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Doing Business in Regional Australia

There are many benefits in basing a business outside major cities. There are drawbacks, too. Domini Stuart finds people in many different ‘bush’ situations have come up with ingenious solutions for overcoming disadvantages.

Bush Business


There are many benefits in basing a business outside major cities. There are drawbacks, too. Domini Stuart finds people in many different ‘bush’ situations have come up with ingenious solutions for overcoming disadvantages.


The great majority of Australians may be city dwellers, but that still leaves a quarter of the population in towns of 20,000 or less and more than two million in communities with fewer than 1,000 residents. Contrary to conventional wisdom, not all small towns are in decline.

The latest ABS figures show that, in the 10 years to 1996, almost half grew by 10 percent or more. In these thriving communities, local businesses are generating jobs, and they also account for more than two-thirds of the money invested in regional Australia. Yet, as many as 97 percent are small and family-owned, and all face a unique set of challenges.

“There are real benefits in being outside of a city,” says Phil Horwell who, as business development manager NSW for the Port of Melbourne Corporation, is based in Wagga Wagga. “Land is cheaper, you’re close to the product, and you can produce and pack more cheaply. There are also subsidies and resources if you know who to ask. But, you have to be realistic. The further you are from major metropolitan centres, the more it’s going to cost to get your product there. Then you have to allow for the time it takes to travel distances of maybe 700 kilometres. And there’s more room for things to go wrong. The truck can break down, the train get derailed, you can even get wash-aways when there’s flooding.”

“You have to accept that you’re a long way from anywhere, but no-one should have a problem getting from the bush to anywhere on the planet,” says Colin Causon, managing director of Ballarat-based Causon International Freight. “We’ve shipped from here to Kazakhstan and Siberia. They eat Australian strawberries in Dubai and Australian lettuce in Kuwait. We have a local company sending bricks and pavers to Taiwan and Japan. Freight is a big component for them, but their customers like the colours and the quality and are prepared to pay for them. Premium product bears the cost of freight.”

Salt may not sound like a premium product but Sun Salt, refined from underground brines in the Murray Darling, attracts premium prices all over the world. “We decided against trying to sell our gourmet products through supermarkets,” says Sun Salt co-founder, Jan Thomson. “If we did, we would incur a new set of distribution costs and we’d also be competing with products in a totally different category. It wouldn’t be viable—it’s hard to compete with the big players even when you’re not in the bush.”

Instead, Sun Salt created its own infrastructure. “At first I felt I’d really been thrown in at the deep end, but you learn as you go,” says Thomson. “Now, everything we export goes through Melbourne. We have a company there that takes care of the shipping or air freight and all of the documentation. We have a trucking company that provides an overnight service to major cities, and we use their depots in Perth, Sydney, Brisbane, Adelaide, and Melbourne, to save on the cost of shipping smaller quantities.

“All of our metropolitan orders go straight to a distributor; we actually find it hardest to get into regional Australia,” she continues. “If a little shop in, say, Wagga wants to stock our products, it’s not worth going through a city and so we post to them directly.”

Packaging can make a significant difference to the weight and size of a carton, and so to the cost of transportation, and Sun Salt has worked hard to ensure theirs is as efficient as possible. “We use stand-up resealable packages, grinders and dispensers that are lightweight and unbreakable,” says Thomson. “We recently started packing 14 units per carton instead of 12, and using super-pallets for overseas shipping. These hold 112 cartons instead of 64 without adding much to the unit cost.

“I’d say avoid glass wherever possible; it’s so heavy and breakable that it can make it difficult to set a margin. The freight could end up costing more than the product.”

Perishability adds another layer to the challenge of distribution. Pure Greed, a family-owned food producer based on the Mid North Coast of NSW, uses local couriers to distribute their range of gourmet food products to delicatessens, cafes, and retailers in the Hunter Valley, Newcastle, and Sydney. However, their fresh pestos can only be sold locally. “We would love to launch into Sydney but we would need refrigerated transport,” says Rosalie Coffey. “Very little is available on the mid to north coast and what is there is too expensive to work for us.”

For the moment, Martha Shepherd of Galeru is content to keep distribution in-house. Winner of the RIRDC Rural Women’s Award 2006, Shepherd has impressive marketing credentials. She played a significant role in the development of Mrs Fields Famous Brands from a small US regional chain to a globally recognised brand with an annual turnover in excess of $US450 million. Now she is applying her skills to the gourmet products she and her partner, David Haviland, make from the leaves, fruits, and nuts of their own native rainforest trees.

“Delivering to places like Brisbane, the Sunshine Coast and the Gold Coast means we maintain a personal relationship with retailers,” she says. “We learned from selling at local markets just how vital it is to know what our customers are thinking. This is how we discovered that having a packaged product on a shelf doesn’t really work for new items like ours unless the packaging, point-of-sale materials, and staff all explain how customers can use the products. At a gourmet shop or winery cellar door, people can be introduced to the product via the menu. And, once they have a taste, they’re much more likely to buy the packaged product.”

Shepherd says she’s lucky to live in an area so popular with tourists, and not only because they’re attracted to such a quintessentially Australian product. “Our introduction into Sydney and Melbourne came from visitors who took product home and then recommended us to a local gourmet food outlet,” she says.


Joining Forces

Bush spirit is legendary, and co-operation is an element in many rural businesses. “Local carriers usually charge less than their urban counterparts because of back-loading opportunities combined with knowledge of the regional market,” says Causon. “Some can combine loads, picking up and dropping off along the way. We do the same for our clients by consolidating freight whenever we can.”

Horwell talks of collaboration within rural communities even among competitors. If, for example, one winery is short of shipping containers, another will inevitably help out. And Penmara Wines is a business built around co-operation. “Five family-owned vineyards had been growing fruit to sell to winemakers,” says Penmara’s marketing and export manager, Matthew Eagan. “As grape prices started to fall, they could all see the need to value-add by making
wine themselves. Individually, they didn’t have the resources or expertise to tackle the marketing and distribution, and so they decided to join forces and create a new brand.”

Eagan, son of one of the vineyard owners, decided to focus on the international market. “The Australian market is small by international standards, and also intensely competitive,” he says. “While international markets aren’t necessarily less competitive, their size means there’s a lot more potential.”

Eagan targeted the UK, US, Canada, and New Zealand, all large, established markets for Australian wine. “We’re too small to be blazing a trail,” he says. “The larger wine companies have done a really good job of that over the past 20 or 30 years, and we’re happy to ride on their coat-tails.”

But the ride wasn’t always easy. “Securing distributors involves a lot of hard work, a lot of door knocking, a lot of rejection and also a lot of luck,” says Eagan. “There are only a few very large wholesalers and they aren’t always interested in new brands. The larger wine companies do it all themselves, but putting on a sales person is too expensive for a business our size. Your only option is often a newer, smaller wholesaler whose networks may not be that well established.”

The wine is warehoused in the lower Hunter Valley and Eagan has no problem physically moving it to its destination. “Whether an order is for 20 or 1,000 cases, our shipping company takes them to a consolidation point where they’re packed with other Australian goods. It’s true that it’s getting more expensive to get an order from warehouse to wharf, but if we were in the city we’d be paying more for the warehousing.”

Eagan believes that the key to success for any rural business is finding out exactly what challenges you face, then setting up your business to work with these parameters. “The biggest problem is not knowing who to talk to,” says Phil Horwell. “There are people at the Department of State and Regional Development, and Austrade, who understand your problems and your business. If there’s help available, they’ll know where to find it.”



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