Success: Making butter even better

By Yoke Har lee

Canary Enterprises' success is built on taking a familiar product, then adding value.

Derek Bartosh says success depends on paying minute attention to what customers want. Photo / Paul Estcourt
Derek Bartosh says success depends on paying minute attention to what customers want. Photo / Paul Estcourt

For years, Kiwi businesses have been exhorted to add value to New Zealand's agricultural exports.

Canary Enterprises cracked the $10 million sales mark last financial year by doing exactly that - taking butter and making it better.

About a decade ago the privately-owned company saw the potential to export butter not in traditional blocks, but in medallion form. Since then it has built an international business by dressing up butter in varied shapes and sizes.

"We went to the New Zealand Dairy Board to get a licence; back then you needed a licence to export dairy," recalls company director Derek Bartosh. "They not only thought our concept was fantastic but wanted to work with us to develop Australia's potential."

Today the company's biggest sellers are butter medallions and butter sheets, used in pastry making.

About 75 per cent of its products are exported directly but including re-exports by other companies, that figure is 85-90 per cent, and Canary has developed a reputation overseas.

"Early in September, in China, we had a presentation to four top chefs from five-star hotels in Shanghai, to introduce our products to them," says Bartosh. "Everyone knew our brand, so we do have very strong brand recognition in the industry."

One key strategy has been paying close attention to what customers want. Although Canary's website lists only six butter products, it is making 120 different stock units. Within the butter medallion range, for instance, there are 40 to 50 types of medallion, Bartosh says.

Paying minute attention to what customers want, and strong relationship building, he says, are the keys to its success.

He recalls clinching the Emirates airline contract, which added real critical mass to the company's production. "Canary presented to Emirates as part of the New Zealand Airline Catering Network. We showed them what we have but realised they didn't really want butter medallions."

The company went back to the drawing board and redesigned the product into rosette form, bought a new cutter and stamper and re-presented to Emirates. "The next time the contract was up for review, we got the win," Bartosh says.

Bartosh says turnover is still growing healthily. Over the past eight years, sales have grown by an average of about 50 per cent, year-on-year. This year, growth sits at over 40 per cent.

Canary opened a new factory at Te Rapa, Hamilton, in 2008 - the same year it was on the Deloitte/Unlimited Fast 50 list of fast-growing companies. This year it was a finalist in NZTE's International Business Awards (in Best Use of Design category).

Canary initially targeted Asia and the Middle East as the regions to tackle before trying the tougher markets such as Europe and the US. Bartosh reckons that in two or three years the company will be ready to tackle Europe, the US and Japan.

"We have aspirations - our own BHAG [big hairy audacious goal] - and are working through these goals to grow the company significantly larger than what we are today."

One of its assets in that quest, says Bartosh, is the expertise of shareholder Murray Seamark, who has a strong knowledge of butter production.

One of the strategic directions for the company is to customise culinary solutions for the food/hospitality industries. These products have a specific form or size and weight - a type of filling, for example, or a garnish to top a piece of steak.

The company's non-butter range looks certain to fly, given that it already has 20 container loads to fill over the next 12 months.

"One customer whom we developed three products for - they were using 110 tonnes of product per year. Within a year [of using Canary's products], their order has dropped to 80 tonnes while business has increased. We have helped them with waste reduction by developing products they can use right away without wastage."

Like all exporters, Canary has had to cope with a fluctuating exchange rate, and recently has faced rises in the price of butter, which has led some customers to look for substitutes. Bartosh says the company is adjusting to the "horrendously expensive" price and has built a machine to cater to products made with a butter-margarine blend.

Canary's direction echoes the advice given by Harvard professor Michael Porter, who has urged New Zealand to move up the value-added economic chain by capitalising on its competitive advantage.

"At the time the call went out, we did our due diligence - we read about the matter and what Porter said and thought 'We are actually doing what's being suggested; that's what is underlying our business rationale'," says Bartosh.

- NZ Herald

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