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EDITOR’S COMMENT
Hello and welcome to the final edition of Business Review Australia for 2016
A
ustralia is rapidly becoming a go-to location for data center services, with companies from around the world storing crucial data in the country. We take a look at the rise of co-location data centers, of which there are already more than 100 with many more to follow. Our top 10 Australian brands also reflects well on the technology sector, with Brand Finance naming at least one tech giant in its most valuable line up. The legal sector is another area where technology is proving a force for good. The decline in demand for large legal firms has led to a wave of tech-savvy players entering the market, for whom the future looks especially bright. Our profiles section this month includes exclusive interviews with Casalingo Foods and Naked Wines, key crowdfunding supporter of many independent winemakers in Australia.
I hope you enjoy the issue and have a wonderful end to 2016. Â Nye Longman Editor Nye.Longman@bizclikmedia.com
3
CONTENTS
F E AT U R E S INTERVIEW
06 Redefining value in the Australian legal 06market PROFILE
76
TECHNOLOGY
The rise of co-location data centers
Casalingo Foods
14
TOP10 LIST
00
Headline for the article
22 52
Fujitsu
Australian brands
64
Naked Wines
C O M PA N Y PROFILES CONSTRUCTION 30 Holcim (Australia) Pty Limited (Holcim Australia)
SUPPLY CHAIN 42 JF Hillebrand
ENERGY 52 Fujitsu
FOOD & DRINK 64 Naked Wines 76 Casalingo Foods
42
JF Hillebrand
30
Holcim (Australia) Pty Limited (Holcim Australia)
Redefining
VALUE
in the Australian
legal market Writ ten by: JOHN O’HANLON
INTERVIEW The decline in demand for the work of law firms in Australia has set alarm bells ringing across the legal profession, calling into question the sustainability of the old models, but creating opportunities for a new agile and technology-savvy generation of lawyers THE EFFECTS OF the global financial crisis on Australia were delayed by the relative independence of its banking sector, and cushioned to some extent by the boom in demand for iron and coal, largely fuelled by China. Today the economy is under pressure: earlier this year an article in Forbes magazine placed China and Australia at the head of a list of seven countries ‘most likely to suffer a debt crisis’ within the next three years. That is not to say that Australia is facing full blown financial meltdown. In fact GDP per capita growth looks healthy and should 7
continue to stay buoyant over the next few years, but it’s fair to say that complacency has been driven from an economy that has grown steadily for the last quarter of a century. This uncertainty is affecting the demand for commercial legal services, which has trended downwards over the past five years, according to a 2015 report by The Melbourne Law School and Thomson Reuters Peer Monitor. The overall decline in demand is primarily attributable to the decline in demand for the industry’s three biggest practice groups (which between them represent 48 percent of all legal services provided): dispute resolution, banking & finance and corporate general, the report says. Overall demand apart, four major factors are disrupting the traditional 8
December 2016
models for legal services provision in Australia, as elsewhere in the world: • • • •
Consolidation among the global law firms In-sourcing by corporate legal departments New entrants to the legal services market Technology
Each of these factors plays into the redefinition of the age-old legal model rooted in the Inns of Court, traditional legal education practices and law firm structures. Despite the decline in demand noted above, there’s no danger of the legal services market drying up, but it is beginning
“
INTERVIEW
“
mediocrity. The war for top talent will intensify. Quality people will seek out quality firms that are well led and have a coherent strategy. Firms that don’t make the grade will simply fragment or fold.” Across the profession, the need to add value to the client is becoming urgent. This has led to the rapid ingress of the ‘big four’ accounting firms into the legal market as they redefine themselves as advisory consulting entities. Traditional legal firms, they argue, stop where the law stops and are unable to offer a full service solution. Bundling legal and accountancy with an element of technology innovation they have been able to leverage
There is little doubt that the Australian legal market is in the mature phase of the life cycle with declining demand, increased price-based competition and pressure on operating margins – Paul Douriaguine, Thomson Reuters’ Chief Technical Officer
“
to look very different. As the report concludes: “There is little doubt that the Australian legal market is in the mature phase of the life cycle with declining demand, increased pricebased competition and pressure on operating margins. In this environment or the ‘new normal’ as some refer to it, clients want more for less and it appears they are getting it. Other than a substantive lift in general economic activity or major regulatory change, it is hard to see what will accelerate demand in the short to near term. “In the past, a combination of high demand, naïve clients and old boys club competition meant even mediocre firms could thrive. It is clear the market will no longer tolerate
INTERVIEW
the ‘NewLaw’ concept and grow their own legal services offering. Nevertheless, whether they work in traditional legal practices, large or small, or in-house corporate or public sector law departments, practitioners will always rely on an information infrastructure to give them access to precedent, procedure and current regulation and legislation. This is provided by a range of courts and government agencies as well as specialist publishers, . One such publisher, Thomson
“We are offering our customers insight generation, not merely raw information as in the past” – Paul Douriaguine, Thomson Reuters’ Chief Technical Officer
Reuters, provides an extensive suite of content and business support materials for law practitioners. Able to deliver this global assets over cutting edge technology platforms, it has evolved painlessly into a role as a business support partner for the entire profession new entrants included. As Jackie Rhodes, Managing Director of Thomson Reuters Legal in Australia and New Zealand puts it: “We have a deep understanding of local needs, but equally there is an advantage to us being able to pull in those big global platform assets.” Thomson Reuters is successfully transitioning from being a content provider into a technologyfocused solutions business. This is a transition driven by technology, and by leveraging its own global platforms it is taking the opportunity to be a leader in the broader digital transformation of the wider legal sector. For example, when WestLaw AU was launched in 2011 it quickly gained 50,000 subscribers: 10
December 2016
well known in the USA and Europe as an indispensable resource for lawyers it is being developed to add practice management and project management capabilities. Paul Douriaguine, Thomson Reuters’ Chief Technical Officer (CTO), says technology will be able to derive insights from legal data that no amount of human research could hope to achieve. “We are offering our customers insight generation, not merely raw information as in the past.”
