Emma and Toms | Tom Griffith
Conversation with Tom Griffith
Tom Griffith is the Co-Founder of Emma and Toms, a leading health food company well known for their delicious, all natural juices. Following on from an early career in finance and startups, it was on a ski trip that Tom had his ‘aha’ moment of launching a premium juice brand into the Australian market. He approached his childhood friend Emma to partner with him, and from there Emma and Toms was born. Almost 15 years later they’re one of Australia's best loved brands with over 3000 stockists worldwide and an ever expanding range of healthy snacks and drinks to help people look after themselves.
“Pallet production accounts for 40% of deforestation… Chep alone buy 55 million new wooded pallets a year in the USA alone.”
Tom Griffith, Co-Founder of Emma And Toms a leading health food company well known for their delicious, all natural juices.
Now in true entrepreneurial style, Tom originally kicked off his career in corporate banking, but on a ski trip in France came up with the crazy idea to launch a premium juice company - the first of its kind in Australia at the time. He came back to Australia and teamed up with childhood friend Emma Welsh, and in 2004 ‘Emma and Toms’ was born.
But getting a product based drinks business off the ground in those early years was anything but easy! The first batches didn’t taste good, they couldn’t get anyone to make their instantly recognisable bottles, and the distribution just wasn’t working.
We dived deep with Tom on facing those challenges head on. Want a summary - we came to the realisation that ‘managing challenges’ is exactly what business is all about.
Emma and Toms now have 40 distribution vans on the road, and over 3000 stockists around Australia and the world, of which they know most by name.
Each year they donate over $100,000 worth of products to community groups, and run a social enterprise “Unite Projects’ to help fight youth homelessness in Australia raising over $350,000 so far. They also are always trying to raise the bar on the environmental impact from distribution and packaging their goods.
It was an absolute treat to chat with Tom, it’s a vital listen for any startup in the product space - here it is for you folks, enjoy!
Mentioned in conversation...
The Emma and Toms story
The production and product lines
Their secret to growth and expansion
All about their brand philosophy ‘look after yourself’
Giving back and all that is being done to get in the B Corp game
Follow Emma And Toms here:
Emma And Toms Website
Emma And Toms Instagram
Emma And Toms Facebook
Full Podcast Transcript - Tom Griffith’s
Pru: Hey Tom, welcome to the show.
Tom: Good to be here. Thank you.
Pru: Yeah, now you have just... you're here in Bryon Bay visiting, you've just come back from a lighthouse run, it's a good morning in Byron Bay?
Tom: We've had a good twelve hours. We arrived yesterday, we had nice little fish dinner at Fish Ed's which was just near where we were staying, so I thought that was a really easy go-to. And despite selling healthy drinks, I had my eye on one of those Bloody Mary Oyster Shooters, which was nice. Bit of protein. And this morning we ran the Lighthouse and then back to Watago. A nice way to start the day.
Pru: Fantastic. Yeah, beautiful, beautiful. And you've seen a bit of rain that we haven't had here for a really long time. So, special for us, not so special for you.
Tom: Yeah, a few drops. I was banking on the front. There's a big front coming into Sydney Airport actually, and there was lightening forecast, and as you know, lightning means, no flying. And I reckon we flew out about 15 minutes before it hit, so we've been blessed.
Pru: Perfect. All right. Well, Emma and Tom's, I was so excited to get you on to the podcast. I've got one of your gorgeous bottles in front of me here, because you're just such a well-known and well loved brand in Australia. And so, I'm just going to start at the start, is it really true that you and Emma have known each other since you were kids?
Tom: We truly did meet having a swimming lesson when I was twelve years old and she was actually a bit younger. At the aptly named Harold Halt Memorial Hall in Melbourne.
Pru: Wow. And so you've known each other since then, and then have you kept in touch because we've really come a long way since then? But were you friends throughout your childhood?
Tom: Yeah, we had... Emma was at school with my sister. She moved to Melbourne University when I was there, when I was working in France and Paris she was studying there. When we then went to London, she was there and we used to go skiing together and things. Part of the same social group. Never best friends, still aren't. But get along really well. We always feel we have similar aims. And we put it down to really three things, which I suppose, is relevant and imperative to any worthwhile and lasting relationship, being trust, respect and a shared vision.
Pru: Yeah.
Tom: And we act in the best interest of Emma and Tom's, not Emma and Tom. That helps.
Pru: Great. I love it. I love it. Okay, now, you didn't start out as a juice merchant, that's for sure. You spent a lot of time... you were in banking to kind of kick off your career, is that right?
Tom: Yeah, I was a boring old Chartered Accountant, and then I went into investment banking, and I went to the UK and was a corporate adviser in a French firm doing really Anglo-French deals in the UK. I had a year and a half actually living in Paris advising the UN Security Council on reparations against Iraq for the first Gulf War, because it wasn't in fact a war, it was an illegal invasion and they siphoned off a couple of hundred billion dollars of oil revenues to repay people who suffered losses. And then I went and did a London start-up which was fun. And then [inaudible 00:02:50] sensationally lost one and a half million... billion pounds of his own wealth in the tech wreck. In four quite separate arenas, so it was good going. He pulled funding, we sued him, he sued us, yada, yada, yada, we sold what we had done and built to that point to Bernie Ecclestone and I did the only thing I thought I could do, is to go skiing.
Pru: Excellent choice. I did that straight after my uni degree actually. I remember being roped in to get my result from the Dean of Psychology at the University of Newcastle, and she said, "You've got great marks, what are you going to do next." I said, "I'm just going snowboarding. That's just what I'm going to do." So, it always clears the head doesn't it, the ski-
Tom: I did one season and came back to Melbourne to look for jobs and things, and didn't really know what I was going to do, so I did the only thing I could do, I went and did a second season. And at that point, I was hoping on the gondi to go to the higher part each morning, drinking these green juices. And at that point, a lot of the French work had been for the French conglomerate Pernod Ricard, and I'd done a start-up, so I had drinks and start up on my brain and I thought, "This is it." That was the aha moment.
