Strategic Insights from 94 Years of the Cordina Family Business

Transcript

Brett Kelly (0s): Welcome back to the Be Better Off Show. Now we're sharing some archive footage. I'm stuck in the middle of my house, housebound due to the China virus, and I'm sharing Louise Cordina. Louise is the daughter of the founder of the Cordina chicken empire, and here she shares with us at a Plan to Win event her amazing story. It's not easy to be somebody coming through in a family business, living in the shadow and trying to do their own piece of building the family legacy. I love this interview because Louise, you're so honest and transparent about the challenge of that, but also her journey and how she's managed that as many of our clients find themselves in situations in family businesses where they're stepping up behind somebody who's done amazing things.

Brett Kelly (43s): And I think Louise gives a great insight and shares enormous wisdom in this interview. So enjoy, I'd love to hear your feedback. You're listening to the Be Better Off Show by Kelly+Partners. I just wanted to start by saying that both Scott and Louise are two of the most interesting and enthusiastic business owners I've ever met in the private sphere. And I'm looking forward to hearing their commentary today. Why don't we start perhaps with you, Louise, and just share the history of your business?

Louise Cordina (1m 14s): Sure. So we're a fourth-generation family business. My great-grandfather started the company in the 1930s, a very typical immigrant story. He came to Australia to try and find a better life for his family, originally starting a market garden. He left his family back in Malta and when he'd saved up enough money and built a small tin shack, he brought his family over from war-torn Europe. My grandfather, who was a young teenager at the time, saw a gap in the market for fresh chicken products.

Louise Cordina (2m 0s): At that time, if you wanted a chicken, you were buying it at the market with the feathers on it. So that was probably the first innovation of our business. The chicken industry didn't actually exist back then. So the business grew from him raising a dozen chickens in the backyard for a bit of pocket money, which then expanded into a processing facility. My father entered the business in the 1970s, and I joined in the 1990s.

Louise Cordina (2m 42s): Today, we're the third largest poultry processing company in Australia, and we're still the oldest. We differentiate ourselves in the market by specialising in innovation and focusing on being more agile than our larger competitors.

Brett Kelly (3m 3s): What year was it that the business was started?

Louise Cordina (3m 6s): It was started in the early thirties in an informal backyard setting and became an incorporated business in 1945.

Brett Kelly (3m 15s): That's a great story. Fantastic. How many chickens did you process last year?

Louise Cordina (3m 22s): We process approximately 650,000 chickens per week.

Brett Kelly (3m 30s): Fantastic. So it's great context—650,000 chickens a week. Tell me about your business before I do start, but I'm just gonna make one correction. My official title is actually non-executive director and shareholder, majority shareholder with my wife, Linda, who's here today. It's important I say that because my CIO, Angela Black, is in the room, and I didn't want her to think that she's lost her job by this event. So our wind farm was founded in 1975.

Brett Kelly (4m 12s): It was founded by my in-laws, Arminio and Olivia Bento. Some people would call me the outlaw, but they both originated from Portugal. They met here in Australia. My father-in-law basically arrived with a shirt on his back and an empty suitcase. He set out to the Snowy Mountains Scheme and spent 11 months working there. He was a cabinet maker by trade. When he left the Snowy Scheme, he came back and started making furniture, supplying a lot of restaurants, and his passion was hunting. Fast forward many years, and he had a big fire in his factory on New Year's Eve and lost everything, spending the next 12 months rebuilding it.

Brett Kelly (4m 58s): He then went to his passion of hunting, and in his backyard aviary of his Bondi Junction home, he had quail, pheasants, guinea fowls, etc., mainly for their own consumption. But that soon grew to family and friends, and then the business started from there. The kitchen was the abattoir, the Volvo was the delivery vehicle, and pretty much that's where it started. What started with a couple of birds for family last year, we averaged about 50 to 55,000 quail a week, and 15 to 20,000 spatchcock a week on top of that as well. But it all began from the backyard aviary in Bondi Junction. Amazing. So it's got hard work, blood, sweat, and tears that's gone into it.

Brett Kelly (5m 40s): Just to give people who aren't avid game meat connoisseurs, what are the products that you produce?

Brett Kelly (6m 28s): Fantastic. Excellent. So what I love to ask people is, what is your motto or a quote or a thought that really summarises your approach to life and business?

Louise Cordina (6m 38s): For me, it's all about being different. In everything that we do in business and probably very much in my own personal approach to life as well, any opportunity to differentiate is what drives our business. In business, if you don't have a need for being, then there's no future in what you're doing. If you have a unique point of difference, then you have a need for being. If you have as many unique points of difference as possible, then you have a good business. So everything that we do, every way that we interact with our customers, the types of products that we produce, where we place ourselves in the market, it's always around looking for that opportunity to find a unique point of difference.

