Braedon Lord

If you think the days of the milkman are long past, think again. Grocery company Aussie Farmers Direct is achieving success by capitalising on customers’ nostalgia for old-fashioned home deliveries.

Chief executive Braedon Lord says the downturn is the perfect opportunity for the company to hit its stride, as consumers spend more time at home and opt for cheaper, home-cooked alternatives.

“As the downturn goes on, we see more people stay inside and band together in family-type situations. And consumers have been eating more at home, and as a result they become well-informed about the type of product they’re buying.”

The company offers home delivery of Australian-produced fruit, vegetables, milk and a variety of other foods including bacon, bread and pasta, left on the doorstep once or twice a fortnight. Lord says the company’s drawing cards are simple – convenience and patriotism.

“In a downturn people want to keep jobs and buy Aussie products, and it’s also convenient and is no more expensive, or even cheaper, than the supermarkets.”

But the company has also viewed the downturn as a catalyst for franchisee growth, with many having lost their jobs and looking to start a career.

“During the last 12 months, a lot of what has driven our business is around franchisees. We’ve had a lot more people trying to control their future by buying into a business and having that protection a franchise can give you. We’ve fallen on prosperous times because of this, combined with more homes cooking for themselves. We keep getting more business.”

The company, which delivers to suburbs in Melbourne, Sydney, Brisbane and now Perth out of 120 franchised locations, recorded 205% during 2008-09, with revenue of $64.9 million.

Marketing the milkman

Lord says the company’s founders, Shane Hodskiss, Jordan Muir and William Scott, started the business to revitalise the home milk delivery industry that died out during the late 1970s. But he says the trio wanted to expand the business to other types of food and base it with a “strong tech background”.

“We started in the Eastern suburbs of Melbourne, and the trio started with a guy from the milk industry who had a particular type of knowledge, combined with marketing and tech background with the other two guys. So they had a very business minded approach to an industry that had died out years ago and didn’t have that basis back then.”

The company quickly grew to locations in both Sydney and Brisbane, but Lord says the small team couldn’t handle the growth and needed to expand.

“I looked at the company, and how well it was doing and then worked to address the franchise system. Traditionally with franchisees you want to look at the capital required, but the business maybe didn’t spend enough time looking at the quality of the franchisee as to whether they could deliver what was expected.”

“That’s why they brought me in 18 months ago in the chief executive role. These guys had a franchise model but they just couldn’t cover all their bases, and had to grow to a larger format.”

Spreading supplies too thin

Lord says he is excited about the prospect of growing into new suburbs and cities, but maintains the company must be disciplined around its growth or risk stretching its supply chain too thin.

“As we grow into Sydney and Brisbane, we get hundreds of calls a month asking to deliver to them, and we have to be conscious of that. Our deliveries have to be conscious and disciplined, because we don’t want to spread ourselves without the ability to follow through.”

Lord says another challenge is finding Australian companies which will support the Australian-made model. He says the company has exposed itself to a smaller supply chain, as it struggled with some companies who weren’t able to offer 100%-Australian ingredients, farming products and manufacturing.

“It makes us work a lot harder. An example is that we are about to launch a soy milk product, which is not available in Australia without foreign ingredients. But you can interchange ingredients to make it, so we’ve had to go out and look for that.”

“We also looked to find someone who makes his own pasta, by graining the wheat and so on. It’s hard to look for these supplies, and it takes time, but it allows us to stand up in front of customers door-to-door and honestly say we have these Australian-made ingredients, which in the long run will always come out better for us, especially in a downturn.”

But the demand of 100%-Australian products drastically reduces the company’s market for suppliers, which Lord says gives the company another challenge.

“While we do get to work with mid-tier manufacturers and communities that don’t have tie ups with the supermarkets, some farms are a bit small for us to deal with and it’s really difficult for operations sometimes.”

Old-fashioned product, old-fashioned marketing

Lord admits that many of its customers hadn’t heard of Aussie Farmers until a friend or family member mentioned the service, and that’s the way he likes it.

“A lot of homes don’t get exposure to us unless they hear about it through word-of-mouth, family members and so no. We actually acquire a lot of customers on the front door, so fortunately we’ve been able to keep our marketing costs low.”

“We are now spread across three cities on the east coast, and now in Perth, and each round of each franchise is made up of one or two suburbs. That sounds like a lot, but it’s not, so we’ve been cutting costs but using grass-roots marketing and promotion.”

While Lord says he is now looking at “above the line marketing” in broadcast and print advertising, he maintains the company’s success boils down to customer satisfaction and subsequent referrals, and “as I’m here… that won’t change”.