Case Study Beerenberg 165 years in the making

Presenters:

Anthony Paech – Managing Director Beerenberg

Andrew Doust – BDO Chartered Accountants

& Advisers

Located in Hahndorf in the Adelaide Hills

1. Johann George Paech

1793 – 1875

2. Johann Christian Paech

1821 – 1905

3. Johann August Paech

1860 – 1933

4. Herman Christian Paech

1903 – 1969

Our family origins

Anthony Paech – 1968Managing Director

(married)

Robert Paech – 1969Farm Manager

(married)

Carol PaechFinancial Controller

Grant Paech – 1940New Product Development

The 5th and 6th generations

Sally Jane Paech – 1971No business involvement

NatashaJane

Scott1998

Shannon2002

Management committee (meet monthly)

• Managing Director Anthony

Paech

• Production Manager Matt Noske

• New product development Grant Paech

• National Retail Sales Manager Russell

Heyzer

• Farm Manager Robert Paech

• Financial Controller Carol Paech

Brief business history

• Farm settled in 1838 by Paech Family from Germany

• 1966 Grant inherits family farm from Father,

two sisters paid out and get married

• 1968 Anthony born

• 1969 First crop of strawberries planted

• 1969 Grant's father dies, Robert born

• 1970 Strawberries sold on side of road and first batch

of jam made

• 1971 Sally born

• 1975 Beerenberg brand created

• 1980 New packing shed and jam kitchen built

• 1985 Qantas contract started

• New management talent employed

Brief business history (cont)

• 1989 Anthony graduates in IT, starts in SA

wholesaling business

• 1989 exports start

• 1993 new machines bought and shed built

• 1995 strong exports

• Business poised for growth

• Late 1996 Anthony leaves to study MBA in Perth

Brief business history (cont)

Discussion

1996 – Beerenberg is ramping up – good growth potential. One son is committed to and dependent on the business. The other leaves with no promise of return.

What would you do if you were Grant? What are his options.

Brief business history (cont)

• 1998 Anthony returns to business – General Manager

• 1999 decision made to invest in huge new portion

packing machine and facility

• 2000 machine commissioned

• Good export growth

• New key staff employed

• 2002 Sydney competitor purchased

• Strong Growth in profitability and revenue

Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-051998 1999 2000 2001 2002 2003 2004 2005

Sales history

What drives our family business?

• Satisfaction of seeing products distributed world

wide

• Aussie battler takes it to the world!

• Not the money (but nice to have)

• Pride in our heritage

Looking forward – vision

• Pursue excellence not size • Globally recognised for best quality• Available in every 5 star hotel around the

world• Profitable enough to explore opportunities

Discussion1. What challenges can you see on the horizon for

Beerenberg and how would you suggest they deal with these to avoid future problems?

2. Can you anticipate a potential clash in aspirations between the brothers? How would you manage this?

3. How can Beerenberg use its family origins to compete against the ‘big boys’ in the international market. What are some of the drawbacks for them as a family business as they expand internationally?

4. How would you suggest Beerenberg sustain its entrepreneurial spirit especially given that they now have so much more to lose?

Looking forward - what could cause tension for us in future?

• Different aspirations – how big, motivations for growth

• Burn out

• Risk aversion as the stakes get higher

• How far to stretch the brand

• Introducing more outsiders in core roles

• Defining and retaining our culture

• Sustaining the innovation cycle and retaining a commercial edge

• Industry pressures – supermarkets

• Marriage break ups