Lion NZ CEO Rory Glass speaks to the Herald about changing workplace culture
As Rory Glass puts it, success is a lousy teacher.
So when failure loomed three years ago for Lion Breweries, the managing director learned his lesson, took stock and realised the company needed some changes.
"We got to the half-year and we were off our targets by about 30 per cent," Glass says.
"We absolutely took stock at that point and we made some big choices about where we wanted to go."
The company removed products from its portfolio, cut back on unprofitable brands and refocused on its core range.
Born in South Africa, Glass and his family moved to New Zealand when he was 13 - just before his older brother could be conscripted into the army.
Glass' journey to a career at Lion NZ was a relatively straightforward one.
After high school, he took on a management and training scheme at Progressive Enterprises, which owns Countdown and Woolworths.
He ended up in category management, at the time when beer was being introduced into supermarkets.
That meant he was dealing with the likes of Lion, DB Breweries and Independent.
About six months later, Lion approached him with a job looking after national accounts, which included supermarkets and traditional liquor stores.
"I wasn't looking for anything at the time and there would have been very few companies I would have jumped over the fence for, but Lion was absolutely one of those companies in terms of the reputation and the emphasis it had on its people and things like that," he says.
"I don't think I could have gone full-time into a commodity type category - baked beans, or toilet paper, or something like that."
Ten years later, he took on the role of managing director when former boss Peter Kean retired in 2011.
Working in most of Lion's departments over his 16-year tenure has given Glass an advantage, he says.
A broad knowledge of the company, which is owned by Japan's Kirin Holdings, also helped him form its strategy.
Lion's beer sales make up just over 55% of its total sales.
"We were probably guilty of spending 95 per cent on just keeping the business running and ticking over. The focus now is about 70 per cent running the business.
"We spend about 20 per cent on things [similar to our core range] as well as work on areas like the non-alcohol space, and then about 10 per cent on absolute breakthrough and disruption. And that model is going well."
Part of this experimentation is the company's launch of food and beverage accelerator programme Lion Unleashed, which starts next month.
Twelve start-up companies chosen by Lion will go through the programme, with each receiving $50,000 cash in exchange for equity.
An accelerator programme isn't business as usual for a brewery, but Glass says it is all about fostering new ideas and projects.
Running one of the two biggest brewing businesses in the country can't be an easy gig.
The alcohol industry has its challenges, not least walking the tightrope between promoting a message of moderation and selling as much product as possible.
Glass says that is just part of the territory.
"We know alcohol comes with some challenges and we have a role to play in that," he says.
"But all of our focus is on the moderation aspect and we're seeing society move in that direction.
We're seeing much more growth in craft [drinks] and the premium range across all the categories as well, so that general trend of people drinking less but drinking better is actually a good business model for everyone involved."
Glass says craft beer accounts for about 15 per cent of the NZ beer market - the highest level in the world - and craft sales are growing at 20 per cent a year.
The growth in craft beer has prompted Lion to expand its portfolio. As well as adding to its Mac's range, Lion has acquired Dunedin brewer Emerson's, Wellington-based Panhead and Australian craft label Little Creatures.
Data from research company Nielsen shows sales, by volume, were up 31 per cent for Mac's, 90 per cent for Emerson's and 76 per cent for Panhead for the 2016 year.
The fact that craft beer commands a premium price hasn't hurt, either.
Nielsen data shows sales of mainstream beer last year were about 35 per cent of supermarket and liquor store beer sales, compared to 44 per cent five years ago.
That proportion is continuing to decline, so increasing sales of more pricey brews is good for the company's bottom line.
Lion has also invested in the growing low- and mid-strength beer market, with a number of products in those categories.
Rory Glass, managing director of Lion Breweries. Photo/Natalie Slade
As New Zealand's second largest wine seller, and largest spirits seller, the company doesn't have all its eggs in one basket.
Glass says its diversification into non-alcoholic drinks, including coffee, is going well for the company.
Even so, it's still a tough business to be in. Lion's revenue for New Zealand and Australia fell 9.5 per cent in the 2016 year, to A$2.2 billion ($2.38b), though the company said the NZ side of the business was performing well.
Lion is not the only brewer facing challenges. Falling consumer demand and increasingly competition are just some of the things making life difficult for the industry.
However, Glass says he is lucky to have a talented team behind him.
When it comes to the company's staff, the managing director walks the talk.
Lion adjusted pay last year to ensure gender pay equity among its staff, and recently launched a flexi-work scheme encouraging employees to work when, where and how they want to.
Glass, who lives on a lifestyle block in Whitford with his wife, daughter, dog and 12 sheep - "the lawnmowers" - leads this initiative.
Wherever possible, he tries to drive his daughter to and from school, adjusting his working day accordingly.
He says the company is more concerned with output than the number of hours its staff put in.
The on-site gym, bar and open-plan environment also encourage a good culture within the company.
Having focused on the physical health of Lion's staff, Glass has also launched a mental and emotional wellbeing initiative.
While it would be easy to be cynical, a staff engagement score of close to 90 per cent suggests the company is doing something right.
While the business is ticking along, Glass says there are always going to be things to worry about and plan for. Fragmentation of the market is one of the big ones.
"We're just seeing much more fragmentation in the market across channels, customers, categories, everything," he says.
"That means for us that we need to provide the right offering across all of those areas and we've got to do that in a way that doesn't overcomplicate us as a business."
Glass says that with hundreds of innovative products hitting the market and one or two new breweries opening every month, surviving requires different thinking.
Localising its offering is one answer, and experimenting with new offerings is another. Looking back, he says Lion was right to make the changes it made.
"It's not until you stop and take stock of how you are spending a lot of your time, that you can see these things," he says.
"What you'll often find is you spend a lot of time running the business and there's an opportunity to spend far more time improving the business.
"On reflection, it was an incredibly tough time but it really set us up for where we want to go and who we want to be. It's an exciting journey."
Rory Glass
Age: 46 Career: 16 years at Lion, six as managing director Family: Married to Jennifer, 12-year-old daughter Neeve Lives: Whitford Last book read: "Untangled, which is all about how to manage girls going into the teenage years so I'm trying to school up on that and I'm reading I am Pilgrim at the moment, which is a bit more light relief." Best decision: "I think never wasting a crisis. It is incredibly tough at the time but it can be such a good thing to go through. Because you learn so much going through a tough time in business and there's that saying, success is a lousy teacher, and it's so true. The trick is not having to go through that to learn the lessons, which is tough." Favourite holiday destination: "Absolutely Italy, Tuscany region. Hands down." Best advice: "Something that always resonates for me is the saying 'progress, not perfection'.