To this end the company is investing in thought leadership. It was an early adopter of IBM’s Watson cognitive computing technology platform, which represents a new era in computing where systems understand the world in the way that humans do: through senses, learning, and experience. It has been successfully implemented in fields such as education and medicine, and now Thomson Reuters uses it to leverage deep content analytics, natural language processing, decision 11
INTERVIEW
support and evidence-based learning. Clients will gain better use of their time and resources, which will make them more competitive and less wasteful – attributes that in the current market climate may spell the difference between survival and growth on the one hand, and extinction on the other. One of the most challenging aspects of this new phase of competition is that much of the investment to improve and innovate gets matched by rivals, the report concludes. “If everything
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December 2016
is matched, everyone stays roughly in the same position. For example, if all firms train their partners in sales skills, no one firm will gain an edge by being better at sales. For the firms that truly wish to outperform, the key lies in ‘softer’ capabilities that are harder to emulate. These include things like agility, discipline, execution, cultural cohesion, diversity and true collaboration. In our view these will be the traits of the firms that will fly in 2016 and beyond.”
The source of value
Procurement executives across the globe continue to see the potential they can unlock throughout the supply chain. They understand that business today is about engaging, collaborating, adapting instantly to evolving needs, and finding new sources of value. Getting that value, however, can prove a challenge.
TECHNOLOGY
THE
RISE
of co-location
data centers
Australia is rapidly becoming a go-to destination for companies all over the world for data storage. Here is an overview of the co-location data scene in the country, along with an outline of the major benefits reaped by organisations using the service Wr i t t e n by : TO M WA D LOW 15
TECHNOLOGY
DATA STORAGE IS big business. To put it into perspective, last year 416.2 terawatt hours of electricity was used to store information in data centers, 110 terawatt hours more than the entire output of the UK and around three percent of the planet’s total consumption. Analysts predict that the amount of gigabytes stored will soar by 300 percent over the course of the 16
December 2016
next decade, which only means one thing – massive opportunities for data center providers. Australia is already home to more than 100 co-location data centers consisting of multiple hot spots based on climatic areas and differing time zones. Though Canberra might be the capital city, it would be wrong to call it a capital of Australian data storage, with other
C O - L O C AT I O N D ATA C E N T E R S
cities including Sydney, Brisbane, Adelaide and Perth each housing colocation data centers comfortably into the double figures. Most of the country’s data storage sites are found on the east and south coasts. Over the past five or so years, the co-location industry in Australia has seen substantial expansion that has encouraged global providers of colocation, cloud and other services to
invest here. The data center services provider landscape in Australia comprises DC specialist providers, IT services firms, telecommunications companies and modular DC providers. While DC specialist providers such as Equinix, NextDC, Metronode, Global Switch and Digital Realty are the most dominant providers of co-location, IT services firms such as Fujitsu, IBM Softlayer, HP and 17
TECHNOLOGY
telcos such as Telstra, Optus and Macquarie Telecom provide managed IT services, which is the faster growing segment in the market. Due to the ability to add capacity on demand, modular DC providers are also becoming increasingly popular amongst cloud services providers and enterprises with special requirements. In June, DCD Australia attracted more than 300 industry experts who discussed a huge array of topics and challenges facing IT managers around the world. Speaking before the event, Kamal Nankani, Global Chief Enterprise Architect at GE Capital, spoke of the need for business in all industries to break silos between IT and facilities: “I think the key for our circuit is not to think of the cloud just from an infrastructure point of view, but also 18
December 2016
from an application point of view. “It is hard to break the silos between the infrastructure development and the application development, because for businesses, they want custom applications, or they want the application on the cloud, that they do not care about the infrastructure, or how the application is being developed. They want the services available.� A no brainer? Enter the co-location option. Often cited as the flexible alternative to on-site expensive hardware systems, co-location services increase the flexibility of infrastructure, the availability of data and the security of networks while driving down maintenance costs. The other major cost benefit comes in the form of scalability, with businesses able to pay for what they use as opposed to investing in fixed on-site capacity. Data center providers also provide crucial 24/7 upkeep and
C O - L O C AT I O N D ATA C E N T E R S
maintenance services and handle other potentially costly issues such as cyber security and tech updates. Many providers, including Telstra, also offer dual redundancy in many locations, meaning in the event of system failure, an identical copy ensures data is accessible at all times. Private, bespoke cloud networks and other applications created by data centers are also commonly adopted by enterprises not wanting to develop such processes in-house.
Momentum According to the Frost & Sullivan report, Australian Data Centre Services Market 2016, the overall market had an annual growth of 18.3 percent reaching $976 million in 2015, and is predicted to grow at annually at 12.4 percent till 2022, with the market reaching $2.055 billion by 2021. Co-location growth is predicted to grow annually at 11.4 percent till 2022, while managed hosting revenues is predicted to grow at 14.5 percent. Another market trend is improved 19
TECHNOLOGY
20
December 2016
C O - L O C AT I O N D ATA C E N T E R S
power densities in data centers. Customers pay for co-location services on a kW rate per rack basis, so cost to the customer is affected by a combination of power consumption and required footprint. As organisations opt for racks at higher compute power, they will still pay proportionate to the amount of power consumed, but at a reduced footprint. Many DC facilities currently run at a facility wide average of 2-3kW, but this is expected to increase significantly as compute power capabilities and efficiencies improve. By the end of 2016, the average kW per rack utilisation will reach close to 5kW, with many big enterprise customers with large compute power requirements requesting their infrastructure to run at very high power densities, between 20-30kW in extreme cases. Australian providers will therefore be seeking to improve power consumption and energy efficiency ratings as demand for highintensity data services grows.
21
TOP 10
AUSTRALIANbrands Wr i t t e n by : TO M WA D LOW
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December 2016
Who are the
MOVERS and SHAKERS
in 2016’s most valuable brand list?
