Cemoh 136: Maleny Dairies CEO, Stephen Tait

Simon (00:01) Welcome to the Cemoh marketing podcast with me your host Simon Dell. Very quickly, let's get all the bullshit out of the way. Cemoh.com if you want to find out more about us. If you want to connect with me, I'm on LinkedIn, [email protected] as well. Cemoh does fractional marketing people, primarily fractional marketing, fractional CMOs. That's what we do all over Australia, hopefully eventually all around the world. Come and find out about us. If you've got any questions, let me know. Let's get that out of the way, because I'm excited to get into this today. I have in a man sitting, who looks like he's sitting in a shed, who I've known for a very, very long time. He's highly entertaining. He's the CEO of Maleny Dairies. Welcome to the show, Stephen Tait.

Stephen Tait (00:55) Hi Simon, thanks for having me on.

Simon (00:57) How the devil are you?

Stephen Tait (00:59) Very well, Simon. I'm sitting in a shed in green pastures surrounded by cows. What better way to spend my Friday.

Simon (01:07) Alright mate, I couldn't think of a better way to spend your Friday. Now, you've got a long, checkered, colourful past. There's probably a thousand things I can ask you. You and I have done an interview before. So I'm gonna sort of, I'm gonna try and find the highlights, the edited highlights of what is a, has been a, looks like a fun and fantastic career. But very quickly, let's start with a little bit about the dairy. Tell me about that. Tell me where, for all the people that don't know, you don't know where it is. us a little bit about that.

Stephen Tait (01:47) Maleny Dairies is based on the Sunshine Coast, obviously in Maleny, the Sunshine Coast in Queensland. It's a family-owned business, it's been owned since 1948, still owned by the original family. They produce high-quality dairy products that are not limited but are exclusively milk, yogurts, cream and custard. So we don't go into the ice cream and the butters and the various other things. We're very, very much focused on these core products. And we pride ourselves on the freshness and the quality of these products. And more importantly, where we get our milk from. And we're very, very focused on supporting the local economy and the dairy farmers around us. So yeah, it's been going since 1948 and I came in three years ago.

Simon (02:14) Yep. Yep. And we'll talk about that because that itself, just what you inherited, know, not to suggest anybody previous was doing anything wrong, but what you suggest, what you inherited was a challenge, I would say. I will get to that in a second. I just also want to explain to everybody that whilst you have cows out there, Maleny Dairies doesn't have their own cows, do they? So you're effectively cowless.

Stephen Tait (03:11) Yep.

Simon (03:12) But someone else owns all the cows, don't they?

Stephen Tait (03:16) Yeah, it's an interesting conversation because everybody seems to think I'm a farmer and I'm not a farmer I mean I was the guy that bought a male and a female cow from my own farm and phoned the breeder up six months later and said when can I start them breeding and he said Well, I don't know what you're talking about and I said well, I bought a male and a female So when did they start breeding? He says they're not and I said why he says you bought a steer and so

Simon (03:20) Yeah.

Stephen Tait (03:45) which is basically a cow without testicles. So I'm not really good at farming, but I'm good at processing and manufacturing. So we are simply a manufacturer of raw material that comes from 12 dairy farmers all within our footprint within 80 kilometres. But we do have our factory smack bang in the middle of a dairy farm. So we have the luxury of having Guernsey cows wandering around us every day, which is a phenomenal view every morning to look out the window and see them. It's great.

Simon (04:18) So, and I think that's probably a lot of things that, I mean, that's one thing a lot of people don't understand about the supply chain of milk and cows is that, you know, there's two steps in there. There's the farmers generally aren't processing their own milk. They obviously milk the cows and then send the milk to you. like, and again, just for everybody's benefit, because this is the sort of shit we're taught in schools, but what do you do to the milk?

Stephen Tait (04:35) Yep. We process it, we pasteurise it, we take all the nasty bugs out of it, and we create a formula that creates either a cream or a custard or a yogurt. We focus very much on the purity of the product. So for example, when you see on the shelf a pure cream, in many cases, it's not pure cream. The fat content in that cream can have additives in there and gelatin to thicken it up. Ours is 54 % fat. Literally, you can use a fork and whip it once and it turns into butter. It's that pure. So we focus very much on keeping the product as pure as we possibly can. Obviously, if we're introducing a lactose-free product, then we have to add in an element of lactate to change its makeup.

But we basically bring the milk in, in the back of a big tanker, we shove it in a vat and we put it through a pasteurizer and we pour it in a bottle and this is about as technical as I can get and then we put it in a crate and we send it to a distributor and he sends it to the customer.

