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THE BIG COMEBACK

Facing the highest energy costs in the world, leading Australian independent retailer Drakes is

more committed than ever to its CO2 transcritical future.

― By Devin Yoshimoto & Caroline Rham

1 July 2017, South In a sector where profit margins are already Australia made razor-thin, fluctuating energy costs can have a On global headlines. On dramatic effect on a ’s bottom line. that day, the state overtook Denmark for the dubious Few understand this better than Drakes honour of having the world's most Supermarkets, which currently operates around expensive electricity, reported the 60 stores in the states of South Australia (SA) Australian Broadcasting Corporation. and Queensland (QLD).

The ABC article detailed energy price The company, founded by Roger Drake in 1974, hikes announced by Australia’s three began as a single three-lane supermarket on largest energy retailers in the middle Henley Beach Road in Torrensville, SA. Today, of last year. Drakes Supermarkets is the largest independent grocery retailer in Australia, with an annual turnover of over $1 billion.

Drakes' Foodland store, North Haven

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Accelerate Australia & NZ travelled to the head office of Drakes Supermarkets in Torrensville to meet Bob Soang, the firm’s general manager.

Speaking eloquently about their journey so far, Soang – who boasts 38 years of experience at Drakes – outlined the most important lessons learned and set out why they see natural refrigerants as the future of Australian retail.

AHEAD OF THE TRANSCRITICAL CURVE

Drakes’ history with CO2 dates back to 2007, when the retailer became the very

first to install a transcritical CO2 system in a southern-hemisphere supermarket.

Soang, who oversaw the installation of the system at the time, describes what motivated the decision.

“As we’re the largest independent, we've always felt that there is some onus on us to do some of the pioneering,” Soang says.

That first system was commissioned in December 2007 at a Drakes Foodmarkets store in Angle Vale, north .

“We got a small government grant to

help, because the CO2 technology was quite a bit more expensive than the more traditional systems,” reflects Soang.

At the time, in an attempt to fight greenhouse gas emissions, the Australian government had made We will available a $2 million subsidy fund to evaluate new technologies in the “continue with commercial refrigeration sector. CO2 because The subsidy was issued under the Faced with the challenge of reducing government’s Greenhouse Gas I do think the operating costs in today’s climate Abatement programme and administered of rising Australian energy prices, by the Green Cooling Council. [synthetic] the company is turning to natural refrigerants to carry it into the future. “Additionally, the government had made gases’ lifespan a decision that it was going to keep Drakes is poised to open three new taxing the carbon gases to the point is coming transcritical CO2-based supermarkets. where you really had to look for some It expects CO2 transcritical to save other option,” Soang explains. to an end. upwards of 20-25% on running „ costs compared to stores fitted with “And that's exactly what we did.” — Bob Soang, traditional HFC-based systems. Drakes Supermarkets The combination of these factors The stores, located at Goodwood led Drakes to move forward with the

Road, Wayville (SA), Stebonheath transcritical CO2 installation. The result? Road, Penfield (SA) and Ardrossen Road, Caboolture (QLD), are due to “It was a disaster,” laughs Soang. “We open by the end of February 2018. had all sorts of problems with it.”

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DRAKES GOODWOOD FOODLAND

O n e o f D r a k e s ’ t h r e e n e w C O 2 S oang b e li eves th e l eve l of “The [transcritical CO 2 system] transcritical stores is located in technological development of was pioneering – so with it came

Wayville, an inner-southern suburb of transcritical CO2 systems simply issues,” he explains. Adelaide. made their adoption at that time too premature. “From what I've seen now, we're T he store will be fully se r viced starting to realise that maybe by a transcritical CO 2 plant and is H e i s n o n e t h e l ess k e e n t o we were just ahead of the curve, scheduled to open in February 2018. s tr ess th a t t h e i s s u e s t h e y that's all.” experienced did not take away Store name: from the fact that the system THE RETURN OF Drakes – Goodwood Foodland was amazingly efficient. TRANSCRITICAL

Location: Witnessing the potential of CO 2 Goodwood Road, Wayville, SA never forgotten how quick the at first hand convinced Soang pull-down was – and I'm talking to move forward with subcritical

No. of transcritical racks: 2 about when we actually started CO2 cascade systems for the next the cases up. The power of that ten years, building confidence

