Our Australian Story
Florentines was established in Tauranga in 1994 as a wholesale manufacturing and marketing company of premium frozen cakes and desserts for the food-service sector. We have not targeted the retail sector.
After reaching national sales and distribution in NZ we decided that it was time to expand and move into Australia.
In the year before exporting into Australia I spent time in-market, researching by;
– Attending in-country trade shows
– Meeting and talking with distributors and competitors as well as potential customers.
– We then set up an Australian company registration, freezer facility and a sales team
Initial Years in Australia
However, our initial years in Australia were encumbered with a number of issues and mistakes.
1. We treated Australia just like a NZ market
2. We fought on price
3. The size of the country – we went national (incurring large costs)
4. Underestimated the cost structure within Australia with-out large enough sales – volume to cost
5. The competition strength and reactions – copied many products but they already had large distribution within Australia so could lock us out
6. The loyalty of distributors to local manufacturers
7. We underestimated the amount of hidden costs and rebates through-out the supply chain
Australian Export Changes
After moving into other the international markets, it became obvious that we needed to change Australia’s business model to fit with our international export model. So, after losing money in the early stages we changed our strategy;
1. We deleted a large range of products in Australia that were similar to the New Zealand’s range
2. We pulled out of core foodservice – differentiation strategy
3. We focused on key accounts and developed products more aligned to these customers
4. We appointed new import / distributors similar to the export model
5. We became more customer lead by spending a large amount of time in market so that we could get down on the ground and really see what the market was doing or expected. We then committed to NPD and developed products specifically designed for the market. We showed that we were flexibile and could develop products that were much more customer centric
6. Pricing was modified to take into account the full cost structure
Growth
Once Florentines decided to treat Australia as an export market and not an extension of NZ, our export sales grew by 132% the first year and then 173% the following year.
Factory Production Strategy to align with Export Strategy
We also had to make sure that the factory could cope with growth generated from increased export sales.
In other words, while we were working on the export strategy we were also working on the company and operational strategy.
This included;
– Implementing lean manufacturing into the business to provide the basis for improved processes and systems.
– Re-build our entire management structure so that we had a more senior management team
– Develop more robust reporting structures, KPIs, systems & processes.
I say this because you need to be ready to export, as problems that occur in the export market cost much more to fix than here in NZ.
Key Learnings;
1. Research the market, customers and competitors as thoroughly as possible
2. Carefully detail the supply chain process – route to market
3. Collate detailed costings outlining all supply chain costs – look for hidden expenses
4. Have a clear Value Proposition
5. Decide your entry strategy –
a. products ie Look at why you are different, Innovative
b. Customers – What problem are you solving for customers and distributors
c. Key Accounts – target strategy rather than a shotgun approach
6. Decide on your pricing strategy – niche, mass market or in-between
7. Have a sales and marketing plan on how to target and communicate to your customers
8. Build strong relationships with your distribution partners
9. Spend quality time in the market
Greg Knight, Managing Director
