BRANDT: Building Something Special
Driving down South Koke Mill Road in Springfield, IL, you will see it. There, beside a small pond, is an impressive-looking brick and glass building with the word “BRANDT” in big silver letters at the top. This is the world headquarters for Brandt Consolidated Inc., one of the nation’s largest ag-oriented companies — one that also features a sizable presence in several overseas markets.
For those who have known the company throughout its almost 60-year history, this 26,000-square foot office building has a much different feel about it than the previous headquarters, located a few miles to the west in Pleasant Plains. Under its roof, visitors will find not only the office space and meeting rooms present at most large companies, but memorabilia celebrating BRANDT’s long history, NASCAR racing gear and many Western-themed sculptures — a testament to the pioneering spirit that lead the Brandt family to Central Illinois from the East Coast back in the early 20th century.
And according to Rick Brandt, CEO, this different “vibe” at the new BRANDT headquarters is no accident. It serves as a monument to the company’s plans as it prepares to face the future, for both agriculture and the world. “We’ve only been in this building for the past five years, but it has really changed our culture and perception to potential customers, employees and everyone else,” says Brandt. “This has been the base for a lot of the changes we’ve had over the past five-year time period.”
Tim McArdle, COO/vice president, agrees with this assessment. “We are so much more aggressive than we were even five years ago as a company,” says McArdle. “We’ve been aggressive in the marketplace, trying to expand our current market holdings while at the same time expanding the products and services that we offer and looking for other opportunities for growth. I credit Rick with fostering this attitude within this company.”
Finding Fertile Ground
Of course, given his lineage, this “expansion spirit” from Rick Brandt should surprise no one. When his father and company founder Glen Brandt was 27 in 1953, he borrowed a tractor from his father Albert to apply anhydrous ammonia for growers in Central Illinois. His sister Evelyn soon joined the company to run the administrative side of things. This was the start of what would become Brandt’s Fertilizer Service. Fourteen years later in 1967, the Brandt siblings added Brandt Chemical Co. (which manufactured ClawEl micronutrients) to the mix. In 1990, these separate companies were merged into a single entity, Brandt Consolidated.
According to the senior Brandt, the company’s success always hinged upon not only taking chances in new market areas, but the people on board that made this possible. “Everything is done on a personal basis,” he wrote in a 2003 book detailing BRANDT’s then 50th anniversary. “We were at the right place at the right time and had the right vision — and we were surrounded with good people.”
Rick Brandt echoed this thread in his remarks. “The many BRANDT friendships developed as a result of these past 50 years were a constant fixture around our house and office as I grew up,” he wrote in the book. “The friendships of associates, customers, suppliers and neighbors have all played a part in who we are as a company.”
And this “family feeling” remains a constant at BRANDT, despite its new trappings. “If there is one word that best describes BRANDT today, it would be family,” says Joe Brummel, CFO. “The relationships we’ve built with our employees, customers and business partners are special, and they’ve help us expand into new areas while reminding us of how we got here in the first place.”
Today, although it operates under the umbrella of a single company, BRANDT consists of three distinct divisions, with each contributing approximately one-third to overall revenue.
The first division is Retail Agronomy, which services more than 1 million acres of Central Illinois farmland from 20 outlets. During the most current calendar year, 55% of the company’s input sales came from fertilizers such as anhydrous ammonia and lime, followed by 22% for seed sales for brands such as Asgrow and DeKalb planted on more than 400,000 acres, 19% for crop protection products and 4% in custom application services.
The second division is Dealer Support, which supplies fertilizer and nitrogen to agricultural and industrial customers around the country. In 2011, this division supplied 195,000 tons of nitrogen, 98,000 tons of phosphorus and 97,500 tons of potassium.
The third division, Specialty Formulations, is the former ClawEl Division. Long a player in the micronutrient market with such product lines as Manni-Plex and Smart System, Specialty Formulations received a significant boost when BRANDT purchased Monterey AgResources in March 2010. Dating its history back to 1963, the renamed BRANDT Monterey is a wholesale supplier of specialized nutrients, adjuvants and biopesticides to the agricultural, horticultural, lawn and garden and feed industries.
Together, Specialty Formulations is in an aggressive expansion mode in terms of products, geographies and capabilities. In November, for example, BRANDT Monterey acquired a neighboring 96,000-square foot facility to produce organic agricultural nutrients in Fresno, CA, in an effort to separate organic from conventional production and lessen the potential for cross-contamination.
“The demand for organic products has been rising in recent years, and we needed to have a facility dedicated to producing nutrients and organic inputs,” says John Salmonson, president of BRANDT Monterey. “In addition, we’ll be developing new organic products for the future as this market continues to grow.”
