Roger Masters, former CEO of Capilano Honey, stopped by to share how product innovation and an evolving business model has seen its business prosper in times of economic hardship.
Capilano Honey has been around since 1953. How have you dealt with the competition over the years?
Essentially it has been a strategy of brand development. We’ve been fortunate enough to have a logo which has a 96% recognition factor among Australian consumers. We also have a strongly recognised jingle, “Squeeze me honey, honey”, and the striking yellow label on our packaging gives us high prominence on supermarket shelves.
In addition to our brand strength we have invested a lot of capital in becoming a low cost producer which helps our competitive position.
In a marketing sense, repositioning honey to the sport industry as an energy gel (a supplement taken by long distance athletes) substitute has helped us get in touch with a totally different demographic. We’re positioning ourselves at all major cycling and running events and providing consumers with samples of our products.
More recently, we’ve introduced social media into our branding campaigns and people have been sharing honey and beauty recipes over our Facebook site.
You’ve gone from a small honey packaging company distributing to stores around Brisbane to a worldwide distributor with the capacity to package 45,000 tonnes of honey per year. What challenges have you faced during this growth?
There have really been two growth phases for Capilano. We started out as a producer-led business, with the aim of removing the crop surplus produced by our bee keepers. To do this, we needed high commodity sales in the bulk export segment of the honey business, which is not too profitable.
In our second phase, we moved towards a more sustainable business model with a corporate focus. This was hard to achieve with a grower-based share holder register, but the Global Financial Crisis in 2008 provided the opportunity for introducing more structure and a new business model… to the extent that we are now moving to the ASX.
Will listing on the ASX affect your operating and reporting procedures?
We’re already listed on the Bendigo Stock Exchange so I don’t see our procedures changing too much. As a public company adhering to the requirements of constant disclosure and reporting, listing on the ASX shouldn’t be any more onerous.
How is the food industry responding to the public’s ever increasing health concerns?
Today’s consumer has an expectation of a high degree of quality in the food they purchase. Capilano has responded to that by having good Quality Assurance programs in place and implementing programs within the honey industry such as Bee Qual, Bee Keeper reference manuals and Hazard Analysis and Critical Control Points (HACCP).
How important is product diversification to your business?
For us, the diversification is not in the product but in its packaging and the different ways in which consumers use our honey – for example, beauty treatments and the use of honey in sport.
Innovation in packaging can be seen with our twist and squeeze, upside down, and honey shotz packaging. The idea for the upside down pack came to me when I was walking through a Frankfurt airport and saw a shampoo bottle sitting upside down in a pharmacy. It seemed obvious to me then that this would be a very convenient way to package honey. Our upside down pack is our number one selling product and the bottle has been adopted by honey manufacturers and other food packaging companies internationally.
With distribution channels across the world, how imperative is supply chain efficiency to your bottom line?
Capilano is one of the few vertically-integrated honey manufacturers and distributers. We have our own bee keepers who provide our honey, so the strength of our supply chain is critical to the success of our business.
You’ve been an audit client of our firm for 20 years. Why have you stayed with William Buck?
William Buck knows our business well. Its people are technically very competent and have creative and innovative ways of looking at problems.
What’s next for Capilano?
Current economic conditions are extremely volatile which means that, for now, we’re in a stage of consolidation to keep making profit and paying good dividends. In the future, there may be growth alternatives.
As for myself, I’ve recently instigated a succession plan within Capilano. The very capable Ben McKee now manages the business, allowing me to move into a non-executive director role, offering strategic and operational advice where necessary.