Simon (05:50) So again, yeah, that's something that I don't think many people understand. In this route from getting milk out of a cow into your cup of tea in the morning or your cup of coffee in the morning, there's four groups of people in that process. There's the farmer, then there's the processor, which is you, then there's the distributor, and then at the other end is the supermarket, the corner store, the IGA, whatever.

Stephen Tait (06:17) Yep, that's exactly right.

Simon (06:17) And I get and the challenge obviously is that all of them cost have a cost associated with it and need to make a profit and so on and so forth.

Stephen Tait (06:23) Yeah. And it's interesting, Simon, because it's, as I said at the start, I've only been here three years. And I've never multi-skilled in my life. But it's the same principle is that the supply chain of a product, if you look at every element of that and say, well, how can I make a better value out of that chain? So we specifically target local farmers. We can get milk from anywhere, but we specifically target the local farmers. We pay them the highest price we possibly can so that they give us the purest product and the thickest fat content. And that in itself is the essence of our brand.

Simon (06:47) Yeah.

Stephen Tait (07:06) is the quality right at the beginning of the value chain, then how quickly can we make that into a great product that customers want? And then how do we get it to them at a price point? That makes it an affordable product. And that's our challenge and the true sort of value chain as well. How do we get it from the cow to the consumer to give it as long a shelf life as we possibly can so it's not turning over every three or four days? So it's really an element of breaking down every element of that chain and seeing, well, how do we get greater value into that for the consumer?

Simon (07:46) And how far are you going now? Because I mean, obviously for those that live on the Sunshine Coast, they know your brand. Ever since you and I did that event together, we've never had anything else in this house other than Maleny Dairy's milk. But how far has you reached at the moment?

Stephen Tait (08:06) So when I joined three years ago, we used a distributor that operated within our footprint of the Sunshine Coast, se. And we were delivering direct to store. So our milk would come off the back line, we'd put it in a truck, and it would go to a retailer within probably 80 kilometres of here. Now if you're selling to Woolworths, each individual store was having to phone our distributor and say, can I have a crate of milk every day?

Now if you were in Gympie and you wanted our milk, which is only 100km up the road, we couldn't deliver it to you because we didn't have the chain to get there. So we went to Coles and Woolies and said, what's a better way doing this? What's the best way of getting our product out? And they said, just send it all to us. Why are you going to individual stores?

And so now we've actually, I was looking at figures this morning, we made the strategic decision to put all of our milk in the back of a truck and we send it to an independent distributor who looks after all of our independent retailers and IGA's and things. That's about 30 % of our business. And we spoke to Coles and Woolies and said, can we just send it to your warehouse and then they distribute it. As a result of that action, the Woolworths volumes grew by about 25 % as a result of that. Now, that doesn't mean we were selling more milk in that store that we were delivering to Strait. So we are now all the way down to Armadale, and we're all the way up to Cairns. The challenge I've got is it's one thing to distribute it to them and put it on the shelf. But who in Cairns knows about Maleny?

Simon (09:46) Okay. Yep.

Stephen Tait (09:58) Because someday I'm relying on somebody walking up to a wall of white milk and go, I'm going to buy that one. it's tough when you're a small family business and you get handed all this phenomenal growth opportunity and we don't have the money to support it to the volume that we'll need to get people to buy our product. So we're pretty well spread now, but we need to support it.

Simon (10:25) So talk to me about the brand then, because I mean, that sort of talks, that challenge talks directly to the brand. I mean, you operate in a world, I guess, to a degree, where milk is milk. People are walking into a store, you know, it's whatever, you know, people, maybe it's almost a functional product for some people. They don't care the label on the front. If it's white and it's in a carton, they'll buy it. How do you...How do you make it stand out? How does milk companies be better brand managers?

Stephen Tait (11:02) There's an interesting challenge around it. It's not even so much how do you get them to buy our milk. It's how do they value that purchase? There's a reason that supermarkets put our milk or milk at the very back of the store. Like 97 % of people buy milk every day. And the supermarkets put it at very back. Which is basically a magnet to draw people in. And then their price point is what makes the next decision in some of the cases. And we are all competing to a market regardless of who our brand is, effectively trying to demonstrate that our product is worth more than the consumer is currently paying for it. So before we get into actually determining how do they buy mine over theirs, my biggest challenge is if a consumer values a two litre bottle of milk that's been milked by a farmer twice a day and getting up at four o'clock in the morning, seven days a week, and he values it at five dollars, nobody makes any money.