Pru: Wow. On a gondola.
Tom: Yeah, on the gondi.
Pru: Yeah, fantastic.
Tom: So it does work.
Pru: Yeah, great. So you've got drinks, you've got start-up in your brain, where do you go next?
Tom: I did a quick turn around in Glasgow and I raised some fast funds and then came to Australia and put the idea to Emma, who said, "I'll think about it." And did and came back a week later and said, "Let's do it." So then we took a year from then to actually launch, which was a bit like the Winter of Discontent, like, "Are we going to get this done? Are we going to do it or not?" When you get to the point of no return where you've got to actually order a hundred thousand bottles to get made.
Tom: And you've got to commit some funds. And one day Emma just said, "I bought twenty thousand bucks worth of passion fruit yesterday." And I thought, "You're kidding me? You got to be joking?" But that was her commodities brain, "It was a good price." She found a deal and and so she's bought it. Mind you, we've probably spent... oh, I don't know how much, oh we would have spent 80 to 90 million dollars since then on fruit, so it wasn't a big lick in the scheme of things. So we launched and we had 8,000 juices and no customers.
Pru: Right. Okay. Now, let's back it up a little bit because you've got quite a finance brain, but Emma's quite different in, she's studied and done some big stuff, but what was Emma's... like what did she bring to the table?
Tom: Emma was the only person I thought I wanted to do this with when I first thought of the opportunity. Emma had worked with Cargill, she's been a... was she corporate, or working with Uncle Bens, which is the Mars Group's pet food division. So, no in commercial, so just basically sourcing raw materials like fish for cat food, making products, so that was a very strong pedigree and that was her main strength to me. And she's been really a great business partner. We've had a long... it's been 15 years and you see a lot of partnerships, most partnerships... well, I've seen them in small business, or a smallish business where, you know... I know one guy went and just pulled 40,000 bucks out of the bank one day. You see it in big businesses where there's co-heads of department at say an investment bank and there's the ego clash. So we've managed to hold it together pretty well for now 16 years.
Pru: Yeah, great. All right. So, she goes out, you come together, you've got the idea, you can see how it would work. It's not being done well in Australia back then at all, because this is around 2003, 2004?
Tom: Yeah.
Pru: Yeah, great. And so you have to commit. Now, I understand that first of all there was the challenge of finding the square bottles that you're so well known for.
Tom: It's funny, I just got a text today to go scuba diving with the guy who was our champion person at the bottle manufacturer, who took us on board literally on the back of a spreadsheet we'd prepared, fully made up. Normally to make a new bottle, you've got to make a model, basically it's a solid perspex model, then you make a mold. And that whole process costs sort of $50,000. The didn't charge us a cent. They just took us on our word, backed us and made this new square bottle. Because back in those days no-one in Australia did a square bottle, and in the US square was denoted as being super-premium.
Pru: Right.
Tom: And this was a super-premium fruit juice because it's made of whole fruit, no added sugar, preservatives, colors, flavors, you name it. And not overly processed. So minimally processed so you preserve all the integrity of the fruit.
Pru: All right. So you get the bottles made. You've now made your big purchase of passion fruit. What comes next? I mean are you setting up manufacture now? Are you making it your kitchen at home? Where do you go?
Tom: We go from the kitchen at home to a small, fairly antiquated bottling plant. And we made a thousand liter batches, and of course, using commercially sourced fruit it tasted terrible compared to fruit from the market in Melbourne. So then you've got to start again and go back through all your different sources of say, mango. And it's going to be Australian and imported, it's going to be frozen [inaudible 00:07:44], can you work out what tastes the best and start again. That took another few months.
Tom: We finally got it right and then the plant actually rang and said, "We can't do it." And we're about to launch, it was like D-Day, and we said, "Well, why?" And they didn't have the sensitive sensing gear on the line to detect the bottles going past the label applicator at 120 bottles a minute. Because our labels are clear, they couldn't pick up once again where the label was going to start. And obviously on a square bottle, you need to be really precise.
Pru: Yes.
Tom: It's got to be placed on perfect. Where a round bottle, you just start somewhere and spin the bottle, off it goes, it doesn't matter. So Emma found a contract manufacturer in Melbourne, a contract labeller. I went up to the bottling plant an had the like, come to Jesus conversation, actually, you are going to do it, this is why. And we were shipping air around Victoria of course, with empty bottles on trucks but we got it going and we got it launched and our point was to get in the game. And despite the additional cost involved of paying for a contract labeler, which was like seven cents a bottle, which is horrendous, we got going and we did launch. And the point is, you got to start.
Pru: Yeah. I think that's a great point. No matter what the obstacles are in front of you, because it always goes pear shaped somehow, it doesn't matter who's sitting on this table in front of me podcasting. There's always something goes pear shaped just before launch.
Tom: Well, absolutely. I mean, if we'd thought about it, which we didn't, we were coming in as novices to a whole new industry, we were going to a thousand mistakes. And it wasn't actually budgeted for or thought about it like that. But of course you're going to.
Pru: Yeah.
Tom: And we've always tried to then turn, what we call roadblocks into stepping stones towards success and to behave like victors and not victims, despite us up against global multi-national companies.
Pru: Yeah, and I guess you and Emma had also come from quite corporate backgrounds hadn't you, and so, did this come with a whole new set of challenges, stepping into your own start-up and small business at that stage?
