To mark the arrival of the Vodafone xone business accelerator, Idealog is interviewing a whole heap of established New Zealand innovators, as well as the founders of the 10 startups selected by Vodafone to receive mentorship, funding and the potential benefits of working with a global network. In this episode, dairy divinity Peter Cullinane talks with Idealog’s publisher at large Vincent Heeringa. 

Vincent Heeringa: Peter, in a country that’s awash in dairy products, launching a dairy company seems complete madness. What were you thinking?

Peter Cullinane: Well, it’s certainly awash in dairy products. I think what I was thinking though was it’s not awash in great dairy products and I think there is a huge difference between, for me always, I’m sort of obsessed by the difference between quantity and quality.  And I think as a country we’ve been focused absolutely on quantity and quality has suffered and I just wanted to turn that on its head.

You actually just wanted nice butter, didn’t you?

Yeah, well that was the starting point and there’s always got to be something that just triggers it and for me it was exactly that. I feel I’ve told this story but I’m a big butter consumer and a proud kiwi etc, but for years I’d sort of given up on New Zealand butter. And I was in a supermarket one Sunday afternoon, one wet Sunday afternoon, and I was putting Lurpak into the shopping trolley –

Lurpak being?

Lurpak being a Danish butter and I had that sort of thought of, what am I doing as a, as a proud Kiwi putting Danish butter in my shopping trolley. And so that’s where it all began. I went home and brewed up my first batch of butter and I’ve still got the butter dish that I used to make the butter.

Was it delicious and tasty and successful?

It wasn’t so good. What I learnt was it’s easy to make butter, it’s hard to make really good butter, but it was just enough to get me going and then there’s a sort of serendipity to these things because that evening I was going out to dinner with my wife and a group of friends and one of them is very successful. And he said to me, ‘so what are you up to’, and I said, ‘oh you know, I’m doing this and I’m doing that and I’m doing something else’. And I could see I wasn’t making quite the impression I should be making so, so at the end of it I said, ‘oh and I’m going to start a butter company’. And he said, ‘okay, but it’s not out of the boot of your car is it? I mean it’s going to be a serious company?’ And so I said, ‘oh no, it’s going to be serious, it’s going to be a serious business’.  But it was just enough to think actually I’m going to do this and so that’s how it all started.

You had a very comfortable live as a successful advertising executive. You worked for Saatchi & Saatchi for many years, you started Assignment Group, your own company. Why did you want to take this leap into the unknown? You could’ve retired.

I think retirement will be anathema, but one of the things I think when you’ve had a career giving other people advice, there’s a big difference between giving advice and, and taking your own. And there’s a huge difference in asking others to write a cheque and writing your own cheque and so –

You have to eat your own butter.

Yeah exactly. And so it was largely driven by that ‘hang on, maybe I should just take my own advice for a change and just sort of up the ante a bit’. And that’s what it was, because suddenly you’re putting into play everything you’ve believed.

Most people would know you, I think, for your chocolate milk that you did as a collaboration with Whittaker’s chocolate. That was a sensation. I suppose you’re going to tell me it was a brilliantly strategic plan that you’ve fulfilled.

No, no I wouldn’t. I wouldn’t tell you that at all. Actually it came out of a lunch with the founders of Farro, you know, which is a brilliant store, and James said, ‘oh, I’ll tell you one thing I’ve always wanted is a decent chocolate milk. Can you do that?’ And that was really the little catalyst and so we thought, again back to this quality over quantity thing, when we had walked – the royal we –you know, the small team we’ve got, but walking up and down the dairy aisle, when we looked at the flavoured milks that were on the shelf at the time, they were all sorts of highly coloured and not, to my sense at least, particularly appealing.

So we thought if we’re going to do a flavoured milk we’ll do it well and we were really lucky that Whittaker’s signed up and that was Holly Whittaker who really made that call. And I’m eternally grateful to her for it because at that stage we were really a little company, and still are really, but Whittaker’s was the most trusted brand in the country. So they were putting a lot of trust in us.  But we had no idea it would be as successful as it was but that was absolutely a sort of rocket to the business.

And was that a kind of a welcome success or did that bring its own problems?

It was a very welcome success. Our butter sales are growing sort of 50% year on year and our white milk sales are growing and our organic milk, you know, that’s all good. But it just took it into a new whole new level. So with success comes a whole lot of challenges but they’re all bloody good challenges to have. Much better than not having a success.

Looking back now, it almost looks like it could be successful. What have you learned, what mistakes, what would you not repeat?

What we wouldn’t repeat again is having a product that was in truly short supply. So in some ways it was sort of brilliant because it fed the frenzy and that sort of fed on itself.

With security guards in shopping aisles and –

All that good stuff. It’s extraordinary, extraordinary. But I tell you what it was. That was, more than anything, because the product was extraordinarily good and that’s a serendipitous thing. But it was because the only way that we could make the chocolate milk was with a powdered product and Whittaker’s had just launched their five roll refined milk chocolate. They basically make the chocolate into a powder before they set it. So it was just one of those wonderful things where we had the best possible chocolate we could have. So that was really at the heart of it. But you can only do that once. You can only run out of stock once at that sort of level. I don’t think supermarkets are that forgiving of that sort of thing. You know, if they give you shelf space they want to keep it full, so we would never knowingly want to repeat that. 

Now this is kind of your model now isn’t it? You’ve built on the success of these things and you’re constantly innovating, introducing new products.

Yes we are and I think, for me, the dairy aisle is full of opportunity, just because it’s been neglected for so long I think and there was a belief that it was impossible to sell another litre of milk in the country and it’s just not true. I think what we’ve proven is actually if you can make a great product, be it white milk or flavoured milk or anything else, people will buy it because people really will search out quality. But you’ve got to have quality to begin with so that’s always been our mantra.

You mentioned at the beginning of the interview that the opportunity was a good milk, a good butter. Do you think quality is an opportunity in every market? I mean if you were to recommend for other entrepreneurs, is quality the way to go?

I think quality’s the way to go at every level and actually at the most fundamental level quality is the way to go for New Zealand. I just keep on coming back to it: our basic model was created when we sent our first slabs of mutton and boxes of butter to London on the SS Dunedin in 1882. At the time, for commodity products, refrigeration was clearly a huge, technological breakthrough. It was about export and low pricing. And those are sort of the levers that we’re still pulling, but we can never win on quantity because we’re just not big enough.

But we have a unique position where we have products that come from the land and are seen as truly clean and green and are produced and packaged and sold in such a way that we are appealing to that quality consumer who exists, right around the globe and is looking for exactly what we have to offer. And I just think it’s a nonsense that we are still competing at the quantity commodity end of the market. We have no right to be there.

Peter Cullinane, thanks for your time.

Very good.