The problem of milking a business for retirement

Sometimes a business built as a de facto superannuation plan develops its own imperatives, as when a single-herd goat farm grows into a multi-million dollar cheese retailer.

One of the pitfalls of family business is that an entrepreneur can sometimes start a business and work like a slave with the aim of it becoming his or her superannuation, but when it comes time to retire, the kids don’t want to sell it. No cash for mum and dad’s retirement, sorry about that.

An Adelaide Hills cheese business called Udder Delights is working on being an example of how to deal smoothly with that problem.

Flying instructor Trevor Dunford started the business with two goats in 1995. He’s now 61 and wants to retire in four years. Daughter Sheree and her husband Saul Sullivan, who is now CEO of what has become a $4 million a year cheese operation growing at 40 per cent a year, bought 50 per cent 10 years ago for cost but can’t afford to buy the rest.

That would be Option 1, if it were possible, which it’s not. Option 2 involves Sheree and Saul buying a bit more to give them control, and then for Trevor to sell the rest to someone else, an investor perhaps. Option 3 is for the business to simply support Trevor in retirement – no lump sum, but comfort.

What Sheree and Saul don’t want to do is sell the business and start again. It’s their life now, having been Trevor’s and his late wife Estelle’s to begin with: they have been responsible for all of the growth over the past ten years from a small local cheese factory to a national dairy brand. It’s a profitable business with plenty of potential for more growth – why sell it?

Anyway, the three of them are now talking about it well ahead of time and I’m sure they will arrive at a solution that suits everyone. In a way, and as often happens, the business itself is kind of a member of the family now and must be heard as well.

Trevor Dunford and his family – wife Estelle, Sheree, then 18, and Andrew, then 19 - moved to Lobethal in the Adelaide Hills in 1995 with the aim of building some kind of goat business. They started with two goats and gradually built a herd, while both Trevor and Estelle continued to work full time, commuting into Adelaide every day.

For four years they sold the milk, and then in 1999 Trevor built a cheese factory, and I mean he actually built it, himself, inside the shell of an Onkaparinga wool shed. It took two years of weekends.

Andrew had got married and left home. Sheree went to Adelaide University where she got a degree in jazz piano, of all things, at the Elder Conservatorium, and then in 1999 she returned to Lobethal to join the family cheese business.

She took over the marketing and management of the business and invented the brand Udder Delights. For five years Trevor worked full time teaching pilots, milked goats morning and night, and spent his weekends maintaining and expanding the factory, while Sheree ran the business. They all worked very hard indeed.

In 2004 two turning points occurred at once: they stopped milking goats and started buying all of the milk from other dairy farmers around the area, becoming purely a cheese-making and marketing business, and Sheree married Saul Sullivan and the two of them immediately bought half the business from Trevor.

Two years later Sheree left that business and opened the Udder Delights Cheese Cellar in Hahndorf up the road as a separate, but connected, operation, wholly owned by her and Saul, while her husband stayed on at Lobethal as CEO of the cheese making business.

Now there are three brands - Udder Delights, Divine Dairy and Cremeux Provincial Cheese – and while they still make very nice goat’s cheese, most of their cheese is made from cow’s milk. Their fastest growing cheeses, pardon the pun, are blue and white mould ones.

The plan with the new Cremeux brand is hopefully to move it into the big supermarkets; the other two brands are sold only in independent grocers and food stores, and that’s where they will stay.

Two years ago the family and the business suffered a terrible setback with the death of Estelle from a brain tumor. At the time the business was still affected by the GFC, but the family basically ignored it for the best part of a year while they turned their attention to caring for Estelle; Sheree says they kept drawing money but didn’t do anything, so the business suffered badly. 

After her mum passed away, Sheree and Saul eventually, painfully, refocused on the business and have now got it back to 40 per cent per annum growth. 

The next thing they want to do is buy a wrapping machine, since all the cheese is still wrapped by hand, and to make a three kilogram wheel of brie and become only the second Australian cheese business to do that.

And after that? “Well,” says Sheree, “I’d really like to move away from the Adelaide water catchment, so we can have pigs to eat our whey, and launch a free range bacon and ham range”. (You can’t have pigs in a water catchment, although goat poo is apparently OK. Who knew?)

Trevor has remarried and Andrew, who is now warehouse manager at Udder Delights, and his wife are about to have a baby, highlighting the most wonderful thing about family businesses: they’re businesses, but most of all, they’re families.