Australia risks losing its supplier base but Darrell Lea saves Heritage, Simons says

Posted by Cat Woods on 7th November 2018

DARRELL LEA’S upward trajectory since its 2012 collapse is gathering further momentum with its recent purchase of Melbourne’s Heritage Fine Chocolates.

In 2012, all the chocolate maker’s retail stores were shut down and the business was taken over by Tony and Christina Quinn, entrepreneurial owners of VIP Pet Foods.

Darrell Lea again became profitable and in January this year proved an attractive acquisition for private equity firm Quadrant, which also purchased the rebranded VIP Pet Foods (now Real Pet Foods) before selling that on for a profit of over $500 million.

The sale in 2012 resulted in Darrell Lea primarily being a wholesale business with approximately 1200 licenced retailers. The Darrell Lea branded, company-owned stores closed in September of 2012 with over 400 jobs made redundant.

Currently, Darrell Lea products are retailed in Woolworths, Coles, Aldi, IGA, David Jones, Big W, Australia Post and independent retailers.

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At 91 years of age, Darrell Lea is one of Australia’s oldest and most well-known confectionary brands. Quadrant’s executive chairman Chris Hadley believes it is this iconic status which positions it ideally for global markets.

The purchase of Heritage Fine Chocolates aligns with the growth strategy of Darrell Lea.

A spokesperson for the company says this acquisition allows Darrell Lea “to establish a chocolate ‘centre of excellence’ in Melbourne. The company now has new capabilities to expand its range of products and categories.”

In 2014, managing director of Heritage Fine Chocolates, Michael Simons told the Herald Sun, the factory produced around 1000 tonnes of chocolate annually as one of the only local producers of chocolate Easter eggs left in Australia.

Today, he is reflective on the vast changes in the confectionary industry over the previous few decades, saying the landscape now is very different.

“Small suppliers were encouraged and were an important part of the retailers’ supply strategy,” Mr Simons says.

“More recently as the major retailers moved to a business model of selecting only two major brands and a private label, the doors closed for many of the smaller independent suppliers.

“Sadly, that saw a talent and investment drain as people lost confidence and left the industry, either voluntarily or through business failure.”

Mr Simon says smaller businesses are not as sustainable as they were 20 years ago, and without investments such as this one in Heritage from Darrell Lea, Australia is at risk of fast losing some of its supplier base, leaving it vulnerable to having to import.

Darrell Lea and Mr Simons have both expressed their excitement and confidence in the future of confectionary manufacturing in Victoria as a result of the acquisition, with all Heritage staff maintaining their employment.