How to brew a family business

Bundaberg Brewed Drinks was bought for a steal nearly 50 years ago. Many exploded vats of fizzy drink later, this third-generation family business now puts the pep in supermarket shelves across Australia.

One of the most useful items in any family business toolbox is a son-in-law.

Yes, I know that borders on the sexist, but it’s the reality. Your eager son-in-law can really come in handy for plugging succession gaps, a sort of familial filler -- paternal putty if you will.

Take Bundaberg Brewed Drinks, a wonderful Australian family business based in regional Queensland that sells more than $100 million a year worth of very fine ginger beer, plus more than a dozen other brewed fizzy drinks -- a quarter of it exported to 36 countries -- all from Bundaberg.

Eleven years ago the second-generation patriarch, Cliff Fleming, turned 60. He’d always been determined to retire from full-time management at 60, but now that the day had finally arrived there wasn’t a third-gen Fleming ready to take over.

After 18 months of indecision, he brought in a non-family CEO -- an experienced corporate executive. Now, any outsider running a family business requires a special combination of strength and humility: you’re the boss, but you’re not. I’ve known a few who have done it brilliantly and been richly rewarded, but this one (his name isn’t important) didn’t do it well at all.

He lasted about a year before the family decided the fit wasn’t right. With the clock ticking, the now 62-year-old Cliff’s gaze then fell upon his 35-year-old son-in-law, John McLean, a teacher who had married Cliff’s daughter Rae-Lee, also a teacher, a decade earlier.

John had been working in the firm for most of those 10 years in a variety of roles, but he wasn’t quite ready to take over. So Cliff brought in another outside CEO, this time with the clear brief to mentor John for 12 months and teach him how to be a CEO, before moving on.

It worked beautifully -- a triumph of succession planning. John McLean became CEO of Bundaberg Brewed Drinks in 2007 and Cliff became non-executive chairman, and the business has since gone from strength to strength.

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Cliff Fleming and John McLean. Photo: Paul Beutel.

As with many family businesses, the history of this one is replete with hard work and opportunism.

Cliff’s father, Neville Fleming had the Dairy Queen soft-serve ice-cream franchise in Rockhampton and his wife Gladys, with her sister Joan, ran the local hamburger joint.

In about 1960, Nev and his young son Cliff decided to add a second business to their little empire and started distributing soft drinks for Electra Breweries (Bundaberg) Pty Ltd. They ended up being Electra’s only distributor, and when Cliff and his wife Lee moved to Darwin for his day job as an account manager for AGC Finance, he took Bundaberg ginger beer with him.

And then Fate stepped and worked her magic: the owner of Electra Breweries (Bundaberg), Arthur Chadwick, received a sudden and rather chunky inheritance from an English relative and found that he no longer needed to bash his head against the brick wall known as the Queensland soft drinks business.

He offered it to the Flemings for not very much at all -- basically just for taking over the lease on the factory. After a few minutes’ thought they said yes, and so the four Flemings -- Nev, Glad, Cliff and Lee -- owned 25 per cent each of a brewed soft drinks business in Bundaberg. They wisely changed the brand from Electra to Bundaberg.

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That first year, 1968, they made $60,000 in sales. The second year, they went backwards. Not good.

For 10 years they plugged away, working very hard and learning how to brew ginger beer, as well as horehound beer, non-alcoholic hop beer and pineapple beer, using yeast instead of injecting carbon dioxide.

Many exploded bottles and vats later Cliff, in particular, got it. (By the way, this bit brings back memories of my own childhood, with bottles of dad’s ginger beer exploding in the laundry cupboard throughout the night like the distant cannons of war.)

In May 1978 came the Flemings’ big breakthrough: they got a deal with Woolworths supermarkets in Queensland. A month later they got into Coles.

Now their little brown stubbies of ginger beer are in supermarkets across the nation, and the business makes 60 per cent of its revenue that way. Ginger beer makes up 70 per cent of sales, and the company has a nice line in lemon, lime and bitters, as well as sarsaparilla, creaming soda, ‘Peachee’, pink grapefruit, guava, blood orange, passionfruit and lime -- all brewed with yeast.

Graph for How to brew a family business

Inside the Bundaberg drinks factory.

In September they are planning to launch three new flavours: pineapple and coconut, non-alcoholic apple cider and traditional brewed lemonade.

These days Cliff and Lee own 88 per cent of the business, having bought out Cliff’s father Nev when he retired in 1988 (he passed away in 1993, but Gladys is now 94 and doing fine).

Cliff’s son Michael is a graphic designer who does some work for the family company, and daughter Rae-Lee, John McLean’s wife, is company secretary.

Cliff is still an active chairman and he and the family have big plans for growth, taking on the big multi-national soft drink makers with yeasty fizzy drinks from Bundaberg, Queensland.

They claim that it tastes better, and -- sample of one -- they’re dead right. My fridge is rarely without a bottle or two of Cliff Fleming’s ginger beer or sarsaparilla. Not sure about the Peachee though.

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