Brett Kelly (7m 26s): Excellent. It's a very simple philosophy: no regrets. I never want to die wondering, and I made a deal with myself at a very early age that if it makes sense, I'm going to give it a go. So very entrepreneurial in my thinking, I believe in structure and process, but I believe what the imagination can dream, you can actually achieve, and I've always lived by that.

Brett Kelly (7m 53s): Excellent. So in terms of ideas and attributes, you mentioned, Louise, this idea of innovation, finding a point of difference. Many businesses that we interact with, including our own, worry about being in a highly contested, potentially undifferentiated, growingly commoditised market. How do you, when you're selling so much of such a core product, give a practical example with the new factory or whatnot of how you've really differentiated?

Louise Cordina (8m 26s): Our approach to differentiation is to understand who our customer is, what their problems are, and give them solutions. It sounds really simple, but if you think about it, the most simple definition of business is really coming up with a solution for a need. So if we are looking for opportunities in every way, whether that be on a personal level with the people we're dealing with or from a business sense, everybody that we interact with has a problem. It might be that they've got an aggressive competitor and they urgently need a product they can launch to combat, or it might be that somebody is time-poor and doesn't have time to do their job properly and needs to get a promotion.

Louise Cordina (9m 10s): So in every way that we interact with our customers, we look for those opportunities. We look for a problem, and wherever we can see a problem, that gives us the opportunity to come to that person and present them with a solution. We also look for opportunities to make a weakness a strength. In every market, you're going to have smaller players and larger players. Whatever that thing is that you potentially see as your challenge, you find a way to turn that into your point of difference. So in our case, we're in a very mature competitive market with some very big national players. We could say, well, we're the small guy, so poor us. That's really hard. How can we compete with people who have such a huge economy of scale compared to a smaller business? Instead, we see that as, how do we make the fact that we're smaller actually an advantage? What can we do better than the big guy? We can be more agile. We can be better at relationships. We can be better at innovation. So we'll look for those types of opportunities to differentiate.

Brett Kelly (10m 39s): I guess being in a very boutique, specialised area that we are, our main attributes are that there are other specialised boutique producers out there. As I said, quail is a product that we fully integrate in, and we've got most of our capital investment tied up, but being able to meet other farmers that are really good at producing quality products but are not good marketers. Whereas we've got a very strong marketing side of our business and a very strong, trusted, relied upon brand that we can take new products to market. So we can offer the customer somewhat of a one-stop shop in a specialty boutique space, not to mention that whenever we've invested in capital equipment, we've always looked well into the future. So we have a processing plant that only operates three days a week. It only operates six hours a day. So we've got plenty of scope for growth from a production point of view. Our products are all about awareness and education. We've been around since 1975, 41 years, and there's probably 80% of the Australian population that still haven't tried quail. It's quite amazing, which shows the opportunities that we have, but our biggest challenge has been getting the distribution channels and getting the Coles and Woolworths that can allow those distribution channels to get to the masses to take our business seriously. That's something that we certainly are focusing on. So in terms of significant events or persons decisions in the life of the business, Louise, what do you see as the things that have really moved you forward or challenged?

Louise Cordina (12m 8s): In our case, it's actually those adversities that I feel have been the most formative for our business. In a business like ours, which is an old business, multi-generation business, you have to be able to evolve and see what the next opportunity is. One of my real beliefs is to be able to find an opportunity in every adversity. So the times in the business, and when you have a business that's 70 years old, you're going to get thrown a few curveballs. At those times, when those curveballs are thrown at you, you have got to be able to not wallow in self-pity or have your head in your hands but say, okay, what's the angle here? Find an angle, get a plan, and execute. Some of those times when you are thrown challenges, actually, if you look at it that way, can be the biggest opportunities presented to you because they really give you an opportunity to look at direction, maybe have communications that you wouldn't have had if everything was going sort of swimmingly. When I think about where we've made adjustments to the course of the business that have gotten us to where we are, it's been usually through finding what's the opportunity in something that's being thrown our way that wasn't expected.

