New Zealand chocolate producer Whittaker's is working to double its production output, with work soon set to begin on the second stage of expansion of its North Island factory.
The Porirua-based chocolate company founded in Christchurch in 1896 is set to invest tens of millions of dollars for two new production facilities which will more than double the size of its almost 8000sq m Wellington-region site.
Construction is currently under way on its "stage 9" two-level roasting facility and is expected to be complete by Christmas, and operational from early 2021.
"Stage 8", originally planned to be completed first, will house the company's additional moulding, foiling and wrapping lines. Work on this site is set to begin later this year after being delayed because of the coronavirus pandemic.
Once operational, the expanded factory - expected to be more than 15,000sq m in size - would enable the business to increase its volumes and efficiency, Matt Whittaker, co-chief operating officer at Whittaker's, told the Herald.
He said it would allow the business to double its chocolate-making volumes and in turn grow its sales in international markets.
Whittaker's holds a 52 per cent share of New Zealand's chocolate market (for chocolate block segment). About 30 per cent of its production is exported overseas to around 20 markets.
"Once we have those two [facilities] in place then we've reached maximisation of this site, and we don't really have any plans to produce offshore or anywhere else. That's our nine to 10-year plans in place," Whittaker says.
The great-grandson of Whittaker's founder James Henry Whittaker said domestic grocery sales of its chocolate blocks experienced a significant uplift during lockdown, but it remained cautious of the potential risk of a downturn as economic conditions were expected to worsen.
The chocolate manufacturer did not access the Government's wage subsidy.
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"Our intention is to continue the investment in expanding our site and our capability, and our quality, we don't see that changing, but we are conscious of the current environment."
Whittaker currently employs close to 200 staff and it expects to increase its staff numbers by at least 50 per cent as the new facilities become operational.
The family-owned and operated business is in growth mode and has experienced year-on-year growth in excess of 10 per cent over the past 10 years. Being a private company, it could not share any revenue of chocolate production figures because of commercial sensitivity.
"We're all about sustainable growth so we don't look to extend ourselves too much. We're not in the business of taking big gambles or big risks," Whittaker says.
The company is focused on growing its market share in New Zealand and doubling its business in Australia. Expanding the factory would allow it to do this while keeping to its bean-to-bar process, he says.
It recently expanded into 800 Coles supermarkets across the Tasman and has growing distribution within Woolworths and independent retailers.
Australia is its fastest-growing market followed by the Middle East (UAE, Bahrain, Oman and Qatar) and Canada, but in dollar terms New Zealand is still its biggest market - followed by Australia. It has recently experienced strong sales in the Middle East, Malaysia, Singapore and China.
The company is about to embark on a growth plan in conjunction with New Zealand Trade and Enterprise as part of its International Growth Fund programme in North America.
Whittaker's has big plans for the continent, using Canada as its beachhead, Whittaker says.
"We've been in Canada for a number of years, but ultimately the US is a big opportunity," he says. It is yet to launch in the United States.
Its chocolate is sold in 1530 stores in the Greater Toronto Area and has been operating in Canada since 2016.
Expansion of travel retail
Before Covid-19, Whittaker's was planning to expand its physical footprint through travel retail locations.
Its Auckland and Christchurch Airport stores had been a "resounding success" and off the back of this, it had early plans to expand its physical footprint into some of the biggest airports in the world.
Whittaker says the company has its eye on expanding into Changi Airport in Singapore, and airports in Shanghai, Kuala Lumpur and the United Arab Emirates - parts of the world where it already has brand awareness and demand. Its chocolate is already sold in Dubai Airport.
"Travel retail is a big one for chocolate around the world," says Whittaker, adding it had fallen off a cliff as of late as a result of the pandemic.
"Once it all starts back up again I think travel retail is a big opportunity for us."
Over time, he says it would look to expand its partnership with travel retailers in the markets where it currently operates a grocery business.
"Travel retail is something that you can build on once you've built significant brand awareness in a certain market - it gives you the ability to leverage incremental sales opportunities at the border," he says.
"Once things come back to normal, I think that [travel retail] is a very good opportunity for us with partners that have really good footprints in those airports."
Whittaker's has been named New Zealand's most trusted brand for nine years in a row. Its popularity in the past five years has soared, but Whittaker says the business had "shifted a gear" in around 2010.
"We're getting up to our limitations in terms of capacity ... we do feel the pressure of needing that additional capacity so we can deliver on the opportunities in front of us," he says.
Focus for 2021 and beyond
The company is working on new innovations and flavours of chocolate that it plans to launch next year in line with its 125th birthday and as part of its strategy to grow its share in the New Zealand market.
Doubling its business in Australia is a major focus for 2021. It has recently engaged its brand ambassador, British celebrity chef Nigella Lawson, to market the product across the Tasman.
Lawson will feature in a number of Whittaker ads in Australia promoting the product.
Asked if the company had any plans to take its business public, Whittaker says it is not a conversation that has been had with the company's owners Andrew and Brian Whittaker.
But, as he says, the company does not look further than a 10-year plan.
The Nigella Lawson effect
Since 2012 Whittaker's sales have been increasing at record rates.
Whittaker says this comes following the partnership with Lawson - who has a lifetime supply of free Whittaker's chocolate - starring in the company's marketing campaigns.
"We set our vision, which was making world-class chocolate from New Zealand, and that then meant there was a need to start to frame up our marketing and our product range and investment in quality. Part of that investment in quality was establishing our brand as world-class so we went out and looked at how we could do that and one way was bringing on an ambassador.
"We landed on Nigella because we thought a lot of her attributes fitted with our aspirations, and she has been an amazing ambassador for us - and long may it continue," Whittaker says.
Sales gradually increased after onboarding Lawson, Whittaker says, adding that she was brought in to help the company achieve its goal of market leadership in the 250g block category.
It achieved that within three years from that date, he says, and the company is hoping her personal brand can do the same again for the business in Australia - and longer term, other markets.
"[Nigella] is probably more well-known in Australia than she is in New Zealand, there's a few markets where she is very well-known, obviously the UK and across Europe."
Being able to lock in Lawson as a brand ambassador was a massive win for Whittaker's, he says.
He describes the relationship between Lawson and the company as genuine.
Whittaker's flies Lawson out to New Zealand every couple of years for a "master ad brand campaign" and visits her in London in alternative years. It had brand activity with her scheduled in New Zealand this year just as Covid hit, which has been put on hold.
The longer-term plan for Whittaker's is to launch in England. It is waiting for the UK-NZ Free Trade Agreement to kick in before it starts exporting there to avoid a 40 per cent tariff on shipments there.
A move into the UK would potentially mean to launch a physical store presence there - but grocery would remain its primary sales strategy, Whittaker says.
"A lot of attributes of our brand would really resonate with consumers in the UK and it's a big chocolate market - they consume even more chocolate than Kiwis."
Whittaker's hopes to be operating businesses in the UK and US within the next three to seven years.