Lindt Australia CEO talks why Australia is such a strong test market

trong>Michael Schai: I started in the baked goods industry. I’ve been in food all my life. So for example, [the business I worked for] supplied all the bakery products for five-star hotels, like the Shangri-La or in a Marriott, but we also supplied every single bun that McDonald’s uses. 

I worked originally in Switzerland, came to Australia, went back to Europe, and then came back to Australia again. I had the opportunity about three-and-a-half years ago to join Lindt in Australia. I understood the Australian market, but also sort of understood the Lindt brand and the Lindt business model from growing up in Switzerland. And that has been a good combination of understanding the chocolate industry and the legacy of Lindt from Switzerland, but also having worked in the Australian retail environment, which is not the easiest thing in the world.

IR: What makes you say that?

MS: I think it’s just a highly concentrated market when you look at our duopoly in supermarkets, and being a relatively low-population country with a vast geography, it doesn’t make it easy to build up a business in this market. But then Switzerland has similar challenges.

IR: What are some of the lessons you’ve learned over your time in the retail and QSR industry that have helped inform how you work today? 

MS: Probably what I see now, even more so than in the past, is the importance of supply chain. As I said before, Australia is a market that’s far away from a lot of manufacturing hubs, whether that’s Europe or the US, so there is always that distance, and you have to be fit on your supply chain, whether that’s cost, service level, etc. 

But now, if I just look over the last 12 months, with Covid-19, global supply-chain interruptions, costs of deliveries going up, the supply chain has become a true competitive advantage. It doesn’t matter whether you sell chocolate or baked goods, unless you have your supply chain under control from a service-level perspective, but also from a cost-perspective, it’s difficult to do business in Australia. 

I also think innovation is extremely important in the Australian context. Compared with a lot of our other markets, Australian shoppers and consumers really like, and are very open to, new concepts. Australia is a really attractive test market for big brands. In Australia, you can run quite exciting new concepts and tests and validate whether they work, and then you can roll them out globally. And if they don’t work, it’s far enough away that it doesn’t impact your global brand.

IR: What have been some of the challenges you’ve seen throughout your career, and how have you dealt with them?

MS: Having the right people in your organisation or in your teams is, I think, a massive opportunity and is a challenge similar to supply chain. There are heavy labour shortages in Australia now, and a war for talent. 

When I started in my career, it was more about having the right process or the right products. But what I’ve come to learn over the last 25 years is, yes, IT services and products are all important, but unless you have the right people on your team with the right mindset and a strong culture, you can have the best product, the best service, it will not succeed over the long term.

IR: Lindt has recently launched a new store in Homebush DFO. Can you tell me a bit about the concept of the store, and what it is that makes this one special, compared with some of the other Lindt stores in Australia?

MS: Sure. First of all, it’s the first Australian store where we’ve used our new global style, with a new visual and furniture installation. We developed something back in 2020, but never had the chance to roll it out due to Covid. Plus, we’re excited that it’s the first store to offer our Crema Gelata, which is basically liquid frozen Lindt chocolates. This is the first one in Australia. We’ve also rolled it out in Japan and Italy.

IR: Can you tell me a bit about what the last couple of years have been like for Lindt? How are you all tracking now that retail is starting to fall back into a bit more of a rhythm?

MS: We’ve got two parts of the business. One is our own retail store business, and we have about 20 stores around Australia. Then we have what we call our grocery or wholesale business, which will be the independents, David Jones, Coles, and other supermarkets. 

For our own retail stores, the moment lockdowns hit, we had to close down, depending on the state. So the retail business was hit directly. 

But what we’ve seen on the grocery side is that chocolate consumption in Australia has gone up. Chocolate overall did really well in 2020 and 2021. The Australian chocolate market grew 10 per cent over the course of the pandemic, where it normally grows between 2-3 per cent, year on year. Both 2020 and 2021 were particularly strong years. I think people wanted to sit at home in isolation and treat themselves. We’ve seen this globally. During Covid, chocolate consumption in most countries went up.

IR: You said that this new Homebush store is the first one you’ve been able to launch for a while. Are there other plans for more store launches moving forward?

MS: We’ve got another one opening in [a few] weeks at Warringah Mall, which will also be of the new concept style, but it’ll be even more special. 

We basically have three retail concepts. One was the original cafe, which we’ve seen over time is probably not the core of our retail business moving forward, so we’re reducing our cafes globally. The two main formats are what we call Lindt Outlets, which will be stores in outlet centres and DFOs, and the Lindt Boutique, which you can almost compare to a Nespresso Boutique. They will be in some of the large malls and use a bit of a smaller footprint, with fresh chocolates, chocolates slabs, and a premium boutique experience. 

Warringah will be the latest boutique concept in Australia. The last one we did was just before Covid hit, in Macquarie Centre. 

IR: What about Lindt’s online offering? How did that grow throughout the pandemic, and what are your plans with that moving forward?

MS: We’ve been a bit late to the party online. I think one of the concerns historically was around a potential hit to the quality of the chocolate, particularly in a country like Australia, with so many different climate zones. But, of course, Covid really accelerated our online presence. 

So we went live in 2021 with a national, fully fledged online offer: no matter where you live in Australia, if you put an order in, we’ll deliver within 72 hours. 

And I think what is special is that we use our own retail shops as local fulfilment centres. So if you’re in Brisbane or the Sunshine Coast and make an order, that order would go to our Lindt shop in Brisbane. We would pick it in the shop and send it basically from Brisbane straight to the Sunshine Coast to minimise the supply chain. 

It’s the same in Perth, Adelaide, Sydney, and Melbourne. We can do it all locally, which means we are quick, and we can control the temperature. We went live about two or three weeks before Easter 2021, and we were not prepared. 

We wanted to do a soft launch just before Easter, but didn’t communicate that well and Covid probably helped us, since everybody was looking for online chocolate. We were completely overwhelmed. We had to get people in to help us out, and pack and pick orders. So, definitely Covid accelerated our online penetration, and we clearly see that as an attractive market going forward, but we also have to be honest that it is mainly strong around certain seasons: Christmas, Valentine’s Day, Easter, Mother’s Day, and Father’s Day, for example. 

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