Super markets

September 4, 2012
The Age

Boutique grocers flourish as shoppers look past the ”big two”, writes Jane Holroyd.

KATIE Falkiner, a North Melbourne resident and lover of good food, is dreaming up her perfect neighbourhood grocery shop. The City Grocer, when and if it is realised, will be stocked full of quality, local produce. Fruit and vegetables will be seasonal – not necessarily organic but as fresh and local as possible.

Customers will know where it’s been grown.

There will be artisan dairy and bread offerings, and meat from specialist producers such as Warialda beef. The staff will be attentive and knowledgable. The aisles will be generously proportioned and tactics to entice impulse buying will be kept to a minimum. There will be a noticeboard for feedback and the shop will open late into the night.

Falkiner and her business partners, three long-time friends, are so confident the City Grocer is everything North Melbourne has been missing, they’re planning to ditch their careers to turn it into a reality. All they need is the right retail space. They had better find one quick.

Across Melbourne and in Victoria’s regional centres, successful grocery shops of the type Falkiner and pals envisage are popping up. As a sector of the community becomes increasingly interested in the path their food travels to the table, and as the consequences of Australia’s supermarket duopoly come under the spotlight, a new band of small-scale grocers and producers are combining forces.

In Elwood’s bustling Ormond Road shopping strip, Leon Mugavin is renovating. His five-year-old business, the Leaf Store, is thriving. His customer base and sales are up 15 per cent over the past year. Coles and Woolworths might want to take a leaf out of Mugavin’s book. Bursting at the seams, he is knocking out a wall, maximising his retail space for a bigger range of produce and pantry lines. A stunning floral counter is being booted to new premises up the road; the area formerly occupied by blossoms will accommodate fourth and fifth registers.

Many of the Leaf Store’s lines are also sold at monthly farmers’ markets. There are green apples from Wandin and organic red Otway potatoes from Warrnambool.

Customers also have access to quality produce from boutique Victorian wholesalers, such as olive oil from Chapman Hill, olives and pulses from Mount Zero in the Western District, and dairy products from Schulz Organic Farms, The Butter Factory in Myrtleford and 180 Acres – to name just a few. In the bread section there is an abundance of loaves from Dench and Irrewarra Sourdough, and several gluten-free lines. ”We don’t call [the Leaf Store] a farmers’ market,” Mugavin says. ”But we are a bit like a seven-day-a-week farmers’ market.”

Mugavin had 15 years’ experience wholesaling fruit and vegetables before he opened Leaf in 2007. ”It was way back in 1997 that I read an article in a newspaper about the future of food retailing and it talked about stores like this, and that planted the seed,” he says.

At Mount Evelyn in the Yarra Valley, Angela Gioffre has opened one of Victoria’s newest independent grocers, spurred by the success of her fruit and vegetable delivery service, Organic Empire. She didn’t just buy the shop building; she bought the farm – 2½ acres of land out the back has been certified organic and soon Gioffre will begin growing vegetables such as Tuscan cabbage and white eggplants.

The Organic Empire Food Store opened in mid-August. The closest supermarket is a small IGA a five-minute drive up the road. Gioffre opens the store only three days a week but business has been booming. ”I can’t believe it,” she says. ”We’ve had people come from all over Melbourne. We don’t advertise, but we have a big email list and I presume it’s through that.”

But some others entering this niche retail space have little or no experience in groceries. In Ascot Vale, Paul Hateley and Hamish Gadsby have developed their business, the Happy Apple, over five years. Hateley says the long-time friends decided to open an ”old-style, village grocer” after returning to Australia from Britain. He worked in senior roles for multinationals Danone and Coca-Cola, and Gadsby had been working for adidas. While living in Clapham in London, Hateley developed a love for the small, independent grocers that specialised in gourmet products. Like the Leaf Store, the Happy Apple started as a typical greengrocer but has since expanded its offering.

