I guess this makes it a Good Beer Year

Melbourne is about to celebrate Good Beer Week – a festival of beer-related events showcasing the output of Australia’s burgeoning microbrewing industry (plus some folks across the from NZ, the US, Japan etc).

Microbrewing startups are popping up across Australia in startling numbers, introducing a much welcomed diversity of flavours, styles and business models to our decidedly bland duopolistic beer market (I find myself uttering that duop_ word far too often around here).

One considerable barrier to even more entrants (and their subsequent growth) has been some nasty excise (i.e. taxation especially reserved for such vices as alcohol) imposts that impact most severely on small brewers. Here’s a pretty comprehensive explanation of the problems faced (courtesy of RMIT student TV – head to about the 3 min point for the specifics):

Put simply, small brewers pay a huge whack of tax (in the vicinity of 25% of value) at the point of production (indeed, within 7 days of brewing) rather than sale.  This is a huge cashflow constraint on these businesses. The very small brewers have had some minor relief whereby up to $10,000 per annum would be refunded (but only to a production threshold of 30,000 litres).

Last night’s Federal Budget finally saw a move in the right direction, with that refund increased to $30,000 per annum and the eligibility threshold removed. This will make some small difference in terms of the capacity of such craft breweries to expand and achieve something like minimum efficient scale.

You may have noted that the RMIT vid is from 2007.  The battle has been a long one for these guys, and the concessions relatively minor. Last November, a national industry association was finally formed, and perhaps this helped get some movement in Canberra (it’s worth noting this change costs a paltry $2.5m per annum in government revenue).

I’d love to see the Aussie Craft Beer Industry Association become as wide-reaching and influential as their US counterpart (especially because they gather some excellent data on sales growth and relative scale that is sadly missing in Australia). This small win speaks to the import role of lobbying (case in point: small wine-makers in Australia have had much more appealing rebates for years – perhaps it helps to be in rural seats and to have no shortage of owners from the legal community?).

Most importantly, I hope this excise shift fuels even more growth in the diversity (and success) of local brewers… so this Spectapular can be even larger next year.

Catching up with the umbrella seller fella (Part 3)

Finally, here’s part 3 of my interview with Steven Pawsey of Stevie Marx, a successful entrepreneur who is still undergrad student here at the University of Melbourne.  His company designs, wholesales and markets a growing range of umbrellas and other fun accessories. Here are three final questions (any more will have to come from you!):

André: With the luxury of hindsight, what would you do differently in setting up Stevie Marx?

Steven:This question has really got me thinking! I can honestly say I don’t think there is anything. I invested initially a minimum amount of capital. I have let it grow at a sustainable pace and I have worked hard on developing a spot in the marketplace for the brand (and now brands). The most frustrating thing about any company is time. You want things to happen quicker, you want to wake up each day and get extremely good news and forge onwards and upwards. But that isn’t reality. Companies like this (with the exception of extremely well-funded or unique brands) take more than 5 years. This is Stevie Marx’s third year and I think that the amount of progression and development in that three year period has been very good. I have always said let’s look back at the 5 year mark and really do a thorough analysis of the business then.

André: What do you know perceive to be your competitive advantages?  And how might these inform your next strategic move?

Steven:I would say Stevie Marx has a few distinct competitive advantages. First is the unique designs and branding the products carry. They speak directly to their target market, and know who to appeal to and how. Secondly, we have very sharp pricing strategy. Our compact umbrella range retails for $9.99 (and has from day one). Our competitors retail from anywhere from $14.99 to $19.99 with no or very boring/little design. We offer our consumers amazing designs at extraordinary pricing. The new C-Thru Umbrella range that will be in Priceline in May will hit $14.99, our competitors float around $19.99 or $24.99 without design.  Our products are not ‘cheap products’ they are competitive products. The market of umbrellas is one that is diluted in Australia, most retailers see it as a great margin grabber, we don’t have that approach. Most retailers know consumers will buy umbrellas regardless of price competitiveness when it rains because they don’t want to get wet. Stevie Marx knows that by offering a point of difference you can get great value and a great product at the same time. Stevie Marx’s strategic moves will continue to shake up the market for the sake of the consumer. There is no need to pay up to $19.99 for a boring black umbrella!

André: What’s next for Stevie Marx? Do you have a medium-to-long-term vision/goal?