Tom: Yeah, you know we'd both done a start-up, but you're quite right, we had come from big corporate backgrounds and we probably... one of our first mistakes was to hire two staff, because you do that don't you, you have staff. Where... and of course we were running around Melbourne, Sydney selling this product into shops and things ourselves, but in hindsight, we feel like we perhaps could have done even more. Because we know for a fact, the more you do yourself, the better you do it.
Pru: Yeah, absolutely. Okay, so where did you start? Where did we see Emma and Tom's first, was it around those shops in Melbourne?
Tom: I've got to say, the Spar in Byron Bay was a very early customer, very early customer
Pru: Oh, shout out to the Spar in Byron Bay.
Tom: And Top Shop and Bayleaf. So all those famous ones which we still enjoy. I was in the Spar only an hour ago. It's funny, I went to the Armstrong Street food store recently in Middle Park and said to the girl who was serving me, because they still stock our products, you've been a really long standing customer and when we first launched here, it was owned by two blokes called Nick. And she said, "Yep, Nick's my dad."
Pru: Oh wow.
Tom: So we're now generational.
Pru: Fantastic. Fantastic. And so, and how did you get into those initial stores, did you go straight through distribution or was it you knocking on doors to start with?
Tom: No, it's the same for everyone. I've just actually read in the last twelve months, both Shoe Dog, about launching Nike, and I'm reading now, the Rip Curl story. And despite those businesses being much bigger than we are, it's all the same stuff. They're running around shops, they're doing runs to Nisa and back with wet suits in the back, going to the surf shops and it's all the same stuff. You've just got to get your brand out there, improve your product. You know they bought a sewing machine and started making wetsuits, they bought a better sewing machine and made more wetsuits. And they hire more people to make more wetsuits and it was like that. And they found better neophane and it's just an evolution and it's very similar. We started, that label's probably our third or fourth iteration because we started with quite a small detailed label, then you realize or you learn that there's a thing called pop. And you want your label to pop off the shelf when it's in a crowded supermarket or grocer or IGA, you want your product to stand out.
Tom: So then you work on a think you've just learned called pop. So, it's that sort of stuff. Emma would call it, it's like pulling on a little thread. You just start pulling and as you go, you improve and you improve and even a few years ago we launched a non-added sugar flavored milks and Emma rang me all sort of upset, that the labels next run, and get going. So, same again. And, it's just work. And okay, you've got to have a good product. And that's a given. People won't buy it twice if it's not. So in our mind, everything must taste absolutely fantastic. Not, that's quite nice. Fantastic. And that's our view.
Pru: Yeah, and I can definitely, I'm you know, I'm one of your biggest customers as well, so they always do taste fantastic. And it's really interesting because I lived in Byron Bay round those times and I do remember your juices being here, and then I moved to the UK and then down to Manley which we were just talking about. And I'm sure that... I was sitting in a café one day, it was Belgrave Cartell, down there in Manley, quite near the wharf, and you, yourself, actually came in and did a delivery. And it was, I think it was Joey behind the counter said, "Oh yeah, that's Tom from Emma and Tom's." I was like, "What? He's coming in doing the deliveries?" And it was you in there. And it seemed... I remember it was quite a, almost a shock to me back then that you were the one actually meeting with your... you were out on the road doing the deliveries as well.
Tom: I often ride shotgun with the guys and girls in the team and I sort of say, "This is your run, they're your customers, I'll help." So while you're doing the invoicing or schmoozing the shop keeper or trying to get new products ranged, I'll carry in the juice for you and put it in fridge and just do the work. And often they say to the owner of the shop, "Oh that's Tom." And they think, "Oh." They assume that Tom's the guy training to probably take over the job or whatever else. And they all do the same thing. After about ten minutes they go, "Oh Tom, Tom." Like, "Yeah, yeah." No, we can still work, it's fine."
Pru: Yeah, fantastic. And now, I was doing a little bit of research and from what I understand you actually got some distribution on board in those early years, but then you moved away from it. Can you tell us a little bit about that?
Tom: We still use distributors, but like I said before, you do a better job. When you're with the distributor, you're part of a phone book of different products, from French fries to biscuits, to ice creams, yogurt, you name it. And we weren't getting the traction, they were upping minimum orders, they were paying us slowly because they, in those days had concerns financially themselves so. We had to actually borrow $100,000 from a friend of mine, who very nicely charged us one bottle of Penfolds Bin 389 per day until we repaid him.
Pru: That's good interest.
Tom: And got his money back in about 42 damn nice bottles of wine. And so we decided to do it ourselves. We were doing some analysis. And we realized we were churning our customer base at 40% per annum.
Pru: Wow.
Tom: Ruthless. And it cost a lot of money to get a customer. So I remember Emma in her grim way, sitting over her computer on a wet August afternoon and she said, "We can trade our way out of this." And her husband and I got in the van and went to South Melbourne, and won seven new customers in an afternoon.
Pru: Wow.
Tom: We realized they loved the superior service alongside the superior product. And then you do more of it and they're paying you cash, so you get out of your hole because you're being paid cash, not waiting 90 odd days.
Pru: Fantastic.
Tom: That funded the expansion into our own distribution and then you start wearing a distributor hat as opposed to a brand owner hat and you think to yourself. "Well, hang on, we've put the handbrake on, what more can we sell to these guys while we're here." A customer mightn't buy four juices, but they could buy a juice and a bar, or a coffee and a bar. So that's what gives rise to doing our raw fruit and nut bars that we've now had in our range for a long time. And every other product's come from that relationship, about giving the customer what they want. And so, to put us nearer the customer and it's really been the making of the business.
Pru: And something that you were mentioning just before we pressed... we went live here was, having the vans out the front, you've got all the products there, so you've just got this additional point of sale now, which of course, you and your team are going to be more passionate about than any of the distributors.
