potential for the use of compost through the partial replacement of topsoil and as resellers. However, based on the current market research, the potential for the use of green compost appears to be exceedingly low. If these figures are correct, then composters have an opportunity to become part of the infrastructure for bulk product resale (e.g., manufactured topsoil).
Professional growers, such as wholesale nurseries, can greatly benefit from the use of compost. Research has illustrated enhanced plant growth rates, reduction in fertilizer use and a reduction in disease expression through the use of various composts. However, wholesale nurseries in the Glasgow and Clyde Valley region offer only limited initial potential for locally produced green compost. A total of seven nurseries were surveyed during the study from a listing of 15. None of these nurserymen had purchased green compost. Seventy-one percent of the nurserymen use peat or peat-based growing media in their operations, and the cost of these products ranges from £30 to £50 per cubic metre.
Reclamation lands consist of landfills, contaminated, vacant and derelict lands. Many of these sites can use compost to improve poor quality site soils in order to establish a vegetative cover that is required, based on specific land usage. In many regions, reclamation lands remain innate markets, difficult to develop. However, to bolster the potential of compost use in this market segment within Scotland, SEPA is very supportive of the use of green compost in these types of applications. Compost application rates on similar types of sites range from 50 to 100 tonnes per hectare, and above. During the study, 1,666 hectares of landfills, 1,625 hectares of vacant land and 3,206 hectares of derelict land were identified.
Table 2 provides estimates of current green compost usage, as well as estimated volumes of compost that could currently be utilized when replacing similar products in a realistic fashion. Replacement figures were made conservatively, and were based on the technically proper usage of compost (research based) and realistic market penetration estimates.
When considering the estimated current and potential usage figures, it is important to understand that certain market sectors are more likely to purchase compost at a fair market value (e.g., landscapers, nurserymen, etc.), and there are those that are less likely to do so (e.g., agriculture). It should also be noted that some of the largest compost users in the area might be obtaining compost for free from current composters. While significant data (volume and pricing) was obtained on those products replaced by or competing with green compost, this data could not be included in this article because of lack of editorial space.
Based on the data obtained during this project, as well as market development experience in the UK and abroad, it is believed that there is an excellent opportunity for expanding “paying” markets for green compost in the Glasgow and Clyde Valley region. Typically, compost markets are expanded using three primary methods: Replacing similar products; Expanding compost (soil ameliorants) usage; and Create new products and applications for compost.
With this in mind, Glasgow and Clyde Valley (actually all UK) composters must work to improve the replacement figures, while expanding overall compost (soil ameliorant) usage. Some of this may only be accomplished if they manufacture and market blended products that contain compost (e.g., topdressing, blended soils). Also, a key to expanded usage of compost by Councils, landscapers and on reclamation land is educating specifiers (e.g., landscape architects, engineers) regarding the use of compost instead of more conventional, but less sustainable, products.
Potential end users were queried to determine “what would encourage them to purchase more green compost?” Although there were specific comments made that were germane to a particular end use or market segment, some general comments were also made. These included: Better product availability; Better price/cost effective; Lower cost, same quality; and Get in landscape architect specifications.
These comments make it clear that there are four things that composters must do to expand compost markets in the Glasgow and Clyde Valley region: Engage the market – let them know that product is available; Provide a high quality product which is competitively priced; Engage specifiers to get compost included; and Provide products that possess the proper characteristics (see below).
Potential end users were also queried to determine “which characteristics that they would consider as ‘ideal’ or ‘undesirable’ for a green compost to possess?” Again, there were specific comments made that were specific to a particular end use or market segment, but the general comments included: Appropriate product cost; Ease of use/application (not too wet); Well decomposed/stabilized; Supplying nutrients; Proper performance (“as good/better than peat or peat-reduced products”); Proven track record; Customer approval/acceptance; and Odor free.
A shorter list of undesirable compost characteristics included: weed seeds, physical contaminants, high cost, and significant odor. It should also be noted that minimal concern seems to exist regarding the use of compost produced from kitchen waste. Of the 25 companies responding, 21 had no concerns (84 percent). Three stated that they had some concern, and one stated that they needed more information before responding.
TURNING LATENT DEMAND INTO SALE
The current estimated usage of compost (28,557 cubic meters) in the region is relatively low (suppressed) at the existing time. However, the latent demand potential for compost in the Glasgow and Clyde Valley region is much larger (94,107 cubic meters). This latent demand represents the current usage of compost, plus the realistic volume that could be used to replace other products currently being used (e.g., topsoil, topdressing, peat). These products are already being used in significant quantities by the market segments surveyed. Therefore, since applications and requirements for green compost do exist in latent form, composters must focus their marketing efforts on educating prospects on the benefits of compost and how it can replace these other conventional products that have been used successfully for many years.
Latent compost demand, can of course, be expanded through education and competing interests as the market matures. It is feasible that the “potential” compost demand could be double, triple or quadruple the current latent demand. However, it is difficult to estimate this figure at the market’s current maturity level. Compost has proven to be an excellent alternative to a variety of mainstream horticultural and agricultural products, and it has proven that it can compete with many of these products on the “open market”. It is believed that the same can be achieved in the Glasgow and Clyde Valley region (and throughout the UK). However, success will take commitment from regional composters, Remade Scotland and national marketing efforts (WRAP). These efforts should be coordinated in order to increase the speed in which the market can develop. We further suggest that regional composters consider and act upon the suggestions listed above in order to increase market penetration.
Ron Alexander is President of R. Alexander Associates, Inc., a company specializing in market development for compost and other organic products based in Apex, North Carolina. He can be contacted via e-mail at firstname.lastname@example.org.
February 17, 2006 | General
Expanding Compost Markets In The Glasgow And Clyde Valley Regions (Scotland)
BioCycle February 2006, Vol. 47, No. 2, p. 51