Business Review Australia takes a look “BRANDS ARE THE single most important and power fulintangible asset in business today,” comments Mark Crowe, Managing Director for Brand Finance Australia. Every year the company ranks the country’s top 100 brands, combining a brand strength score with a royalty rate and revenues to give an overall valuation. “Strong brands create high ‘brand equity’ with customers, thus enabling a business to differentiate itself in the market, increase margins, sell greater volumes and promote
brand loyalty,” Crowe continues. “Successful organisations recognise the need to understand brand value and brand strength when making informed strategic decisions. By placing a financial value on such a powerful asset, it compels boards and management to understand and recognise the need for effective brand investment.” So which Australian brands has Brand Finance placed in its top 10 for this year? Here are the latest valuations, with some major leaps and falls since 2015. 23
TOP 10
BRAND VALUE: $4.2 billion, down 19 percent on 2015
BRAND VALUE: $4.9 billion, up 31 percent on 2015
BRAND VALUE: $6.6 billion, down eight percent on 2015
BRAND VALUE: $7.2 billion, down four percent on 2015
25
TOP 10
BRAND VALUE: $7.6 billion, up 20 percent on 2015
BRAND VALUE: $8 billion, up 15 percent on 2015
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December 2016
BRAND VALUE: $9.8 billion, up seven percent on 2015
BRAND VALUE: $10.2 billion, up 25 percent on 2015
TOP 10
BRAND VALUE: $10.6 billion, down four percent on 2015
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December 2016
BRAND FINANCE COMMENT: Woolworths has slipped to the number two ranking after being Australia’s most valuable brand since 2009. With sales expecting to slow at faster rates than rivals, the biggest challenge to Woolworths and other supermarket operators is coming from the German discount chain Aldi.
BRAND VALUE: $14.6 billion, up 37 percent on 2015 BRAND FINANCE COMMENT: With a 37 percent increase in brand value and underpinned by a cohesive customer advocacy strategy, Telstra
has gained the top place for Australia’s most valuable brand. It is testimony to Telstra’s continued brand strength which has driven a significant increase in value despite only a 3.6 percent increase in revenue. Telstra has also climbed 35 places to be ranked 110 in the Global 500. Increasing competition from Singtel-Optus and Vodafone Hutchison, especially in the mobile sector, points to the need for further investment in the Telstra brand both locally and overseas, in order to maintain its value and strength.
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BUILDING BRIDGES within the business Tasked with restructuring Holcim Australia’s procurement practices, Kelly Irwin transformed her team from a disjointed ‘complaints department’ to an engaged and integral part of the business
Written by Adam Turner Produced by Erika Kracer
HOLCIM (Australia) PTY LIMITED (Holcim Australia)
H
olcim Australia is a contracts and rarely left the office,” leading supplier of Irwin says. “The business didn’t aggregates, concrete leverage the potential strengths of and precast concrete products to the procurement department – if support projects from residential and there was any interaction with the commercial developments to major procurement team it was only to infrastructure. When management complain about something. identified the opportunity to improve “Today we’ve turned that around procurement processes in the and procurement has gone from a business, it handed the complaints department to an job of turning things effective unit which is really around to Kelly aligned with the business Year Founded Irwin – Head of and adds value. I’ve Procurement implemented what for Holcim I call the ‘the bums (dates back to 1901 in Australia and off seats’ policy Australia previously operating New Zealand. – you can’t be a under the well known Irwin’s good procurement ReadyMix and Humes brands) success saw person if you’re sitting her recently at your desk all day, awarded the CIPS every day: you need to Procurement and Supply get out there in the thick of it.” Chain Management Professional Irwin believes firmly in the of the Year, while her procurement importance of spending time building team has been awarded the strong and strategic internal and Holcim Australia Internal Customer external relationships. She adds: “A Excellence award three years in a row. successful procurement function “Previously there was no real must clearly understand the needs engagement with the business, the of their stakeholders, both internal procurement team just handled customers and external suppliers
2009
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December 2016
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and this can only be done by regular engagement either face to face or by telephone - not simply sitting in office emailing. This is what the ‘bums off seats’ approach is all about.” The transformation included centralising procurement processes, taking away the ability for staff members throughout the business to raise purchase orders without approval. The procurement team now manages the purchasing of everything from pencils to explosives, along with services such as travel. Centralising purchasing decisions and processes presented change management challenges for the business, which Irwin approached in a ‘consultative fashion’. It helped to have the top-down support of senior management – not just locally but also from the LafargeHolcim head office in Zurich – but Irwin says this isn’t enough to ensure success if you can’t engage the various stakeholders, win them over and get them to come to you willingly. “The change management process was around communicating
Kelly Irwin Head of Procurement for Holcim Australia and New Zealand
CIPS Procurement and Supply Chain Management Professional of the Year, Irwin is responsible for a spend of over $900m at Holcim Australia and New Zealand. She has implemented a centralised structure and process aligned with the global business, as well as developed a highly effective procurement team which has been awarded the Internal Customer Excellence award three years in a row.
