Tired of seeing Australian brands such as Vegemite fall into foreign hands, local entrepreneur Dick Smith launched his own range of food products to remarkable success. Peanut butter, cola, sauces & cereal, whatever Dick launched, it did well. But with most of this growth coming at the expense of fellow Australian companies rather than the multinationals Dick sought to challenge, has his goal backfired? David Robertson reports from Down Under.
Australians could take the loss of its national airline Qantas to foreigners and even Speedo but when Vegemite was sold to the US-based Philip Morris enough was enough.
Go deeper with GlobalData
Mirroring what Paul Newman did for salad dressings Australian entrepreneur Dick Smith launched his own range of self-branded food products. Smith made his money selling electronic goods and the shops carrying his name are still a high street fixture – as common as Dixons in the UK or Radio Shack in the US.
But Smith was shocked to discover that 85% of an average shopping cart is foreign-owned or foreign-made and he has pledged to level the playing field. In February last year Dick Smith Foods launched its first product, a peanut butter spread that has now grabbed 20% of the Australian market – 19% coming from Kraft.
The company is already producing revenues of A$90m (US$46.9m) and is on target to beat its stated goal of A$100m. General manager Chres James told just-food that this early success has prompted the company to upgrade its target to A$150m by next year.
It makes nearly 60 different items including cheese, barbecue sauce, cereals, biscuits and even OzeCola. But the real mission will come later this year with the launch of OzEmite – will the Aussies ditch the sacred Vegemite in favour of a product that is Australian-owned?
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“It hasn’t been that difficult to achieve what we have because there is enormous sentiment in Australia for Australian-owned products,” said James. “There are concerns over the globalisation of the food industry. It is taking from Australia. There are far more foreign companies here than Australian companies overseas and that creates a big imbalance. That has ramifications on profit and wealth generation in this country.”
The weak Australian dollar and easy access to its market have prompted a flood of interest from foreign multinationals in Australia. To regain the initiative Dick Smith Foods is targeting premium value products rather than generic goods like bread and milk. In most of the premium food categories multinationals control more than 70% of the market and James says these areas are ripe for a nationalistic brand to make inroads.
One of the more painful losses to foreigners was Arnotts Biscuits, which makes TimTams, to the Campbell Soup Company. The mere mention of a TimTam to an expatriate Australian is usually enough to prompt long-winded memories of beaches and swimming pools. Dick Smith Foods has launched its own biscuits and has captured about 1.5% of the market.
Unfortunately for the Smith philosophy Arnotts has also gained market share, up 4.2% in the year to April, while the smaller players have lost out. Weston’s biscuit sales are down 4.1%, Players Biscuits down more than 20% and Paradise’s biscuits down 3.4%. Critics point out that all Dick Smith has done is squeeze out traditional Australian-owned businesses with his own label.
“There is always some impact on the local market but we aim to take on the multinationals in a way that smaller companies cannot,” said James. Dick Smiths Foods is basically a marketing shell with the production of foods outsourced to Australian companies.
Smith is not restricting himself to concerns over foreign ownership and will only do business with companies that pay directors modest salaries and are socially responsible. Dick Smith Foods is also planning to return one third of its profits to charity.
The launch of Dick Smith Foods has prompted a rash of criticism with commentators pointing out the irony of Smith’s comments about Australian-ownership when he built his fortune on importing electronic goods. But this does not seem to have caused Smith to falter. If anything the debate only seems to encourage him further – what other explanation can there be for launching a brand, named after yourself, called Dickheads?
Australian’s had always been proud of their Redhead matches – at least until the company was sold to the Swedes. Smith has retaliated with Dickhead matches. The matches are in a red box, similar to Redheads, and feature a dark-haired woman with a startled expression.
A message on the matchbox says: “We would have to be complete dickheads to let most of our famous Australian brands be taken over by foreign companies. Brands such as Vegemite, Aeroplane Jelly, Arnott’s, Speedo and Redhead matches are in overseas hands. This means the profit and wealth created goes overseas and robs our children and grandchildren of a future.”
By David Robertson, just-food.com correspondent
