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TAKING OUR LICKS OVERSEAS

by Simon Lord,
last updated 23/07/2009

Simon Lord talks about exporting with Shane Lamont of New Zealand Natural - NZ's most global franchise

The purchase of New Zealand Natural by Diane Foreman's Emerald Group in 2005 did more than bring a famous brand under Kiwi ownership - it also created New Zealand's biggest franchise exporter. The company has over 300 franchised stores in 17 countries around the world including China, the UK, the USA and India, making it truly a global brand. We talked to Shane Lamont, Emerald Food Group's CEO, to find out more about expanding overseas, the dangers of ‘food miles' and the brand that has come home.

In fact, ‘home' is the wrong word for the company. New Zealand Natural has its roots in a small ice creamery in Christchurch in 1984, but a chance meeting between its inventor and South African entrepreneur Rael Polivnick on a plane saw the first real New Zealand Natural store open at Sydney's Bondi Beach in 1985. So successful was this store - with uncomplaining customers waiting up to 20 minutes for the chance to taste the fabulous ice creams - that Rael bought first the Australian and later the world rights for the concept. After experimenting with supplying and licensing the product to other retailers, the franchise proper was launched in 1990. The first New Zealand Natural store in New Zealand opened in March 1995.

A few years ago, Diane Foreman saw the opportunity to acquire this unique brand and move production to her ice cream factory and in 2005 purchaased 100% of the company from its Australian owners. Emerald Foods has a number of brands in its portfolio, including Mövenpick, Killinchy Gold, Heavenly Treats and Zilch! (a reduced fat ice cream with no added sugar, now being sold through New Zealand Natural stores). ‘However, it is New Zealand Natural that is the flagship product,' says Shane Lamont.

Brand New Zealand

Shane says that the ‘New Zealand' part of the franchise's name is very important in most overseas markets. ‘The country's image supports the ‘natural' appeal of the product, and a lot of our marketing material places the product in New Zealand landscapes. We have brightened up much of our merchandising recently, but New Zealand is a key part of the branding internationally.

‘Take the US, for example. Our master franchisees there are former senior executives with the global ice cream chain Ben & Jerry's and they see the New Zealand connection as being very important. On the west coast, in particular, there's pretty strong awareness of New Zealand as an attractive tourist destination: hunting, fishing, a clean, green country. It's the same in the UK and in much of Asia - there's a popular and positive image of New Zealand that is very valuable to  this country.'

Shane says that the same image has not been established in the Gulf states of the GCC (Gulf Co-operation Council) which includes Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and the Sultanate of Oman. ‘Our marketing material there concentrates much more on product, although this is also for cultural reasons. It's harder to use photographs of people - you can picture covered males but definitely not females. You can't show cones, which are seen as phallic, and we had to rename our Chocolate Ecstasy product as the name was thought to have drug connections. There are other significant differences too: for example, in Saudi Arabia we have to have segregated areas in the stores for men and women. But everybody loves the product.'

Unsurprisingly, Shane sees the most populous countries in the world as offering huge opportunities. ‘After just a year in China we have two master franchisees there and 32 stores open, with a lot more to come. India is also set for rapid growth - we could easily see 100 franchised stores open there in the next calendar year.' The company seems to have reached critical mass to be accepted as a global franchise, making the brand a desirable acquisition world-wide, and is currently negotiating with possible master franchisees in several other countries around the world.

But there's more to New Zealand Natural's success than the globalisation of its brand and franchise system. It has succeeded where many others have failed by exporting finished products, not just raw materials. ‘Our ice cream has always been produced in New Zealand, formerly in Christchurch and now at Emerald's factory in East Tamaki,' Shane says. ‘That is not without problems: some countries have significant trade barriers, and different countries have different regulations on things like shelf-life, for example. Labelling regulations are constantly changing and there are also different standards in each country. In the US, every lick of hokey-pokey is expected to have a piece of toffee in it.

‘Because of tarriff issues, we manufacture in Malaysia for Vietnam but we still use New Zealand ingredients. All our other markets receive New Zealand-manufactured product and since Emerald bought the brand everything  - product, research and development, creative and franchise management - has become Auckland-based.'

Food Miles

This brings up the emotive subject of food miles - the environmental cost of transporting ice cream around the world. With leading UK environmentalist George Monbiot declaring ‘it's obscene to import from New Zealand,' and various media campaigns pushing consumers to choose local produce rather than imported, what are the implications for a brand which relies so heavily upon the New Zealand connection?

‘New Zealand dairy producers are second to none in terms of efficiency, and that has to be promoted and recognised,' says Shane. ‘Our products are 100% sea-freighted, which is actually very efficient too. Certainly, our products are very environmentally-friendly when compared to the inefficient outputs of the highly-subsidised farming industries in many countries. For that reason, I think New Zealand dairy will actually get stronger as subsidies are reduced elsewhere. At the moment, it's actually hard for the dairy industry here to keep up with demand and droughts in the US and Australia are only increasing that pressure.

‘Having said that, there certainly is an emotive aspect to the food miles talk, and it needs to be addressed by New Zealand as a country altogether. Consumers will drive it at the end of the day and we have to ensure that they get real facts, not misinformation. None of our national master franchisees have even raised the subject with us so far but it's something we will be keeping an eye on.'

Horses For Courses

Apart from the marketing imagery, New Zealand Natural has adopted different approaches to franchising in different countries. In New Zealand and many parts of Australia, the company franchises direct to franchisees. In Western Australia and Victoria, state master franchisees have been appointed, while internationally national master franchisees operate in most countries. However, in China, where both areas and populations are huge, regional master franchisees are charged with developing and sub-franchising in their own provinces.

Meanwhile, in the United Kingdom where costs are high and sites often hard to secure, New Zealand Natural operates mini parlours within a chain of coffee shops. The shops in question are BB's Coffee and Muffins, another familiar name from Down Under.

Shane Lamont won't be drawn on whether he thinks New Zealand Natural would have achieved spectacular global success if it had not been for its long domicile in Australia. ‘Austrade were certainly helpful when the franchise started going international, and we were in Indonesia and Malaysia before New Zealand,' he comments. ‘I know that the Australian federal government and Queensland state government in particular are extremely helpful in finding export markets and seem to be taking a real interest in franchising. But we have a good relationship with New Zealand Trade & Enterprise and in Hong Kong, where rents are huge, we even have a flagship store in a NZTE-backed retail and business centre called New Zealand Focus.'

Shane believes that New Zealand Natural has a bright future not just as a global franchise but as a symbol for New Zealand throughout the world. ‘Our company image is all about escapism, freedom, adventure, vitality, energy, honesty and freshness - all solid New Zealand qualities,' he points out. ‘We back that up with premium quality products for people who are health and image conscious. It's about taking the best of New Zealand to the world. What we're finding is that the world likes what we're delivering - and they want more.'

This article was first published in Franchise New Zealand magazine Volume 16 Issue 1 

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