Natalie Sarich-Dayton feels the weight of running Australia’s oldest dairy.
TRADITION is a strange beast when it comes to running Australia’s oldest dairy.
Hailing from a sales and marketing background, the Brownes managing director and chief executive has all three somewhere on her horizon as the local firm seeks to compete against major players such as Bega Cheese and global rivals including Lactalis.
Included in product discussions is the potential revival of the obscure but much loved Yogo Dirt Dessert, the unexpected success of Brownes’ revival of home delivery during the pandemic, and the surprise combination of cheese and sugar on a stick, which has become a monster seller for the company’s Chinese parent, Shanghai Milkground Food Technology Co.
And then there’s Hunt and Brew, Brownes’ modern take on iced coffee pitched as a substitute for cold brew coffee made in a cafe.
Launched more than five years ago, it already represents 10 per cent of the dairy’s turnover and has led its efforts to sell to the eastern states.
“We are the oldest dairy in Australia because we are innovative,” Ms Sarich-Dayton said.
Fonterra then split the business, keeping the ice-cream division and brands such as Connoisseur, while it sold Brownes to private equity in 2011.
Sydney-based fund Archer Capital, in turn, sold it to Chinese consortium Australia Zhiran, which included Shanghai Milkground Food Technology Co, in 2017.
Ms Sarich-Dayton was at Brownes from 2013, and saw the most challenging of these times, notably from 2015 when new chief executive Tony Girgis was brought in to find efficiencies and drive the business harder as a prelude to sale two years later.
Unsurprisingly, her department faced a big part of the cost-cutting, a situation the marketing executive said was extremely tough but also honed many of the skills she uses today as chief executive.
“I think there was a quarter of the marketing budget left, which made us make good decisions,” Ms Sarich-Dayton told Business News.
That process did not cease overnight. After its acquisition by Chinese owners, the business had the advantage of its debt being removed but still had to rely on its own means to return to growth.
Ms Sarich-Dayton describes that period as pivotal.
“It was a turnaround, we made brave decisions, we did things that maybe we would not do in other businesses,” she said.
There is no doubt the Brownes current chief had an impeccable record for the role she took when she arrived at the company 10 years ago.
Graduating from the University of Western Australia with a commerce degree majoring in marketing, Ms Sarich-Dayton began her career in the late 1990s at Coca Cola Amatil, the first in a 15-year series of increasingly ascending positions in marketing and sales with fast-moving consumer goods companies, all of which are household names.
Her business career includes a brand manager role at Unilever and then senior brand manager roles at Danone and Heinz in the UK before again working with Coca Cola, this time in major marketing roles that covered the European Union.
A background like that suggests a return to Perth in 2013 meant an adjustment in terms of career trajectory. However, Ms Sarich-Dayton said it was when the business was being prepared for sale by Archer Capital that the difference between her former multinational employers and a regional player such as Brownes became most obvious.
“When you come from big companies with big budgets, it is different,” Ms Sarich-Dayton said.
“[Here] you have to make do.
“You still have to deliver in your role and make a difference for the business.
“You learn to do things for yourself, you learn to get out on the streets and sample, whatever it takes, right? “
You have gotten rid of every agency retainer you possibly have on the books and anyone who had an office in the city with a view, we got rid of them quite quickly.”
Asked about what she thought were the best decisions Brownes made during this tough period of turning the business around after the harsh medicine of cost cutting, Ms Sarich-Dayton highlights four markedly different initiatives.
Any visitor to the company’s headquarters in Balcatta would be hard-pressed to miss the emphasis on school tours.
There is significant signage directing school bus drivers to parking, a big fridge full of branded product greets arrivals at the door, and the processing plant’s ageing interior is well set out to handle hordes of observers.
Ms Sarich-Dayton said the resumption of school tours, with an emphasis on dairy as a healthy part of diet, had helped immensely with revitalising the Brownes brand and getting it back at the forefront of household purchasing.
Another was the launch of Hunt and Brew, a fabulously successful product Ms Sarich-Dayton said had yet to be countered by any of the major producers around the country.
A third important move was relaunching Brownes yoghurt, an important volume play that helps counter the challenges in other parts of the business.
And finally, during COVID, Brownes launched a home-delivery service called Milko, reviving a trade abandoned a long time ago.
“We were worried staff were going to lose their jobs,” Ms Sarich-Dayton said of Milko.
“All of us were driving vans.
“That was a great way to understand the logistics of the business.”
Her team is currently working on where they can take that service.
“That is a passion project, we have a few of them kicking around the business,” Ms Sarich-Dayton said.
While such nimbleness and innovation are the key, Ms Sarich-Dayton said she couldn’t ignore the reality of the volume in the milk business.
That makes the 2021 loss of the Woolworths process and package contract to the local arm of the world’s biggest dairy group, Lactalis, particularly hurtful in a commercial sense.
Even without that, Brownes claims to be the state’s biggest milk purchaser and says it holds 30 per cent of the market.
But the reduction in volume at its operations was significant and the reason it seeks to grow elsewhere.
