Family businesses, according to a 2013 KPMG survey, outperform competitors in areas that include quality, productivity, innovation, growth and financial performance. There is plenty they could teach non-family firms. What are some of the lessons from some of the best?
Anyone wanting to turn their company into a pace setter should look at Casella Wines. After pillaging the profits of the big wine companies, John Casella has been a great believer in spotting trends before they happen. His business model has transformed the wine industry. A decade ago the Casella winery was a tin shed on a 39-hectare block, and now the Casellas are big in Griffith making one in every five bottles of Australian wine sold overseas. The key to its success has been innovation and risk taking.
Australia’s largest family-owned winery has done everything differently from its competitors. While others built their brands locally before venturing overseas, John Casella went the other way and created his product offshore. When the Riverina-based wine maker entered the US market in 2000, he was not interested in wine drinkers; he wanted something larger, converting beer and ready-to-drink consumers to drinking wine. He felt instinctively that the punters wanted a social drink, not something with a taste and tradition they found difficult to appreciate.
The next big step came when he bought the soft-in-taste Yellow Tail label from a South Australian designer. Australia was popular in America at this time because of the Sydney Olympics, and Casella knew the picture of the kangaroo against a yellow background would appeal to his target market.
More recently company has been recording losses because of the strong Australian dollar, but Casella sees it as short term, particularly with the dollar now heading down, and has refused to increase costs to offset overheads so that it can maintain market share. Always innovative and prepared to take risks, the company has diversified into beer.
Rossi Boots is a century-old business started by the Rossiter family, and is the only footwear brand still manufacturing entirely in Australia at its factory in Sir Donald Bradman Drive in Adelaide. Still very much a family business, it has shown how companies can stay competitive through constant innovation.
New technology and innovation has kept the company profitable, generating $12 million in annual sales, and producing 5000 pairs a week and 75 different boot styles. It’s this sort of innovation that allows the company to resist the temptation to fatten margins by going the way of other manufacturers and moving offshore.
The key has been to use the latest innovations in leather, providing abrasion resistance and flexibility using innovations like Surtek, which combines graphite and ceramic. Other innovations include using an Evertex waterproof lining with dry-plus membrane to keep feet drier, and a Vtex fabric lining, supported a moisture wicking membrane, to provide ongoing comfort.
The mattresses and bedding maker is a great example of a company that rebounded from catastrophe. Indeed, A.H. Beard is a case study of reinvention, something all businesses need to know. The family business is 115 years old, starting out in 1899 producing handmade straw paillasses and tufted horsehair mattresses.
In 1926, the family factory Australian Bedding Mill burnt down, leaving the founder Enoch William Beard ruined. He gave his son, Albert, a half gold sovereign and Albert used the money to buy some black and white striped ticking, flock, kapok and horse hair. With the assistance of his wife Ada, they began hand sewing mattresses.
In 1946, Albert’s son Austin embraced technology, modernising the production and importing the latest bedding spring machinery. In 1996, the bed maker -- which now produces 5000 mattresses a week in Australia and earns more than $100 million a year in sales of seven different brands -- started looking at international growth.
The company is already a supplier to Harvey Norman, Forty Winks and top hotel chains. Two years ago, it expanded into China with the opening of a branded retail store in Shanghai – picking the trend for China’s growing middle class to buy fashion and homewares made in the US, Europe and Australia.
Innovation helped turn Visy, started by Richard Pratt in 1948 with a £1000 loan from his aunt, into one of the world’s biggest privately owned packaging, paper and recycling companies. It now employs more than 9600 people across Australia, New Zealand, South-East Asia and the United States.
Visy has three special laboratories: Paper and Board, Analytical and Polymer Chemistry and Food Technology. The labs operate with the support of the CSIRO and universities. The company also has an insights and innovation team, which analyses category and market trends, working with customers to produce innovations.
Examples include the Byron Bay beer bottle developed through a partnership with Byron Bay Brewery. This particular innovation was created in response to the sharp rise in glassing incidents across Australia and the introduction of new liquor licensing laws, banning the serving of glass after midnight at key venues. The Visy PET bottle used proprietary PET bottle technology, encompassing both design and materials innovation.
The menswear store, set up originally in 1890 on the corner of Swanston and Collins Streets in Melbourne, is still going strong as a family business, largely because of its intense focus on customer and supplier relationships.
It’s a lesson for other retailers. There are now three stores in Melbourne, two in Sydney and one in Adelaide. The store has a tradition where the customers were first brought in by their fathers when they were 16 or 17, and remained as customers until they retired. While other retailers focus on shareholder returns, the focus at Henry Bucks is on customers.
Henry Bucks keeps in touch with the 70,000 customers on its database through emails, inviting them to regular store events. There is a heavy focus on customer service, with staff going through product knowledge sessions. All are specialists.