Director Briefing with Greg McLardie – CaroMel Ltd

In this Director Briefing Greg McLardie discusses: 

 

With rapidly growing wealth in Asia, demand for luxuries and high quality foods continues to rise. China is expected to account for 44% of the global personal luxury market by 2020. As a result, innovative companies have emerged focusing on new ways to connect markets around the world.

 

Eden Exchange recently spoke with Greg McLardie, the Managing Director of CaroMel Ltd. CaroMel Ltd believes the “Dining Boom” has only just begun The Company aims to connect fishermen and farmers directly to high-end restaurants and their end consumers. Initially the Company is focusing on the supply of Southern Rock Lobster (SRL) and Abalone to high-end restaurants in China.

 

Thanks for speaking with us Greg. Firstly, what brought you to the leadership position at CaroMel Ltd? Can you tell us a bit about your background and experience?

 

I wanted to make a difference and put a dent in the universe and saw my greatest opportunity in the food industry. I always wanted to build a noble with ethical ideals that would last for generations.

 

My career began at Ernst & Young in Sydney as a Chartered Accountant. After completing an MBA at the Kenan-Flagler Business School at the University of North Carolina I was hired by Procter & Gamble. After four years in finance at Procter & Gamble’s headquarters in Cincinnati, I moved to the marketing division. I took to marketing like a like a duck to water and became a brand manager. At Procter and Gamble, I learned about branding, innovation, fact-based decision making and ethical business.

 

My wife and I then moved back to Australia to raise our kids here. In Australia, I joined Pacific Brands Food Group, which was Australia’s biggest branded, food company at the time. They sent me to Tokyo as Regional President of the Food Group, where I was first exposed to the Japanese and Korean food industry. Pacific Brand’s Food Group was divided and sold off. My wife and I then bought and ran a food business which was an an amazing experience. After selling the business, my journey in the luxury seafood sector started after I become the CEO of an abalone business which I took to IPO.

 

 

We enable the direct connection of fishermen and farmers with high-end restaurants in China. Middlemen currently comprise approximately 49% of supply chain costs yet add little value to fishermen or restaurants other than moving product from point A to point B. Eliminating supply chain costs will see higher profits for fishermen and restaurants and a healthy and sustainable margin for CaroMel.

 

For example, over 90% of annual Australian southern rock lobster catch ends up in China. Currently fishermen sell to exporters who sell to the Chinese illegal “grey channel”. They then sell to wholesalers who on-sell to restaurants. The “grey channel” transports these lobsters into Hanoi or Hong Kong, and then smuggles them across the border to avoid Chinese tariffs and taxes. Neither fishermen nor exporters have direct contact with end customers, typically restaurants. Traceability of origin is not possible

 

CaroMel disrupts the supply chain via a digital platform which allows orders to be received from and shipped directly to the restaurant in China. The restaurant receives a product with proven traceability and provenance. Restaurant patrons also receive an enhanced food experience. This simplifies the supply chain. Participants in the supply chain become strategic partners as the profitability and experiences of of fishermen and restaurants improves.

 

We regard the wealth growth through China and Asia as one of the great stories of our time. As wealth grows, people consume more proteins. We believe the “Dining Boom” has only just begun. Australia has a great reputation in China for our environment, practices and regulations, leading to an enviable reputation for food safety and quality.  

 

 

Feedback from our target markets has been extremely encouraging. The Managing Director of a leading luxury hotel in Shanghai told us, “In the world of food, no one is doing what CaroMel is proposing.” This is from a Michelin restaurant sourcing the best food from around the world.

 

As we connect more farmers and fishermen with high-end restaurants, the opportunities are exciting. End users are already keen for us to move into a range of products. Initially, China will be the focus. However, once we gain traction we expect to move into other high-end seafoods, proteins and foods as well as high-end restaurants in other countries. Also, because we have built infrastructure for a direct to restaurant service, we expect it will be straightforward to offer a direct to consumer service in China.

 

 

There will be a per kilo fee for our services. Apart from that, the opportunity to value add beyond simply supplying goods to market is enormous. Our business model relies on buyer behavior, with trust being a key factor. We believe transparency will lead to trustworthiness and we will be transparent with fishermen, farmers and restaurants. Trust builds loyalty and we expect it drive repeat business.

 

Fishermen are currently frustrated by the lack of market transparency. They have no clue what happens with pricing or the end customer experience once they sell to exporters. Our system changes this completely and at the same time enhances the food experience for restaurant patrons.

 

 

We have already conducted a number of direct to restaurant trials which have exceeded our expectations. Based on our experience of meeting restaurants in China, volumes can be substantial with a few cornerstone clients. We have customers who are excited. It is important we deliver on that excitement.