In addition, BRANDT conducts a sizable portion of its business outside the U.S. At last count, the company had sales in more than 45 countries around the globe. Right now, says Bill Engel, corporate vice president, Specialty Formulations, approximately half of BRANDT’s business comes from three or four countries, but this dynamic should change as the company branches out into new areas of opportunity and builds up its familiarity with the needs and cultures in each region. One thing that will work in BRANDT’s favor in these endeavors, he believes, is its potential synergy with the company’s Central Illinois roots.
“I think this will work both ways for us,” says Engel. “We will be able to take our business experience helping Central Illinois agriculture and the culture of our company to a worldwide audience and be successful with it. But this also will give us a chance to not only touch all parts of this world, but bring this global experience right back here to our customers in Central Illinois as well.”
Racing Around The Globe
In one sense, BRANDT is cultivating this local/global duality with its sponsorship of NASCAR driver Justin Allgaier, a native of Riverton, IL, and part of the Turner Motorsports team. In December, the company announced that it would once again sponsor Allgaier’s No. 31 car for the 2012 NASCAR season. During BRANDT’s inaugural season in 2011, Allgaier finished third in the overall NASCAR Nationwide Series championship points standings, notching one win, six Top Five finishes and 17 Top 10 finishes.
“We are extremely pleased with the outcome of our first season in NASCAR and look forward to returning as a championship contending team with Turner Motorsports and Justin Allgaier in the Nationwide Series,” says Brandt.
To some observers, the connection between an ag-oriented company such as BRANDT and NASCAR may not be that obvious, but Brandt insists it makes perfect sense when you consider it through marketing eyes. “I’ve always been a fan of marketing and business,” he says. “Several years back, I started wondering what we as a company could use as a marketing resource that could tie into all parts of our business. Then, in August 2010, I received an e-mail to see if we were interested in doing a one-time sponsorship.”
BRANDT agreed to sponsor one NASCAR race in St. Louis. But after that race, Brandt had a chance to meet Allgaier, where the fellow Central Illinois native mentioned he was looking for a full-time sponsor.
Brandt jumped at the opportunity. “It was one of those marketing opportunities you don’t often get in a career,” he says.
According to Karl Barnhart, chief marketing officer, the BRANDT/NASCAR sponsorship goes beyond simply serving as a marketing vehicle for the company. “If you ask me why this makes sense for us, I can give you three reasons,” says Barnhart. “The first reason is client engagement. NASCAR allows us to engage our clients and potentially gets us new prospects. We can get them to the track where Allgaier is racing and have them participant in the BRANDT culture. That’s a huge deal.”
The second reason for the sponsorship is its ability to serve as a tool for recruiting and brand building. “It’s a conversation starter,” says Barnhart. “The sponsorship makes us much bigger than a Central Illinois company because of the international footprint NASCAR gives us.”
The third reason is the chance the sponsorship provides for BRANDT to integrate and engage its own employees. “We provide an e-mail after every race that goes to every employee,” says Barnhart. “This tells them all how our team did and provides a chance for everyone to take pride in this accomplishment.”
Enjoying The Good Times
Of course, part of the reason BRANDT and the rest of agriculture can take pride in their marketplace ties back to how well it has performed in recent years. From the dark days of 2008-09, agriculture has overall thrived, with grower-customer and (subsequently) ag retailer income on the uptick. In fact, according to data from the 2011 CropLife 100 report, the nation’s top dealerships and cooperatives had crop input and service sales of $24.2 billion last year, up 17% from the prior year.
According to McArdle, much of this agricultural prosperity can be traced back to the fortunes of a single crop — corn. “In the world of ag today, it seems like the great common denominator is the price of corn,” he says. “When it’s in the more than $6 per bushel range like now, that kind of sets the tone.”
This is all the more impressive, he adds, when you look at the kinds of weather adversity grower-customers were dealing with for much of last year. “We’ve been in an excellent place for corn the past few years, and we did not have an exceptional growing season in 2011,” says McArdle. “People tend to forget it was a very wet spring and a very dry summer in the Midwest, but the steady price for corn more than made up for that.”
Better still, the early indications are for another strong corn year in 2012. “From a crop basis for inputs, we had a tremendous fall,” says McArdle. “Fertilizer rates were higher than they’ve been during the past several years for us. Many of our customers were putting fertilizer in ground that’s really needed it this past fall, particularly nitrogen and anhydrous ammonia. That typically means corn acres will be quite strong.”
This could lead to some concerns once 2013 rolls around, however. “If we have 94 million acres of corn in 2012 and it’s a really good growing season — which we have not had for a while now — there could be a larger inventory of corn come fall. If that happens, we could see a negative impact on the price of corn at the end of the year, which would affect the prospects for more corn in 2013.”
McArdle adds that BRANDT has seen “some softening” of fertilizer prices lately. This, in turn, has put some pressure on the company to protect itself from the rapid price swings that characterized the crash of mid-2008.