Tom: Absolutely. And if a customer changes hands or goes broke or closes, we can just go next door. Then bang, we're up again. So you can. And you can then work on getting as much [inaudible 00:16:26] as you possibly can. And look, it's sale or return, so there's no risk to the customer. So, ideally it's a really solid service. And we've now got about 3,000 of our own proprietary customers plus of course Coles and Woolworths, plus of course customers that are serviced by distributors. And then online sales we do as well. And now export sales. So we have a really broad, risk diverse platform.
Pru: Wow. That's incredible to hear that actually. And I think a lot of people will take some good knowledge out of that. Now part of that was actually getting your own branded vans on the road as well. Can you tell us a little bit about that?
Tom: We actually had some awful vans. And they were run down, because of course we were in a very bad state. And we were asked by Virgin to bring a van along to their offices in Queensland, in Brisbane for a big barbeque. And there's vans there with peeling lettering on it and faded and all of a sudden, the chopper appeared over the road on the oval, piloted by Graham Kennedy, out gets Branson, and he's walking past this disgraceful brand. And my father always quotes Sir Don Bradman who says, "The first thing you've got to do, is look like a cricketer."
Pru: Mm-hmm (affirmative). Great.
Tom: So ever since then we've looked polished. We've got now 40 vans. They're white, they've got red Emma and Tom's all over them. And they're mobile billboards as well of course, because if we priced them like you price the cost of advertising in a bus shelter for 12 months, multiplied by 40 odd vans a year, it's akin to sort of 3 to 4 million dollars in equivalent ad spent. Which we get by having a local presence. So whilst no-one really knows Emma or I, which is a good thing. We can walk down the middle of a street and no-one goes, "Oh, there's Emma and Tom." So the brand doesn't require us to do a Branson for it. But people feel they know the brand and part of that was the brand build via the route trade, where you go into say the Armstrong's Trade food store and Nick says, "Look you're buying this sandwich Pru, how about one of these great new juices from Emma and Tom's, they're delicious."
Tom: So, you haven't been advertised at. You've discovered it yourself, you drink it, you like it, you tell your friends. And that was the idea going back 15 years as to how we were going to build our brand with no cash.
Pru: And 15 years is a long time to be in the game as well. Where there any big spikes in your growth along those 15 years or was it just showing up every day and doing the work and taking the small steps.
Tom: We've always said there's no sort of silver bullet. It's not Pop Idol. And I think it's been very much a fact that we're just a slow... grind's the wrong word, because it's been fun, but it's just a slow relentless build and of course there are times when you have... you have more presence or maybe some PR or something turns in your favor and you get an increased spike. But I really think it's about application and being tenacious.
Pru: I love that. I love that. And how has being a partnership either helped or hindered you? Because I know that they can be... well, obviously you and Emma have a successful partnership, but is it because you bring different things to the table? I mean, you do have diverse skillsets, but you also play quite different role within the business.
Tom: Yeah, we do. And also, even in the early days where we used to share the freecall number on our mobile phone, we'd have a few months and then pass it across again. And of course whenever the phone rang, someone had a problem.
Pru: Mm-hmm (affirmative).
Tom: And we're like, "Oh my god, what could it be next." Then you realize, it's all about solving problems. If there were no problems, you'd be living up here the entire time. Happy days. So there's always stuff going on I can tell you.
Tom: And now, because we have 60 odd different products and they're all made from real ingredients with no preservatives, there's going to be thing that go wrong. We call it the risk of real.
Pru: I like that.
Tom: But we prefer to deal with that than obviously cover up things with preservatives or other forms to make them stable. So they're real products. Our orange juice tastes a bit more sour in winter than it does in summer. It's one of those things. So we now very used to it and we have obviously, refrigeration... what they call a chill chain from the minute something is bottled to when it's consumed. And it's all monitored. But we've just had to learn to do that. That's been our challenge. And that also protects us from a lot of the bigger players who don't have a refrigerated chill chain. All their drinks are ambient. So, it's one of the things that keeps us I suppose at a higher level of product integrity.
Pru: And that's interesting because you have developed quite a few new product lines along the way. What was the first one after the juices?
Tom: We did quenchers, just because they are easy to do. And then we did the fruit and nut bars that Woolworths picked up quite quickly and they've been one of the better selling health food lines that Woolworth have for a long time.
Tom: And it does help. If you go into supermarkets it's not a bad thing. It means more people will see the product. More recently we've partnered with a group called the Fermentery who are experts in fermenting. And as you know these days, fermenting is the ducks guts.
Pru: Especially here in Bryon.
Tom: And we're doing a kefir water.
Pru: Oh great.
Tom: And when Kombucha gets made, we do a Kombucha as well mind you, so I'm not preparing Kombucha, but when Kombucha ferments it makes citric acid, which gives that quite vinegary taste. When Kefir ferments it makes a lactic acid, not quite as harsh. So it still has the billion bacteria per bottle and everything else, just not quite as tart a taste. So we think kefir is probably one of the next big things, plus, as you can see just on the table here, you're now egg white protein ball with two egg whites per ball. So it's very high in protein.
Pru: It's amazing. The mocha crunch.
Tom: Yeah.
Pru: I could dig right into that.
Tom: Yeah, delicious.
Pru: Yeah.
Tom: So we now have realized after some years, it's all about innovation. We can't do a coke and pump out product until Woolworths will price support [inaudible 00:22:17] for 12 months while it gradually gets some traction with the consumers. We can't afford that. Ours have got to taste great and sell from day one.
Tom: You get about six months to prove things. So we're always working on new innovation and fortunately because of the brand platform, when things come out people trust them and go, "It's Emma and Tom's, I'm sure it's great." And they adopt it.