And basically, the only people who are benefiting from it are the retailers who are driving traffic into their stores to get somebody to walk right through the back. Because you then have to pick up your milk at five bucks. You go down and pick up a can of Coke at 370 and pay five bucks for it. We've got a challenge as a product to convince people that milk is a far greater valuable commodity than it is. So that's the first challenge.

Simon (12:47) Yeah.

Stephen Tait (12:48) The second challenge especially for my brand is that we are a premium product.

So we're at the top end of the market. So an average two litre bottle of milk from our competitors can go from anything from $4 to $4.50. And we're up at $5.86. Now there's a reason for it. And this is our challenge, is that how do you convince somebody to pay up to 20 % more for my milk against somebody else's product? So there is a big cooperative brand, which will remain nameless.

Simon (13:18) Yeah.

Stephen Tait (13:23) It turns over $600 million a year, makes enormous amounts of product and spends a shitload on television advertising convincing everybody to buy their product because it's supporting local farmers. And then you've got us, who's paying 15 % more to the farmers than they are and supporting hyper-local communities as a result of it.

But it's in a white bottle, it's a product that looks white, it's exactly the same, but theirs is 20 % cheaper. So ironically, our brand has this amazing pull from a consumer that people pick it up and walk away and look at the price. In my market, in my home market, people look at us as being a brand that they should support because it's on the Sunshine Coast.

Simon (13:54) Yeah. Hmm.

Stephen Tait (14:18) Now as the CEO, my challenge is, buy my milk because we're local doesn't work in Cairns. And so we're a victim of our own success. We've built our brand being based on the authenticity of the owners.

Simon (14:26) No, no.

Stephen Tait (14:36) Our owners have been in this business for 25 years. They are phenomenal brand ambassadors. They're out there all the time and they're real farming type people and that works in my footprint. But if I'm sitting in front of a major retailing group and saying you need to stock my product in Sydney, they're going to say to me, why? So I'm going to be limited if all I've got is because we're local. So it's how do I compete in my growth, not how do I compete now. Because our brand Providence is kept as successful in our footprint, but we're ambitious to grow that. How do I become King Island? Nobody goes by King Island because it's local. we all go in and buy King Island cheese, even though they're just up for sale. But King Island has managed to take its brand and make it ubiquitous to quality dairy, fresh, all over the place.

Simon (15:21) Yeah.

Stephen Tait (15:36) The thing is Simon, is that I'm a small family business. We've no fucking money to support the growth. I mean, and then the challenge, some of the things you've said there, as well about, you know, the, you know, the quality of the quality of the milk, you know, you look at the local area, it's a beautiful area, everything's green around the Sunshine Coast. It feels like a healthier area. I'm trying to find the right word for it. But there's other people that can play on those messages as well. mean, you're not the only milk brand in Australia that has that sort of provident story as well. And yeah.

That's an interesting challenge and we're not going to solve that challenge, you and I talking now. It'd be interesting if someone else out there from a brand background goes, sees that and goes, okay, how about, how about this kind of, you know, these kinds of messages? Because I guess if you tap the right one there, you know, people in Sydney and Melbourne are going to want that product.

I think my challenge, and I'm not a marketing expert like you, I'm just like a dumb salesman, at the end of the day, milk is very much a local product, but soft dairy isn't. So, cheese, butter, new products of kefir.

Simon (17:18) Yeah.

Stephen Tait (17:18) All of these new product ranges can cross multiple boundaries because they're now, you can keep them in the fridge longer. Milk is a product that you can churn through pretty quickly. But in Queensland, for example, there is not a major manufacturer of butter. So...

Simon (17:37) Yeah.

Stephen Tait (17:40) creating a, most of our butter now comes from New Zealand unfortunately, because we shut down all the butter factories and made them into art studios. So I cannot find anybody to manufacture butter for me in Queensland. I can't find, I don't have somebody who can make me a kefir product.

Simon (17:52) Yeah. Yeah.

Stephen Tait (18:01) So as much as our factory is set up for the products we make right now, product innovation in itself will help us grow our footprint because it can appeal to an audience or a market. The growth market right now is protein, protein product, protein based product. Look at the amount of space that's getting taken up on the shelf now by protein. So I've got an enormous opportunity to create products with increased levels of protein, like a 20 % yogurt or 25 % yogurt or a protein drink that aids sports recovery. It allows me to extend my brand without it being seen as a local Providence product. But that in itself involves new pieces of equipment, new pieces of technology, investment in branding and advertising.

You know, it's tough when you're a small business that you can see this big opportunity and you think we could do that. Like we are a dynamic small company that could really create a product, a premium product, that delivers significant profit for us, but we have to go all the way through our value chain and say, how do we build an ROI on that? So my frustration is that we have spent the last sort of three years getting us ready for that growth.

