Capillano: The growth of a small business

At the heart of some of Australia’s biggest brands, lies a small business. How did these small companies create such big names? Here are their secrets to growing brand and sales, without expanding the business.

Capilano honey can be found in many Australian pantries. Although it is a well-recognised name, many people don’t realise that behind the scenes of this big brand is a business with only 100 employees. 

Roger Masters, Capilano Honey managing director, thinks of Capilano as a medium business with a lot of smaller businesses hanging off. Why? Because the well-known honey that we see on supermarket shelves is actually made from the supplies of more than 500 Australian beekeepers. 

So how did this honey packer become so well known? It wasn’t by expanding their physical presence.

 “The brand developed as we progressed nationally and acquired other brands,” says Dr Ben McKee, Capilano Honey Limited group operations manager.

The consolidation process is eased with local packing facilities, the company’s Brisbane factory was rebuilt for high-speed bulk and retail packing. But while the technology moves fast, the process of growing a brand can actually be quite slow, says McKee. It has taken Capilano since 1953, when brothers Tim and Bert Smith first began packing and selling their Capilano brand of honey, to reach this point.

However, it eventually became essential to support the constant brand growth and Capilano turned to print and television media to run a national campaign. While the campaign has helped maintain the brand, it isn’t everything.

“The primary strength of Capilano is the way we responded to consumer demands to improve delivery systems for honey and limit the ‘stickiness’ factor, ” says McKee, giving this as the reason behind Capilano’s PET squeeze bottles.

Being a small business has obviously been a plus for Capilano, but remaining small wasn’t planned from the start, admits McKee. “The business was set up on a cooperative basis. We have always been conscious of retaining a low cost base while having the capacity to respond to fluctuations in seasonal crop deliveries.” Careful planning has meant that the company has been able to work through some of their biggest seasonal challenges and they’ve even managed to get through the drought without too many hitches.

Other benefits of remaining an SME are clear as well. “The smaller business is able to respond quicker and easier to the structural changes that have taken place in the honey market in recent times,” says McKee, referring the emergence of private label competitors and a resulting shift in profits.

One of the business’ greatest weapons, keeping them profitable against private competitors, has been their strong brand. “The big brand has helped us defend our position in a domestic retail market with a greater presence of private label offerings that are commonly at a reduced price to a premium product such as Capilano.”   

Slow Build

So those are the key reasons for keeping the business small, but what’s Capilano’s secret to expanding its brand and sales? “Brands require commitment if they’re to grow and be maintained,” says McKee. “Building a brand is a long-term proposition.” Capilano chalks its success up to consistently delivering a product consumers want, the way they want it.

While being a small business can be beneficial, it does also come with some drawbacks, namely the limitations of human resources, says McKee. “It’s important for management to prioritise and identify the tasks that are going to have the greatest impact and not endeavour to achieve everything. We concentrate on our strengths and turn to outside professionals as required for short-term support.”

There are other small businesses that find Capilano’s big brand rather sweet too, especially in the long term. “Being a supplier to Capilano gives our business a regular cash flow,” says one beekeeper, who has had a honey supply agreement with Capilano for 22 years. “When the general public ask where we sell our honey, and we say Capilano, they immediately recognise the brand.”

Becoming a supplier for a business with a big brand was part of this beekeeper’s plan from the get-go. “The demand for their product is there, which in turn means they sell more honey than other brands. To sum it up, it brings stability to our business.”

Online Branding

Most online businesses, compared to a bricks and mortar business like Capilano, have had much less time to develop their brands, but this doesn’t mean that their brands aren’t just as big. 

In the last three years Deals Direct, the online retailer, has become a household name and has consecutively won the Hitwise award for Australia’s number one online department store. Their controlled growth was planned from day one.

“We have grown our team from two to 80 people, but it’s been very solid, organic growth,” says Paul Greenberg, Deals Direct co-founder, explaining that he and business partner Mike Rosenbaum learnt a lot from the tech wreck. “We’re not doing a dot com–growing quickly, just taking on a lot of people and going crazy. We approach business in a fairly traditional way in terms of growth.”

Because of their approach the business has grown about 70 percent in the last year, and Greenberg expects to finish the financial year with a $50-60 million turnover, which he hopes to double the year after. Still, they are a small business, and intend to stay so for some time.