AS CONTAMINATED berries again put the spotlight on supermarket purchasing strategies, another growing company is demonstrating that for many consumers, price is not the only determinant of value.
Farm-to-door fresh food service Aussie Farmers Direct (AFD) isn’t yet a household name, which is why the business guidance cited by AFD chief executive Keith Louie is something of a revelation.
After 10 years of making direct deliveries of fresh food, Mr Louie said AFD has built an annual turnover “in the hundreds of millions” through a active customer base of around 130,000, based on a supply base of about 400 farmers.
AFD was founded on ideals - fair farmgate prices, 100 per cent Australian product, minimal food waste and minimal food miles - or as Mr Louie puts it, “purpose before profit”.
“We are far more interested in value and genuine quality than a race to the bottom.”
“We don’t do high-volume homogenous products, removing all the local diversity. We are 100pc Australian - we don’t have any bread from Ireland, oranges from California, garlic from China, ham from Canada, seafood from south east Asia. I think that’s becoming more important to Australians.”
On this foundation of fair-play principles, the AFD model has been built using delivery franchises - there are now more than 250, according to Mr Louie - through which franchisee owner-operators deliver chilled fresh produce sourced by AFD direct to the customer’s door.
The company began with milk, and has expanded to bread, meat and fruit and vegetables.
While the majors have built their businesses on “convenience” shopping, AFD is staking its claim on an entirely new level of convenience for fresh food staples.
Customers assemble their orders online. Delivery on all orders over $25 is free (and only $2 if under $25), and delivery schedules can be mandated by the customer. If the householder isn’t home, deliveries are left in an insulated container.
Consumers have responded favourably to AFD’s principles, and to the convenience.
AFD was the fastest-growing Australian franchise for three years running when it was pushing out its geographical area from its heartland in Victoria.
Growth has moderated as the company consolidates its existing franchises, but Mr Louie believes there is ample room for more growth in the domestic business, even as AFD begins to look offshore.
“We only deliver to about 2pc of the homes that we drive past, so you can see the potential expansion in the core milk-bread-eggs-fruit-veggies home delivery offer,” he said.
Clues to the areas that AFD might work on in its quest for growth lie in Mr Louie’s history.
Prior to November 2014, when he took up an equity stake in AFD and became its chief executive, Mr Louie was general manager of Coles Online.
During a 2012 meetup of the ShopTalk e-commerce group, Mr Louie reiterated that the winning factor in online grocery shopping is convenience. To realise on that promise requires excellent logistics. As it happens, logistics is Mr Louie’s speciality.
In 2012, from under his Coles hat, Mr Louie was r eported as saying that “…typically the customer isn't going to buy from Coles because they present baked beans better, or they describe it better, or even that it is lowest price – it will be because Coles offer the most convenient way of getting the baked beans to your door – or a pick up location”
But AFD has other options for growth.
Mr Louie said there is scope for using the company’s network of farmers to supply fresh food on a wholesale basis, while the export demand for Australian produce is developing its own momentum.
Camperdown Dairy, the original supplier to AFD, is already selling fresh milk, butter and yoghurt into China.
“We see that export market continuing to grow, but we don’t see a need to push it,” Mr Louie said.
“It’s less about us pushing proactively into a particular country, than recognising that there is demand for what’s perceived overseas to be very high quality Australian produce.”
While growth is a good measure of AFD’s success, not everyone responds favourably to the concept. The online review site Pr oduct Review has some tough assessments of AFD’s offering among the glowing endorsements. Some are based on a misunderstanding of what the company is about, but some have genuine cause for complaint, like mouldy strawberries. In fairness, the major suppliers would receive the same complaints, but they would not make it past the customer service counter out into the world of Google. On Twitter, @AussieFarmersD is getting plenty of love.