Thanks to three ‘P’s, a sock maker in country Victoria has survived industry restructures and become an exporter to the United States.
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Entrepreneur: Brian Powell, Joint Managing Director
Company: John Brown Hosiery Pty Ltd
Business type: Manufacturer and marketer of men’s socks
Founded: 1980
Turnover: $10M
Head office: Kyneton, Victoria
Contact details: +61 3 5422 1222
The John Brown Hosiery Story
John Brown Hosiery is a privately owned company that was formed in 1980, following a management buyout (MBO) of a business that had been making socks in Kyneton, Victoria since 1922. The company’s joint managing director, Brian Powell, was one of the three senior executives who participated in the MBO, buying the sock division of John Brown Industries, a company that had changed hands many times and had a history of restructuring.
When the executives bought the company, 80% of its sales were to discounters, mainly Target and the Franklins grocery chain. Powell says: “We had to develop a strong brand so that it would not matter whether the socks were made in Kyneton or Beijing. At that time, the [Labor Government’s industry restructure] Button Plan was being introduced to reduce tariffs and get rid of quotas, which meant that 20% of the local market was going to be lost to us.
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Key learning points:
- Branding - A good brand is everything when a company is battling to compete on price.
- Market share - A strong local market is needed to fund a move into exports.
- Exporting - The company has sold to most countries - Iceland, Finland, Greece, Germany, Spain, England, Republic of Ireland, Canada - but now concentrates on the United States.
- Three P’s - Export success is dependent on product, people and persistence.
- Innovation - Current innovation equals future sales.
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Powell, who had worked previously at Julius Marlow shoes, understood the importance of branding. He says: “We decided two things had to be done: we had to get a very strong brand, and - if we wanted to continue having a viable manufacturing operation in Australia - we had to make 20% of our sales overseas.”
Powell says that it has taken 20 years to get to the stage where 30% of sales are made overseas, 98% to the United States. He says: “Export success is dependant on three P’s: product, people and persistence. You have to have the right product. We tried to sell the Americans woollen socks, made from Merino wool. After much trial and error, we got the right product for them: cotton socks.
“You have to have the right person. After accumulating losses of $300,000 in America, we finally found the right person.
“And persistence. The move into the American market eventually paid off. We currently have a quarter of a million [US] dollar order to be delivered in the first week of June 2003” - one of the businesses biggest ever contracts.
John Brown Hosiery supplies less than five per cent of the Australian sock market but has a 30-40% market share of the better end of the Australian market. Powell says: “We only sell to department stores and better men’s wear stores.”
The Pure Australian Sock Company - a subsidiary of John Brown Hosiery - was set up specifically for the American market. Powell says: “Exporting helps your business tremendously. It makes you better and allows you to be more innovative locally. We had the confidence to buy machines to manufacture for the US market and then introduced that product to Australia.
“We were the first people to put a really top-quality work sock on the market; we were the first to go into a cushion foot; we manufactured the first cotton sock and developed a blister guard sock using Teflon in the toe and heel. In the last 24 years, we’ve probably been more innovative than anybody else. You’ve got to be coming up with new ideas to make people buy your product. We can never compete on price so we’ve got to be better than the others on quality and service.”
The company lives up to its tagline of more than 20 years: ‘We’re serious about socks because feet are funny things.’