“One of the biggest challenges we face today as a company is risk management,” he says. “That’s extremely hard to do with commodities such as fertilizer because there are really no good opportunities to hedge your bets. But we have to figure out a way to manage this risk in order to supply our customers in the supply chain and remain profitable.”
To effectively manage this risk factor, McArdle says BRANDT uses a two-pronged approach. One is to heavily rely on market intelligence from business partners and other inside sources the company has a long-standing relationship with to anticipate price shifts. BRANDT’s Dealer Support Manager, Al Mallicoat, has 40 years of experience and contacts to rely on.
“The other way we’ve used to protect our investment since 2008 is through prepaid contracts for our products,” he says. “Many of us in doing business in the fertilizer industry implemented this kind of arrangement with our customers during that time and we’ve continued to do so with little or no push-back from the market. For the growers, the prepaid contract can be a positive because it allows them to lock in a price for their fertilizer and budget accordingly. For us, having the prepaid contract lets us alleviate some of the risk of ownership and storage of that product.”
Besides the introduction of prepaid contracts, BRANDT has experienced a few other changes with its grower-customers these past five years. For one thing, says McArdle, the rate of grower consolidation has slowed a bit in recent years due in part to the strong revenues agriculture has enjoyed during that time. However, the large grower continues to grow and add acres. “In Illinois, 67% of the ground is owned by an absentee landlord and tenant farmed,” he says. “These grower-customers present a different kind of challenge to our organization than a 500-acre farmer who owns his own land.”
Even more challenging, he adds, is effectively managing the really large grower-customer. “Grower consolidation is a big issue for today’s retailer because the key 10,000-acre plus farmers is staying relevant,” says McArdle. “A smaller farmer largely has to rely on the retailer for many of his services, but when you get to be that big, you can conceivably afford to do a lot of this work yourself. So how do we as a retailer stay relevant?”
In BRANDT’s case, says McArdle, the company has strived to find ways be more valuable to these folks through unique offerings. “We have no desire to be just a commodity provider,” he says. “The really large farmer may be able to buy a ton of fertilizer at the same railroad depot we buy from, but he may not be able to get a comprehensive technology program to collect and analyze all his field data. Through our proprietary programs such as Seed Rx and Nutrazone, we can do that for him. In doing so, information and information technology become just as critical as the basic commodity.”
Still, McArdle stresses that in his eyes, all grower-customers represent a single market segment, regardless of their size or acreage. “There are a lot of 500-acre farmers out here as well as plenty of 2,000-acre ones,” he says. “Our ultimate goal is to serve them all equally.”
To accomplish this, McArdle says BRANDT continues to play off the principle that help found the company back in 1953 — family. “This family has always said to its employees ‘take ownership of what you do,’” he says. “We have 20 retail locations and every one of them takes ownership of their business. And when you view your job in this way, it’s easier to stay relevant to the customers. That’s the culture of this company, and sooner or later, the big circle comes back around to the people.”
The Time Crunch
Still, sometimes finding the personnel to round out this family has presented its own set of challenges. Part of the issue, says Engel, is how much the company and its existing employees tend to want to accomplish in a short amount of time.
“Sometimes, I think we could get everything we want to done if we had a 48-hour day,” he says. “Then we could get twice as much done. Of course, if we had that much time and the personnel on staff to cover it, we would probably want to get four times as much done!”
Brandt agrees the company is extremely driven when it comes to trying to get things done on a daily basis. “We have a philosophy around here that when we come to a fork in the road, we take it,” he says. “The trouble is that fork tends to have its own forks, and those forks have forks, and so on.”
To do this much, BRANDT has spent the past few years adding personnel to its roster. “In this case, all the consolidation we’ve seen in the retailer industry has been helpful to us because there’s been a lot of good people who were looking for a job that came to us,” says Engel. The company has also utilized an active summer intern program to bring in employees who are still in school in the hopes they will ultimately decide to make BRANDT a stop on their future career paths.
Speaking of the future, this notion is something everyone at BRANDT thinks about often. “During the past 10 years, the company has spent a lot of its time diversifying its business, adding divisions and new market areas,” says McArdle. “In the next 10 years, I think we will spend more time on making a bigger overall contribution to agriculture through product development and introductions, which we are on the verge of doing right now.”
Of course, to add this many new people and product offerings will take not only time, but space. Even through its headquarters building is only five years old, Brandt says the company is looking to add another two wings and 20,000 square feet “in the very near future.”
Furthermore, this should only improve BRANDT’s chances of being a big player in the world of agriculture for years to come — be it on this planet or another. “A lot of the decisions I am making right now are ones that won’t just impact the company in 2012, but will pan out 20 years down the line or more,” he says. “Ultimately, I want BRANDT to be the first fertilizer company on the Moon.”