Natural Sugars has pivioted amid the Omicron outbreak to bottle oil for the grocery channel. Photo / Supplied
Hamish Gordon, founder and group chief executive of FMCG business Natural Sugars, talks pivoting operations and launching new products on a whim to help keep supermarket shelves stocked amid supply chain disruptions and the realities of increasing cost pressures
What does your business do?
Natural Sugars is made up of two businesses within one, we have our retail arm where we have established relationships with major New Zealand retailers, where we supply own-brand product - the likes of Pams and Value, but we also supply our own brands into the market; we've got Harvest Edible Oils and Everybody's and other brands such as Canfields, a brand called Truvea that we distribute on behalf of Cargill in the US, in New Zealand and Australia, and other plant-based brands such as plant-based coffee range Stir.
We also have the industrial side of the business which supplies bulk sugar and edible oils. Through Natural Sugars we also supply the likes of Foodstuffs with their 1.5 litre drinks in Pams and Value range as well as a lot of their oils. Under Natural Sugars we have a couple of hundred product skews through into the industrial food manufacturing side.
What was the motivation for starting it?
I founded the business back in 2009. My passion was to always make New Zealand products and sell them to New Zealand but also the world. As much as we started in a food ingredient business, the way that the business has evolved has taken a long time to get the cashflow and make every business profitable in it.
How big is your team?
We have about 20 people in the Natural Sugars team.
How was the business funded?
Initially in 2009 there was three of us that started the business. One of the founding shareholders put up a bit of capital, but outside of that the business was funded based on retaining profits and banking. We paid back all of the capital that we borrowed from one of the founding shareholders in the first four years. We started off with about $2 million.
How did supermarkets rely on your company during the peaks of the pandemic?
Oil has been a large part of our business for a long time and we've been pretty strongly aligned with Foodstuffs. We have our Harvest brand that we sell into the market and then a lot of the Pams oils that we've contracted through them. But basically in the last two years with Covid, there has been a massive global supply chain upheaval and not only is Canola oil now two and a half times the price as it was 15 months ago, you've got freight which is now six times the price it was a year ago, and major supply chain challenges as well. There's been a lot of inconsistency of supply, and so the reason we started bottling Everybody's Oil in December was to fill a void and make sure that Foodstuffs customers and the New Zealand market had continuous supply of oil because we were running out of oil in the country. It went from concept to market within four weeks.
Natural Sugars owns the brand Everybody's - not that we ever bottled oil with that brand, we have it under our kombucha label, but it was something that we knew we wouldn't have a trademark infringement on and the 1.5 litre beverages that we manufacture for Foodstuffs was a bottle that we could easily access. We'd never bottled oil on our beverage line but through the relationship with Foodstuffs we thought we'd give it a go knowing we could get that oil to market quickly. We had access to buying bulk Canola oil in New Zealand so we turned the new product around quickly. There were a lot of logistical challenges at the start and a lot of risk because of the type of unconventional bottle it was in.
Canola oil is not grown in New Zealand, it is actually Canadian, and there is Canola grown in Australia now, so we had to buy bulk from a Tauranga-based company that brings in bulk shipments. It was lucky that we had access to that and the timing worked out.
What are you focused on right now?
We are looking at exports with some of our retail products and also reinforcing our New Zealand relationships with our key partners. We deal with a lot of privately-owned manufacturers and New Zealand-owned companies so we are focused on working with them to grow and develop our product ranges, and cementing our distribution.
With our drinks we do everything from scratch, we talk to Foodstuffs, ask what they want, look at all the trends and then we develop a product especially for them. That's how most of the beverage side of the business works, so we will continue our work on that.
What's the biggest challenge you have worked through in the past two years?
The first lockdown had the biggest detrimental effect on our business because, like many New Zealand businesses, everything changed so quickly and it took a while for us to adapt. On the manufacturing side of things we lost about 80 per cent of our business overnight, but we quickly pivoted to make hand sanitiser for Foodstuffs, and our whole bottling plant was converted to make hand sanitiser, which we had never done before either. We had to pivot quickly and that was the difference between making profit and not making profit for Natural Sugars two years ago. The biggest thing we faced and learned was you have to be agile and pivot quickly because if you don't you will lose the game.
Supply chain has been an absolute hill to deal with in recent years. The last six months of 2021 it hit its peak of challenges, our freight rate literally increased six times from September to October which was tough, and then with commodities we have footed a massive shift in inflation that put pressure on cashflow.
Where do you see the business in three to five year's time?
Natural Sugars is part of a group of businesses in the Global Endeavours Group, we have vertically integrated businesses, and the more our branded products sell on a global scale, the larger the Natural Sugars business grows. Our whole purpose is to inspire human connection through great food and beverage so we want more people at the other side of the world having our plant milks when they are having their coffee, or our espresso martini when they're knocking off after work. We want to continue to make New Zealand brands and products and sell them to the world.
At the moment we are exporting to the Pacific Islands, Australia and the UAE, and we're about to get orders out of the United States and Britain. We're in the process of purchasing a winery, which will open up new markets of Japan, Taiwan, South Korea and China. Within the next 12 months alone there is a massive shift to export.
What financial targets has Natural Sugars set?
The group combined with Natural Sugars employs 100 staff and we have a turnover of about $120 million. We've grown at 25 per cent year-on-year since the end of year one in 2010, so we want to continue on at least at that pace. Every business in the group is run completely independently, but there are synergies and we do strive to grow together as a group.
What advice do you give to others thinking about starting their own business?
Through a crisis a good business will come out okay, but a great business will come out even stronger and that's a good goal to have with every challenge we are faced with.
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