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CONSTRUCTION
with people, making the business, which requires getting sure they understood out of the office and talking to people, what was happening and the even if it means acknowledging your escalation procedures in place mistakes and learning from them. If if there was an issue,” she says. you’re just trying to put a positive spin “We had to sell ourselves to the on things and pretend everything is business and a big part of it was also perfect then you lose that credibility.” ensuring they could see the benefits of To help establish the procurement the changes and how we were adding department’s credibility within the value, which we supported by business, Irwin vowed there developing some really was no problem that good reporting tools to was too small for the improve visibility into team to address. the procurement One of the first process.” issues it tackled Number of employees For such a was complaints transformation regarding work to succeed, it pants being is important to too hot for some engage with the outdoor projects. wider business to prove “It might seem like a your worth, Irwin says. little thing but I knew we needed “That means truly understanding to show that we could get things the business – understanding what all done and it was a stepping stone in the stakeholders need from your team strengthening our relationship with and also how you can proactively the wider business,” she says. add value, streamline processes To take things to the next level Irwin and deliver synergies,” she says. recruited staff strategically, looking for “You need to establish and maintain people who had specific experience your credibility and integrity within in the area they’d be working with
3,000
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HOLCIM (Australia) PTY LIMITED (Holcim Australia)
rather than just generic procurement skills. A mix of procurement experience and wider business expertise, with a cross pollination of skill sets within the department, ensures the team has the skills to connect with the business. Holcim Australia primarily has a direct spend base, purchasing directly from suppliers, rather than an indirect spend base via third parties such as consultants – meaning the procurement team needs to really understand the business and its purchasing requirements. “They were a fairly new team who were, in some instances, coming into quite a challenging environment because they were taking procurement authority away from some staff and becoming a more integral part of their business processes,” Irwin says. “It was crucial that our procurement people really understood the business areas they were working with, in order to gain respect. “Despite these challenges our staff engagement score within the procurement department was very
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December 2016
high at 80 percent. When we asked the team why they were so satisfied they said it was because they could see the difference they were making and felt like we had their back when they found themselves in a difficult situation. From my perspective, it’s much easier to sell yourself to the business when your staff are engaged and love what they do.” The procurement transformation program coincided with the downturn in the mining sector, which forced the business to refocus its sales pipeline as well as its spending practices. A drop in spending power means a drop in negotiating power, but procurement’s closer integration into the business offers more opportunities to deliver value through process improvements, efficiencies and improved supplier relationships. Centralising and standardising procurement practices, while increasing visibility, afforded Irwin’s team the ability to rationalise the supply base and gain leverage with suppliers where practical. The shift allowed Irwin to emphasise the importance of the procurement
CONSTRUCTION
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HOLCIM (Australia) PTY LIMITED (Holcim Australia)
department and encourage business units to view the procurement team as a powerful tool at their disposal. In the last few years the business has increased its focus on sustainable procurement, including the kind of suppliers it works with and how it works with them. Today sustainable procurement is integrated into Holcim
Australia’s and New Zealand’s dayto-day operations and Irwin says it’s always looking for ways to identify and manage risks in the supply chain – whether that be around health and safety, social and corporate responsibility, or the environment. Lessons learnt during Australian implementation greatly assisted when integrating Holcim’s
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December 2016
CONSTRUCTION
Holcim - Kelly Irwin and Team
New Zealand business into its centralised procurement approach. Again, engagement was key as the business was different and had different pain points. “Now that we’ve got centralised
control, standardised data coding and more granular visibility we’re in a much stronger position to make informed procurement decisions and back them with solid numbers,” says Irwin.
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GOOD to the LAST DROP
How JF Hillebrand Group capitalised on the growth of Australia and New Zealand’s alcohol industries Written by Adam Turner Produced by Erika Kracer
JF HILLEBRAND GROUP
F
ounded in Germany in 1844, servicing freight barges along the Rhine, today JF Hillebrand has a presence in every major beer, wine, and spirits market – both production and consumption – around the globe. With its headquarters in Mainz, Germany, the business has more than 58 offices around the world with a workforce of more than 2,500. Locally, JF Hillebrand has offices in Sydney, Adelaide and Auckland. Australia and New Zealand are known around the world more for their wines than beers or spirits, with 80 percent of JF Hillebrand’s local business focused on exports and only 20 percent on imports. JF Hillebrand deals with more than 500 customers throughout Australia and New Zealand, amongst which large clients are industry stalwarts such as Treasury Wine Estates (responsible for Penfolds and Wolf Blass amongst other brands), Accolade Wines (Hardys), Pernod Ricard Winemakers (Jacobs Creek), and Casella Wines (Yellowtail). While these customers each ship several thousand containers each quarter, JF Hillebrand also caters to smaller producers who may ship as little as a single case of wine each year. The United Kingdom is Australia’s largest
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December 2016
S U P P LY C H A I N
export destination by volume accounting for 32 percent of all litres exported. Interestingly, while China only represents 12 percent of litres exported, it has just become their number one market by value and continues to grow. The UK market is heavily influenced by the major supermarket chains such as Tesco, Sainsbury’s, Marks & Spencer, and Waitrose, with more than three quarters of this wine shipped in bulk and then bottled in the UK. Bulk wine travels across the globe by sea in 24,000-litre flexitanks fitted inside
standard 20 foot shipping containers. “Shipping wine overseas in bulk can offer advantages compared to finished bottled product both financially and environmentally while preserving the quality of the wine. Indeed the quality of wine arriving overseas in flexitanks is no different to that bottled in Australia, due to the wine being less affected by temperature shifts experienced when crossing the equator en route to the Northern Hemisphere,” says Michael Frogbrook, Managing Director for JF Hillebrand Australia.