Simon (19:01) Mm.

Stephen Tait (19:23) But without your opening remarks about the challenges I faced, we're a family business. And family businesses operate in a family manner. And coming from my background, you do have to have a corporate lens over the way we manufacture nowadays. You just can't do it the way we used to do things. So it's an interdict you know, in that sort of business, there's not this, you know, unending pot of R &D investment that you can throw at these throw at these things because because your margins are still, you know, small, if you're building software and your margins are at 90%, you can sit there and, and take a gamble and throw money into ideas and, and all those kinds of things. But when you're running a business that so many people are reliant on from a local economy perspective, from a jobs perspective, and a heritage business that's been running what 90 years now, you know, it's I mean, I'm sure it's not in this position, but you know, an incorrect investment isn't necessarily going to kill the business, but it's going to hurt the business and it's going to take time to recover.

Yeah, you're correct. There are the small margins that we get on milk. And we do. And again, this is all open, so I don't mind discussing it because it's all public. We pay our farmers just over a dollar, I think it's $1.05 a litre. That's what the average farmer will earn. Now, if you're doing a million litres a year, it's a reasonable income. It's not profit, but it's a reasonable income.

Simon (20:41) Yeah. Yeah, yeah, yeah.

Stephen Tait (21:05) A dollar five for a liter and then I've got to ship it to my factory then I've got to process it then I've got to put it in a bottle then I'm put in a crate then I'm gonna put in a warehouse truck then I've got to pay a distributor and then I've got to give margin to retailer and you walk in with the supermarkets and there's a bottle of milk there for a dollar eighty and you go how does anybody make money at that and

Simon (21:16) Yeah.

Stephen Tait (21:31) And therefore, how much investment would you make in that brand to actually help grow its volume when the margins are so slim that it's a challenge to justify it? Now, you'd be horrified to discover how much we spent on marketing last year. Like horrified.

Simon (21:45) Yeah.

Stephen Tait (21:52) I think I've probably spent more with the local football club than we spent. And that's our challenge, is that our margins are so slow.

Simon (21:59) Yeah. Yeah.

Stephen Tait (22:05) We're getting there because we've now got our product range getting there. We've launched in the last 18 months lactose-free milk, lactose free cream, sour cream. We've revamped our yogurts. So our business is still growing now, but the real growth opportunity we've had to sort our distribution out. So we've done that. We've got our supply chain secured. So we feel like we're on the starting line. We feel like we've cleaned everything up and we're all ready

Simon (22:28) Yeah.

Stephen Tait (22:35) to go and now it is NPD and now it is new outlets and it is you know a new product range that can allow us to generate greater profits.

Simon (22:47) Yeah, the story your distribution woes I'm not going to go into because that itself is probably this pretty half an hour conversation in that and there's probably some legals around that. We don't want on a podcast. what I there's a couple of things that I remember when you told me this story because I think I've heard this story a couple of times now that never occurs to me and I don't think it occurs to a lot of people right, was one of the things that you said to me was if things don't, because you remember you were going individually to Woolworths and Coles and things like that, right? If the distributor, if the product doesn't arrive at Coles and Woolworths at the right time on the right day, and I want to stress this isn't a slight on Coles and Woolworths, they're running big businesses, they need things to be there in, you know, a lot of time windows, that if your product missed an allotted time window, that it could sit in the back, not in the fridges facing the customers for days on end. that, that was the case? Did I get that right?

Stephen Tait (23:57) Yep. Because they run a business and each store, and we all have been in supermarket stores, and you're right, it's not a slight against them. They have a process, and they run their business through that process. If we can't fit into that process, that's our problem, not ours. So when you walk in a Coles or a Woolworths, or an IGA, they have a roster of staff that says, we fill it this time, we fill it that time. If your product doesn't land at that back door at the right time, they take it, they put it in the cold room, and it won't be until the next shift that you'll be loaded. And the biggest insight that I got into my brand when I first started was I would walk around all these supermarkets and retailers and I looked at our social media and we've got an enormous following on Facebook. Like we have no marketing expertise here. got a guy answers the phone doing my social media. So.

Simon (24:48) Yeah.

Stephen Tait (24:54) The biggest comments were we love your product when we can get it.

Simon (25:00) Yeah.

Stephen Tait (25:02) So there was something wrong with the way we were getting our product to market. And such was the allure of our brand that people wanted it and we just couldn't get it to them. So that's why we had to change our distribution methodology. And I think it's been the best thing we've done because it's got us that growth and it's got our brand presence now on shelf. So I have more confidence to look at, right, okay, how do we shift more product now? How do we actually get more shelf space?