Brett Kelly (13m 25s): Yeah, it's Scotty, there's been a couple that I can think of, but the most significant would have been when the second generation being myself and her brother Mark took financial ownership of the business. We purchased the business from the founding generation 11 years after I started, that was back in 2004, when that transaction happened, I can swear on hand on heart that for those first 11 years, I gave it my absolute everything. But when you take financial responsibility for a business and the business is yours, you just seem to be able to grow arms and legs. This is a message out there for first generations that haven't let go and don't want to give their second generation that full control. It's the element of risk that you're willing to take when it's your own money rather than somebody else's money. That was a significant time in our business where for the next five or six years, we just grew at double-digit growth year on year and profitability went through the roof. We bought out two of our competitors. It was a really exciting and interesting and challenging time. Whilst the first generation, being Arminio and Olivia, had built these great foundations, we were able to take those foundations, grow it, and take it to a whole new level. The other significant event was when we got our export license. We're the only game bird plant in Australia that has an export license. That opened up markets into Japan, Singapore, Hong Kong, and the Middle East. It gave me the opportunity to network and meet with a whole different group of people that allowed me to open my mind and take my personal development to a whole new level, which then led to an opportunity to invest in a startup business in Dubai 11 years ago, where we import products from all around the world, mainly high-end proteins, and distribute to the five and six-star hotels, the airlines, the supermarkets, etc. We're an equal partner in that business. It's amazing how certain significant events can change the path of a business. So what about the nature of both of these businesses being family businesses and very long-standing? What are the challenges around working in a family business that are unique in terms of interpersonal relationships and general dynamics? Can you speak a little bit about how you respectfully work with the older generation and intelligently inspire, encourage, and train up the next generation?

Louise Cordina (15m 42s): When I started, I was 24 years of age. I had no fear and a lot to learn, and I had a job to do as well. When I first walked in, there was my mother and father-in-law, their son, my wife, Linda, uncles, nephews, nieces, you name it. As you can imagine, in a family business like that, not all family were towing the line as they should have and were not supporting their quality. There had to be a lot of hard decisions made. Let's just say that I wasn't the most popular for the first couple of years. That was the only time we ever had problems. The only other time that I can think of outside of that is my inability to stop talking work when I would come home. Linda would be awake at midnight, so would I, and I'd roll over to her and say, did you pay that creditor today? Or did you do this or that? That inability to turn off. Today, we have our daughter, Ashley, in the business while she's at uni, just getting experience as we did with our son, Daniel. My brother Craig is in charge of inventory control, and we have our nephew, Tyler. Daniel worked in the business while he was at university as well. I've always seen it as a good thing. I never want to encourage our children to be part of the future of the farm. I want them to follow their own dreams and build their own careers. But seeing your family members contribute to a business in a positive way is great. Who better to trust and rely on than people you know who have heart and soul and passion in the business? So in nearly 85 years since an informal beginning, there have been a few generations. I've seen the photos, but you've still got your dad around and your grandfather.

Louise Cordina (17m 50s): My grandfather was part of the business until he passed away just last December. Until his last day, he was passionate about the business. His very last thought was of the business. He would call me every day with a new idea. He was 93 when he passed away. He credited his long life to his passion and excitement for the business. The family dynamic is one of the more difficult structures. There are plenty of horror stories around businesses imploding when they get to generation three. For a family business structure to work, there are a few key points that make it more workable. You've got to forget about being the world's greatest democracy. At the end of the day, like any business, there's got to be one clear direction and one person calling the shots. A lot of confusion in family business structure comes from family dynamics getting blurred. Priorities of the business start to take a back seat to the priorities of family members. For a genuine good succession in a family business, you must be clear about the fact that the business is its own entity. Decisions have to be the right ones for the business, and that's always number one. Be unapologetic about that. If the right decisions are made for the business, ultimately, that flows onto the family anyway. It's very important in any business to have the right people in the right jobs. Oftentimes, those people are not going to be family members.

Brett Kelly (19m 43s): In any business, particularly a growth business, delicate conversations are necessary. Mike Cannon-Brookes, who founded a business with Scott, shared that while employing 500 new people a year, they were also exiting people into their alumni program who had been outgrown by the business. When that's not family, it's hard enough. When it is family, it's even more delicate.

Louise Cordina (20m 22s): There's got to be a clear understanding when people want to come into the family business. In the time I've been in the business, I always have a reality check conversation, which is to say, by all means, come into the business, but this is what you're signing up for. One of those things is the business is not here to serve you. You're here to deliver for the business. If you're a family member in a business, you're actually making sacrifices rather than the other way around. If that's clear from the outset, family members need to understand that they have to work harder than everybody else. When you're coming into the family business, you need to understand that the business has its own path. I never entered the business with the naive thought that I will still be doing it when I'm 70, 80, or 90. If I am, great, but ultimately, decisions for the business will be about what's right for the business, even if that conflicts with what I might like.

Brett Kelly (21m 50s): Just like in any relationship, particularly employment, you've got to have those hard conversations. I actually had to have that hard conversation with myself after 22 years of running the business. The last four years of that, it was pretty much leaderless. I was running around doing all the other things I enjoy. I sat myself down and said, it's not tracking in the right direction. We're not achieving growth or success. It's about time I step aside and hand over to someone who can take the business to a whole new level. We have 75 employees and families that we're responsible for, and it's important to see their development and growth. Angela, who's been with us for 10 months, brought an objective view and professional expertise to our business. It was time for me to step aside, and it certainly improved our quality of life and allowed us to fulfil other dreams and aspirations.

