Prophets before profits in the cereal trade

By Dita De Boni

A rousing new advertising campaign for Weetbix and Marmite and sponsorship of the All Blacks has signalled a radical departure for one of New Zealand's most notoriously secretive companies.

New Zealand regional manager Jim Richards says the company has traditionally had such a low profile it was "almost subterranean" and has since decided to fill the void of information with slick public relations and sponsorships, most notably the recent high-profile product campaigns featuring bonny, Weetbix-eating rugby players.

Sanitarium has slowly thawed its fortress image over the past few years, concentrating on becoming a seriously competitive player and working hard on protecting its iconic food brands by hitching them to the All Black dream factory.

Mr Richards, a Sanitarium employee for 28 years, is adamant the All Blacks are the appropriate role models for Weetbix, although he concedes that the company debated for a long time whether to take them on, deciding that the ads would focus on certain aspects of rugby only - "there will be no big tackles or hits."

Media interest in Sanitarium in the past has overwhelmingly centred on the company's ownership by the Seventh-Day Adventist Church and "charitable trust" status - meaning no tax is paid on profits.

"Sanitarium pays all the taxes we are legally required to - like GST and PAYE - which adds up to about $6 million across NZ and Australia each year, and then we hand over all our profits to the church.

"The only tax we don't pay is company profit tax because it all goes to charity. That's an option for any company ... no legislation protects us in particular, it's just an issue our competitors trot out from time to time."

Sanitarium's 12 directors, including independents not affiliated with the church, have driven the move to restructure the company, improve profits and raise its profile.

Profits - of which less than half go back to the company for development - are not disclosed and Mr Richards admits the company cannot trace every dollar given to charity, although it is "working on it."

The church puts the money into humanitarian projects. Although "it's not the Adventist way to turn our work into a marketing issue," he says it supports causes both in New Zealand and internationally in places such as Kosovo and Timor through the Adventist Disaster Relief Agency.

The Adventist ethic permeates every facet of company life, including the continued development of products that complement the church's favoured "Lacto-ovo" diet - heavy on milk, eggs and vegetables, easy on stimulants and meat.

The genesis of high-fibre cereals began in Battle Creek, Michigan, in 1876 when Dr John Kellogg - fellow Seventh-Day Adventist and progenitor of the Kelloggs empire - developed hearty breakfasts to counter mental disturbance and chronic masturbation.

A couple of Kellogg disciples were dispatched to Australia and New Zealand almost simultaneously some time later to start two bakeries - one in Christchurch and one in Melbourne.

In New Zealand, healthy-living zealots rode door-to-door on bicycles for years without profit, selling wholemeal breads and non-caffeinated drinks to a community more accustomed to meat, lard, beer and cigarettes.

Sanitarium now earns revenues of $300 million annually and employs 1500 workers - $80 million and 400 of which comprise the New Zealand operation.

There have been a couple of tough years here, blamed on one-off costs such as moving to GM-free products and strong competition from Kelloggs and Hubbards.

The company exports a "minuscule" amount to Pacific Islands and has So Good soy milk production plants in Britain and Canada. Mr Richards says he hopes to build the export ratio.

Joint ventures, generic grocery lines and variations on main brands have expanded the company's portfolio but it finds an unfailing, if not growing, market for the signature products leading to a heavy investment in sugar-free, salt-free, mother-friendly foods.

Weetbix, produced since 1928, is the major cereal brand, commanding around 45 per cent of the ready-to-eat cereal market and has enjoyed an average yearly growth since 1996 of 10 per cent against sexier rivals such as Nutri Grain and Coco Pops.

Mr Richards says the company keeps the product contemporary against a host of more sophisticated children's cereals by tying it in to what is current.

"We have the Weetbix kids triathlon, which about 10,000 kids do every year, as well as All Blacks sponsorships, which keep the product cool for kids while making sure mums approve," he says.

Although the company now hires non churchgoers and has increased salaries to "just above medium market rates," Mr Richards says the company continues to stay true to its mission of promoting good nutrition and healthy lifestyle.

All 12 Sanitarium operations shut down between sundown Friday and sundown Saturday for the Sabbath, and during that time the company does not actively advertise.

Working days begin with a voluntary round of prayers and singing.

But more than religion, Mr Richards believes the unique quality of Sanitarium is its family-like atmosphere and the stress on growth from within - despite encroachment from the modern world of advertising, marketing and public relations.

"We may not be the sharpest tools in the tool box, but our reach goes right into a family's love zone, and in that environment, we need to be building brands as professionally as anyone else."