So it's taken three years to get us to this point.

Simon (25:36) Yeah, the other the other thing I remember you talking about, which, which I want to discuss was the fact that the cows, you're not a product that you're not a business that can sit there and control the supply to to a degree, because cows, cows generate milk and cows generate milk in differing, differing seasons, don't they? They don't they don't generate the same amount of milk every day, every month. Throughout the year. It's cyclical, isn't it? So you're having to deal with the fact that sometimes they don't produce enough and sometimes they produce too much. And there's absolutely fuck all you can do about it.

Stephen Tait (26:15) Honestly, it was the biggest shock of my life that if I sell 100 litres of milk a week I go to a farmer and say can you get me 100 litres a week and he goes yep, can do that But he annualises it and he goes well, I'll give you 5,000 litres and I go that's fantastic and so for the first few weeks I get my 100 litres and I sell my 100 litres and then all of a sudden he rocks up with 200 litres and I go I only wanted 100 he goes can you tell the cow?

So there's no taps on cows, which I was horrified on. So every, we call it, it's called spring flush, which is a new technical term for me, where cows actually produce more milk during springtime. That's when they've carved and things like that. So they overproduce. So there is no consistency in the supply. The only consistency is expect it to increase by 50 % when you least expect it. And it happens literally over a couple of weeks you're just happily trotting along at 100 litres a week and selling 100 litres a week and then all of a sudden there's massive spike of excess milk and you can't get rid of it. What are you going to do with it?

Simon (27:26) Yeah. Yeah.

Stephen Tait (27:30) Because it will go off. So we end up having to sell that product to somebody else who then makes it into cheese. But I've sold it to him cheaper than I bought it because I have to get rid of it. And his business model is based on buying cheap milk.

Simon (27:46) Yeah. Yeah.

Stephen Tait (27:52) So he only has to make his milk during the spring flush and he's laughing. And then it gets to winter and then it becomes 50 litres a week. The cows don't like producing milk during the winter. So it's quite a challenge, I have to say.

Simon (28:10) I was gonna say that, and that's probably, you you think of all the retail, you know, manufacturing retail products out there, be it food, be it whatever, I would probably say 99.9 % of, can control their supply if they don't, you know, clothing manufacturers, I would say most food manufacturers, if, you know, and sure, there's some, you know, I'd imagine there's some other foods like, you know, potentially apples and fruit and things like that.

But even to a degree, they can probably predict how many apples are coming off a tree at a certain time of the year.

Stephen Tait (28:45) If you've planted 10 trees you know it's going to come into fruit for this period of time. It's going to produce this average amount of apples. So you can sit there and scale up, know, backwards and forwards, but...

It's a more technical business than I ever anticipated. I thought I was going to turn up like Ernie the Milkman and sell milk. I didn't think it was going to be this hard. Nobody told me that I had to actually be a Wall Street trader to deal with the volumes of milk that I was getting dealt with whenever they felt like it. My biggest frustration is I watch the television and I...

Simon (29:03) Yeah.

Stephen Tait (29:23) and I see, oh the prices of lettuce are now $13 because it's rained. And people go, yeah, well, I like lettuce. Milk, like, it's seasonal. I can't say to the consumer, sorry, your milk's $10 this week because the cows won't produce enough. Because we've educated the public that milk's just milk and you just have to pay a couple of dollars for it. And that's the problem.

Simon (29:28) Yeah. Yeah, yeah. And the other thing that sort of just to sort of wind up this part of it was that I think you you said this when we when we chatted last time was that the difference in price, if people really want to help farmers go and buy these, these products that are that you know, are coming not direct from the farmer but are supporting the farmers. So you said you pay them 15 % more than you know, other people would pay them. So there's a clear, there's a clear message there. If you want to go and support, you know, local farmers on the Sunshine Coast in Queensland, and buy, go and buy your milk. And I, do you know what? I've completely forgotten where I was going with that, that, that observation.

Stephen Tait (30:37) Well, we did some research last year about the economic impact of milk within our region. And it's not just about supporting the farmer. It's actually the whole supply chain that supports that farmer. It's the mechanic, it's the electrician, it's the irrigation specialist. So for every 30,000 litres of milk we produce, that employs another one person.

Simon (30:55) Yeah. Yeah.

Stephen Tait (31:06) So, but it keeps I think we had ten years ago we had 720 dairy farmers in Queensland we've now got 270 and it's because consumers Don't see the price of milk as being you know and we do get complaints if we put the milk up by 10 cents We get complaints about it, and you're like seriously these people are on their knees at a farm

Simon (31:31) Yeah. Yeah.

