When Shaun Jacka and his wife Kathryn came back to New Zealand from Australia three years ago, wondering what business opportunity to pursue, one thing they really missed was their favourite Queensland yoghurt.
“There was nothing like if over here,” he says. “We convinced the Australians to let us have a crack at it.”
The result is Piako Gourmet Yoghurt, a thick, indulgent-tasting treat pitched at the specialty and premium end of the market, which has the Auckland-based company as one of 10 finalists in the Entrepeneurs’ Challenge run by Auckland University’s School of Business.
Jacka says the yoghurt is more labour intensive to make than other types, with a different type of setting process designed to be more “artisan”. It is also made in comparatively small two tonne batches, and the company’s ramping up of production involves making more batches rather than bigger ones.
He established the business in November 2008 and used wider family finances as well as bank backing, which was literally just before the global financial crisis hit – a week later and he would’ve missed out!
An initial challenge was sourcing milk, which while better raw for the yoghurt process, Piako had to learn to use in a pre-pasteurised form. Learning and processing issues meant the first six batches of yoghurt were written off, as his team experimented to adjust for differences between Queensland and New Zealand milk.
As well as sourcing the milk from Fonterra, Piako has used the co-operative’s expertise to help bring its production facility up to a world class standard for dairy products. Fonterra has also assisted with some of the company’s marketing, providing market information and sales channels Jacka says.
“They’ve partnered with us because we’re the first movers in this segment, they like us and we make a good product.”
And while they may’ve been first, Piako now has some competition at the top end of the market, “though they’re not as good as us,” Jacka says.
Among the unique aspects of its yoghurt and marketing is a clear plastic tub, with just a logo on it. “We’re letting the product display itself, and people can see the fruit through it,” he says. “We put all the nutritional information on the lid.” The fruit marbling effect throughout the yoghurt looks great visually Jacka says, compared to other yoghurts which often have its fruit component on the top or bottom.
Piako’s initial marketing push was to target specialty food outlets such as delicatessens, including Moore Wilson, Nosh and Farro. Although the company’s plan was to only now begin supplying supermarkets, such has been the demand from that sector that Piako has been providing product on a case by case basis.
Jacka’s initial thinking was that if Piako supplied supermarkets from the get-go, it would be too easy to lose shelf space, or be pushed out all together by competitors with more financial muscle.
“We could’ve been mightily exposed,” he says. Today 30% of Piako’s production is sold through supermarkets, with the gourmet food suppliers continuing to promote and push its yoghurt to “foodies”.
The company is also tapping into Fonterra’s distribution channels, as “they have the best chilled distribution in the country,” he says. “It’s tested, temperature controlled, audited. Our product quality hassles are removed.”
Protection of Piako’s intellectual property is problematic, as there are only a few different processes compared to less fancy yoghurt. “We haven’t patented anything, because then you let the world know how to do it,” Jacka says.
“We’ve found a market by being first mover at the high end, and have built brand loyalty.” In addition, having partnered so well with smaller outlets, yoghurt-producers who might be direct competitors are often told to “p…. off.”
Piako’s expansion plans include a recently purchased (at least a deposit made) of a factory site in Britain, with the intention to begin producing before Christmas. The company’s Australian partners are already expanding in the U.S.A market.
Its production model should enable Piako to replicate its British production in two tonne batches, and at 10 tonnes a day and 50 tonnes a week, the company should quickly ramp up to making 100,000 pots per week.
Jacka has a number of exit strategies for Britain, “but we need to get to a certain level of production first.”
If Piako wins one of the prizes in the Entrepreneurs’ Challenge, though Jacka insists it will win, the capital input will be used to offset the deposit already made on the UK factory. “The money would only spend a day in a New Zealand bank account,” he says.