Today we are talking with Mimmo Lubrano, the chief of NSW-based food company Sandhurst Foods. The company, which has turnover of over $30 million, started out as a hobby but has ridden the gourmet food boom to post impressive growth in the past decade.
Today he talks about the changing taste of Australian food lovers, the art of family business and why getting bank support is an age-old problem.
Let’s go back to the start. Sandhurst has got a really interesting history – even the name has a lot of history.
Yes, in the 1970s my father had a similar business called Sandhurst Farms. He had that business from 1968 to 1975, and he basically bought the business from an Englishman who was educated at Sandhurst Military Academy. My father grew the business quite strongly, but the name came with him when he sold the business in 1975 and he sort of let it lay dormant for 20 years. So when he restarted the business in the late 1980s, when he started to play around with the olives again, we said call it Sandhurst because it was lucky before. Quite superstitious, the Italians.
Your father got back into the business as sort of a hobby.
Yes it was a hobby, a retirement project. We had a contract with I&J processing frozen seafood but it was only taking us three days a week to do it, so there was two days a week which was spare so it was a bit of a time filler. We have a history of buying and selling businesses and we soon realised that he was really good at buying and selling food businesses. Building them up, selling them off and making a decent profit, that is what his strength was, but he was really bad when it came to non-food businesses. He lost money when he wasn’t dealing with food. I was still working at Phillips Electronics as a marketing manager, so I wasn’t in the business, it was at least 1991 when I joined the business.
When you arrived, it was obviously pretty different, but were there things that you could see needed to be done?
Coming from the industrial marketing side of the electronics sector, we decided by default rather than anything to work on the industrial side of the business. So instead of going straight to Woolworths, Coles and Franklins, you’d go to the food services side, which is the café market and the restaurant market, which was an easier market to actually get through. So you would marinate olives in bulk and then delicatessens would then present them as olives sold by the kilo. There was a bit of a change in Australian tastes at that stage, olives were going through a bit of a boom at the end of 1991-92. Mind you, they weren’t nearly as sophisticated as they are now, the variety of olives that are available now has never been seen before in Australia.
You guys would have been perfectly placed to ride that food boom.
We rode a gourmet food wave and we still are to a certain extent. Our growth has come through product breakthroughs, we have never really set about to increase our customer numbers, we just grow our customers organically, including Woolworths and Coles, so the foods that we come out with are always sort of topical and trendy. So the first boom food was the olives, then there was the sun-dried tomatoes, then there was the semi-dried, then there was the pesto and then there was the char-grilled eggplants and cheese peppers came after that.
So it seems like every two or three years, thankfully there is a boom product coming through which injects the category with a bit of interest and people start looking at the category again, saying ‘have you seen what is new in gourmet condiments or antipasto as we call it’. So that is the good thing about it and as good food is becoming more and more mainstream, more people are becoming knowledgeable and you can actually move quality brands as well. That’s great – you could never argue quality on certain products before, but now people are very savvy and want to know the origin of their ingredients and things like organics get explained quite easily.
And of course when you talk about these new boom products they are probably not new products to your family. Does that give you a bit of an insight?
It does. A lot of the techniques that my parents did learn from Italy we’ve incorporated into our manufacturing which gives us a distinct advantage in flavour profile. So the authenticity of our product is unquestioned. Something that the opposition tries to take away from us and they can’t is the Lubrano family seal of approval, which goes into every single product that we do. So we have got our own family stamp on every single product which makes it authentic.
What is it like working in a family business where everyone has had experience running a business? I am sure everyone comes up with good ideas.
I think one of the secrets that I learnt was that everyone has to have their own section, their own department and ultimately everyone is responsible for their own destiny in their own department. My brief was sales and marketing initially so I became the CEO by default because no one else wanted to do it. My brother was quite happy to do manufacturing and operations and I did sales and marketing and also he is in charge of finance, so I figured with his portfolio of operations, warehousing and finance it is a pretty heavy portfolio, so for me to take the CEO and sales and marketing role it probably a fair distribution of the responsibility.
And as your parents get older you tend to let them do what ever they want. If they want to come in for an hour a day or 10 hours a day, then that is their choice and that is what we have allowed them to do.
Also there is a consultation system where the family meets on a regular basis. And being a member of Family Business Australia is a big advantage because you get to meet with other family members as well and realise that the family council or family board is something that will drive the family. You can do your job but as long as you have got a board meeting that you have got to go to once a week or sometimes even twice a week, you can always put the decision through to the family board. It is quite good.
You make it sound very easy but it does take a bit of work setting up?
Ultimately, to pass ideas on to your siblings, and to get on with your siblings is like any other partnership. A family business is a partnership which ever way you look at it. You have two partners and one guy thinks the business should go left and the other thinks it should go right and that is where you get partnerships falling apart.
When it is your family it is a bit different because you have an intimate knowledge of each other and pretty much know what each other is thinking. But even today you set yourself challenges to get on better with your siblings because you realise that if you are getting on together, if my brother and I are getting on, then the business is growing. If we are busy fighting with each other or factionalising then you are actually destroying the business.
So you have got to think of the prosperity of the business and you have obviously got to stand outside the business every so often and say, what is good for the business. Personal agendas you have really got to put aside. This business is not me, it is not my brother, it is not even my parents, it is a separate entity altogether. And that is when you start to think more objectively and find the right decisions.
Can you give us a sense of how big the business is in terms of revenue?
In terms of revenue we are between $30-50 million in turnover.
What has growth been like in recent years?
Growth has been about 10% every year. When you get to a certain amount of turnover you can’t expect the growth of 20-25% that we used to get. So in the initial stages we were getting growth of 20-25% which was great, we didn’t even realise that that was way above average levels of growth. The industry was growing as well; we were in the right place at the right time.