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Wins & woes in food manufacturing: Part two

It took the collapse of a fellow South Australian brand for Phil Sims, CEO of confectioner Robern Menz to realise just how supportive Australian consumers are of homegrown brands.

In April this year, 65 year old pickles and sauce company, Spring Gully, went into voluntary administration after crumbling with debts of more than $3m.

Completely unaware of the effect it would have, Sims turned to social media, trying to rally support for the iconic South Australian brand.

"We've got 35,000 fans on our Facebook page, and they're predominantly all South Australians because our Fruitchocs brand is iconic here. So we sent out a simple message which said 'Spring Gully is in a spot of bother at the moment. It would be great if you could all go out and buy some of their products this weekend,'" explained Sims.

What followed was a tremendous expression of commentary and sharing on social media, and more importantly, three weeks worth of sales took place over a three day period with Foodland, IGA and Coles placing extra orders to make up for the increase in sales.

Bolstered by South Australians' efforts to help the struggling brand, Sims, who also sits on the board of Food SA, helped launch a new campaign – Shop and Swap.

"We're asking shoppers, when they go to the supermarket, to just consider swapping one product to a locally-made, South Australian product," Sims told Food magazine.

"It's about the South Australian food industry. We say it's unrealistic for people to swap everything to South Australian – one, because we don't make everything in South Australia, and two, people have their favourite brands and we understand that – but if your basket of goods has 30 items, if you consider swapping one of those items for a South Australian alternative then, overall, that would make a huge difference to our local industry," he said.

Sims says the South Australian food industry is lucky that consumers are so patriotic, adding that most South Australians have a vested interest in its survival.

"The food industry is the biggest single employer, as far as an industry sector goes, in the state. One in five people in South Australia is connected with the food industry in one form or another. By supporting the local industry it has a major effect on the South Australian    economy," said Sims.

But more often than not, homegrown brands need more than just domestic support.

"Most of our businesses need more than the local market to grow these days. The local scene is great but most of us need to be doing significant business across state boundaries and in overseas markets."

Despite this need to send products offshore, manufacturers like Robern Menz face an uphill battle when it comes to exporting goods.

"When you're bringing in some ingredients because you don't have any other option, like with cocoa, it [the high Australian dollar] helps because you're importing. But if you're exporting it's particularly challenging. Your product is costing 20 to 30 percent more to the end buyer than what it did a couple of years ago.

"Our background traditionally has been export. We've exported a lot of things but it has been less of a focus these days and the Australian dollar is one factor. It's not the sole reason but it's one of the major reasons. You're suddenly 20 to 30 percent less competitive and a lot of suppliers, to keep their markets open, are being asked to subsidise that, so to drop their cost base by 20 to 30 percent because they [retailers] don't want to pay anything more. And if you get into some of these big retailers overseas and you're desperate for their business, that's what companies have been doing," said Sims.

With a 105-year history and four generations of successive family ownership, Sims says he's most proud of the company's ability to evolve and stay relevant in what is a very difficult time for many food manufacturers.

"We've had to embrace change to remain relevant," he said. "We've evolved from a retailer into a fruit processor to more of a confectioner and we're dabbling back in retail again now. We've recently opened a new shop in the tourist town of Harndorf … And when you're in a tourist town, the bulk of the business os on weekends and public holidays, so you have to be mindful of the labour costs. You've got to make sure that your model is sustainable to carry those sorts of costs. We understand they're there and that it's a cost of doing business."

Fellow South Australian businessman, Peter Davis, is the owner of Kangaroo Island's Island Beehive, producing some of the state's – and perhaps the country's – best organic honey.

Davis spoke to Food mag recently about the successes and struggles his brand is experiencing at the moment. To read his comments, click here.


 

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