Stephen Tait (31:32) And I'm dealing with farmers who are maybe 50 years old. Do you honestly think their kids are going to go and turn up and do that for seven days a week for a dollar? It's just not sustainable. And one day we're going to wake up and go, you know what? We'll be buying our milk and powder format from across the seas, reconstituting it and that's something I'm absolutely determined won't happen with us.

Simon (32:01) Yeah. And that's where I was going with that original statement was when you're going in and I go in and do the weekly shop or the fortnightly shop for myself and my two boys, and I would come out of there having spent, you know, some weeks, 250, sometimes even $300 if I'm, you know, buying everything. I look at the difference between buying a milk that would support, you know, local farmers, is making maybe a $2, $3 difference to the shop that I'm to amount of money I'm spending. And then I think and that's one thing. And the other thing I think about is some of the money that I spend on shitty process, shitty processed brands that I shouldn't be spending high amounts of money on like, know, the big global brands, the Cokes and the Nestle's of this world, I just go, you know, the Cadbury's, why am I quibbling over a dollar in a milk or $2 in milk when I'm going and wasting $6 on a packet of biscuits that all last, you know, when you look at it like that, you just go, buy the fucking, buy the best milk that you can that's gonna help the local people.

Stephen Tait (33:20) Do you remember the old days where they had the Pepsi challenge or the Coke challenge or whatever it was? If you put down a litre of milk and a litre of bottled water next to each other, it didn't do a price on it. Do you honestly think somebody would say, I'm going to pay $5 for that water and I'm going to buy $2 for that milk? Because I don't think people think about it. They walk up and buy a...

Simon (33:25) Yeah.

Yeah.

Stephen Tait (33:50) I'm very conscious of criticising them, but water manufacturers are actually just producing plastic. It's just a plastic bottle they're selling with a brand on it. And shame on us for not being able to articulate the fact that my wife will walk in and think nothing of spending $5.50 on a pump bottle of water in the BP service station.

Simon (33:56) Yeah.

Stephen Tait (34:13) But will come out of the supermarket and say, I see your milk's gone up in price. yes, sorry pet, it's $2.40. Right? And I'm really sorry that you've had to pay half the price. So. And then I go to the flavour side of it. And this is the thing, again, I'm probably coming across as a more frustrated marketeer than anything, because I create amazing products. So our milk actually tastes like milk. It has higher fat content than everybody else's. In Australia, you can call your product a full fat product at 38 % fat. So 3.8 % fat.

Simon (34:39) Yeah.

Stephen Tait (34:58) So you can claim to have a full fat milk at 3.8 % fat and ours is over 4%. Now that doesn't sound like a lot, but actually our milk has cream floating on the top of it.

Most milk manufacturers take that off, make it into a cream and charge $9 a litre for it. And they're left with a raw material of 3.8 % fat, which they claim to be full fat standing next to mine. And I've not taken the fat out of it. So that's why we charge our premium. The easiest thing I could do is take the fat off my milk, put it down to 3.8, reduce the price and compete against them. And then take that back and make it into something else. And it would destroy the very essence of my brand.

Simon (35:43) Yeah. Yeah. I sit and think about what my two, you know, aged six and eight, the bottles of what's the one the Mr. Beast, no, not the Mr. Beast one, that one of those power drinks that's like they want they go into war worse, and they go we want that whether it's a Gatorade or a powerade, but there's another one, I can't remember what it's called. But it's like $4 or $4 20 and it's 500 mils and it's just, it's shit in a bottle and it's just heavily marketed. You know, and that they want it. And I mean, you know, to be fair, they drink a lot of milk, they drink milk with their, you know, cereals, they drink milk on its own, they drink milk before they go to bed. So they drink a lot of milk, but them as children aren't seeing the difference between, you know, the fact that that's a more healthy option versus this shit in a bottle that's been heavily marketed and, and aren't thinking anything of spending that money. Whereas you say, you're getting picked up by increasing your price by 10 cents. It must be incredibly frustrating.

Stephen Tait (36:59) It's dreadful and I'm probably coming across as a cranky joke but it really does. I stand in the fridges in supermarkets and ask people why they just, why have they just bought that own brand milk versus not just mine, but like a branded product of milk. Because these guys are paying the farmers more and yet you'll sign up a petition to say support the farmers, but I'm actually gonna choose to not spend a dollar 50 more to do that. just, God help me as a marketeer, that's why I can't do it. I can't run a campaign that says, what do you think you're playing at?