Brett Kelly (23m 14s): Succession is a huge issue. Scott's a good friend of mine, and I've observed that process. It's extremely rare these days for people to be objective enough about themselves in their business to say, you know what, there might be someone better to do this role than me. What's your advice to people in that situation?

Brett Kelly (23m 51s): It's as simple as being true to yourself. I had lost my passion for the business. It was founded by my in-laws, and although I was given a great opportunity, I never felt it was truly mine. I had ambitions to start a business from scratch and build it. So be true to yourself. Give it your absolute best. If the business isn't realising its true potential, it's time to look within. I wanted to hand the baton over to someone within our business, but the right person didn't exist. So I had to look outside. I knew Angela for over 10 years. She brought a wealth of experience and objectivity, and that was what excited me. One of the best things I've ever done was join a business group. We meet once a month, and it's professionally facilitated. You get to know yourself and work closely with people who bond together. You must love what you do and be passionate about it.

Brett Kelly (26m 2s): Always customer-focused. Relate the story of dealing with people at Coles and Woolworths who are huge and sophisticated. How do you build relationships at multiple levels across such large organisations?

Louise Cordina (26m 44s): Our business has always been about relationships. My grandfather said loyalty to your customers is the most important factor in business. However, I've realised loyalty doesn't exist in business. Customers don't owe us anything, and loyalty can lead to complacency. We've had a relationship with Coles for 50 years, but if we expect them to stay just because of loyalty, we're missing the point. Loyalty in business is about being indispensable to your customers. When they sit down to make hard decisions, they need to see us as irreplaceable. Whether it's smaller partners or larger partners, it's about understanding who our customer is, what their problems are, and how we can make their life easier.

Brett Kelly (29m 43s): You've worked in Dubai as well, dealing with a different customer base. How does your approach adapt?

Brett Kelly (30m 30s): The principles are the same. It's about finding common ground, building relationships, and solving their problems. One lesson I've learned is the importance of having a relationship matrix, especially with important clients. We had a great relationship with a senior business manager at Woolworths for 15 years, but when they brought in new people from Europe, we realised we hadn't developed relationships with the R&D teams and chefs who influence decisions. Ensure you have a relationship matrix and map out key decision-makers in your client's business. Look at the worst-case scenario and minimise risks. Louise has done this incredibly well.

Brett Kelly (32m 40s): Let's open the floor for any questions.

Audience Member (32m 47s): Hi, my name's Tom. How has the internet impacted your ability to transact directly with consumers instead of going through distributors?

Louise Cordina (33m 22s): From our perspective, there's not been a huge change. Our relationships are not directly with the end user. Our business is about making other people look good and arming other brands with unique products. We don't have a strong direct-to-consumer presence, except through retail brands.

Brett Kelly (34m 13s): For us, social media is key, especially for niche products like quail and spatchcock. Shows like MasterChef have helped build awareness and educate consumers. Social media allows us to communicate recipes and cooking instructions, but our distribution channels remain through retailers.

Brett Kelly (35m 33s): Any other questions?

Audience Member (36m 6s): Are you for sale?

Louise Cordina (36m 16s): We get approached regularly by private equity firms. It's important to maximise the business's value regardless of ownership. We're passionate about what we do, and while we see ourselves in the industry for a long time, the right decision for the business will always prevail.

Brett Kelly (38m 8s): It's an interesting question because businesses like ours were once on the nose. Now, they're talking double-digit EBITDA multiples. Always keep an open mind and consider what's best for the business, but respect family traditions and ensure the business reaches its true potential.

Audience Member (38m 54s): With the food revolution in the last five to seven years, has that awareness made you think about your business differently?

Louise Cordina (39m 18s): The popularity of shows like MasterChef has had a huge impact. It's educated consumers and expedited innovation. Consumers are becoming more adventurous, which plays to our strengths. It's a great opportunity for us to introduce new products.

Brett Kelly (40m 42s): It's been great for building awareness, but our biggest challenge is getting major retailers to take us seriously and give us the distribution channels we need. Angela has brought expertise and relationships that have helped us succeed at the retail level.

Brett Kelly (41m 34s): I want to thank Louise and Scott on behalf of Kelly+Partners for their time today. I hope today has provided value, and people will walk away with some useful notes. Thank you.

Brett Kelly (41m 59s): Thanks for listening to the Be Better Off Show. If you enjoyed this episode, don't forget to rate and review on Apple Podcasts. Have a great day.