The big retailers were already shifting the way the sector operated.
Woolworths was understood to have purchased milk for its Farmers Own brand direct from the local farmers, which was processed and packaged by Brownes Similarly, Coles is understood to have the same kind of arrangements.
Its milk is processed by Bega, owner of the Masters brand, at its Bentley facility, which it purchased from Kirin about two years ago as part of the Lion Dairy & Drinks acquisition.
Aside from its own brands, Brownes makes the Country Dairy brand exclusively for IGA supermarkets.
And there are also sizeable niche players like Northcliffe-based Bannister Downs, backed by Gina Rinehart, which has been popular in the cafe segment.
Outside of dairy, Brownes is the biggest player in the state’s orange juice market, a reflection of previous, successful efforts to use its incredible local network to diversify.
She also had licence from the Chinese parent to innovate and, unlike the period under private equity, the business was not highly geared.
“We are very much self-sustaining,” Ms Sarich-Dayton said.
“Every dollar stays in WA.”
Ms Sarich-Dayton acknowledges that her promotion to chief executive was largely based on the confidence and encouragement of Chai Xiu, who is the president and founder of listed Shanghai Milkground Food Technology Co, the key player in the consortium that acquired Brownes.
Ms Chai, known as China’s cheese queen, is the matriarch of a northern Chinese family business that, through a complex corporate process, ended up being listed as part of a food technology company.
The launch of a sweet cheese snack, Miao Ke Lan Duo, catapulted Shanghai Milkground to become the nation’s number one brand in China’s relatively immature but fast-growing cheese industry.
She still runs the business although it is controlled by a much bigger dairy player, Mengniu.
Ms Sarich-Dayton said her opportunity to run Brownes came directly from Ms Chai, who encouraged her to take the role after the COVID lockdowns made it difficult for Mr Girgis to continue in the job as a fly-in, fly-out executive from Melbourne.
“It was about that time that everyone was thinking about the future,” Ms Sarich-Dayton said of Ms Chai.
“You have an ownership with growth ambitions who has a quite entrepreneurial style and who has an ambition to be international.
“That was definitely some of the qualities she was very fond of in me.
“And, you know how it goes, every meeting is a job interview, right?”
Ms Sarich-Dayton said the Chinese ownership also valued the stability offered by recruiting from within and promoting a known quantity they trusted.
“That was a big part of their thought process, she said.
“This is one of the hottest gigs in town, but she backs her people.”
About 18 months into her new role, Ms Sarich-Dayton is confident the pieces are falling into place, with a heavy emphasis on recruiting the right people in key positions to transform outdated systems and processes in order to grow.
However, the past year has not been kind in many respects.
The worst of the pandemic’s impact on WA came during that time; Brownes then lost the Woolworths contract (creating a big gap in the dairy’s production process); and then higher goods prices started to hurt consumers at the checkout.
Another growing issue for the dairy industry, globally, is changing consumer sentiment around the environment and the impact of methane-producing cattle, which has mainly hit the red meat sector to date.
According to Ms Sarich-Dayton, all that combines to make the year ahead quite difficult and means the company is more than ever reliant on its people to steer the business in positive directions, at a time when recruitment is as hard as it has ever been.
“We are competing with the mining industry, and it is always difficult to attract talent and workers in an industry that’s 24-7, she said.
“Add to that we are the most isolated place in the world in a different time zone. “Isolation is a big factor in that.”
Despite this seeming bleak environment, Ms Sarich-Dayton said Brownes was filling key positions and retaining staff by creating the right culture and giving employees more control of the decision-making processes.
“To drive growth in this business, I don’t do that by myself, I do that with our people,” she said.
“We have recruited some amazing people.
“People see opportunities here.”
Ms Sarich-Dayton said she felt a lot of responsibility in her role: leading a 136-year-old business was a gift but also required her to be a caretaker.
“I am conscious that I have one of the hardest gigs because it is not only the oldest dairy but it is an icon of WA,” she said.
“It is very much how we make this business fighting fit and ready to survive the next century.
“It is clear to me that if we don’t change this business and strengthen the foundations we are on we will not survive the next century.
“We need all the growth drivers available to us as a business to ensure Brownes survives another 136 years.”
The growth drivers Brownes has identified are very broad.
Ms Sarich-Dayton said the business had to remain strong in WA, finding ways to combat the market power of major retailers and partner with farmers who had been dealt a stronger hand under the three-year-old Dairy Industry Code of Conduct.
After that it is more about new markets, such as finding the right products to take to the east coast, relaunching the Brownes brand in South-East Asian centres like Singapore, where it was well known 20 years ago, and even looking at partners in Europe.
Ms Sarich-Dayton said she took her leadership team to Europe late last year to look at the market there.
“We came back, and we are crystal clear these are the areas we are going to focus on, these are the areas we are going to grow,” she said.
“My attention is on prioritising our growth drivers and having the right people to do that.”
And it is clear innovation remains the driver.
“It can’t be two-litre bottles of white milk,” Ms Sarich-Dayton said.