Steven: Our most immediate goals are to continue to develop the Mini Marx Range and the USA expansion. We will continue to come up with fresh new designs at amazing prices. Our customers love us for this and so do retailers, because we give their stores a competitive edge. I would suspect in the next 12 to 24 months you will see a few new additions to the Stevie Marx Range, away from just umbrellas, rainboots, raincoats and handbag organisers! Watch this space!!

Great last couple of answers there – strategic realism combined with entrepreneurial bravado!

So, readers, do you have any questions you’d like me to fire at Steven? (post them as comments here and I’ll hassle about yet another round of interviews).

Catching up with the umbrella seller fella (Part 2)

Here’s the next episode in the Stevie Marx interviews. He’s a Melbourne entrepeneur and uni student selling fun umbrellas (and more)…

André: How has expansion into overseas markets made your business more complex?

Steven: The US market is a complex but lucrative market that can really bring any brand to a completely new level. Australian retailers have anywhere between 100 to 400 stores (with the major supermarkets having around 700-750 stores), in the States the smaller chains have around 500 and the ‘big guys’ have up to 4,000.

Most wholesalers in Australia have a hard time keeping up with the strict guidelines and demands of a national retailer here, but in the US the already complex nature of any deal is taken to the extreme. Things like things that are pretty basic here in Australia such as promotions, ordering, rebates, insurances etc. are much more thought-out and planned for. Luckily the team I am working with in the USA have an exceptional record and are really professional people. For example, I have found that my presentations to national retailers have improved probably by 40 or 50% just from working with them and developing the absolute best presentation possible so as to attract attention.

André: Do you find your products needed adaptation for different consumer tastes? If so, did this impose unexpected costs?

Steven: I have already noticed a difference in designs that are liked and ones that are not as well received by the buyers and ‘reps’ in the USA. I have my own personal opinion of just about every design ever been produced by Stevie Marx (and there are a lot of them), and I have normally found that my opinion has been matched by their performance in stores. There have been some designs I would put in my less preferred range that have I have received feedback from the States that I would never have imagined, like “the best design they have seen in years”. It is really interesting to see how some patterns and colours are more favourable in different retail atmospheres.

There is no doubt that the USA expansion has been an additional cost to the business due to the amount of work that was done on samples and presentations. At one stage we were creating over 700 samples to be sent to the USA of about 20 different umbrellas and 5 different gumboots and raincoats. Getting each individual made for the first time was extremely expensive (with the opening of moulds and the purchasing of small amounts of fabric for samples).

André: I note you still haven’t got the online store up and running? Does this reflect a shift in your perceptions of the value of e-commerce?

Steven: Yes, your right. On www.steviemarx.com we have yet to open an online store. Initially this was postponed due to the global financial crisis. We thought it was not worth the risk of developing at this stage. It has been something we’re hoping to do sometime before the winter season of 2010.

To some extent it does reflect our perception of the value of e-commerce. Umbrellas are really an impulse buy item, when you see it in a store and you think “hey that looks cool!” you might buy it. I am unsure of the amount of people that would go online to buy an umbrella from an online store. I definitely believe the Australian market has not yet fully embraced the e-commerce market as much as a market like the USA.

I must admit this has been one of the most difficult “to do or not to do “parts of the business. I have changed my mind about it numerous times. Business is all about generating income; non-income producing work is the last thing any company wants. An online store would take a certain amount of time and it could very easily become non-income producing work.

What do the readers think about the online store aspect?

Update: Part 3 is now posted here.

Catching up with the umbrella seller fella (Part 1)

Long-time readers of this blog might remember the series of interviews (1, 2, 3 & 4) I did with young entrepreneur Steven Pawsey, who (while a first year undergrad) had kicked off a nifty umbrella business under the Stevie Marx banner.

Fifteen months on, we have had another (lengthy) email exchange about the progress of his business. Here’s part one:

André: So, Steven, it’s been a while. What have been the big shifts for Stevie Marx over the past 15 months or so?

Steven: The past year or so has been an interesting time of growth and development from Stevie Marx, expanding the number of brands it has from one to three . We now have Stevie Marx for women, Marx - a unisex offering that opens up the male demographic, and Mini Marx for kids.

Fifteen months ago Stevie Marx only ranged one type of product in one retailer. Thanks to a lot of hard work ,Stevie Marx now supplies another two top Australian retailers, Super Cheap Auto and Boating Camping and Fishing (B.C.F) with the Marx brand. Together that is about an additional 300 stores nationwide.