Pru: Fantastic, fantastic. Okay, now with the two of you on board, with you and Emma, surely you come to some disagreements and I'm really interested in this partnership, you know, the dynamic that you have between you. I mean, how do you figure it out?
Tom: I mean, I've got a mother and two sisters and two daughters, so I pretty well know my place, I can tell you.
Tom: Once again, we actually act in the best interest of the business or the staff or the consumers and not of ourselves. So things have got to sell. We don't generally disagree on an awful lot to be honest. We have very similar palates and in this business that's actually quite an important thing of course. We have a very similar commercial outlook, and obviously you've got to be commercial and then there's areas where I'll just step back knowing Emma's view will be more educated and informed. Similarly on things like corporate issues, she's happy for me to take a front foot. But having said that, we always listen to each other as well, because Emma will always have a very valid point to make, or more. As do I on NPD type issues. But she runs that. And of course, when you're bigger you need to have a bit more system involved, so as not send the issues all over the shop and then similarly, there's no point in Emma and I doing the same thing together the whole time because that's complete duplication.
Pru: And so what are some of those growth... what have you implemented along your path to support those kind of system upgrades if you like?
Tom: I mean, we persisted for a long time with our initial accounting software, which was a disaster because it only [inaudible 00:24:23] account for stock in one location. We had to count four states and warehouses everywhere else. So now we use Net Suite, which is a very simple to use, out of the box ARP system, which has changed our lives. So we can kind of add data now, anywhere you like. Sales per state, per customer, per type of customer, per product. You name it. Which gives us a lot of power. To the point where, last year, we went to the NAB and asked for quite a lot more money, just to lend. And they gave us a challenging hit list of questions to respond to and our super new CFO, mostly sit in the back with one spreadsheet with 12 tabs. And it was undeniable. Thank you. And they said, we can't argue with this. We got the cash.
Pru: Fantastic.
Tom: You got the cash. At least you're on the doorstop of the home law commission, so challenging times, so that's where it's giving us a lot of power. And of course we now do month end in five days. So information's been huge.
Pru: Yeah.
Tom: So that's internally produced information. Also early on we didn't take advice. It wasn't through arrogance or anything else, we just thought we had a job to do and were off doing it. Emma went and had a son and I had two daughters, or we had two daughters. And I often joked that having children and doing start-ups was like running a marathon and being passed a fridge to carry. So, it's work.
Pru: That's a great analogy.
Tom: It's like, "Thanks for that." And then we realized we weren't taking advice. And we ended up putting together an advisory board and now we can try to seek advice wherever we go, all the time. And almost the point of, if we're talking to someone who's giving us advice, well then you get a lead from them, who's a good person to talk to next time. So it goes on and on and on.
Tom: So now we are actively always seeking out advice. And we sat down with a friend of mine, who ended up being our chairman for some time. And I said to him, "Do you think we need an advisory board?" And he just went, "Bang." And then we said "Why?" We got a plan?
Tom: And he said, "It's two hours of free advice." And we started this thing and one of the members was very generous, Carolyn Cresswell from Carmen's and we'd do two hours of meeting. And a two hour download gives you an awful lot of work to do. Two hours? After the first meeting, I said to, Emma, "I feel almost lucky I wasn't sacked then." Because they hold a mirror up. They hold a mirror up, right up in front of you. And you're accountable as a business owner. And that was for three or four years we had that in place. And once again, a two hour meeting gave you a three or four months work no problem.
Pru: Yep. And that's really interesting. I like how you did that, was not seeking advice, and like you say, not through arrogance for the first few years, but also, so that your product was unique and so that your product and your offering was unique to you and Emma and what you wanted to bring into the world. But then, as it grew, to be smart enough and wise enough to bring that advice on board and to listen to it.
Tom: And what I've now learned, is that we're good doing hamburgers, trampolines, corporate advisory, you name it, it's all the same problems. It's suppliers, it's finance, it's customers, it's contracts. So it's all very similar really.
Pru: Actually, I find myself saying that a lot as well, working with businesses. It's really not rocket science to run a business, and once you kind of have the fundamentals, you can run most businesses with those fundamentals. And of course, as they progress and grow, you need additional skills. But like you say, the same problems sit in all of them. Quite often the same framework sits behind them too.
Tom: Yeah, we couldn't find a designer when we first... it was one of our first needs before we had launched. And we were looking around Melbourne, they were all making meetings for us and stuff, and I was on the phone with a guy Ian Whistler, who I'd been skiing with for two seasons, he went, "Tom, try James Segrove." And James had apparently been working in Whistler at the same time, but he was a Melbourne boy. Found that Brian Segrove had a famous design background being the Australian fifty dollar note, the Walmart, the police logo, the Channel Nine logo, the Spit Rock Torode labeling, so Brian had been one of the most industry leaders at Cato and those guys. And James is his father's son, who still today, we work really closely with. And he probably owns the brand as much as Emma and I would. And James famously says, "Tom, less costs more." Which you understand.
Pru: I do, I do indeed.
Tom: So, he's been great.
Pru: Yeah, fantastic. Fantastic. Awesome. All right, well. You have a brand philosophy which is "Look After Yourself." Can you tell us a little bit more about that. Has that been in place since day one?
Tom: It has. And we were sitting in a meeting with PR firm originally. And we were just brain-storming things. And one of the directors said, "Because people want to look after themselves." And Emma and I just jumped on it and said, "That's it. Look after yourself." So we both sort of... we didn't make it up, but we heard it and got it subliminally. And our view is that people are happier when they're healthy. And then if you eat well, you stay well. So that's our motto to help you stay well, "Look after yourself."
