Driving sustainable growth

Anthony Paech still lives on the family farm that has housed seven generations of his family, but the managing director of Beerenberg, a South Australian jam and condiments manufacturer, is leveraging governance to drive innovation.

Anthony Paech feels he is part of something bigger. “When you’re in a family business, you believe you are a steward of the land,” he says. “I have grown up in the house that I am sitting in right now, in my office. It’s like I never left home.”

Indeed, seven generations of the Paech family have lived on the Beerenberg farm since they first arrived from Prussia in 1839 and settled in the Adelaide Hills. The first four generations were farmers, but in 1970, Paech’s father, Grant, decided that instead of working for his own father, he wanted something of his own and began growing strawberries and making jam.

Today, Paech, his brother Robert and sister Sally oversee all the farm’s operations, from planting to harvesting and marketing. Beerenberg now has 70 retail products, including chutneys, relishes and sauces, employs 60 full-time staff and enjoys a turnover of around $20 million a year. Revenue has been growing fast – up 20 per cent in the past financial year. “That’s why I have joined the 12 month Directing Growth Program for owner directors of mid-sized businesses,” says Paech.

“In family businesses, it’s important that you all get along and have systems in place to manage the various generations,” he says. “You have to be able to separate ownership from management. A lot of families don’t do that very well. They also don’t deal very well with succession. I did the Company Directors Course three years ago and it really opened up a whole world of governance. It made me realise how important governance was and that we needed to improve.”

Business expansion

Beerenberg’s family board, consisting of Paech, his mother and siblings, usually conducts its board meetings informally around the kitchen table. But it plans to set up an advisory board later this year. “As a managing director, you need an independent bunch of people who can give you a reality check on your thinking and a chairman to motivate you to think bigger and to be like a coach. You cannot coach yourself to success.”

Since completing the Company Directors Course, Paech has joined the board of the Australian Food and Grocery Council. “That was a big eye opener for me. I had underestimated how valuable it can be to have a diverse group around the table with different opinions and a chairman that can draw ideas out from different people and get everyone contributing. I learnt a lot about chairing and am now chairman of Food South Australia.”

On expanding the business, Paech says: “We realised that to grow we need to innovate and to bring new products to market. So when you go to a customer, you don’t go empty-handed. You take two new products and give the buyer a reason to have the conversation. We aim to have four new products each year.”

Paech says innovation is about more than just new products, noting that Beerenberg’s rebranding last year helped boost its sales by 30 per cent in key eastern states. “We changed the personality of the brand and the way we communicated it on the label and via the logo. This opened up new market opportunities for us to innovate. Previously, we had a Germanic green and gold label. We didn’t realise it, but that limited our ability to innovate in certain areas,” he says.

“You can’t really do an Italian pesto or an Asian soy dressing with a Germanic label. We wanted a modern label that was natural and Australian looking and we achieved that – a clean, fresh look, just like our products. They are homemade in an old-fashioned way in our factory on our farm. You only have the label to communicate what you have inside and our label wasn’t working hard enough for us.”

Paech recently attended the Directing Growth Program’s seminar on innovation. “I was very impressed,” he says. “I was looking for ideas to grow the business. There were things in there that I could definitely use. Often the stuff you learn is not directly applicable. I was able to immediately use the checklist and do some benchmarking. It was perfect timing and innovation, in particular, is something I am very interested in.”

On the next part of his governance journey, Paech says: “Growing a business from small- to medium-size is difficult. There are structures that need to be put in place which add to overheads and don’t feel like they have any immediate benefit. However, you have to build the skeleton of a new bigger company before you have the sales to flesh it out,” he says.

“Corporate governance is a critical part of growth, particularly in a family-owned business. You have to find a balance between the growth of bureaucratic procedures and the freedom to create and experiment,” he adds.