Perusing the shelves and refrigerators at the Union Road store is a joy. In the freezer are pies, made from the Happy Apple’s fruit at the cooking school up the road. Boutique Victorian brands compete for shelf space, ensuring customers stumble, with regularity, upon new producers. Doodles Creek mayonnaise? Bullfrog Gully eggs? In the cheese cabinet, next to offerings from growing brands Meredith Dairy and Yarra Valley Dairy, is Locheilan farmhouse cheese, which hails from Wunghnu, a dot on the map near Shepparton.
Agrifood consultant David McKinna says the boutique producers are defying the gloom that shrouds much of the local food-processing sector. He defines ”boutique” as companies with an annual turnover of less than $20 million. ”You also define them by the specialness or niche nature of their product,” McKinna says.
”Invariably, they start out as passionate foodies producing products at home and then grow into successful businesses.” He points to Locheilan cheese as an example. ”They were a small dairy farm that were too small to make money, so they started making cheese and selling it through farmers’ markets; now they’re moving into providores and independent supermarkets.”

But McKinna says retailers who are making money from boutique products are unlikely to ever worry ”the big boys” because higher prices cut out a swath of Australian shoppers, with 80 cents in every grocery dollar currently spent at Coles and Woolworths.

Bronwynne Calvert, who owns Irrewarra Sourdough with her husband John, isn’t waiting for the big supermarket chains to knock on her door. Irrewarra hand-shapes 17,000 sourdough loaves each week, up from about 5000 loaves in 2005. Demand already outstrips supply and the family had to open a second factory late last year. Bronwynne says quality would suffer if the company tried to expand much more: ”We would probably have to mechanise.” She is also reluctant to relinquish control of distribution and pricing.

Irrewarra Sourdough is stocked in small grocery stores, providores and markets and, increasingly, in independent supermarkets in better-off areas where, Calvert says, people ”can afford to care about the quality of ingredients in their food”.

Supermarkets such as McCoppins in Clifton Hill and the Renaissance IGAs in Hawthorn are some of Irrewarra’s bigger retailers. Irrewarra has recently begun supplying the Yarraville FoodWorks on Anderson Street. Owner Marc Heine is rebranding the supermarket the Village Store. He is typical of a growing number of independent supermarket proprietors trying to differentiate themselves from the big two by offering in-demand boutique products while trying to remain price competitive on everyday items.

Demand is so strong for some boutique products that producers exercise near-complete control over distribution. Soon after Mugavin set up the Leaf Store, he had to beg the Calverts to supply him with their sourdough. Bronwynne says there are risks in supplying a new retailer. ”We look at the range of products they are selling. We look at things like whether they have enough car parking space.” Most importantly, they make sure they share common values with the proprietor. ”We decided to supply Leon because he was so passionate and knowledgable about food. And he harassed us.”

Mugavin points to another example of the strength of the artisan food market. ”During the $1 milk wars between Coles and Woolies, our sales of organic milk went up.”

The Leaf Store stocks unhomogenised milk from Schulz Organic Farms in Timboon, among others. It retails for about $3 a litre. Owner Simon Schulz says his business grew 120 per cent between 2010-11 and 2011-12. ”The recent issue about permeate has added another string to our bow.” He does not feel he’s competing with the $1-a-litre milk suppliers, or for those who buy it. ”It’s an entirely different product.”

There are signs that Coles and Woolworths are taking note of the strength of the boutique market. McKinna says the Thomas Dux stores are Woolworths’ testing ground for gourmet products. In June, Coles announced plans to sell more ”hidden local gems” in some of its stores. But whether these are genuine attempts to expand product range and support local producers is a moot point to small grocers doing well. And they’re not averse to stealing some ideas themselves. The Happy Apple has recently introduced a loyalty-card program and an online shopping option for customers.

In Castlemaine in central Victoria, married couple Eva Bodno and Matt Williams are unconcerned about rumours (hearsay, according to one local councillor) that Coles and Woolworths have both bought land on the outskirts of the growing town.

Until now, their four-year-old business Green Goes the Grocer has faced supermarket competition only from IGA. Specialising in local and organic produce, they are doing so well they’ve had to triple the size of their coolroom and take on more staff, and recently they spent $2500 on a shipping container for extra storage space at the back of the store.

Bodno estimates turnover has quadrupled since their first year of operation. ”I don’t think our customers are the type of people who shop in supermarkets,” she says. As if to make the point, a woman and her daughter enter Bodno’s store, apparently for the first time, and exclaim at the price of her sweetcorn (two heads for $6). Williams shrugs as the woman and her daughter leave; $3 a sweetcorn is simply the price of buying organic produce at a time of year when Queensland supplies have been affected by flooding. Bodno and Williams’ regular customers are willing to pay $3 and they have more and more regulars.
”At first we knew everyone’s names,” Williams says. ”But now we can’t keep track.”

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