Pru: Yeah fantastic.
Tom: And now we're playing around with things like, evidence now saying, you'll live until you're a hundred, well, we'll help you. We're the better alternative. It's not the game changer, but rather than picking up something which is full of sugar or hollow calories, we're now trying to make sure that our products are ranged alongside them, so you can get an impulse drink or snack that actually has some nutritional value for you as well.
Pru: I love that. I've actually got a really great friend, she's a personal trainer and I remember when we first became friends, one thing she was... we were running a challenge together, I think I was doing the mindset component, she was doing the training component, we had someone else doing the nutritional component, and she just said really simply, she said, "I look at whatever I'm about to put in my mouth, and think, 'Is this going to be... is this going to help me or harm me?'"
Tom: Yeah.
Pru: And it's as simple as that really isn't it? Is this going to actually help me or harm me?
Tom: Emma and I are doing a 12 week body challenge with a girl called Brie Rutland, who runs a business called Indy Active. And our great new Marketing Director's putting a lot of this on Instagram Stories and things, to follow the journey. And having used things like My Fitness Pal, where you actually have to write down what you have eaten, you know, yesterday, was with my daughters and they were still asleep, so I got up and did a 30 minute high intensity interval training, which I probably wouldn't have done if it hadn't been on my brain. I do quite a lot of activity, but I wouldn't have just squeezed that in. I then went and had a bit of breakfast and I probably would have had half the volume of what I would normally have, because once again you're conscious of it.
Tom: It's funny, if you just... it's just about bringing the focus back on to you a bit, as opposed to the flight you haven't caught. The meetings, the this, the that. And I think it's really good just to right size yourself occasionally. And once again, if we have some products that help people do that, it gives you once again the healthier option, I mean your little ball now, which is 150 calories, if you have that as an afternoon snack with a mug of green tea, that'll see you through until dinner time. You don't need the almond croissant. And it's those things that I'm finding makes the big difference.
Pru: Yeah absolutely. It's all those small changes along the way. The auto-corrects when we're on the flight path. Okay. Now, you guys have actually really strong on give back as well, and actually, before we go into give back, you're also B Corp Certified which a lot of our guests on here actually are B Corp Certified, I think that's just my natural affiliation with the businesses and brands that I love. When did you become B Corp Certified?
Tom: We're in our third year. So we've got to re qualify next June. And we did it because we just liked the whole philosophy of having a social and an environmental bottom line alongside your financial one. And it makes you, once again, it's a bit like the 12 week body plan, it just makes you aware of things. How do you know what your water usage is if you aren't even measuring it?
Pru: Mm-hmm (affirmative).
Tom: That sort of thing.
Pru: True.
Tom: Why wouldn't you use an environmentally sustainable cleaning product, rather than one that's not. So, once again, it's small things, but we feel that we've got three stakeholder groups, being our team, our customers and our consumers. And they all like the fact that we're doing this and I think it does spread a bit. Alan Carr made the great comment recently that on a day where there's water restrictions, you're not hosing your drive way, it just makes you aware and considerate of it. And there's lots of little things in it. Things like, longevity of supply relationships. If you're not a nice business and you tune your suppliers, you won't have that. We've got a long list of more than ten years of the same suppliers. We like relationships and we enjoy it and it sort of shows you if you do what you say you're going to do, it does come through to the business.
Tom: Even things like the gap between the lowest and the highest paid employees. The percentage of remuneration that is non-executive bonuses. It goes right through of course to, if you're getting T-Shirts made in the most environmentally and socially sustainable factory in Bangladesh, you think you're okay, but if you're using cotton from Sierra Leone, it's probably child labor.
Tom: So you go right back. And now this [inaudible 00:33:39] businesses have come through, which is really good and challenging, Danone just came through, which is a huge one for the whole movement. And of course one of the early ones was Patagonia and of course from Byron Bay, the famously Stone and Wood.
Pru: And yes, a few episodes ago we had, well in Season One actually, we had James Perrin who is the sustainability manager at Stone and Wood come in and we talked a lot about it. And it was very similar. He said, it's not about having the logo on website which is very nice to have but it's actually an audit of our own processes and what are we doing well and where can we improve?
Tom: Small world. One of the founders of Stone and Wood, was one of our early PR in Melbourne.
Pru: Oh, wow. Small world indeed.
Tom: Very small world.
Pru: Yeah, I love what B Corp's doing and I think it's really, I don't want to say catching on, that makes it sound like a trend or something, but I think there's a lot more awareness about B Corp certified brands and people-
Tom: I agree. Yeah, and I was saying, you know, because they're aware of it, they've been so busy certifying new companies with their resources they've got, they haven't done enough, and they will, because I was saying this to make sure that they do. They're making consumers aware and retail chains aware... saying to Woolworths or lobbying the big people who buy, "Right, you should be supporting the Stone and Woods, the Wholekids, the Emma and Tom's who are B Corps."
Pru: Yep.
Tom: As your consumers. You're not doing enough on our behalf now, to start shouting from the rooftops, which I'm sure they will once they get themselves through this raft of applicants. Which is a good thing to see because obviously, success begets success.
Pru: Mm-hmm (affirmative). I love it. And quite a few, I mean we have a few thousand listeners each week here and I quite often get that feedback. They say, "Oh, this B Corp thing keeps coming up." Or... it seems to be train and it's great because I'm actually... I was having a conversation with James about potentially doing some workshops and things around helping small businesses go through the B Corp process as well just. Because it's a movement. We're not competition in it, we're all together in it and it's all for the betterment of the world.
Tom: Absolutely. Yeah, I got and email last week from a corporate gifting business that's a B Corp wanting to collaborate. And to that I replied, "I'm so... we're a dud if we don't do corporate gifts." Well, I think you chose us. We can though. It can though in time. And I've given quite a few people advice on what they should be doing, how they go about it, everything else. I think even I try to mention it when I do corporate presentations.
