Christine Nikiel: Kitchen bench beginnings prove fruitful

Graeme and Annie Giles sought expert help to develop a long-term strategy. Photo / Supplied

Marlborough farmer Graeme Giles gave his wife Annie a dehydrator for Christmas in 1985, it was a gift that kept on giving. What started as a kitchen benchtop operation supplying the farm's roadside stall is now the successful export business Annies of Marlborough.

The company sells its 100 per cent fruit and vegetable bars to a leading United States health food supermarket chain and to major New Zealand and Australian supermarkets. In the past five years staff numbers have shot up from 10 to 50 and a purpose-built factory has replaced the farmhouse operation.

Turnover, less than $1 million in 2003, has increased tenfold since then, says managing director Annie Giles, and the company has its sights set on the Asia-Pacific market.

When the business started, the Giles were growing apples for export and vegetables for frozen food producer Talleys on their 40ha farm. Annie Giles, then a nurse, turned overripe fruit into the fruit "leather" she'd come across while living in the US. Demand grew, and after a year the couple applied for the then-Labour Government's regional development grant, matching their own investment.

They bought more dehydrators, moved the business to the basement and hired a couple of staff. The bigger operation provided a constant monthly income that the farm could not.

By 1997 the fruit and vegetable bars were in most New Zealand supermarkets and by 2003, when Annies started supplying supermarkets across the Tasman, the couple realised some major expansion plans were in order. Their accountant suggested they talk to business consultant Bill Wallace, former managing director of shoe chain Hannah's. Wallace, now Annies' chairman, provided the much-needed corporate discipline and marketing structure, says Giles, and forced her and Graeme to see beyond the day-to-day running of the business to long-term goals.

In 2003 the US health food company - which Giles says would rather not be named - approached her to negotiate a deal for its 360 supermarkets. Annies' operations were too small to supply such a big a chain but the US company asked for a timeframe and said it would wait. Just over two years later Annies was pumping out the required amount from its $2 million purpose-built factory, where 45 staff now work.

Growth has been the biggest challenge, says Giles, mainly due to the increase in bureaucracy. Suddenly procedures such as training - which previously involved a day working alongside her - had to be documented. And after years of working hands-on in the manufacturing side, she found it hard to step back.

"In the basement I knew every facet of production and quality. We've gone from knowing [staff's] husbands' and wives' names and what their family was up to, to walking in some days and seeing a new face and not knowing who they are."

"Ideas man" Graeme now focuses on the R&D side of things, while Annie manages the day-to-day business.

Maintaining quality and consistency is an ongoing challenge. Taste can be affected because one variety of apricots, for example, produces a sharper flavour than another type. Or, if the moisture content of a batch of apricots is higher than another because it rained just before they were picked, the dried pulp is thinner and more layers are needed to make up the weight of a bar.

The company has had to be innovative. It hired an in-house engineer and has partnered with a local engineering firm and built its own automatic fruit loader, 1400KW drying system and an air-reticulation system.

However, Giles laments the loss of what she calls her "South American loading machine" - four Brazilians in the basement pouring jugs of fruit puree into the dryer. Automation has created its own problems and while the loading equipment gives better consistency, it can still create headaches with pulp variations causing crack lines in the finished product.

Staff have to be "subjectively trained" to deal with inconsistencies, says Giles, and "like winemakers" are always tweaking the process. However, the inconsistencies work for them in some ways.

In the early days the couple hawked their product around local craft fairs, pushing the "handmade and no-additives" label, and Giles believes their hard work early on means people are now willing to accept variations in taste or colour. "We say fresh is best, ours is second best."

Once chock-full of fruit and vegetable farms, Marlborough's new reputation as a winegrowing region means Giles has to look further afield for her supplies. She uses fruit-sourcing company RD2 and buys New Zealand-grown produce where possible. Flavour is top of her list and trumps price every time.

Giles believes her best marketing is done by "getting the product in people's mouths". Annies stalls are regulars at events such as Teddy Bears picnics and diabetic camps, and Giles is often found doling out tasty chunks of her fruit bars at supermarkets. Early on, the pair set up a mail-order catalogue which now makes up around 5 per cent of turnover.

The couple sold some of their 40ha block but still grow contract grapes for three wineries. They also have a wine shop on the property, offering tastings for five local wineries.

When she's not working, Giles is dancing, having fallen in love with salsa 16 years ago. The company has become a "magnet" for the mainland's South American population, she says, estimating that about half Annies' staff are from that part of the world.