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JF HILLEBRAND GROUP
Given the evolution over the last decade of the major global wine markets to ship in bulk and bottle at destination, in 2007 the JF Hillebrand Group had the foresight to purchase Trans Ocean Distribution (TOD), the market leader in flexitank production and technology. This acquisition included three factories in China, Malaysia, and South Africa as well as a dedicated R&D
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December 2016
team who continue to develop and enhance the flexitank product including tailoring specific bespoke solutions for individual customers. Shipping lines were initially hesitant at the concept of fitting flexitanks inside standard containers, as early efforts would cause containers to bulge – making it difficult to slot them amongst other containers on a ship. Containers equipped with
S U P P LY C H A I N
flexitanks also need to be handled with care, especially on trains and trucks, due to the forces at play when moving such vast amounts of liquid in a single container. However having an in-house manufacturing base for flexitanks (and other industry related products) placed JF Hillebrand Group in a unique position of being in full control of design, quality and performance of the flexitank - and the technological advances made have now virtually eliminated these concerns. As with many technologies there are numerous options available but due to a number of incidents with bulking tanks leaking on ships and wharves, most reputable shipping lines now refuse to carry flexitanks if they haven’t been approved by an independent body – the Container Owners Association (COA). JF Hillebrand Group is one of only two approved suppliers. In some countries the import duty on bulk wine is lower than bottled wine, giving JF Hillebrand another economic advantage, plus bottling at the destination helps create local
Michael Frogbrook
Managing Director of JF Hillebrand Australia
“The carbon footprint of a bottle of New Zealand wine on a UK supermarket shelf
WAS MUCH LOWER than the footprint of a bottle of French wine on the same UK supermarket shelf”
– MichaelFrogbrook, Managing Director of JF Hillebrand Australia
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JF HILLEBRAND GROUP
jobs. The use of flexitanks also allows Australian wines to significantly lower their carbon footprint from the vineyard to the shelf, which is important in the UK market where many retailers include carbon footprint information on product labels. “This was highlighted a few years ago at a major wine show where the carbon footprint of a bottle of New Zealand wine on a UK supermarket
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shelf was much lower than the footprint of a bottle of French wine on the same UK supermarket shelf,” Frogbrook says. “To put that in perspective, Auckland is over 12,000 miles away from London while Paris is only 200 miles away – the carbon footprint per litre when shipping wine in bulk across the world is tiny.” Bearing in mind that depending on the style of the wine and its region of
S U P P LY C H A I N
origin it might have to be bottled in the region of production, meaning that it cannot be transported in flexitank. JF Hillebrand offers a multitude of valued added services to the beer, wine and spirits industry such as transport management, information management, cargo care & safety, integrated logistics solutions, and customs brokerage. Underpinned by a bespoke
operating system (used by all JF Hillebrand offices globally) developed in-house by their own dedicated IT division, it is totally customised for the industry. The company offers customers free access to its various logistics software products covering sales, operations, finance and supply chain management, including a real time order tracking tool. Additionally the company creates interfaces
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Proud Partners to J.F. Hillebrand Australia
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Success is always uplifting! JF Hillebrand is not just your beverage forwarder. With its wide range of import and export supply chain facilities (including inland freight management; warehousing and specialised services) JFH is helping to drive the industry forward in every way. Another great brand is Hamburg Süd. With our high-tech equipment, sensitive cargo care capabilities, global services network and frequent, reliable schedules we’re one of JF Hillebrand’s principal partners. Hamburg Süd – fine wine’s favourite line. No matter what. www.hamburgsud-line.com
Joe Marsili
Arthur Theodos
Commercial Director Australia
Financial Controller for Oceania
“Indeed the quality of wine arriving overseas in flexitanks
IS NO DIFFERENT TO THAT BOTTLED IN AUSTRALIA, due
to the wine being less affected by temperature shifts experienced when crossing the equator en route to the Northern Hemisphere”
into customer ERP systems which eliminates a lot of manual data transactions between both parties reducing errors, saving time and generally increasing efficiency. “In a more a more competitive environment, our clients need integrated logistics solutions enabling them to better anticipate and control the efficiency and global costs of their supply chain in the long term.”
– Michael Frogbrook, Managing Director of JF Hillebrand Australia
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THE POWER to process Written by John O’Hanlon Produced by Josef Smith
ENERGY
Fujitsu entered the Australian market in 1973 and today provides key ICT infrastructure to both public and private sectors. It is also one of Australia’s leading data centre providers, leading the technology market in sustainable practices
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veryone is aware of the impact technology has on the way we live, and most people know that as the Internet of Things (IoT) gathers momentum a further transformation will happen. Smart cars, smart appliances, smart buildings, and smart clothing are just some of the
things that promise to enhance our lives, and at the same time the soft aspects of life like medical, educational, financial, and legal services are being transformed by the application of big data. Fewer people understand that the ‘the cloud’ is in fact a world embracing
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network of physical servers, most of Australia’s public sector, financial of them located in data centres. services, retail (it’s Fujitsu that keeps Fewer still have any idea what data the point of sale services going for centres are or even where they are: some of Australia’s major retailers) certainly not the amount of power and the national airline Qantas. they use. Ten years ago, they used an With that hat on he supports these imperceptible proportion of electricity clients’ environmental performance consumption: today they account targets. “When doing consulting for some three percent work we benchmark to see of global electricity where they stand, and supply and two look for the quick I find that even percent of total wins first,” he says. companies that greenhouse gas “Sometimes profess to be green, emissions. Ten that’s just a policy and committed to 100 years from now change or putting percent renewable that is expected in a power meter. power are missing out to reach ten Or checking on many opportunities percent. the actual power to do better consumption Advice and of equipment consultation like laptops against Lee Stewart has been the manufacturer’s leading Fujitsu’s strategy to make claim before purchasing. sustainability a part of its DNA “I find that even companies that for the last five years. As Head of profess to be green, and committed Sustainability for the Oceania region, to 100 percent renewable power are he is part of a large sustainability team missing out on many opportunities within the global company. He does a to do better.” When you consider lot of consultancy work with Fujitsu’s that for a bank, 70 percent of its clients, which include large swathes energy costs are associated with
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Fujitsu has their entire Data Centre portfolio rated proving that they operate at 27% more efficient than the industry average
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Schneider Electric and Fujitsu: Delivering energy-efficient Data Centres For over 15 years, Schneider Electric has been a data centre infrastructure technology provider for Fujitsu across Australia. By applying simplification and innovation at every level, Schneider Electric has future-proofed and redefined data centres, and addressed the balance of speed without compromising availability or operational efficiency. The data centre solution integrates the latest in IT, uninterruptible power supply (UPS), computer racks, PDUs, plus low voltage and medium voltage electrical technology to achieve reliable and sustainable facilities. Fujitsu clients can expect to see significant improvements in energy efficiency through enhanced data centre design and management technology. Data Centre Innovation at every level Data centres are the centre of everyone’s digital life. Digitisation, and the growth of IoT are going to place huge demands on the world’s networks and data centre infrastructure. Growth in the cloud and at the edge is creating a distributed architecture that will require a new way to manage holistically. We need to ensure data centres physical infrastructure can adapt quickly to support whatever the future brings, without compromising availability or operational efficiency. Schneider Electric’s commitment to simplifying data centres in the cloud and at the edge – using our lifecycle approach, digital tools, connected offers and digital services – will facilitate addressing the challenges in the new digital world. “We build energy management and automation technologies that ensure Life Is On everywhere, for everyone and at every moment. We engineer solutions to make energy safe, reliable, efficient, sustainable and connected. We invest heavily in innovation, connecting our products and systems through the Internet of Things to our portfolio of software, making energy more distributed and connected, “ said Joe Craparotta, Vice President for IT Business and Strategic Segments, Schneider Electric. About Schneider Electric Schneider Electric is the global specialist in energy management and automation. With revenues of ~€27 billion in FY2015, our 160,000+ employees serve customers in over 100 countries, helping them to manage their energy and process in ways that are safe, reliable, efficient and sustainable. From the simplest of switches to complex operational systems, our technology, software and services improve the way our customers manage and automate their operations. Our connected technologies reshape industries, transform cities and enrich lives. At Schneider Electric, we call this Life Is On.
