By Andrew Patterson
Making thick, creamy yogurt that you just can’t stop eating has been a winner for The Collective.
Starting a business in the middle of a recession is never going to be an option for the faint hearted.
But for Angus Allan, the co-founder of dairy products start-up The Collective, it’s a decision he doesn’t regret for a moment.
The Auckland based manufacturer, founded in 2009, has been one of those disruptive forces that come along every once in a while and redefines the category they enter. In this case it was yogurt.
However, the company’s manufacturing operation in the middle of Avondale could easily be overlooked if you didn’t have their street address loaded into your GPS.
In a non-descript building, with almost no external signage, lurks a brand that is really taking it to the competition and has become a quintessentially NZ success story in the fast moving consumer goods (FMCG) space.
What makes it all the more impressive is that it’s also one of those classic David and Goliath tussles that Kiwi’s love. The small, cheeky, dairy start up taking on the might of global dairy giant Fonterra. But then these are the stories that also define what it is to achieve businesses success in NZ, particularly where there’s food involved.
Feeling a bit stuck in corporate life three years ago, former chef Angus Allan was ready for a new challenge. So when a former competitor came to him with an offer to go into business together he jumped at the chance to be part of a new dairy start up.
“We found a business that was in distress so we just plunged headlong into it.”
“Learning dairy is a huge learning curve, very steep, so it was quite different to what I’d been doing previously when I was simply making hummus and dips.
“The reason we brought the business was the fact there was some existing expertise here already making yoghurt and cheese and we wanted to capitalise on that. However, we did have some issues at the beginning and I can tell you that it wasn’t a lot of fun.”
“It’s also a very capital intensive business; it’s very expensive to run because there are so many moving parts involved, it’s risky and you have to have a lot of technical knowledge. I have to say it’s not easy.”
Starting out the company’s founders wanted to create a new type of yogurt. One that was thicker, creamier, had more texture and lots and lots of flavour.
“We knew that yogurt is a massive category in dairy that we wanted to really liven up and we also saw an opportunity to introduce new products to our range such as drinking yogurt and haloumi.”
When you’re up against the likes of Fonterra and other global dairy brands such as Nestle there’s obviously an imbalance when it comes to marketing budgets, but it can also mean brands like The Collective can be a lot more nimble and also take a bit of risk due to their smaller scale.
The business also breaks the generally accepted rule about doing your research first and validating the market before you actually dive in.
“We didn’t do any research prior to starting the business. We had tasted products overseas that we liked so we knew there were opportunities to produce a different type of dairy product. But to be honest, we haven’t done research at all; it’s just not our style. It can give you answers you don’t want and I call it passion killing in my books. We much prefer to go on our gut instinct.”
Getting the product right was important, so The Collective founders made it their mission to try and produce the perfect yoghurt.
“When we tasted yoghurt in Australia we found that the styles were either fresh and fruity or sour Greek and there wasn’t relay a lot in between. However, there were a few styles that we really liked and we realised there was a category for a yoghurt that was really thick and creamy, that could be consumed as either a breakfast food or a dessert and you just wanted to eat more of it. In many ways the perfect yoghurt which is what we set out to make.”
Engaging with customers
When it comes to customer engagement The Collective is a new age company that sees this as one of its core brand values which has also contributed greatly to its success.
“Our approach is to make sure that we’re in touch with every customer and what’s more, we talk to every customer we can and we treat every customer like they’re special. That really is at the core of our brand which is about being community driven and connected with our customers. We put a lot of emphasis on social media to get our message out there so we stay fully engaged with our customers because in the end they help us make our business what it is.”
“So Facebook, Twitter, email etc are all touch points with our customers and therefore our mission is to really deliver on customer service. We’ve built a culture in this business about being like that, but it’s not something we take lightly, it’s constantly front of mind.
“We have a very transparent and honest approach to everything we do, that really a core value. You just can’t hide in the social media space.”
“For me it’s really a personal philosophy, but I think it’s also the way business will have to move. No longer can you sit in your boardroom and hide behind things such as when you have new products about to be released and you feel the need to be all secretive. We don’t hide any of that; we just put it out there.”
Social media has played a big part in the company’s success.
In fact, as Angus Allan puts it, it’s been virtually The Collectives sole marketing strategy.
“We don’t spend anything on traditional above the line marketing. It’s just not us and more importantly, it’s now how we work. We do a little bit of point of sale promotion including product tastings and a few street posters, but we don’t see ourselves as being on TV at this point.”
“I think advertising has changed forever. We’ve spent a lot of money on social media and only now are we starting to see it return us a dividend. Of course, it’s a cost to us, but it’s also investment in our marketing platform and you can’t quantify the value of it to the brand. I can’t speak highly enough of it really.”
But what of the skill set of the person who drives the social media strategy and more importantly can you put a price on their value to the brand?
“It’s actually very difficult to try and quantify the skill set required to be successful in social media. I can tell you the person we have who manages it for us is extremely into it and loves it and really believes in our brand. We tried to write a job description for her once and a strategy for how we’d replace her, but I gave up.”
“God forbid if anything were ever to happen to her. I’ve just come to the conclusion she’d be impossible to replace!”
Earlier this year The Collective was named as the first and only NZ business to feature in the Global Social Brands Top 100 short list after being nominated by someone locally. The UK based competition assessed companies on their engagement with customers across all forms of social media over a period of four months. No small feat when you sitting alongside the likes of global brands such as Virgin, Dell and Innocent Drinks.
As for the future, the company plans to continue focusing on growing both its domestic and international markets.
“We’re focused on Australia, and we want to keep growing here in NZ and we’ll also maybe consider entering some of the emerging markets.”
“We just seem to keep growing and blowing past our sales budgets each month and somehow we keep surprising ourselves.”
So much for the recession, but taste the yoghurt and you’ll see why.
|Sector:||dairy products / FMCG|
|Staff:||55 (8 international)|
|Ownership:||Private. (100% owned by founders)|
|Sales split: domestic / international||90% : 10%|
|Fastest growing markets:||UK, NZ|
|Annual growth rate:||250%|
|Recent highlights:||Placement in the Global Top 100 Social Brands shortlist and securing its first order from UK supermarket giant Tesco|
|Likely to IPO:||No|