David Prior, founder of organic yoghurt brand five:am, is an entrepreneur with a very different approach to business.
In considering the elements of his success, there are all the usual suspects: methodical planning, a firm grounding in the academics of business, and already having one successful enterprise under his belt.
Alongside these, throw a fearless determination, and an almost supernatural ability to manage stress into the mix, and you have the makings of a winner.
Having completed an MBA at the age of 27, Prior went into business with his father to found a successful food packaging business. Sold ten years later in 2007 to Visy, this was the springboard to further entrepreneurship.
“I took a year off, went surfing, and planned what was going to be my next business venture. I wanted to do something still in manufacturing, but was really interested in the food space. I always believed food is something we do well in Australia, and I really liked the yoghurt category, because it’s a healthy product and again, dairy is something we do really well,” Prior says.
Researching the yoghurt market, Prior believed there was space for another organic yoghurt brand, as long as it would have guaranteed year-round supply, and was competitively priced.
Meetings with several potential distributors eventually led him to Woolworths, and armed with an “incredibly detailed, 40-50 page business plan”, Prior won their backing.
“So in 2010 we built a yoghurt plant facility in Carrum Downs in Victoria. The capital for that came from the sale of the first business that I had and was backed by Westpac as well. So I thought I had enough money but I didn’t. It’s very expensive to build a yoghurt plant!” Prior says.
If it seems like an incredible leap to go from running a packaging business to building a yoghurt plant – that’s because it is. Prior says in retrospect it was a truly crazy idea, but having supplied the packaging for a number of brands and observing strong growth rates, he was confident it could succeed.
“While there were lots of gaps in what we didn’t know, we knew we could also go out and find the people who did, and partner with them,” Prior says. “We’ve got a very good relationship with the organic dairy famers co-op which basically controls the majority of organic milk in Australia. We work really closely with them and are true partners,” he adds.
Traditionally, one hurdle facing organic dairy products has been the issue of supply. “One of the problems with organic has always been you can’t get it year-round, so if you want to supply a Woolworths or a Coles, you can’t just have a month where you say oh there’s no organic milk this month. They can’t have empty shelves. So that’s why our first port of call was really the co-op. We said we were going to need around a million litres in the first year, and were they going to be able to supply it, they said yes – and we actually ended up using closer to 2 [million litres] – and they were able to keep up with us which was fantastic,” Prior says.
The business kicked off in 2010, and the first tub of yoghurt was made in March 2011, when five:am officially launched. “We launched with 4 products, in around 400 Woolworths stores, and we’ve grown to 20 products in around 600 stores. Distribution is expanding as well throughout this year into other channels. We’ve grown and business is doing mid-$20 million in revenue. We didn’t think that it would grow that quickly, but we’ve really put a good product on the shelf, at a good price for organic,” Prior says.
Prior is also not shy in admitting there were many difficulties along the way, describing the five:am journey as ‘non-stop challenges’.
“When we got our opening orders in that first week of March, and as we went through we had so many issues commissioning the plant, I was literally working 23 hour days and sleeping down at the facility. You’d get up and just go again. Luckily I had a great team who were doing the same thing. But honestly we came within a whisker of not making the launch, which would have just been a disaster obviously,” Prior says.
The team did make it though, and piece-by-piece, things started to run more smoothly. “It’s funny though, because that week or so of commissioning really set the tone for the company. Everyone really knew it was touch and go, they could see this passionate thing that I’d brought together and put my whole life into, was maybe going to sink before it got off the ground. So I think the fact that we got off the ground and got into the market, that from the minute we launched it’s been a really good success and its defined the culture of the company, and I think now our people believe there’s nothing that they can’t do,” he says.
For Prior, the attention to detail in the business plan was key. “I spent a lot of time doing that, and going through the whole thing, the numbers, the scenarios, the brand, what did the brand stand for, why were we going to be different,” he says.
“Ultimately though, you’ve just got to back yourself, because for every one person who said it could work, there’s definitely 100 who said it was crazy and wouldn’t work, so you’ve got to be behind yourself, trust yourself, believe in yourself, because it’s inevitable that you will come up against roadblocks and hurdles.”