Peter and Anne Hector's award-winning Mundella Foods at Mundijong, WA, is one example of a mid-size operation with big presence – and it continues to go from strength to strength, winning the Risk Management Award at the 2011 NAB Agribusiness Awards for Excellence.

The Hectors bought the business back from Lion (then National Foods) in 2005, having sold it four years earlier to pursue other opportunities.

"We saw that jobs at the factory were in jeopardy and the business was in real need of rejuvenation – it was producing milk and yoghurt, but not taking advantage of niche markets and value added products - so we decided to take up the challenge and re-build the business, including expanding into a range of yoghurts and drinking yoghurts containing the health-giving properties of probiotics," Peter said.

The business buy-back has been a resounding success, with the business achieving an annual growth of more than 17.9%, which Peter attributed to the company's "strong brand recognition and support, exceptional quality, quality management and expansion into new markets".

"We can't be – and we don't want to be a Holden or a Ford – we want to be a Rolls Royce where quality comes in.

"Yes, we are dearer, but our products contain no preservatives or artificial ingredients.

"We aren't mass producers but we produce value for money and quality that is justified in our pricing structure."

And with the news in October last year that Mundella Foods won a national contract to produce Coles' sour cream, the company will require an additional 1.8 million litres of milk annually from local farmers.

Peter said the news was testament to the fact that small and medium manufacturers can compete with national and multi-national organisations on quality and premium produce.

"We may not have the capacity to be mass producers of cheaper products, but we can create a point of difference when it comes to premium and niche products, quality."

One product Peter is particularly excited about is Mundella's probiotic yoghurt drinks.

"Probiotic drinking yoghurt contains about 15 billion beneficial live cultures per 100ml serve - this is up to 100 times more than other competitors' products.

"We are also one of the first companies to use probiotics. We are always looking at ways to value add to our raw product and find new markets, big or small."

In 2010 Mundella began exporting its products to Asia, and last year, secured a contract to supply breakfast yoghurts to Qantas for all flights out of Perth, and some Cathay Pacific flights out of Perth.

Along with its business expansion, Mundella has taken out a swag of industry awards including Australia's Champion Yoghurt five times. It was also awarded the Australian Grand Dairy Champions title for three consecutive years.

Mundella products are distributed through IGA, Woolworths, Coles and smaller boutique retailers throughout WA, South Australia and Victoria.

"The awards have really helped us ensure that as a small to medium sized company, we can still be a dominant market force.

"We can back up our claims that we produce the best quality products because of our national awards and therefore, can compete for fridge space with the big guys," Anne said.

And like the proverbial cream, Mundella's business and products continue to rise to the top.

The Hectors have appointed CEO David Day to lead the company into the future as they take a small step back in a bid to enjoy more time with their family and friends.

Mundella's inroads to succession planning have given the business a competent and experienced management team that has assumed the key leadership roles, with the family board operating at the strategic level.

Four local dairy farmers currently supply the manufacturer, which uses around 20,000 litres a day.

"As we continue to expand, we will be seeking high quality milk from more local farmers," Peter said.

He believes the secret to Mundella's success lies in its "team culture" and "ability to value-add, differentiate and seek new markets and better prices for premium products".

And it all starts on the farm, he said.

"We are very in-touch with our farmers, they are not just names in book, without them, we – along with our products - cease to exist, so we want to do everything in our power to look after them.

"In turn, they reward us with their loyalty and meet our needs in terms of reliable, premium produce."

In return for loyalty and a commitment to supplying the best quality produce, Mundella pays its farmers "above the going price" and works with them to help achieve the highest quality milk.

Peter said the better-than-going prices paid by the company "helps farmers with their budgeting and purchasing decisions" and "ensures greater financial security, which is crucial in dairy farming".

He is also a believer in supporting the local community that supports his business, something he said often "falls by the way side when big companies come to town".

"Sure, we could buy our packaging cheaper from overseas, but we want to support the local suppliers and in turn, they support us."

Owning as well as running Mundella ensures the business runs sustainably.

"We aren't just manufacturers," Anne said.

"We are dairy farmers ourselves, and as such, we understand the pressures, the day-to-day frustrations, the production problems and the climatic issues that arise in dairying.

"This greater understanding helps us work with farmers more effectively to achieve both parties' goals," she said.