Chocolate, change and gain: business makeovers

Phil Sims and his brother Richard lead a family business which was founded by his great grandfather 111 years ago. Yet the business has been different in every generation.

“What we do now is completely different to what my grandfather did and what my great grandfather did, and it’s just about adapting and being relevant to the consumer,” says Phil Sims, the chief executive of South Australian confectionery company Robern Menz.

In the past 18 months, Robern Menz snapped up two of Australia’s favourite confectionery treats, the Violet Crumble and – more recently – the Polly Waffle, from global giant Nestle. It’s just the latest in a series of twists and turns for the Robern clan since beginning with a chain of small grocery stores in Adelaide’s southern suburbs before moving into fruit production in the state’s Riverland region. (The Robern name came from combining the first and last name of a Sims family friend who died).

The family’s move into confectionery manufacturing came in the 1980s – initially with fruit confectionery and then choc honeycomb – when grape vines replaced many hectares of fruit and changed the economics of the business.

Then in 1992, the modern incarnation was born when Robern acquired the confectionery business of another iconic South Australian company, Menz, which was being sold by Arnotts after its acquisition by US company Campbell.

“That was the first time we got hold of some brands,” says Sims, who had a stint outside the family company as NSW Sales Manager for multinational hair products company Schwarzkopf.

“We got FruChocs, a cube of dried peach and apricot covered in milk chocolate, and Crown Mints, and we started to understand the power of brands and how to develop them.

“(Then in 2018) Violet Crumble was a great fit for us, and we were perhaps able to invest more into it than Nestle which has so many other brands.

“It was attractive as a national brand we could own and develop, there was upside from the point of view of scale, and there was also the fact that if someone else got hold of it, what would that mean for our business?”

Ganesh Chandrasekkar, the general manager of SME Banking at Westpac, says Robern Menz’s ability to evolve and adapt to change feeds into a wider trend he dubs the “second act” – mature businesses open to “new ideas and ways of doing things” and turning their legacy into an asset, rather than a drag. It’s a dynamic expected to confront more businesses in coming years as technology changes and disruption picks up pace, consultants at BCG arguing “the speed of response matters” and early movers were better placed to “experiment with new businesses and models”.

“New businesses can’t buy customer loyalty, and you can’t buy legacy,” adds Chandrasekkar.

“The richness of having a business which is a leader in its craft or has a loyal customer base, that is very hard to replicate for new businesses and finding a way to leverage that legacy creates a competitive advantage.”
 

According to a recent survey commissioned by Westpac, 67 per cent of established businesses say they are in “maintain” or “wind down” mode as confidence wanes in the face of heavy red tape, increasing energy prices and intense competition, including from newer digital platforms.

Chandrasekkar says businesses needed to constantly look at the context in which they operate and how to take advantage of it, citing social media success stories such as Robern Menz that tapped into and leveraged how people were connecting around their much-loved products. He says greater use of new technology was a common trend among owners looking to drive their next phase of growth.

“After we announced we had acquired Violet Crumble we kept hearing one thing from social media and general conversation: bring back the Polly Waffle!” recalls Sims of the acquisition earlier this year of the Polly Waffle brand, which ceased production in 2009.

“We looked into it and saw there was a passionate community of people who love this product and were petitioning for its return. There was a Facebook group to bring back the Polly Waffle with more than 50,000 members, so we realised there had to be something there.”

In all of the company’s moves over the years, Sims says the key has been to “embrace change”.

The company may have had a solid foundation and a good reputation, but the market was changing rapidly and its history would count for nothing if it failed to move with the times. Being a family business also creates a different mindset around longevity, says Sims, instead of making decisions with a view to selling the business in the short to medium term.

“In the dried fruit period of our company we were very reliant on scale, and when cheap fruit imports started to appear we needed to change if we were going to survive,” he says.

“If we are going to survive beyond a fourth generation then we need to look at things like chocolate, and develop brands which we can take into other markets.”

The views expressed are those of the author and do not necessarily reflect those of the Westpac Group.