Before setting our properly protected feet onto Bundaberg distilling grounds our entire tour group was required to place any mechanical objects into lockers, including such inconsequential objects as watches and car keys. This is because our tour introduced us to a closed off a building containing twelve 22,000 liter vats filled with aging rum and highly flammable fumes. These were only a few of Bundaberg's 350 vats, totaling $5.5 billion in Bundaberg rum.
Nearly 96% of this rum is kept in Austalia; only 3% is exported to New Zealand and only 1% is exported to the rest of the world.
From what I gathered, Bundaberg is owned by Diageo, which owns over 150 brands including Smirnoff, Guiness, and many other well known brands.
Barn by the entrance
Main entrance
The management building had a small walk-through tour on the history of Bundaberg.
At the end of the walk-through was a small theatre for power points and video presentations.
This is where we learned about Bundaberg's history and brand marketing image - a friendly polar bear.
Bar and giftshop at the end of the Bundaberg tour. Bartender was telling us how the entire plant was closed due to floods just a few days before.
Fosters:
Our Fosters tour was lead by Ian Johnston, CEO. According to Mr. Johnston, Fosters is in a "duopoly with half the business" which will stick with an Australian centered beer business. Yes, take note of that - it is an Australia centered alcohol business, just like Bundaberg. Although they are Centered around Australia, Fosters exports some wine to the US, China, and New Zealand, but not to Eastern Europe. This is very similar to the model Bundaberg follows, so I wonder if it's based off alcohol consumption markets.
I asked about that theory and was given a lengthy explanation into expansion. To begin, they are considering expanding into India despite its history as a low consumption market. Mr. Johnson reasons this by describing the potential within India's 30 various markets. To financially succeed, each would have to be targeted individually. Incomparison, China is basically one big market so marketing within China can be universal. Four of their major brands are solely available in China, yet globalization has allowed the head of the China team to work from Melbourne until recently. Essentially, you can use the same campaign within every region of China and you never have to change your brand image, whereas you'd need 30 individual ad campaigns to place your product into India. As this is only a small portion of the reason, I'll just happily believe that the US, China, and New Zealand are more condensed and higher consumption markets than those of Eastern Europe. Despite the few markets Fosters enters, they are still the owners of the only wine brand in top 100 supermarket sales. This may be because around the world most of the big companies are liquor companies.
Okay, so remember how I JUST said the "around the world most of the big companies are liquor companies?" Well this is pretty important to Foster's model. They took a very unusual path. The company began with beer but followed through with a pursuit of wine rather than spirits. This is pretty unique for the market, yet is a testament to Foster's success. As Mr. Johnson put it: "if you put a vine in the ground todays you need 15 years to get something off it, then 5 years of storage... we just don't have time to wait on finance which can be so easily ruined by bad weather or bugs." He continued to say, "theres no room in the spirits industry."However, wine is working well for Fosters, the "per capita growth in wine is growing faster than beer... Highly a trend in the USA... Women must be drinking more!"
Since the wine industry seems to be taking off, the Foster's industry would need to make significant changes. As is typical with industry changes, these suggestions meet complacency, resistance, and fear. According to Mr. Johnson "the corporate environment lacks people development and should reward success." As explained by Mr. Johnson, "if you have a strategy you cant always get a result. If you have the people you can sometimes get a result with the right people... If youre moving in the right direction you can be fine."As we learned in our Introduction to Management courses a good way to cope with change, complacency, and resistance is to create a corporate culture which embraces change. Due to this, Fosters puts emphasis on their company mottos:
Assertive"deliver on our promises"
Aggressive "act with energy and urgency"
Adaptable "positively embrace change"
To deal with industry competition Fosters competes in price wars, knowing that their competition is unable to afford price cuts unto their research and development teams, whereas Fosters does not have this trouble. Finally, Fosters is coping with the changing industry in another manner: they are going to announce a demerger of beer and wine this February. This means they expect to need to create a new smaller executive board within this new company.
Foster's was especially interesting because most of what Mr. Johnson described were management problems we've learned about in classes, then his solutions were real world implementation of our studies. Hearing about the recreation of a board as well as the difficulty during the decision and elections process in creating that board was interesting as well, judging experience was not the only qualifying variable being examined.
He catered his presentation to us, students.
Mr. Johnson
Mr. Johnson introduces himself to us.
Brewery tour:
Like the Bundaberg tour, the Fosters brewery tour was extremely interesting and informative. The differences between each:
- They produce 500 thousand gallons per day
- Demand for packaged beer (outside bars) started around the 80s
- Employees get 2 free slabs per month to encourage them not to drink at work
- 20 tons of barley delivered 10 times per day from the farming district (Hopefully little impact from rain - came at a time it can do good)
- Use just in time inventory
- Machine fills 1100 bottles per minute
- Majority is consumed within 1 week of leaving plant
AFL:
Some interesting facts I learned in the AFL presentation:
- There is no set field size in the AFL (That would not work for the NFL...)
- Get rid of ball by hand-balling or kicking
- While playing players are required to bounce the ball every 15 meters
- 15 mil spectators
- 2563 AFL club teams
- $3.4 billion annually to Australian economy
- $2.00 to $15 adult unreserved seat ticket - Not only trying to get people into seats. - trying to make it a popular past-time for entire Australian society.