www.schneider-electric.com.au
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IT, the amount of value that Fujitsu can add becomes apparent. His conversations with clients these days have moved up to board level as the reputational and financial gains to be made are made clear. But like charity, sustainability begins at home. Fujitsu has more than 100 data centres round the world. Six of these are in Australia, and the company has been among the first to grasp the energy nettle. Fujitsu’s 17,500 square metres of data centre space accounts for 97 percent of the company’s greenhouse gas emissions. The data centres accommodate Fujitsu’s own servers and cloud infrastructure as well as a large amount of space dedicated to colocation services. Each of the data centres uses as much power as a small sized town. Sustainability - a global imperative Most of the power available in Australia is generated from coal: renewable alternatives are making inroads but the electricity they generate is still more costly. Basically, most of Australian
power is ‘dirty power’. Stewart tells how even his thinking, driven by a passion for sustainable development as it already was, was given a jolt at the Australian Emission Reduction conference in Melbourne. “The former Prime Minister of Kiribati Anote Tong spoke about how he has already bought land in Fiji to relocate his people. It was his speech to COP21 in Paris that swayed the adoption of a 1.5-degree target for global warming when he explained that even that would not be enough to save his entire country, which is only just above sea level, from being swamped. Inspired by Anote Tong’s words he wants to drive forward an initiative that has been dear to his heart from day one. “When I took this role over five years ago our data centre managers were doing very good work but what I found frustrating was that the power use effectiveness (PUE) metric that we use in our industry was not being applied transparently.” PUE measures the ratio between the total power used by the data centre and the energy delivered to run computing power vs. the overheads
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Fujitsu Australia Head Office. The recent move to a new office with activity based working has saved over 60% in office energy costs
such as cooling, backup power and lighting. A ratio of 1:1 would mean that no energy at all was used for cooling or lighting. “We set our interim target at 1.6, but I found it frustrating that competitors were making unverifiable claims of 1.2. So, I was very excited when the government announced it was going to introduce independently validated rating of PUE.” Transparency for clients and regulators The federal government brought in the National Australian Built Environment Rating System (NABERS) to assess data centres and give them a star
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rating, with one star for unsatisfactory, and six for market leading performance. The system was already familiar in the construction industry, where it has been used for a decade to rate the environmental performance of a building, rather like LEED in the USA. Before this happened, it was too easy for data centre owners and operators to make claims they couldn’t achieve. “Sustainability is all about transparency and honesty,” says Stewart. “Now you need twelve months’ of energy bills before you can be audited by a trained assessor who has been through a course run and accredited by the government. They
ENERGY
audit the meters and equipment, and average out your energy load over the year minus your IT load, which gives you a reliable PUE rating.” In June 2016, Fujitsu achieved an Australian first, gaining NABERS Energy ratings across its six data centres. It publishes all its ratings on the NABERS website, so all its clients can be assured it’s achieved an average rating of 3.75 stars. Its target is to take the portfolio up to 4.5 by 2020. Suddenly the language changed, says Stewart “The customers get it: it gives them a credible assurance of our energy efficiency efforts and also provides us
with a common language that works globally. And the internal stakeholders get it – I hear our data centre people discussing what they need to do to get a half star better. We were the first to adopt it, the first to submit a portfolio, and we are now driving the market to make sure our customers ask for a NABERS rating if they are looking for hosted space. “More than that, we are working closely with state bodies to ensure it is adopted and taken up as a standard ‘business as usual’ practice.” A good example of this is the recent
Lee Stewart at the New Fujitsu Australia Head Office at Macquarie Park in Sydney
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NABERS LEARN MORE
www.nabers.gov.au nabers@environment.nsw.gov.au
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announcement by the government of New South Wales that by 2017 it will no longer use any data centre space with less than a 4.5-star rating. It has been a rewarding journey. Lee Stewart likes to differentiate Fujitsu from other data centre operators by the customers, whose interests he puts first. “Our industry often gets bogged down in the technical detail and tends to lose sight of the big picture, the overall transparency and assurance for our customers, which is a big driver.” He has been working on a major new report, the Australian SMARTer2030 Report, jointly produced by Fujitsu and Telstra, Australia’s largest telecoms company. This concludes among many other things that as ICT becomes less expensive and more accessible, billions more people around the world will become connected by 2030 improving their income potential and wellbeing, and that even in Australia there is significant opportunity for ICT to deliver substantial social benefits, equalising access to services and allowing full participation in
society, regardless of location. The report speaks of the broad effects of ICT on the human race, but it should never be forgotten that every transaction, every communication, every search and every automated response is touched by many data centres. It’s in everyone’s interests to achieve monumental levels of upscaling in a sustainable manner.
