Kill your brand integrity or lose your business? A regional honey producer with a national business faced this awful choice - and emerged stronger as a result.
|
Entrepreneur: Jodie Goldsworthy, Director and Co-Owner
Company: Beechworth Honey
Business type: Honey producer and marketer
Founded: 1992
Employees: 20+ (seasonal)
Head office: Corowa, NSW
Contact details: +61 2 6033 2322
The Beechworth Honey Story
For Jodie Goldsworthy 2003 was "the worst year of my life". In the four generations since her great grandfather Benjamin Robinson founded what became Beechworth Honey - selling to Victorian gold prospectors in the 1880s - there had never been such a honey scarcity.
|
|
Key learning points:
- Ethics - Brand integrity is about much more than price points or advertising slogans. Sound managerial ethics make good business sense.
- Decisions - Don't panic! Think out the long-term consequences of obvious solutions to short-term problems.
- Marketing - Word-of-mouth endorsements beat any form of advertising.
|
|
A worldwide shortage of honey due to drought and international contamination had choked off supplies, forcing Jodie and her husband Steven to make a critical business decision: dramatically reduce their output to protect their brand or do what other local honey companies saw as a no-brainer and import foreign honey.
Either way, Jodie and Steven risked losing the benefits of 10 years' hard work. Since 1993, they had grown the tiny regional producer - then delivering just five boxes of honey from the boot of their sedan to the shelves of one Bendigo supermarket - into a national operation, supplying Coles and Woolworths supermarkets across Australia.
The Challenge
With three young kids and 10 staff to support, option 1 (reduce output) would threaten everyone's livelihoods, but option 2 (use imported honey) could threaten Beechworth's brand credibility.
The Solution
The Goldsworthy's crisis emerged when the worlds' largest honey-producing countries - Argentina and China - were found to have used carcinogenic nitrofurans and chloramphenicals (antibiotics) in their bee-keeping production. This problem and the drought in Australia had cut the Goldsworthy's honey supply by 50% in a market where demand was more than exceeding supply.
Jodie and Steven contemplated importing honey to fill their massive shortfall but they didn't want to risk their brand. Beechworth Honey had sold itself as 100% Australian honey from Australian apiaries. Overseas honey could be contaminated and would lack Beechworth's distinctive eucalyptus flavour. Jodie says: "It all boiled down to: ‘Would we feed this honey to our kids?' The answer for both of us was ‘No way'".
The Goldsworthys' approached the supermarkets to drop their bombshell. Jodie says: "We told the supermarkets we were prepared to make the financial sacrifices to keep our brand safe from any negativity associated with imported honey". She says the supermarkets couldn't believe they weren't going to follow the lead of other major Australian honey companies and import product. "We literally halved our business".
But six months later came the turning point. Jodie sat in a Sydney airport lounge watching a Today Tonight story about Australian honey contaminated by imported product. She called Steven to tell him that she was hightailing it straight to the office. By 9:30pm, she had arrived and the phones were running hot.
Customers wanted reassurances that Beechworth Honey was 100% Australian. Jodie says: "We had to manage a national media frenzy with pretty limited resources; we only had three office staff, including Steve and me". Almost overnight Beechworth Honey became synonymous with pure Australian honey and a company that put customers before profit.
But not only consumers were calling them. Australian beekeepers wanted to move their business to Beechworth too. Jodie says: "So the catastrophic shortfall we planned for never fully eventuated because we ended up with beekeepers diverting their honey supplies to us. They thought we were doing the right thing". Within eight months the Goldsworthys had doubled the number of beekeepers supplying them.
Jodie was happy with how they had managed the crisis. But she also realised that once the drought ended they would have to create markets for all Beechworth's loyal, new beekeepers. "We were coming out of the drought knowing we needed to grow our market, otherwise we'd have a whole lot of people unhappy with us".
Jodie and Steven felt it was the perfect time to develop an overseas market and exploit the negative perceptions people still held about Chinese and Argentinean honey. They would push ‘clean and green' Aussie honey.
It took creativity to expand their domestic market with a modest marketing budget. While they were touring the United States in 2006 they saw a concept store, which gave them the idea for what eventually became the Beechworth Honey Experience. The store would offer free honey tours, cooking demonstrations and delicacies such as honey ice-cream.
Beechworth Honey Experience opened in Beechworth in March 2008 and has the potential to reach many of the 1.3 million visitors who visit the region each year. Jodie says: "We reasoned that even reaching half this number would result in word-of-mouth endorsements, which makes a great marketing strategy when you don't have many dollars".
The Result
Beechworth Honey started with a handful of honey hives. Jodie says it is now the largest independently owned honey producer in Australia, supplying 600 Woolworths stores, 600 Coles stores and 1,000 IGA stores. She says it now has about 9% of the retail domestic market share, second only to honey giant Capilano. Beechworth has more than 20 staff and exports to eight countries in the Middle East, Asia and North America.
Jodie says: "We never set out to be this big. What drives us isn't the money but making sure we leave the Australian honey industry in a much better place to where we started".