A New Spring

A heartbreaking business announcement turned into the local good-news story of 2013 a year ago when unprecedented public support for the embattled Spring Gully turned the company’s fortunes around.

A heartbreaking business announcement turned into the local good-news story of 2013 a year ago when unprecedented public support for the embattled Spring Gully turned the company’s fortunes around.

An emotional Kevin Webb (Spring Gully’s Managing Director, pictured) appeared in front of news cameras in April last year to explain that Spring Gully was going into voluntary administration as the South Australian food company had debts of more than $3 million after an abrupt 60 percent drop in sales. After this announcement, the public, retailers and media supported the 68-year-old family business in unparalleled fashion, with Spring Gully stock selling out across the land (sales trebled while in voluntary administration). Then there were the Facebook pages and media support, which included many stories in The Advertiser, while Belinda Heggen dedicated an entire show on FIVEaa to the iconic local brand. Webb says he hasn’t had a lot of time to reflect on the events of 12 months ago, as they’ve been “busy bringing the company out of voluntary administration”. “We’ve been humbled by what happened. We really have just been driving the business to make sure we do everything right for our creditors and the business itself,” Webb explains. Spring Gully, famous for its range of gherkins, pickled onions and sauces, as well as its Gardener and Leabrook Farms products, moved out of voluntary administration on July 1, 2013. It began to pay back creditors last year, including just under a million dollars on October 31 and roughly $400,000 on January 31, 2014. Total payment will take between two and three years. Webb believes a number of events led to the wave of public support behind Spring Gully. “We couldn’t have had our issue at a better time, because that week Holden had announced it had problems. Manufacturing in Australia was reportedly suffering around the country. Businesses were disappearing and brands were disappearing and it was a moment in time where the public, of South Australia in particular, said, ‘Enough’s enough. I can spend my two or three dollars and I can do my bit.’ But people were spending a hundred dollars, two hundred dollars. “That was combined with the human side of our family and the way we opened ourselves completely to the media. We had no baggage as a business or a family; no one could dig anything up on us. Also, when Austin Taylor [auditor] and his people went through our business – they went through our bank statements for three or four years, through every transaction to make sure we hadn’t stripped the company of money. None of that was there. The realism of what I was portraying [in front of the cameras] wasn’t an act. From what I’ve been told, that genuine article came through from my behaviour, being myself. This is who I am. This is who we are. I got advice that night [April 10, 2013] not to shut the cameras out if they showed interest – because we didn’t know if they’d be interested in us. We thought we might be buried on page 22 or something – ‘another brand gone’ that sort of thing. As you know that didn’t happen. Our advisor, Peter Haynes from Corporate Conversations, said, ‘Don’t shut them out. If they’re interested, just be yourself and tell it as it is.’” Webb says the fi rst few weeks after the event were “incredible”, as the support was not only driven by consumers but retailers such as Aldi. “We were waiting month-by-month for the pantry to be full, because how many gherkins can you buy? We laugh now but it was important to us at the time. But they never did stop. They must have eaten them. “Each month we were looking at the numbers, ‘Has it hit yet?’ It never hit. It settled. It’s not at the level it was in the first few weeks – that was mania – but we’ve been in double-digit growth since the event now, and that’s removing the event itself. It just reminded people that Spring Gully is part of their life and they’ve continued to keep it as part of their life.” A positive to be taken from last year’s event is that the industry, as well as the public, now realise the importance of local manufacturing. “Retailers are now supporting South Australian businesses in their aisles,” Webb explains. “It highlighted the fact that South Australia needs to look after its own manufacturing as best it can. We can’t all make that decision but at least we know about it and you can make that purchasing decision in the store. The retail industry, whether it’s Foodland, Coles or Woolworths, now have signs or tags that read, ‘Support South Australian business’.” On the sudden drop in sales a year ago, Webb says that no one can pinpoint the exact reason for the rapid fall, as it happened across their products, not just Spring Gully. “We just had this lull. On top of that were the low margins and the high cost of doing business out here, and a product mix-change at our production facility. They were the four key things prior to us making our announcement. So, what have we done about that? We have worked very hard on making the business profitable and getting the margins back up. Part of that was negotiating with our customers, and the employment of a new operations manager who brings a world of experience from the wine industry. His whole task is to make us more efficient, to keep the Spring Gully culture going and to lift our gross margins. If a business is profitable, it shouldn’t get itself into problems. We had lost that ability prior to that event.” Webb says the business will have a larger focus on the Spring Gully range (it is a contract supplier for other brands including Dick Smith) in the future, while being more innovative to ;introduce “modern and relevant products” to its stable. Spring Gully will also be rebranded in September with a new label. Looking back, Webb says the family-run business feels privileged that the community got behind them. “As a MD and as a family member I’ll never forget that. We don’t know how to repay that other than to maintain Spring Gully’s future. It’s difficult at the moment with the honey shortage but our focus is on making sure Spring Gully’s here for generations. We think the way to thank the people of South Australia and Australia who got behind us is by making this company successful and growing it.” springgullyfoods.com.au

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