Simon (37:41) I can imagine how frustrating it is. Look, I'm conscious of time. And I just want to ask you one question really around your previous role before you got to the dairy was in an organization called CCIQ, which was Chamber of Commerce and Industry Queensland and has since undergone a well, I think, well, this is where I kind of see the link because that business has undergone a rebrand, different people in charge now, et cetera, et cetera. I won't go into that, but you were exposed for a long time about, you were exposed for a long time looking at Queensland businesses. And I would, my question is, that there must have been some things that you learned over that time that you then took into the dairy business. mean, you saw the good, the bad and the ugly of Queensland business during that time. did you learn? I mean, I'm sure you learned a lot, but what are some of the key things you learned doing that role?

Stephen Tait (38:43) Yeah. Spend less than you make.

I think that...That's a really good question. That's a really good question.

I think that, I think when I came into this from my corporate background, which I did come from, I came from a newspaper background, CCIQ was very much a subscription-based model of advocacy. It was a content company, effectively. And it was about creating a voice for business. working with the businesses, the research that I had to carry out, ended me up here because I saw consumer changes. So what did I learn? think being flexible. I think listening to the customer or identifying the customer to create a service or a product and some businesses had stayed in their lane, didn't see a trend emerging and that's how I ended up here. Because I asked my staff at the time, could you find me businesses that are going to be affected by this government policy of this drive for carbon neutrality, know, this clean emission type, you know, and they set some ambitious targets but didn't give a pathway to do it.

And I thought, why are they doing it and it? Must be because the general public are now becoming far more focused on the sustainable conversation or the sustainable part of it. And so I asked my team to bring in a bunch of customers to talk to them about if you were to you know see yourself in 10 years time, how would you view it through the lens of having a product or a service that now reflects consumers and what can government do about it? And what I've actually learned Simon in that time was how few businesses thought five to 10 years out.

I love spending time talking to my customers. So I split my week between 30 % with my retailers, 30 % of my time in my factory, 30 % of the time with consumers. Because they will tell you what they want and they'll tell you when they want it and they'll tell you what price they want it. So during that time, I probably found a lot of businesses that made stuff and that's how they made it. And it wasn't until something happened

Simon (41:03) Mm. Yeah.

Stephen Tait (41:28) that they would then change. In fairness there was a lot of businesses that were fantastic, I was in awe of them. Absolutely, they were the most inspiring businesses. But even down to how you communicate with your customers, how do you engage with your customers, how often do you ask them what they're looking for, there was very few SMEs that would do that. And in this case, what happened was I came across millennial data, they would come in every month to talk about their challenges on that journey towards sustainability.

And I used to say to them, so do you see this as an investment in your company to become or to create a point of differentiation for your brand? Instead of seeing it as being a risk, do you see it as an opportunity? What could you be doing with your bottles, your packaging? Instead of producing crates, can you put it in cardboard boxes? Anything that creates a narrative around that you're listening to your customer.

Simon (42:13) Yeah.

Stephen Tait (42:30) And so the lesson I learned in that time was spend less than you make, is a really good one. I think that the one was, are you looking far enough ahead? Are you looking down on the business? And what information are you taking in to see what that trend looks like? It's easy to get caught up in the day to day running a machine and pressing a button and pulling a lever.

Simon (42:42) Yeah.

Stephen Tait (42:57) But realistically why are you doing it and who's it for and who else is doing it better, quicker, faster? And I think that that's the lesson I've learned here is that this is the most entrepreneurial job I've ever had.

Simon (43:11) Yeah.

Stephen Tait (43:12) Because every day I am seeing the opportunity to emerging trends, consumer behaviors. I'm seeing retailers changing the way they do things. know, Coles and Wolley, I think Coles said the other day there, they're gonna reduce the duplication of their products. So instead of having 14 salts on the shelf, they're only gonna have five.

Simon (43:33) Because they and that's because they've they've seen they've seen Audi do that and Audi sitting there going fuck we're just have one salt, you know, and and and everyone's going what a great experience Audi is and what was the sitting there? Why are we bothering giving everyone this choice? What's the you know...

Stephen Tait (43:37) Okay. Great. So what am I going to do to make sure that when they get round to the wall of white that my product still stays on that shelf? And it's because consumer demand drives it. Not because they want to put it on their shelf, it's the consumer demand. So yeah, I learned a lot in that sense, I think the other part of it is what I learned was that government basically...

Simon (43:58) Yeah.

Stephen Tait (44:18) had a principle of unless you can get me re-elected, unless you can make me popular, unless I can have an announceable, they don't really actually want to listen to small business. My conversation with government officials over the last three years have been interesting that they keep referring to me as an agricultural business. I'm a processor. I'm a manufacturer. I need...

