Australian confectionery icon placed in administration

Posted by AFN Staff Writers on 10th July 2012

The iconic Australian chocolate and confectionery brand Darrell Lea has been placed into voluntary administration by its directors.

The company, started 85 years ago by the same family from a small factory under the first arch of the Sydney Harbour Bridge, now has 69 stores owned or licensed across Australia, whilst its well-known products are sold in more than 1,800 retail outlets in Australia, New Zealand and the United States. The business employs about 700 people.

Insolvency specialists PPB Advisory have been appointed to take control of Darrell Lea, which will continue trading while it is being prepared for a sale.

Darrell Lea characterises itself as “one of the original Aussie brands, a name you can trust and enjoy”. This brand identity could provide a significant opportunity for any major manufacturer looking to diversify.

The difficulties of Darrell Lea may stem from the fact it is an old-fashioned retail business that is still concentrated in a shopping mall environment under pressure from direct marketers using the internet for selling. With fewer people shopping in the malls or main shopping centres, one obvious impact on confectionery businesses would be the shrinkage in passing trade and a big drop in the number of potential impulse buyers.

What of its future?

The iconic nature of the Darrell Lea brand offers numerous possibilities for branding leverage. In the recent past, major chocolate-makers such as Cadbury and Nestlé have diversified into ice-cream and into breakfast product lines. The fact that the Cadbury brand is owned by a cheese brand, Kraft, should not be forgotten.

A fresh and innovative approach has worked for other Australian iconic brands such as Clark Rubber.

Will the example of Swiss-based multinational Nestlé, which began as a condensed milk manufacturer before moving into milk-based baby foods and milk chocolate, inspire Australian dairy brands such as Bega Cheese, Warrnambool Cheese, or Murray Goulburn to get into new pastures?

Given the challenge posed by supermarket house brands, will the Darrell Lea brand stimulate interest from a food company that can see the opportunity to diversify into an icon brand and reduce the pressure of supermarket commodification?