LT rack capacity: 34.884 kW CO2 transcritical system was able and experience in using the to reduce the temperature inside technology along the way. LT operating temperatures: the cases so quickly”. -28°C to -33°C "I had never seen anything like the systems work, we were quite No. of LT display cases: 12 it before." happy to roll them out one after the other.” MT rack capacity: 161.116 kW P r o b l e m s s t e m min g f r o m poor design and technology Since 2007, Drakes has installed

MT operating temperatures: eventually led Soang to swap subcritical CO2 cascade systems -6°C to -10°C the system out, but ever since at 14 store locations.

he has been convinced that CO2

No. of MT display cases: 37 is the way forward. “When we first started with CO2 and it was transcritical, it was a Case supplier: Arneg “ I n t h e e n d , I r e p l a c e d t h e problem,” Soang admits. transcritical system and went

Contractor: AJ Baker back to the more traditional CO2 “But from that day onwards, cascade system,” Soang says. we've had no problems with the

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The savings on the technology. The [subcritical] CO2 “Now I know that the transcritical systems have worked brilliantly.” systems will be even more efficient running costs and the than the current cascade systems “ Not only were the subcritical CO2 that we've been using,” he says. operating efficiencies systems running reliably, but they were also delivering 10-15% savings “They are still CO2 but just more are such that on running costs compared to Drakes’ efficient CO2, because the technology standard HFC-based systems. is more efficient.” [CO2 transcritical is] In the intervening years, Soang has Indeed, it seems that the company’s where the future is been closely watching the level of original experiment with transcritical transcritical CO2 technology improve CO2 did not discourage Soang, but going to take us over rapidly year on year. instead gave him the confidence to return to the technology once it had the next few years. The improvements in technology and matured. „ design, combined with the promise — Bob Soang, of even further energy savings, have “The efficiencies that I saw with Drakes Supermarkets driven Drakes to take a second look at transcritical at Angle Vale all those

transcritical CO2. years ago – I was always impressed with how efficient the system was,” “Now, I've got to say, transcritical has says Soang. raised its head again and there is a lot more modern technology that's now "The problem was that the design making us reconsider our position on and the technology wasn't right at

ABOVE transcritical CO2.” that time." Mark Turner, AJ Baker & Sons (left) and Bob Soang, Indeed, Drakes has already taken Drakes Supermarkets (right), action, with the scheduled opening of

Goodwood store the three new transcritical CO2-based stores. Soang is expecting a further LEFT 10% energy savings. Drakes supermarket in Owen Terrace, Wallaroo.

Photography by: Peter Barnes

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1/

2/

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CO2 CABINETS THE TIME IS NOW In the new Drakes supermarkets, the As Drakes moves forward with its plans for

cabinets in use on the shop f loor transcritical CO2 in 2018, Soang hopes that the play a crucial role in increasing the experience will serve as an example for other

energy efficiency of the CO 2 trans- independent retailers in Australia. critical system. H e u n d e r s t and s t h e c h a l l e n g e s f a c i n g small companies in considering investing in

transcritical CO2 technology.

"Obviously the cases have been moder- “To spend $1 million, $2 million, $3 million on a nised; you get cosmetic changes. But with cosmetic changes come techno- operator or a small multi-store operator, that's a logical advancements too," says Bob fairly serious risk that you put on your balance Soang, Drakes’ general manager. sheet,” he says.

"A lot of our cases now have glass Nevertheless, Soang believes that now is the doors. We've obviously always had right time to be investing in good equipment glass-door freezers but [now we use] that is future-proof and will save money in the glass-door dairy cases." long term.

The relationship that Drakes enjoys “It's an opportunity to be a), investing money with Arneg is one of trust, built up over in refurbishments and b), to be doing them many years. Both companies have been charting a pioneering course for says Soang. natural refrigerants in Australia for a long time now. “Also, the technology is actually modern and likely to carry you through much longer than that "We’ve been a customer of Arneg’s for nearly 20 years," says Soang. This philosophy is in line with Drakes’ overall "When Arneg was not in Australia, when culture, set by its founder, Roger Drake. we first started talking to them, they were operating out of Asia. That’s got "We are long-term players in the industry so in to be close to twenty years ago, when every decision we make, we never consider the choice of 'Let's buy it cheap and let's do a cheap some cases and it grew to now, where and nasty job'. We've never believed that works," Arneg are our preferred refrigeration says Soang. case company." "Roger has always been a guy that appreciated

Ever since, Arneg CO 2 cabinets have the value of technology and that we have to keep been successfully installed in all Drakes up with it." supermarkets. Though Drakes considers itself to be a small player compared to the larger food retail chains in Australia, the investments made by the company in the past calendar year have been some of the most significant spends in its recent history.

