New boss gets down to earth

Sydney Morning Herald

Friday October 23, 2009

Paul McIntyre.

Bolshie farmers are just the first challenge, writes Paul McIntyre. THE image this week on the ABC's 7.30 Report of an angry Tasmanian dairy farmer pouring mud out of a Pura milk container and predicting it would be the future of the brand if farmers were not paid fairly is not what Andrew Reeves plans for his $3.3 billion dairy and juice business.The incoming managing director of National Foods wants to follow the strategy he set while head of Lion Nathan's Australian operation and invest more heavily in brand marketing. The brewer set 8 to 10 per cent of sales as the ideal target to generate continuing growth.But disgruntled dairy farmers are ensuring Reeves has a different and more urgent public perception challenge to deal with first.Reeves does not start until November 1 but he is already making conciliatory noises to producers.€œI need to get inside the business and spend more time with these guys to understand what those issues are,€ he says of the Tasmanian flare-up, which happened after the Melbourne dairy giant, owned by the Japanese brewer Kirin, slashed farm-gate milk prices this year, despite domestic retail prices not changing. "But the bottom line is we have got to have sustainable, beneficial relationships with our farmers because without milk we do not have a dairy business."That authenticity, that link back to the farmer and the land and the nurturing that comes with it is really powerful imagery for the dairy industry generally and it should be reflected in the brands and how the category is marketed.€More broadly, Reeves has big plans for the business under Kirin's new structure, which houses National Foods and Dairy Farmers, its recent acquisition, under the same roof as Lion Nathan, although the businesses are autonomous.A bigger investment in National Foods brands €“ which include Pura, King Island Dairy, Yoplait, Coon, Dairy Farmers, Big M and Dare €“ is a priority, although Reeves says a brand consolidation program is likely before that takes place. It will not be dissimilar to what has occurred with regional breweries moving to national brands in the past decade.€œThe acquisition of Dairy Farmers is a really crucial strategic change,€ says Reeves, a former boss of Coca-Cola Amatil and the Smith's Snackfood Company before joining Lion Nathan. €œFor the first time it gives a dairy company a genuine national business that can have key brands in all branded dairy segments nationally and be a leading player in all of those segments."The brewing business has come up from a fairly parochial regional basis around local breweries, and that industry has transformed itself to a point where local provenance is nowhere near as crucial as what it was. It's now about big national brands, and even global brands, so having a debate between regional and national is really quite irrelevant."One of our big strategic questions is: what are the right brands to invest in longer term that have the potential to become really large-scale national brands or at the very least significant multi-regional ones?"

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