Pru: Great.
Tom: And even just that level of awareness I think is a flying start. Because it's very embryonic. I haven't checked the website recently but I reckon there wouldn't be 3,000 B Corps globally.
Pru: Mm-hmm (affirmative).
Tom: That's a guess. Maybe there's five. But I think it's about three thousand.
Pru: Yep.
Tom: So it's still quite a small movement.
Pru: And I think it will rapidly grow to be honest, which is really, really exciting. Now, talking about give back. You also have done some incredible things, particularly with your pure Australian spring water, which goes to supporting... yes, we've got one here right now actually, which I'm looking at. To supporting disadvantaged young people. Can you tell us a little bit more about that?
Tom: Yeah, we started working with Cotton On, and we had a foundation called the Unite Project, which was supporting youth homelessness. And they ended up pulling out about two years ago. They wanted to do bigger things, so we parted ways with Cotton On, and now we do our own charity water which raises money once again for really... people who can't help themselves. So it might be a swimming school out in the country. It might be a homelessness, like Street in Melbourne who run coffee shops and then therefore employ homeless to run the coffee shops. Because we see time and time again, all these people who start having their road map laid out for them, they then get a sense of empowerment.
Pru: Mm-hmm (affirmative).
Tom: So it's the whole job thing. And we're working more and more on, rather than catching them once they've fallen off the cliff, you get them before they fall. But there's a lot of systemic problems in Australia still with all this, they've just changed the minimum age for foster care from 18 to 21. But I understand still, when you leave foster care you get government sponsored 10 days in a hotel to get your life sorted out. Now often you haven't got a driver's license, you haven't got ID, so you can't get a bank account. No bank, no government funding. And then of course, all people who might have ill intentions know just where those hotels are.
Pru: Right.
Tom: So it's a pretty tough system.
Pru: Mm-hmm (affirmative). Mm-hmm (affirmative).
Pru: And it's good to see you guys do some work. And we actually had Simon Rowe from Sleep Bus on here a little while ago as well. I'm not sure if you're aware of him, he's doing some great stuff down there in Melbourne. Again, just that really early intervention stuff of giving people a safe night's sleep. So-
Tom: Even now, today, we do sale or return. So we've worked well for us as distributors. We can sell a bottle to a customer with eight day's life on it, it could be back in seven days time. Whereas a distributor wouldn't touch our bottles with less than about 20 odd days life on them, because it's just work. So we bring in the out of date, or the near date bottles. And they go to a charity called The Big Umbrella. Who convinced us that even out of date... because frankly the date is a date we choose. It's not a formula. It's what we believe it can get to, plus with a decent amount of headroom, so it's a safe date.
Tom: And they in back to us and we deliver, ourselves to The Big Umbrella, who feed homeless men and women at Finder Street Station every Wednesday night. So even though, what used to be throw outs, now go to youth or to homelessness. And I think, if you've been on the street, having a sort of a cold, clean, fruit juice is very cleansing, not just for your palate, but almost for your body.
Pru: Yeah. And to get that great nutrition out of there as well. So, it's incredible.
Pru: And you guys do a lot of this kind of work. So it's either giving back, giving through, and also a bunch of in-kind donations that you do along the way as well.
Tom: Yeah.
Pru: Yeah, it's fantastic to hear about. Okay, now Tom, you're... now as we mentioned, we were talking about this a little bit fore we came online, but Emma's taken over the CEO role there at Emma's and Tom's, so she's very much in the driver's seat. There's a little bit of noise in the background everyone, because Maverick, my dog is going crazy. Now she's taken over the CEO role, which has kind of freed you up to be involved in some other things. And one thing that you mentioned was recycled plastic pallets. Can you tell us a bit about that?
Tom: Yes, I've been working with some guys who have been working there for 15 years, so that's the overnight success, on developing a pallet made from recycled HDPE, which is milk bottles, and PET, which is Emma and Tom's, coke bottles, plastic. And we make essentially extruded planks of plastic, like planks of wood. This can mold like a sandwich press, waffle press and these are intended to replace the wooden pallets that are now prevalent around the world. Chep alone buy 55 million new wooded pallets a year in the USA alone.
Pru: Wow.
Tom: Now, pallet production accounts for 40% of deforestation.
Pru: That blows my mind.
Tom: Yeah, it's a huge number. And Chep currently can't be involved in the export pool because you can't sterilize a wooden pallet and you can't send an unsterilized pallet abroad. So they've got 400 odd depots around the world. And there were 3 billion one-way pallet journeys used for export every year. So the pallet's used once, then destroyed. It's often soft wood and it's burned. Or it's cheap, brittle plastic, like a frame and that just gets basically binned. So this technology will allow someone like Chep to enter the export pool, which is probably another billion pallets required there, so the upside on it is tremendous.
Tom: And we've got a pilot plant in Melbourne which is just starting to produce. And we're just finalizing the development and we'll be in full production actually by about very early in the New Year. And it's very exciting because it will really eliminate the second hand bottle market and turn it into a circular recycling business because at the end of our pallet's life, we'll take it back, we want it back, we'll pay a rebate. And then reuse it. And these should be re-used for hundreds of years. There's no sort of short half-life on them. So we see it as being a massive opportunity.
Pru: Yeah. And because you can sterilize them?
Tom: And you can repair them.
Pru: Yes.