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CONNECTING BOUTIQUE WINE LABELS DIRECTLY WITH THEIR CUSTOMERS, NAKED WINES PROVIDES CROWDFUNDING TO ENSURE THE DREAMS OF INDEPENDENT WINEMAKERS DON’T WITHER ON THE VINE Written by Adam Turner Produced by Stephen Johnson
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aunched in the United Kingdom in 2008, Naked Wines was founded by a group of friends led by South African-born entrepreneur Rowan Gormley, who had formerly served as Richard Branson’s in-house venture capitalist and helped establish Virgin Wines. After finding success in the UK, Naked Wines expanded to Australia and the USA in 2012 and today has more than 50,000 Australian members. Shunning the traditional ‘wine of the month club’ model, Naked Wines instead asks members to deposit $40 per month into their account – with the money used to fund projects by 35 independent winemakers across the country. Referred to as ‘angels’, as in
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angel investors, members can use their accumulated credit to purchase wines at a discount of at least 25 percent, with free metropolitan next-day delivery. There is no long-term commitment – members can cancel at any time and withdraw unused credit from their account. Naked Wines also sells wine to the general public, although some wines are only available to angels. The business was built on the simple idea of establishing a wine retailer which works for both winemakers and their customers, rather than against them, says Greg Banbury – one of Naked Wines’s original founders and now Managing Director
FOOD & DRINK
of Australian operations. “We started Naked Wines because we realised the wine industry was totally broken. The two most important people, the wine drinker and the winemaker, were the two people getting the worst deal,” Banbury says. “Meanwhile the retailers were sitting in the middle, screwing the suppliers and screwing the consumers. We figured this could only go on for so long,
so we formed Naked Wines to tap into that opportunity.” “The problem with the traditional wine club model is that there’s no inspiration – you get sent a box of wine you didn’t choose every few months and you don’t know anything about the wines or the winemakers. It’s inertia selling, hanging in there until the subscriber finally cancels, but we felt there was a better way.” Great winemakers tend to
“We tend to try and focus on the winemakers’ stories, which is why the social media aspect of the business model is so important”
“We started Naked Wines because we realised the wine industry was totally broken. The two most important people, the wine drinker and the winemaker, were the two people getting the worst deal” be terrible salespeople and great salespeople tend to be terrible winemakers, according to Banbury, so the idea was to free up talented independent winemakers to focus on their craft while Naked Wines handled sales, marketing and fulfillment. The crowdfunding model allows Naked Wines to provide capital to fund projects while reducing risk for winemakers, granting them the freedom to follow their passions. “A winemaker might come to us and say ‘hey I found this amazing parcel of shiraz and I’ve always wanted to make wine from there, can I go buy the parcel?’” Banbury says. “We’ll say ‘yes, absolutely, we trust you as a winemaker,
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go for your life’. We send them the cash, they buy the grapes and when the wine is ready they box it all up. They ship it to us and we handle everything from there – we have warehouses in Sydney, Melbourne and Perth.” Naked Wines’s business model also has a strong focus on social media, with its app connecting winemakers and wine drinkers so members can both offer feedback and feel more connected to the winemakers they are supporting. It also recently hosted a tasting event in Sydney where members could meet winemakers face to face. Publishing updates and interacting with customers is mandatory for winemakers, as it is such a key element of driving
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Greg Banbury,
Managing Director, Naked Wines Australia With more than 10 years experience in the wine retail industry, Greg Banbury has worked across a ride range of roles including customer service, operations, sales, IT, marketing and project management, strategy, finance and creative. He was a founding member of Naked Wines in the United Kingdom and later moved to Australia to act as Marketing Director and Managing Director.
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customer engagement. Some are reluctant at first, and Naked Wines has parted ways with several winemakers who did not want to embrace the social media side of the business, but Banbury says most come around when they see the boost in sales figures for winemakers who engage with members. “At the tastings the winemakers can’t believe it when they’re treated like rockstars, because they’ve built up such a strong connection with their customers,” he says. “Winemakers are usually tucked away behind the scenes, they’re not used to being front and centre, but it’s part of what makes the Naked Wines model such a success.” “The thing that the winemakers love the most is the direct communication with the people that drink their wine. They’re not talking to a wine buyer in a suit. They’re not getting feedback in spreadsheets and graphs. They’re getting qualitative feedback from the people that
are drinking their wines, and for a winemaker that is priceless.” Naked Wines has also built up a community amongst its members, with the service offering wine recommendations based on what others are drinking. Rather than
“The thing that the winemakers love the most is the direct communication with the people that drink their wine. They’re not talking to a wine buyer in a suit. They’re not getting feedback in spreadsheets and graphs. They’re getting qualitative feedback from the people that are drinking their wines, and for a winemaker that is priceless” w w w. n a k e d w i n e s . c o m . a u
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Sam Plunkett and his wife Bronwyn naked winemaker
simply making recommendations based on what other members have purchased, the service looks for people who share similar tastes in wine based on their feedback. The service is not aimed at wine connoisseurs, Banbury says, as that market segment is already well catered for. Instead it is aimed at wine drinkers dissatisfied with the way major supermarket and liquor chains treat their customers and winemakers. Part of their mission is
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to educate Australian wine drinkers about their options beyond the major retail shelves and help them understand exactly where their money goes when they shop with Naked Wines. Happy suppliers providing great products to happy customers creates a ‘virtuous circle’, he says, rather than a race to the bottom on price and quality. “We tend to try and focus on the winemakers’ stories, which is why the social media aspect
Daryl Groom
naked winemaker
“At the tastings the winemakers can’t believe it when they’re treated like rockstars, because they’ve built up such a strong connection with their customers” of the business model is so important,” Banbury says. “Once you tell that story people get what Naked Wines is all about, people get onboard and the model is built on loyalty from both customers and winemakers.” “On top of that, Australians love supporting the underdog and that’s exactly what we’re doing – giving the little guy a chance against the powerful supermarket groups who are squeezing their suppliers and
Bill and Claudia Small naked winemakers
Jen Pfeiffer
naked winemaker trying to produce their own label wines in an effort to drive down prices while maximising profits. Naked Wines doesn’t screw anyone to keep prices low and our success confirms our belief that there’s a way to do business where everyone can win.”