Furthermore, the core range of compact umbrellas has been expanded to include an amazing large sized C-Thru umbrella that will be hitting Priceline in May! This higher dollar item is allowing us to reach out to more umbrella consumers nationwide at the more expensive but still affordable $14.99 – $19.99 price point.

The other exciting development has been the creation of the Stevie Marx Handbag Organiser Range that has been in Priceline for the past three months. This is our first move away from just the humble umbrella and the retail sales have been strong which has been extremely rewarding.

The Handbag Organiser is a PVC series of 5 pockets that allows women to store things like iPods, Sunglasses, Keys, Wallets, Pens all in one organiser that can moved from bag to bag. The success of this first range will hopefully lead to a development in this range to offer more material, sizing and design options shortly.

And the final major development over the past 14 months has been the early steps to create Stevie Marx USA. We have designed new ranges of umbrellas styles and complimentary products of gumboots and Rraincoats to tackle this market strongly and we have be getting exceptional responses from our first few presentations in the USA. No doubt this will the focus of the next 12 months.

André: What is the logic behind the three brands?

Steven: Stevie Marx, the female and original brand has created us an amazing platform for us to be recognised for our design work and retail value.

However, when you limit yourself at mass market to just one gender you are restricting your potential.

Thus, we implemented Marx and Mini Marx. Marx is a unisex brand that has some male designs and some female designs that can be ranged in more male dominated arenas such as Super Cheap Auto and B.C.F. Retailers don’t like brands in their stores that just don’t fit. Umbrellas are products that fit both genders for obvious reasons, but Stevie Marx does not due to its highly feminine brand. These brands don’t compete or conflict with each other, they more complement each other and it allows us to design on at a greater scope for all retailer in this country and the world.

As for Mini Marx the children’s market for rainwear is extremely solid and is one we have identified as one we would like to compete it. We have started presenting this range to national retailers and no doubt in the near future we will be able to name our first official partner to be ranging Mini Marx.

Andre: Do you use the same Chinese producer for all three?

Steven: Yes, my maker and I develop all the ranges together. He has the capabilities, so far, to make or get made all the products that we are developing or have developed.

Andre: Could you have launched with all three? Or did it require a build of awareness with your customers/distributors?

Steven: The answer to this question is probably yes.

However, I believe if we did we probably would not have been as effective at understanding our identity and target markets. Stevie Marx has built a strong brand very aware of its customer and the people that likes to buy Stevie Marx products. We are developing that now with Marx and soon to be Mini Marx.

The titled level of expansion allows you to firstly not overextend yourself and secondly to actually get what you’re doing right. We only expanded on the original Stevie Marx because we thought it was time and we were ready to take the next steps in developing a greater customers for the company.

When you develop more than one brand at one time you really do open the door for misjudgment and confusion in what you stand for. It also makes it easier when you are developing the second and third brand to not make the mistakes you might have made with the first brand and it normally takes less time to develop. I think it really only takes 1 or 2 seconds of looking at our products or website design for Stevie Marx to see who the target is and what service it provides- which is ideally what you need your brand to do.

I do admit it probably is a little easier doing that for a distinctive pinkish female brand than a more mild black uni sex brand, however these are the challenges you must face in product and brand development.

Stay tuned for the next instalment of this interview early next week. And start firing through some follow-up questions for Steven. He is a mightily obliging fellow.

Update: Here is Part 2 and Part 3.

Want to bargain together?

This story from the New York Times piqued my interest and has got my pondering the international transferability of a potentially profitable business idea.

The brainchild in question utilises social networking and web-based communities to build consumer bargaining power in negotiating cheap deals with retailers.  Now that in itself is not a particularly new idea, as buying clubs have existing before both online and off.

But this time round the business (here it is a mob called Groupon) focuses on using scale (and thus the promise of considerable bump-ups in customer traffic) to win over smaller scale suppliers of products and, increasingly, services.

This coalition building on both sides of the buy-sell equation helps to shift this intermediated relationship from one of virtual bullying (i.e. “If you all back me, I’ll go and squeeze every last penny out that nasty retailer/supplier by playing them off against their hapless competitors”) to almost an altruistic act of matchmaking and local boosterism (“Let’s all hang out and help out that nice new entrepreneur down the road build up some clientele… but at a group discount”).

In a world of Facebooking, Tweeting and web-based micro-entrepreneurs, how long until someone starts knocking on doors around Melbourne promising such love-ins?

(I eagerly await a comment now telling me of such a start-up).