Alchemy Cordial Drinks to Export Success
September 2019
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Australia’s free trade agreements have helped Queensland business Alchemy
Cordial to find new markets for its cordials and syrups. Exports now
comprise 15 per cent of the company’s turnover.
In 1997, the only place you could find Alchemy Cordial’s products was at
food markets. Today, the company’s syrups and cordials can be found in
cafes, restaurants, bars, delicatessans and supermarkets across Australia.
Known for their natural flavour and use of high-quality ingredients,
Alchemy Cordial’s beverages are now winning new fans around the world. The
family-owned company exports to Canada, China, Fiji, Japan, Mexico, New
Zealand, Singapore, the UK, the US and Vietnam.
Up until 2014, Alchemy Cordial was what Managing Director Malcolm Lack
describes as an ‘accidental’ exporter. The company would receive an
enquiry, make a deal and send products to the customer. Repeat business was
irregular and unprofitable, or simply non-existent.
One morning, Lack woke up and decided it was time to ‘put some energy into
the US or the UK that have bigger populations than Australia and see what
happens. I mentioned it at the sales meeting that same morning and a week
later, my salespeople came back with all these leads!’
FTAs ease market entry
Lack worked with a TradeStart representative to develop a table that
compared tariffs across the overseas markets, including those markets where
Australia had a free trade agreement and where the company did business or
was interested in exploring.
‘For example, we signed a new customer in Canada recently, and we found out
that under the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP), the base tariff of 10.5 per cent on our exported
products had been eliminated on entry into force. Our products are now more
competitive than ever for our Canadian customer,’ says Lack.
Free trade agreements have also enabled Alchemy Cordial to reignite
business relationships. For instance, under the ASEAN-Australia-New Zealand
Free Trade Agreement (AANZFTA), the 15 per cent tariff on Alchemy Cordial’s
products exported to Vietnam has been eliminated since 2018.
‘We uncovered quite a lot with the FTA comparison exercise,’ says Lack. ‘We
were able to go back to existing clients and encourage them to purchase
more from Australia due to our products being more competitive than ever’.
‘They also have the option of channelling these savings into marketing to
increase sales, or reinvest in the business.
‘Exports made up 3 per cent of our turnover when we were “accidentally”
exporting; by being proactive and using FTAs, exports now make up 15 per
cent of our turnover,’ says Lack.
Do your due diligence
Alchemy Cordial’s early export success caught Lack by surprise, and the
company initially struggled to meet orders because it was simply not
prepared.
‘If I had my time again, we would have been more strategic about
exporting,’ says Lack. ‘We would have built the infrastructure, systems and
knowledge ahead of time, and skilled up my staff. You can’t neglect your
domestic market either; it’s not one or the other, you need to pay
attention to both.’
Lack also advises exporters to do their due diligence before entering a
market.
‘There’s a lot of qualification that needs to be done because not all of
them are profitable,’ he says. ‘We have quite an expensive product, so
we’ve got to make sure the demography of these countries can also deal with
the price that comes with it.’
Take the time to build relationships
When Alchemy Cordial first started exporting, Lack said he encountered many
requests from potential partners for exclusivity rights. He advises against
rushing into such an arrangement.
‘You meet someone and they say “We’d love to distribute your product but
can we have exclusive rights to the US” or to Korea or whichever market it
is. Well, no, you can’t,’ says Lack.
‘You’ve got to qualify the people that you want to partner with and make
sure they share your beliefs and share the way that you do business. You’ve
got to make sure they’re honourable.
‘So it’s better to just trade for a while and get to know each other, and
see if you are a good business fit before committing to a long-term
arrangement,’ says Lack.
Put the right people in place
Lack advises exporters to ensure they have strong operating procedures in
place and the right people overseeing and completing those procedures.
‘We don’t have a dedicated export manager for China, and in the past we had
three or four different people doing the certifications,’ he says. ‘All
these people referred to us differently, so we ended up with four
certificates with a different company name on each. We quickly made a
process change and now we have one person who is responsible for all our
documentation.’
Exporters should also consider how they will overcome the language barrier.
‘Our food tech employee speaks fluent Mandarin, so that makes it easier for
us to work with Chinese partners,’ says Lack. ‘Having people you trust on
your side that can help you negotiate language and cultural differences is
vital.’
To learn more about Australia’s FTAs, visit www.austrade.gov.au/ftas.
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