Tom: You can do all that yes. And you can change their size and shape, so all these new dark warehouses, that the supermarkets and the Amazons of the world are setting up with robotic forks and things in them, they need to have plastic pallets because you need to have the exact measurements, otherwise the forks, the tines is going to hit wood. And if wood then chips off, it contaminates the products, it breaks the... also the rise of food in pharmaceutical trade, you need sterile pallets. And we gather even now, they're soon to be outlawed in certain parts of the world, in pallets, because of course they're metal and they can cause damage.
Tom: So when you think about it like that, you think about a wooden pallet, it's sort of going the way of the typewriter. It's a very old technology. And this is a challenge of brand. And we're already combining... people say what's so special about this, why's it taken so long? It's combining about seven different technologies to produce the product that we have. That's the same function and lighter. We actually use a organic foaming agent, so the middle layer is aerated, so it's half air.
Pru: Wow.
Tom: Very smart.
Pru: And being here, we're located in an industrial estate here Byron Bay and there's constantly pallets out on the street which people will go and pick up or, like you say, they're too damaged to use and off they go and be burned. But this is really exciting, knowing that deforestation...40% of deforestation is caused by pallet production or is responsible for pallet production and that you're going to... you're looking to just really shape shift this market.
Tom: That's right. I mean, our first appetite for recycled plastic, for just the flakes that are the recycled plastic, is 12,000 tonnes. Which, if you look at it in a way you can get your head around it, that's 406 railway freight containers full of chipped up plastic.
Pru: Mm-hmm (affirmative).
Tom: So, that starts to move the dial on Melbourne's output for example.
Pru: Yep.
Tom: And we know that, obviously if you look at market capitalization as a reference point, were Australia's about 1% of world [inaudible 00:44:15] capitalization, therefore we should... it's about 1% of world trade, so the game's off shore in North America and Europe where the appetite's huge.
Pru: Fantastic.
Tom: So stay tuned.
Pru: Stay tuned. Early in the new year. And also you're involved... tell us a little bit about Record Point?
Tom: Record point was started by a very good friend of mine Michael Ferman about ten years ago. It's an investment bank with a advisory firm in Sydney which does a lot of... for its size, extraordinary transactions with a reasonably small team, but we, last year alone, the guys sold, Kamart Tire and Auto on behalf of West Farmers for $350,000.
Pru: Oh wow.
Tom: They raised a billion dollars for [inaudible 00:44:53] Care, which is another Australian success story. So they're going from strength to strength. Michael's now based in the states which is why I'm more involved in Australia. And it's a really fun role. It's a nice bit of diversity from other things that I do.
Pru: Yeah, yeah, incredible, incredible. I love it.
Pru: All right. Well, Tom what's next for Emma and Tom's.
Tom: We are exporting a lot more. And we've always been, as I'm sure you're aware, an impulse brand. Single serve. And we're focusing now more and more on getting bigger take home packs into supermarkets in Australia because obviously the next level of growth is to have that [inaudible 00:45:31] along customer where the family spends 120 bucks a week on their groceries, and you're part of that staple buy. Not just I feel like this, this lunchtime, but we buy it for our fridge or our pantry every week. And that then generates a lot of growth and scale. So we're really focused on being Australia's leading healthy snacks and drinks business. Not the leading Australian, Australia's leading.
Pru: Mm-hmm (affirmative). Fantastic. Fantastic.
Pru: All right. Final question for you. If you had your time again, would you have done anything differently?
Tom: I often laugh, and this is self-depreciating, not arrogant, but if someone was starting a similar business, I could honestly charge them $100,000 for a day's consulting. And I reckon they'll save themselves a million.
Pru: Yeah.
Tom: The mistakes we've made are epic. And I suppose you can't do anything about that, you've got to forge on and we've been really good at forging on. But I was at a conference here just recently, and someone asked me from the audience, and there's an audience full of all private equity executives, so their livelihood is praying on people like us, who are at a weak moment. And he said, "Do you still own it?" And I said, "Yeah, we've hung on." And he said to me, "Well done." Because you know, it's hard, but it's part of the fun too.
Pru: Yeah. Fantastic, I love that. Okay, a few rapid fire questions to finish us off Tom. Tea or Coffee?
Tom: Coffee.
Pru: Always. Fate or free will?
Tom: Free will.
Pru: Do you have any kick arse daily habits in place?
Tom: I do try and exercise every day. I've been notching up ten sessions a week for the last few weeks because of my 12 week challenge.
Pru: I love it. Okay, if you could jump on a plane tomorrow and go anywhere in the world with anyone, where would you and how would you go with?
Tom: I'd my daughters skiing somewhere fun.
Pru: Oh I love that. I'd like to do the same. Okay, who else would you like to see me interview on the podcast?
Tom: Good question. Who have I found recently? I'll tell you who's a really interesting person, his name's Tim and he runs a business called Performance Data.
Pru: Oh.
Tom: And they do all the stat taking of AFL and NRL. To the point now that they can almost predict the outcome of games because they've got so much data.
Pru: Wow.
Tom: And, to quote him, "Data's the new oil."
Pru: Mm-hmm (affirmative).
Tom: It's very interesting.
Pru: Yeah, fascinating. Okay, and then finally, how can people connect with you at Emma and Tom's.
Tom: We're hoping now that people are going to see us daily or weekly, because we're in about 6,000 Australian outlets, so you're walking past something the whole time. I want them to feel like they're doing themselves a favor to pick one and buy one, because it is looking after yourself. Obviously we're online at emmaandtom dot com and we're doing an increased social presence. And we still try and do those community events and get out and do fun runs and sponsor... in fact we're doing one soon, polo by the pier. So it's water polo, but in the ocean. Good fun stuff you know?
Pru: Fantastic.
Tom: So we're around and we're local. And if you see a van stop and say hello.
Pru: Perfect, love it, Tom thank you so much for joining me today.
Tom: Thank you. Good fun.