Darrell Lea hits the sweet spot in the US

30 August 2022

Darrell Lea may be 95 years old this year, but the business is as fresh as its famous black liquorice. In the last 4 years alone, it acquired and refreshed the Life Savers brand, launched new chocolate blocks and helped drive growth in the confectionery category.

It also focused on growing exports of its soft liquorice. The Americans in particular can’t get enough of this product. The US is Darrell Lea’s largest export market and accounts for 15–20% of its total revenue. And the company is hungry for more success. It is working to expand its already extensive sales channels and launch more products into the market.

The UK is another market with immense potential. When the Australia-UK Free Trade Agreement enters into force, tariffs on Australian liquorice and chocolate will be eliminated. This will boost Darrell Lea’s ability to compete in a crowded market of inexpensive confectionery. The company is already testing products in the market so it can hit the ground running when the FTA is enacted.

Austrade is supporting Darrell Lea’s US and UK ambitions, sharing market knowledge and connecting the company to distributors and stakeholders.

‘We’ve only just started working with Austrade, but I’m really pleased with what I’ve experienced to date,’ says Jason Clements, Darrell Lea’s General Manager for New Zealand and International. ‘The energy and drive of their people is impressive. They are engaged and always willing to help.’

A loved brand with a growing international profile

Darrell Lea was founded in 1927 by the Lea family. Today, the 400-person company is one of Australasia’s largest confectionery manufacturers. Its two facilities in Australia and one in New Zealand make iconic products such as liquorice, chocolate, coconut ice and Rocklea Road. In 2018, the company bought the Life Savers brand, adding lollies like Fruit Tingles and Sherbert Fizz to its portfolio.

Export was a small part of Darrell Lea’s business until 2012, when the Quinn family acquired the company after it went into receivership. Clements joined the company in 2016 to grow exports. In 2018, Quadrant Private Equity bought Darrell Lea from the Quinns, stating it had plans to expand the brand’s reach in Australia and overseas. Since then, export sales have trebled, with growth forecast to increase in the future.

‘We want to take everything Australians know and love about Darrell Lea and take it overseas,’ says Clements. ‘Our export strategy is to keep it simple. We go deep rather than wide, focusing on expanding a small number of products in select markets. It only takes a handful of successful SKUs in a market like the US to have a very successful export business.’

Winning the liquorice market in the US

The US is Darrell Lea’s biggest market, where it has been exporting for 15 years. The country accounts for 15–20% of the company’s total revenue. Its liquorice is available at CVS pharmacies, Kroger, Publix Super Markets, Shop Rite, Walgreens and Walmart. It also has a large presence on Amazon.com, where it is one of the leading liquorice retailers.

Darrell Lea’s popularity is due in large part to its difference from American liquorice. Its soft black liquorice is plant-based, 100% palm oil-free, made with natural flavours and contains no preservatives. American liquorice is harder, chewier and often filled with artificial ingredients.

‘Our high-quality product is better in every way: better ingredients, better taste, better texture and better for you,’ says Clements. ‘We were first-in-market with a soft liquorice. Today, Australian liquorice is a sub-segment of the US liquorice category, thanks to Darrell Lea.’

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US expansion plans

Darrell Lea is keen to expand its US sales channels beyond grocery stores. ‘In confectionery, a very large proportion of overall sales sits outside of grocery,’ says Clements. ‘We have identified channel mix as an extremely critical component of our future plans.’ The company’s coast-to-coast distribution network means it is well placed to expand its reach.

Darrell Lea also wants to grow its product range. ‘We own our US model and have strong expertise sitting in the US,’ says Clements. ‘We can reach every retailer in the US, and we have existing infrastructure and relationships to start tacking on chocolate and other confectionery to our liquorice offering.’

Austrade is supporting Darrell Lea to meet these two goals. ‘Both organisations are pooling their knowledge, whether it’s sharing expertise or contacts, to maximise the outcomes,’ says Clements.

‘Liquorice remains the heart of our US business,’ he says. ‘But with manufacturing expertise across all confectionery products, there is significant opportunity to grow new product development and distribution. We are extremely excited about where the future lies.’

Advice for exporters wanting to enter the US

Clements advises exporters to consider employing people in-market. ‘Nobody knows your brand like you do,’ he says. ‘When we moved from a distributor model to our own people, the step change was significant. By taking control of our brand, we doubled our business within a couple of years after a decade of slow growth. 

‘We were fortunate to be at a scale where it also made financial sense,’ he says. ‘But I would recommend even companies starting in the US to take a small risk and get your own person on-board working alongside your importer.’

Australia-UK FTA to throw open doors

Darrell Lea is hoping to replicate its US success in the UK. Its liquorice is well known there after 15 years of export. However, the UK is a competitively priced market. The tariffs on Australian liquorice and chocolate entering the UK have made it hard for Darrell Lea to compete.

Clements is counting the days until the Australia-UK Free Trade Agreement (FTA) enters into force.

‘When the FTA comes into effect, the tariffs on liquorice and chocolate will disappear,’ he says. ‘Our products will become more competitive overnight. It will throw open the doors to the UK for us.’

Darrell Lea has spent the last 18 months preparing for a strong launch. It is testing products with smaller retailers and designing new packaging and artwork.

‘Our Austrade contact in the UK has been superb,’ says Clements. ‘He’s been critical in getting some initial doors opened and setting up meetings. He’s been brilliant.’

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