Simon (44:29) No, no, no, no, no.

Stephen Tait (44:47) data, I need technology,

Simon (44:48) Yeah.

Stephen Tait (44:50) I need AI, I need to be automated. But you do not hear them talking about dairy processing or processing or food manufacturing, talking about making widgets or solar panels or jeez you can't eat them. And we're losing the primary producers of Australia because we're not investing enough in them. So what I learned was you have to offer government solutions that will actually help them get re-elected as opposed to solve your own bloody problems. And you know, buy Queensland, buy Queensland, buy Queensland. Well, what about looking at your own bloody supply chain and making sure that you're buying Queensland? We went to a government function four weeks ago, well, four months ago, with the previous government, which was to meet the locals and they were serving milk that was owned by a French company,

Simon (45:23) Yeah. Yeah, yeah.

Stephen Tait (45:44) and it was 30 minutes from my factory and you're like seriously shoot yourself in the foot why don't you so we we need to think about what governments are looking to do which industries that they think they should be supportive what can I do to be part of that conversation.

Simon (45:49) God. Yeah.

Stephen Tait (46:06) And so the one thing that I think we have learned here is that what are the opportunities that are coming down in front of us? And what can we do to take advantage of it and work with all our stakeholders to create it? And health and hygiene and sport, and we've got the Olympics coming.

Simon (46:15) Yep.

Stephen Tait (46:28) We need to be creating product ranges now and then positioning our brand accordingly, away from being just a little local farming processor, know, good old boys, and being seen as a cutting edge entrepreneurial, innovative brand that produces healthy products that help you in your recovery, helps age care.

Simon (46:31) Yeah.

Stephen Tait (46:51) Going down and actually telling a story of what benefit we offer our different segments, not just we're local and we're really nice people.

Simon (47:00) I think you're, well, you and I know, because we've had this conversation before, but the sport, the sport thing was something that was opened my eyes a couple of years back when we, when I was speaking to a mutual friend of ours. And I went and did a bit of research and at the time a guy was, a guy was working for me who was a semi-pro AFL player. And he would travel to the Gold Coast at weekends, sometimes to Darwin, Adelaide to play semi-pro AFL and he'd been told by the performance coaches at his club that at the end of every game, at the end of every training session, they were all to drink instead of drinking water, they were to drink a liter or whatever it was of milk, a full fat milk. And they said that the performance coaches have made it very clear that that was the best recovery drink that they recommended to all their sports players. Forget the power aids and the waters and all this stuff. It was a liter of milk. And I think that is a story, that is a message that needs to get out.

Stephen Tait (48:17) And I think that that's a brand story that we can tell, but we're gonna have to bust out, we're gonna have to do something different, and we're gonna have to think of way of articulating it differently, because we are famous, absolutely famous for being a local, high quality product, owned by a family, and you should support the farmers. That's not gonna help me with a 25-year-old athlete that's in Sydney. I need to create something that appeals to the broader audience with my brand and I'm now probably going to get inundated with 300 chief marketing officers all wanting to help me. Please don't, I've got no money. Do it for nothing. Do it for results.

Simon (49:02) Mate, honestly, you and I could, as you know, we could spend all morning gabbing on about stuff and maybe we will another time. But look, I think everything you've, everything you said has been, I've heard it all before, but I love hearing it again. And I think, you know, everyone else will enjoy it. So thank you very much for that. And I guess the last appeal is if there is anyone in Queensland, not chief marketing offices, because it doesn't need that. If there's anyone in Queensland that fancies making butter, I guess like on an industrial scale, then Stephen would like to hear from you, I suspect.

Stephen Tait (49:36) Hahaha! Absolutely. Again, can I just say Simon, I love talking to you. You're an incredible marketeer. You're very smart. And I always get something out of the conversations we have. And for the people that are viewing or listening to this, if you don't follow Simon on Instagram, I strongly suggest you do, because it will brighten your day every single day. It's one of the first things I look at. It makes me laugh. He's got a good sense of humor as well as being a smart man.

Simon (50:08) See there's the funny thing is I was talking to my internal marketing person yesterday and we were talking about what my brand is. Is it marketing, is it business or is it just me being stupid online? And she's looking at me, going I can see what she wants to say.

Stephen Tait (50:22) Yeah.

Simon (50:30) Okay, I'll take that on board and anyway mate look, thank you very much for your time It's been an absolute pleasure and you know, good luck to you and obviously well, we will bump into each other very soon

Stephen Tait (50:33) We will do. Simon, thanks very much for having us on. Take care.