" L ast year, I think we spe nt $27 million in refurbishments and fit- outs of stores,” says Soang.

"Historically, we just know that it is worth the 1/ Arneg cabinets, Drakes extra money to buy the right cases, to buy the Goodwood Foodland right technology, and to run those cases and install them efficiently." 2/ Cabinets in Drakes Newton Foodland, New Haven

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INVESTING IN KNOWLEDGE “I still believe you have to have a He describes the visits he made last return on investment, so you have to year to some of Europe’s biggest names What has driven Soang to take understand what we do.” in retail and spoke enthusiastically such a keen interest in refrigeration about how generous they were with their technology over the course of his Soang emphasises the extra effort knowledge and time. almost four decades with Drakes? he puts into understanding the most important parts of his business, “I've just come back from a European “My dad used to say, if you look after especially the technology, to help trip,” says Soang. the cents, the dollars follow,” he says. make the best decisions. “I met the guys at Gigante (Il Gigante, an “But I still think that if you don't look “The days of us just putting baked Italian hypermarket) in Italy, Jumbo (a after the real big dollar purchases, you beans and products on the shelves supermarket chain) in the Netherlands, are setting yourself up to fail.” are long gone. Leaders of this and Migros in Switzerland (the country’s industry have to actually understand largest retail company). These guys gave Soang believes the real return on a lot more of the intricate parts of the us a lot of time, like a day each, with their investment comes from looking after important parts of the business – and whole senior team.” the big dollar spends of the business. refrigeration is without a doubt the And what does he consider one of the most important part.” Meeting these people, Soang explains, biggest spends for a supermarket? reinvigorated him and widened his Refrigeration. Soang is serious about his investment perspective on today’s retail industry. in understanding technology, not “When I talk to the guys coming just by listening to the technology Indeed, as reported by Accelerate through, when I look at my direct suppliers with whom he has built a Australia & NZ last winter, not only end reports, we talk about return on close professional relationship, but users like Drakes but also several leading investment,” says Soang. also by travelling overseas himself. Australian HVAC&R companies were at EuroShop 2017 to learn from their European counterparts.

“It just makes you realise, it's not just the Australian world; it's the whole world that we all have to share. We all have to help,” says Soang.

THE FUTURE IS NATURAL

In terms of refrigeration technology, where does Soang see Australia’s commercial retail industry heading in the next couple of years? “I have no doubt that the direction that we're in is the direction that we’re going to continue to go,” he says.

“That is, I think we will continue with CO2 because I do think the carbon gases’ lifespan is coming to an end.”

Soang believes the future is transcritical because of the energy savings he has seen with these systems compared to cascades.

"Transcritical is going to be the new future because, yes, it is slightly more expensive," says Soang. "But the savings on running costs and operating efficiencies are such that that's where the future is going to take us over the Bob Soang, next few years." Drakes Supermarkets

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He expects the move to natural refrigerants to take place not just in commercial retail operations, but in industrial-sized systems too. HISTORICALLY, “We're looking at warehousing,” says Soang. WE JUST “We run a couple of fresh food warehouses – one in South Australia and one in Queensland, and when you look at warehousing, you start talking about ammonia.” KNOW THAT

Soang admits that his knowledge of ammonia-based refrigeration systems remains limited. But the efficiency IT IS WORTH benefit of these systems is piquing his interest.

“I wonder if [ammonia] is that efficient, that perhaps that might be the THE EXTRA future – the next step,” says Soang. With retailers in Australia currently facing high energy prices – and after a long journey during which mistakes MONEY TO BUY were made – Soang is confident that CO2 technology is now at a critical juncture.

But this fact does not faze Soang, whose confidence comes from his experience. THE RIGHT CASES, TO BUY

"The advantage of being older is that I know the world is round, and everything goes around and around. So what was THE RIGHT new today was old before and it becomes new again." For Drakes, the natural refrigerants TECHNOLOGY, journey has now reached a turning point, where previous risks and experience gained is beginning to pay off.

As for Soang, his journey with Drakes AND TO has given him the confidence to lead the company – and Australian industry at large – towards a natural refrigerant future. DY & CR RUN THOSE CASES AND INSTALL THEM EFFICIENTLY. Summer 2018 // Accelerate Australia & NZ