Business Masterclass

David Sharp can’t hide his nostalgia when he mentions the once-acclaimed Rosemount Chardonnay. The wine that he and his wife Lyndsay first tried on their honeymoon in the Hunter Valley 20 years ago is more symbolic than he realised.

“It planted the seed,” he says.

Today the Sharps own about 50 acres of vineyards on the Bellarine Peninsula in Victoria under the Leura Park Estate and Jack Rabbit labels. David is one of three BRW competition winners who are about to get an insight into how the famous founder of Rosemount wines, Robert (Bob) Oatley, took a small vineyard to the world stage and used the fortunes from its sale to branch out into an empire that includes tourism, yachting and retirement homes.

Sharp, 48, Stephen Large, 57, and Levi Kavanagh, 28, were selected from 200 applicants for the 2012 BRW Business Masterclass, where they spent four days living and breathing “the Oatley way” and learning about what it takes to run Australia’s most successful family business.

Large is the chief executive of Tasmania’s Port Arthur Historic Site Management Authority and Kavanagh is the son of famous Melbourne-based horse trainer Mark Kavanagh (the family name became nationally recognised when their horse Shocking won the Melbourne Cup in 2009).

Sharp wanted to learn how to run his vineyards more efficiently and expand. Large hoped to get some lessons on how to tackle the impact of the high Australian dollar and lack of competition in the airline industry on the local tourism market. Kavanagh is interested in the dynamics of the family business.

Standing in the boardroom of the Oatley family’s St Leonards-based head office, the three winners get a quick business overview by Sandy Oatley (Bob’s son), the man who is now very much in control of the Oatley empire and whom they will spend the next week shadowing.

Sandy, 60, kicks off with lesson No.1 of the Oatley way of doing business: “Our word is our bond and our handshake is our binding contract,” he explains. On paper it’s somewhat of a corny cliché but it’s Sandy’s way of portraying how this family business is solidly old school. He doesn’t adhere to new-age corporate management styles of keeping email trails. He prefers to discuss issues by phone or in person. Big decisions aren’t always made at the boardroom but often over the dinner table.

“It’s the honour of the word that’s important to us,” Sandy says. “You don’t need to keep looking over your shoulder to see who’s going to rip you off.”

Bob Oatley built up his fortunes as a coffee and cocoa trader in Papua New Guinea before founding Rosemount in the upper Hunter Valley in 1969. Sandy was just a child when he helped plant and harvest the first grapes at the family vineyard. They started producing shiraz but they soon realised whites could prove more lucrative, branched out, and grew the label to sell more than 3 million cases a year.

In 2001, the Oatleys sold Rosemount to Southcorp Wines for $1.5 billion and their remaining 20 per cent to Fosters for $597 million in 2005. Wine has remained a crucial part of the Oatley business empire with their current venture, Robert Oatley Vineyards. Started in 2006 on almost 500 hectares of family-owned land in Mudgee, it boasts vineyards that produce more than 1 million bottle of wines a year under the Wild Oats, Robert Oatley, and Montrose labels. This month they launched a number of new premium wines under revamped packaging helped designed by Bob Oatley’s grandson, James Oatley.

The Oatleys also own Hamilton Island on Queensland’s Great Barrier Reef. They bought the island in 2003 for $198 million and have since spent about $350 million trying to make it the go-to destination at the Whitsunday Islands, including building luxury resort Qualia that hosts celebrities and high-level business executives (the paparazzi can’t get on the island without the Oatley’s approval), a new yacht club and villas and an 18-hole golf course designed by championship golfer Peter Thomson.

The other businesses in the group include one of the largest commercial Charolais cattle herds in Australia, a large thoroughbred horse stud at Muswellbrook and recently started luxury retirement homes for over 55s at Yowie Bay and Greenwich in Sydney.

On day one of the week the trio meet the man who started it all. Bob Oatley, now 84, is less involved in the business these days but his authority is still felt when he enters the room. While Sandy makes most of the day-to-day decisions, Bob, addressed as “Popeye” by his family, is still the ultimate boss. His approval is felt through a simple acknowledgement; a quick nod. He tells a few jokes and spends most of the time discussing his love of sailing. He owns the yacht Wild Oats, well-known for racing Sydney to Hobart and winning it five times.

That evening the trio get a quick viewing of Wild Oats before spending the night on Sandy’s luxury yacht, Andiamo, along with his daughter Nicky Oatley. Nicky, 27, is starting to make her mark on the Oatley empire. For the moment it’s limited to the creative side, whether it’s coming up with the name for their $100 million resort Qualia (meaning “deeper sensory experience”), the books that sit in the resort’s library (everything from architecture, to oceanic wilderness to travel books on India) or the colour theme for the furniture at the recently revamped Beach Club hotel lobby. Her ambitions to take over the reins one day are known but for the time being she’s happy to sit back, watch and learn. “I don’t think I’m at that stage yet, of making decisions by myself,” she says. “But it’s my wish and their wish as well. Nothing would make Popeye happier.”

Day two and three of the business masterclass is all about wine. The winners are flown by private jet to Mudgee, 270 kilometres north-west of Sydney, to see the vineyards first hand.

The trio gets a quick rundown of the wine business by Robert Oatley vineyards chief executive Anthony Roberts, before doing some serious wine tasting with their wine communications guru Darren Jahn. Roberts talks about the challenges of selling wine in a market that’s dominated by supermarket giants Woolworths and Coles. Currently the company sells only about 5 per cent of its wines through the supermarkets, with most going direct to restaurants and some sales through the cellar door.

Next stop is Hamilton Island, where the group is given a tour of Qualia by general manager Michael Shah. The luxury resort, which hosted Oprah Winfrey during her stay, has 60 villas ranging from $950 to $1500 a night. Over lunch at Pebble Beach Restaurant, which overlooks the Whitsunday group of islands, the winners learn the next important lesson of doing things the Oatley way: give your senior management staff enough control.

At Hamilton Island, every restaurant manager runs his own business and budgets are tightly managed based on a percentage of overall revenue.

“We’ve allowed them to run their own budgets so that they feel the lord and master,” Sandy says. On the final day of the journey, the winners are flown by helicopter over the reef and Whitehaven Beach, get a tour of the golf club and yacht club, and finish their week of living the high life with a dinner at the yacht club’s flashy Bommie Restaurant.

The one surprise about the Oatley way of business is that despite building up a fortune, the Oatleys for the most part remain approachable and affable people. “They’re just really down-to-earth knock-about kind of people,” Kavanagh says, after having developed somewhat of a father-son relationship with Sandy. Both Levi and Sandy are the sons of very successful people, who in some ways seek the limelight more than their sons.

“Sandy gets a vision early on and it doesn’t matter if he doesn’t know everything about every business; he’ll employ the right people to take care of it,” Levi says.

Sharp adds: “He empowers them by giving them a sense of ownership.” As well as learning about small techniques on how to cut vines more efficiently and less expensively at his vineyard (he’s learnt that a useful trimming machine can cost as little as $1000), Sharp says the experience has taught him to think about the bigger picture. “It’s certainly made me stop and think about the end goal,” he says. “We need to know what we’re working towards – maybe we could start tearing apart some our vineyards,” he says half jokingly.

Large says Sandy is a boss who leads by example. “He cares about the people that work for him and in turn they respect him. They employ staff who will work to a common goal; who do things the Oatley way.”

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