 

At the same time, we really want to excite the fishermen by increasing their profits, power and prestige. Also, we need to show CaroMel's model is sustainable through positive cash flows. Once we tick these boxes, we plan to IPO to raise the funds for aggressive expansion.

 

 

We are in the process of completing the build of our platform and brand, with the intention to launch soon. Steve Jobs once said “you can't connect the dots looking forward; you can only connect them looking backwards." So you have to trust that the dots will somehow connect in your future.” We believe this and are fully aware that rapid adaption to market dynamics is the key to a successful disruptive service.

 

Our business model has already changed significantly from it's initial direction. We initially focused on aggregating the high-end seafood sector, by raising tens of millions to buy seafood quota assets and processors. This changed dramatically in mid-December 2016, when I received a call for help from a fisherman leader who, was told by a big exporter that fishermen had to accept lower prices in the future.

 

We’re treading a new path. With so much change around us from China’s growth, digital disruption, big data and weak western political leadership, it is critical we have the agility to learn, change and morph continuously.

 

 

The board and management team have been brilliant. Lou Villella has long-term experience in China and he understands the high-end seafood industry very well. Wayne Hayes built his own IT business providing supply chain solutions in Australia and Asia.

 

Gerard Dempsey, our CFO, has been exceptional over the journey so far. His financial modelling and perspective have been crucial. Stuart McLardie, has had great FMCG marketing experience, including digital marketing and social media. He brings terrific energy, can-do attitude and fresh thinking. Also our platform builder has tremendous passion for his craft. He’s a rock star! He already has significant runs on the board.

 

James Zhai provides us with great insight and perspective on China. He has had twelve years as a CEO with his head office in Shanghai and a global reach. He also has great connections in China’s government and commerce. Clay Maxwell is an advisor from Peer Insight, which advises on digital disruption. Finally, Dr Martin Vogel has coached our team to achieve the extraordinary.

 

 

I predict that in two hundred years people will say the wealth growth in China and digital disruption are the stories of our time. China is expected to become 44% of the global personal luxury market by 2020. We are seeing it emerge as arguably the world’s most brand and prestige oriented market. Despite this, there is a brand vacuum in premium agricultural products. The wine industry has taught us that strong branding and romancing provenance is a winning combination. Branding will differentiate CaroMel and provide a valuable point of difference to our restaurant partners.

 

We view trends in the food industry as global. Traceability and provenance are international trends and food safety is a big issue. People want to know exactly where their food comes from and they are willing to pay a premium for proven provenance.

 

In the USA, over 50% of seafood sold is misrepresented. In China, it is a much bigger issue. There have been high profile food safety disasters in China, such as the fatal baby formula manufacturing scandal. In response, the Chinese government regulated traceability back to farm locations and names of fishing vessels. However, many industry players ignore this or avoiding this regulation. In China or any market, you do this at your peril. An enriched food experience is another international trend. Look at the abundance of quality cooking shows in Australia. You see more food theatre in high-end restaurants and more exotic genres, styles and cultures of cooking.

 

 

I am proud of the relationships built in China, and amongst the fishing and farmer communities in Australia, New Zealand and North America. I am proud we have partners through the supply chain who believe in what we are doing. They support our vision of exciting fishermen, farmers and restaurants and maximising their profits. They know that if we achieve our vision, we can have a dramatic impact on those industries while doing very well ourselves.

 

 

In 3 months we will have the digital platform and traceability at a stage where revenues will grow. A year from now I would like to see CaroMel preparing for IPO so we have the working capital funding to expand. Unlike the traditional business model, we do not need to acquire hard assets to expand. I love our business mode and seeing the responses from fishermen and leading restaurants has been brilliant.

 

The strategic priority is to execute with equal brilliance and to build a culture where we relentlessly focus on delighting farmers, fishermen, restaurants and end consumers.

 

 

 

 

CaroMel Ltd aims to connect fishermen and farmers directly to high-end restaurants and their end consumers. Initially the Company will focus on the supply of Southern Rock Lobster (SRL) and Abalone to high-end restaurants in China. To find out more about CaroMel Ltd click here.

 

DISCLAIMER: Eden Exchange Pty Ltd and Funding Strategies Pty Ltd have taken all reasonable care in publishing the information contained in this Director Briefing. It is information given in a summary form and does not purport to be complete. The information contained is not intended to be used as the basis for making any investment decision and you are solely responsible for any use you choose to make of the information. We strongly advise that you seek independent professional advice before making any investment decisions. Eden Exchange Pty Ltd and Funding Strategies Pty are not responsible for any consequences of the use you make of the information, including any loss or damage you or a third party might suffer as a result of that use.