Case Study – Export

Innovative New Zealand food producer Smartfoods has invested $3 million on new equipment

Innovative New Zealand food producer Smartfoods has invested $3 million on new equipment

Innovative New Zealand food producer Smartfoods has invested $3 million on new equipment and a new high-tech factory to meet soaring demand for its premium breakfast cereals and snacks in Australia and China.

Smartfoods new purpose-built factory allows it to increase production as export demand for its healthy breakfast products skyrockets.

The company’s Mt Wellington factory, Auckland, has state-of-the-art machinery that can produce four times more cereal than its first manufacturing site in St Johns.

Smartfoods is the country’s second largest seller of muesli, marketing its healthy breakfast products under the Vogel’s brand name, as well as doing a variety of contract manufacturing.

The company’s general manager, Vicky Taylor, says moving to the new factory is an important milestone in Smartfoods’ growth.

“We’ve invested in major new pieces of machinery that will enable us to increase our capacity and meet the growth planned from exports,” Ms Taylor says.

“We’re making the cereals that people want to eat right now, that people enjoy and feel is good value for money. It puts us in a good position going forward.”

Taylor and her husband Justin Hall, who founded Smartfoods and is the managing director, have built up their manufacturing business over 10 years. Ms Taylor’s background in the food and beverage industry has been a valuable resource for the couple, as has Mr Hall’s entrepreneurial spirit and can-do attitude.

Since founding, the company has grown to employ 46 people in its team, including three food technologists, a process technologist and a quality manager, as well as operations, finance, sales and marketing.

Looking ahead, even though Australia is the company’s export darling with annual sales expected to match last year’s successful 30 percent rise, Ms Taylor says China is where the vast potential lies.

Although the United States has the most cereal munchers per capita, China’s low consumption rate and large population gives Smartfoods excellent potential.

Ms Taylor says the scale is already noticeably different, because while a potential new retailer in New Zealand or Australia might order a couple of pallets of product to see how sales go, for China they order a 40 foot container.

It is just as well Smartfoods can deliver to market fast. The company is able to take products from concept to supermarket shelf within just six months.

“We’ve had a reasonable sized business in China and we are focused on growing there, it is definitely the biggest leverage point. We’ve got a foothold and have spent a lot of time learning about the market,” says Ms Taylor, adding it is important to be nimble and dynamic in the Chinese market.

“A traditional Chinese breakfast is hot and savoury, and a traditional cereal breakfast is cold and sweet so we’re a long way apart. But there are significant market opportunities to both sell the products we already make and also customise our products further,” she says.

This includes customising the flavours and textures of its products for the Chinese market, as well as making the most of being New Zealand made and a healthy breakfast choice.

New product development is a core part of Smartfoods’ growth strategy, and the company works alongside NZTE and other New Zealand exporters to help build its product range and relationships in China.

Interestingly, Ms Taylor says their market research has shown Chinese consumers like to know the product they are buying off the shelf or online is the same as that sold where it is made.

That is the reason Smartfoods keeps its packaging the same for the Chinese market, simply putting a sticker on each pack to comply with food regulations.

“They really want to know the brand’s heritage and authenticity. Part of what we’re selling is the New Zealand story. The majority of our ingredients for almost every product are grown in New Zealand.”

The lion’s share of Smartfoods’ sales in China are from online e-commerce retailers, and Taylor says that is the best platform for their products because Chinese consumers are very digitally savvy and like to buy products from overseas online. She says they like the idea of cutting out the middle man and therefore getting a better price.

The company has several distributors in China, and Ms Taylor says relationships are crucial in the Chinese market.

“It is different from New Zealand and Australia, you don’t walk into a room and do a deal and away you go. There’s a lot of time spent establishing relationships and making sure you’re mutually aligned. It’s a longer pipeline,” she says.

Smartfoods is on track to turnover $20 million this financial year, and expects to more than double that by 2020.

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