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Virals and vodka

Virals and vodka

Its cheeky online campaign propelled boutique New Zealand distiller 42 Below into a global brand. But the real success story is about how the company made sure its IS side of the business can cope with this sudden growth.

You are a boutique New Zealand company whose product - fruit flavoured vodka - is considered hip and trendy. You first shot to global fame through a cheeky viral online campaign. Consequently, sales boomed, and you are now moving into new markets like gin and spring water, hoping your vodka's cachet rubs off on your new products.

Naturally, New Zealand is not big enough, and for that kind of success, you have to conquer the overseas market.

You get your wish, but find out your systems are not equipped for such massive growth.

42 Below, the Auckland-based exporter faced this problem as it matured from a small town supplier, to one of the big boys in the lucrative alcoholic beverage market.

Named after the company's original base (Wellington is on the 42nd parallel below the equator), the company's vodka range quickly developed a following.

In October 2003, 42 Below listed on the New Zealand stock Exchange and now enjoys projected revenues of $15 million for 2006 - some 70 per cent higher than 2005.

More than half of revenue comes from export sales, with 42 Below having offices in Australia, the US, the UK, and other distributors and agents across Europe and the Pacific.

Growth was helped by the company relying on personal contact and viral email, with enthusiastic staff visiting club, hotels and bars, promoting the vodka and South, the company's premium gin.

There was one hitch, however. 42 Below has outgrown its legacy financial management system from MYOB.

"It is a great package for a small business, but became too small for us," explains CFO Stephen Sinclair. "Stock handling became the biggest issue. MYOB produced a good set of accounts but not good enough for stock and general reporting."

The company reviewed leading financial systems on the market, using systems integrator RealTech and another provider, who each presented 42 Below with three to four different packages for testing. "We had a couple of key requirements. One of the biggest was reports of profit and loss for each market. It was surprising we could not get a package that was structured for P&L for each country," says Sinclair.

42 Below selected SAP, citing the company's long-term record and promises of continued support, even though a patch had to be written to allow for such reporting.

Sinclair made the final decision, with Ian Haylor, 42 Below's IT manager or self-styled "IT bloke" advising on how the system will integrate with the company's Windows-based platform.

42 Below employs 24 staff in Auckland, with a scattering of others in Australia, the UK and the US, with several dozen contractors making up the remainder.

Thus, Haylor is the only IT staffer within the company. RealTech carried out much of the implementation.

Installation took place early in 2005, some six months after the company first decided it needed a new system. Data had to be transferred from MYOB and many manual internal systems were automated as the system went live on 1 April 2005.

"Taking our time going through this helped us as we got as many issues and glitches out of the way before we went live," says Sinclair.

Early benefits include vastly improved stock control systems and the ability to reconcile things automatically, regardless of where the stock is kept. Foreign currency transactions are also handled automatically, removing a previously complex and time-consuming manual task.

Though happy with its performance, better understanding of the package would have helped it run smoother, adds Sinclair. Now, 42 Below is looking at developing an interface with its contract bottling plant in East Tamaki, using a company owned by Lion Nathan. The aim is to streamline order and billing.

"We receive all our orders here and we electronically upload these orders. What we want to do is replace a manual process in reconciling stocks between the two," he adds.

Key viral ads

Other future plans include creating a virtual private network between the overseas offices.

While 42 Below is happy with its financial package, it is the viral marketing that has set the company apart and made it so well-known.

Such viral adverts are made in-house, with support from marketing company Conception.

"We weren't the first in the world, but it created a wave," says Haylor.

Ideas are derived involving the company's marketing department, co-founder and chief executive Geoff Ross and Darryl Parsons of Conception.

Some five key viral ads have been made, with others in the pipeline.

"We are quite well-spoken in guerrilla marketing circles as being effective, and the humour transcends the Americans," says Haylor.

"It's an extremely cost-effective way of getting your message across. The great public becomes your ambassadors," interrupts Sinclair.

In the past six months, more than 70,000 people visited the 42 Below website to view the "Story of 42" ads. A gay-themed advert attracted 20,000 visitors and a "Britain" advert, 40,000.

A "call centre" advert received nearly 50,000 downloads within the first few months of its November launch.

The adverts, which started in late 2003, are made in Macromedia Flash, which Haylor says is "extremely versatile and wholly appropriate for the (company) image". These are then embedded on a web server page, allowing people to link to them.

"The only limitation of Flash is your creativity," Haylor adds.

However, for a change, 42 below used a video file for its latest "call centre" ad.

Other marketing media can also be accessed by overseas staff from a central server the company hosts in the United States.

Melding IT and marketing

Indeed, it is the impact of marketing that 42 Below believes sets Haylor's role apart from any other regular IT job.

"The company is a marketing company. Sales, distribution and marketing are outsourced. IT will grow but not like in any other business. Here it's about IT looking after the marketing department in a devolved business," Sinclair explains.

Thus, Haylor performs all the IT functions from tech support, to installing new servers, as well as helping the marketing department on IT issues, even giving presentations.

Before joining 42 below at its creation, Haylor was IT manager at Empower, where he worked for Sinclair. Other previous jobs included being IT manager at Terabyte Interactive and network administrator at Flying Pig.

Haylor, who came to New Zealand 10 years ago from Hertfordshire, England, says he is excited by 42 Below's products, the people he works with and its environment.

"I have my autonomy, I am my own boss and I have my eye on the whole company every day, its ebbs and flows," he says.

The only major downside is "the Auckland traffic".

Typically, he works a 40-something hour week and outside work, plays guitar and sings in a band called The Pleasures of June that performs in local bars. The band's film and music clips can be downloaded from its own website and that of 42 Below as the group seeks a recording contract.

"(Nonetheless) I have my mind on the job seven days a week. It's my show and I have to keep it running," says Haylor.

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