- $1 million per year to put sponsorship on the front of back of a jersey/"jumper", then get 15% profit off jersey/"jumper" sales
- "Even if you're the number one sport, keep changing and keep growing"
- Pretty much double revenue in last 10 years 8% growth
- Now trying to take 2 teams to an exhibition game in China 19 teams in Melbourne Melbourne Cricket Grounds: Canberra Glassworks: We made glass tiles - rotate 90 degrees clockwise
- Recently introduced 2 new teams because good time, could afford it.
- Want to recruit players with a draft like the US major sports. Currently, there are competitions for the 18 best non-professional teams all through Australia where they are drafted. Not from schools.
- 22 players dont play each game so about 5-6 are turned over per year.
- Kids play in their local community.
- Average player lasts 7 years but all are guaranteed 2 years minimum in their signing contract 18-38.
- Usually retire at 31
- Not allowed to tackle or touch the head.
- Head to head clashes are rare and illegal.
- Just changed a rule to prevent knee injuries, in the begining they now stand in a circle to they have less momentum when bashing together to get the ball.
- Major sponsor is Toyota.
- Does famous moments in history in a humorous manner. - Like lifting a retired 70 year old player with a crane to recreate a famous moment.
- Dont advertise outside australia but indirectly have fans and industry in South Africa.
Australia Institute of Sport:
The Australian Institute of Sport was established after Australia experiences a set of Olympic years where they won very few medals. They realized that they were one of the few countries that did not support their Olympic athletics with government subsidization and training facilities. In turn they built multimillion dollar training facilities in Canberra for 8 major sports at any time in the large arena. The weight room itself is worth over 2 million dollars. Additionally, if a program does not perform well in the Olympics they risk being shut down so funds can go to a more productive sport. I found it really interesting that they would be willing to shut down an entire sport simply to redirect funds. Makes me wonder why they even compete in Winter Olympic sports. Also, these facilities are not only used for sports training and hosting Olympic games. Since the stadium is set up to support so many people they hold regular performances in the large arena for bands such as Matchbox 20 and Lady Gaga.
The large arena.
A small portion of the co-ed Olympic gymnasium.
Weight room worth more than @2 million.
Flea Market:
The flea market was structured more like a farmers market. There were almost 100 stands most selling various foods on the first floor.
The food was all delicious and very fresh. (Happy pancakes!)
The second level had more artistic sales pieces. There were some artists selling glasswork and some aboriginal performing artists.
It was nice to talk to the locals as they inquired about life in the states and compared it to their own lives. Of course, they all seemed to envy the weather in the states, but I'm not sure they would have envied it a month ago, before the floods.
Natural History Museum:
The Natural History Museum in Canberra was designed with beautiful architecture. They really tried to display each section of Australia's geography through abstract, 2D, and 3D artwork. I'm sure some of the designs cost the museum millions to put on display; however, many were left unexplained without plaques or mention by the tour guide.
Historical woven containers from each region of Australia. Since I love anthropology, I found it especially interesting how each region of Australia developed similar tools in different manners to suit their specific means. They put a lot of emphasis on how these were important for aboriginal history, but I do wish they had some sort of interactive section to show you why each region was different. While I'm sure any Australian child would know the geographic regions of Australia as well as a US child knows the difference between New England and the west coast, but I am an ignorant American who needs it spelled out for me.
Beautiful woven tapestries took over certain aboriginal regions, while dead animal skin and fur ornamented other regions.
This section was pretty cool. They showed us arrow heads then put a display of a flint took during each stage of production. There was also a stone we were allowed to play with to explore how a grinding stone worked and was used. Many students were shocked by it's smooth feel since the amount of time needed to grind something that large down so smooth, is somewhat unfathomable to students in the computer age.
As you may be aware by now, the Aborigines were artists in both the musical form and the painting arts. I was a huge fan of the painting arts because the majority of their work involves chewing paint and spitting it out through or onto your hand. This tortoise shell showed how their spit spray framed the object they were shadowing.
Parlament:
Australian Parliament was pretty interesting. The building itself is fairly new, it is only 23 years old; however, the larger building was necessary as it was nearly impossible to fit both chambers into the small building across the water.
Main entrance - the fountain outside is designed so that the water changes direction every few feet. Hopefully this isn't a statement towards Australian politicians.
Old parliament house.
They tried to make the house as reflective of Australian culture and history as possible, so the inside is filled with the colors of their gum tree: pale green leaves, and bright pink sap.
See - pale green! (I have a photo of the pink in my photo album, but I'm having trouble loading the other photos.)
The most interesting part of the Parliament house was their voting requirements. If you don't vote during a election you have to submit a legitimate reason (ie in the hospital), then if that reason isn't good enough (or you forgot to submit a reason) you have to pay a hefty fine, or get arrested. They are very serious about voting in Australia and seem both shocked and disgusted by voter turnout in the United States.
- Posted using BlogPress from my iPhone :)
Location:Bundaberg, Melbourne, and Canberra
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