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Casalingo: the taste of
Tradition
Written by John O’Hanlon
Produced by Stephen Johnson
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Casalingo is an Italian word associated with home cooking, and though Casalingo Foods is expanding fast in its native Australia and moving into new markets overseas, the standards of Italy still prevail in this family firm
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ustralia is defined by its diversity in culture and the welcome it has given to people from across the world wishing to make their future there. Though Italians have been settling in Australia since the 19th century, there was a spike in immigration after the end of the Second World War, mostly comprising skilled
tradespeople and craftsmen. It was during the 1950s that many construction business were started, some of them now among the largest in the Asia-Pacific region. The food industry was also a big beneficiary of Italian know-how, and when brothers Francesco and Carmine Ventura brought their family tradition of producing prosciutto and other products local to their home in Abruzzo, they set about establishing a similar business in their new homeland. For the next 30 years Carmine and wife Angelina continued to make Italian delicacies from their North Fitzroy butcher shop. Carmine Ventura (not the same one but his grandson and namesake who is now General
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Manager of Casalingo Foods) explains the company’s subsequent history. “It was about 15 years ago that my father Domenic and I made the decision to take the company out of retail and to concentrate it at the site we occupy now in Clayton, a suburb of Melbourne.” This was the start of Casalingo Foods, aimed at restoring the company to its roots as a manufacturer of Italian meat products, or smallgoods as they are known in Australia. The category of goods produced includes premium ham products like prosciutto and pancetta, seasoned pork in the form of porchetta or lonza, and sausages from Italian salami and salsicce to chorizo and other European style variants. To give an idea of the growth of Casalingo over the last 15 years, it started out with just four different products and today has more than a hundred lines. The company has grown by strategic acquisition as well as organically. In 2011 it added Fiora distributors to its portfolio, an established family owned and operated business famous for its
“Our strategy was to look to the growth opportunities in Asia, IN THE HOSPITALITY SECTOR in particular” – Carmine Ventura, General Manager
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General Manager
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Cacciatore salami. Earlier in 2016 it bought Crackle & Co, producer of a popular pork ‘scratchings’ snack. “When we acquire a business we bring production on to our existing site, which cuts costs,” says Ventura. “The crackle business was struggling to survive on its own, but it is a
by-product of the meat we use for our other products, and enables us to add real value from material we’d otherwise have to dispose of at low cost.” With Casalingo’s client base and distribution network in every part of Australia open to it, the crackle business is now finding new markets,
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and it is already growing fast. Growth at the Clayton site has been achieved by gradually purchasing adjacent factories, investing in modern equipment, and taking advantage of economies of scale. From just one 800 square metre factory in 2001, Casalingo Foods now occupies five premises, all interconnected one with the other. “We have an acre under roof,” Carmine explains. “For a small manufacturing plant employing 50 people it is quite advanced. We have continually invested in modern ovens, mincing and cutting equipment, for example. Our future plan is to invest in automated packaging lines. We are heavily involved in
foodservice but if we want to be a bigger player in retail we need the latest machinery to give us that premium look.” For now, though, foodservice is the focus – the wide range of pubs, hotels and other hospitality outlets that form the lion’s share of the company’s client base. It was with this in mind that a new investor was brought in to the company, the group headed by the entrepreneur Chris Morris. The Morris Group embraces a major hospitality chain CLG, with large number of pubs, hotels, casinos, restaurants and resorts. Casalingo supplies all of these with
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smallgoods. Together the companies are turning their attention to export markets in the Asia-Pacific region. “We are one of the few smallgoods companies in Australia that has a license to export.” It took a couple of years’ hard work to get that license from the Australian government, he adds, but it was work that paid big dividends. From zero three years ago, 30 percent of Casalingo’s turnover now derives from export. Singapore and Hong Kong are the prime markets for premium products, which are airfreighted daily
to distributors who forward them to the end users on the same day. There is also a very healthy market in the Pacific islands for sausages and other smallgoods with a longer shelf life, which can be sent out by sea. The strategy of focusing on export was arrived at following a realistic analysis of the domestic food market, which is dominated by large supermarkets such as Coles and Woolworths. The volumes available from these channels are offset by the squeezed margins and long term uncertainty of demand that characterises them. “Our
“We are ONE OF THE FEW smallgoods companies in Australia that has a licence to export” – Carmine Ventura, General Manager
strategy was to look to the growth opportunities in Asia, in the hospitality sector in particular, and the increasing popularity of Western style foods. We decided rather than competing in the supermarket space we would continue with the foodservice offering which we do well, and push into Asia.� It was this strategy and the company’s clear success with it, he says, that attracted the attention of the Morris Group. The association brought in an interesting addition to the business in the form of Greenvale Farm. A growing
number of Australians are taking an interest in the sustainability and ethical production of the food they eat – and are willing to pay a premium for that. Greenvale Farm is both a free-range farm and a brand in the market. It still caters for a relatively small niche within the Australian market, but Casalingo has already been able to introduce it to Singapore and Hong Kong and Ventura sees a healthy potential for growth in these markets too. Pork, the raw material for most Casalingo products, is in short supply in Australia, which has pushed up prices and made it difficult to secure
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supplies. Though it would ideally like to use only Australian-produced meat it has had to start importing pork from the USA, Canada and Europe for some of their sausages and cooked meats. It is ironic that it should be cheaper to source raw materials from such great distances, but if the company is to continue to grow as fast as Domenic and Carmine Ventura plan, there’s no alternative.
Father and son have travelled to Spain to learn the secrets of chorizo and have had to embrace the tastes of multicultural Australia, producing German, Polish and other regional products that are in demand, and not only from the descendants of these immigrants. Such a large variety of SKUs is making the company which has hitherto relied on traditional and predominantly manual methods
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for stock, process and quality control, look again at its systems. “We are moving to a point where we will bring in more IT-based quality management systems and ERP systems that can help us with tracking our goods and streamlining our ordering systems too,” says Carmine. He relishes the challenge of driving the exports to greater levels, and foresees that within five years the factory will be producing double its present volumes of product. “Next year we will be focusing on new markets like Japan and
Year founded
2001
Indonesia. These are desirable markets that we are not in yet but where there is definitely a strong demand: we have tested the water at trade shows and with trade missions that have come here.” Perhaps unexpectedly, Dubai is also offering tempting chances. Casalingo is working with a distribution partner that holds a license to sell pork products to expatriates and tourists there, and he is hopeful that an import license will soon be forthcoming – just one of the affluent global markets he is keen to crack.
Number of Employees
Industry
50
Food service
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