3. Respond to industry trends
Darrell Lea has built its brand on nostalgia, but Sivasailam says it should have still responded to industry trends.
He points to Haigh’s as a competitor which trades on its long history while still remaining relevant.
“It does seem, given Darrell Lea’s position as an old nostalgic chocolate with things like Rocklea Road, that they have perhaps had their time,” he says.
“The trend towards things like fair trade and organic chocolate has been a huge hit with consumers, and there was $110 million in sales in the last year in fair trade chocolate.
“Haigh’s has transformed much of its range to fair trade and organic. Their ability to be more proactive towards change in the market has certainly helped them.”
4. Address declining sales
While Australians eat an average of seven kilos a year of chocolate, Walker warns that chocolate consumption at best is 1% or 2% projected growth, “so clearly it is a sector in decline”.
“People are far more health conscious now and more aware of their bodies, so we are less likely to buy and give chocolates as we once did,” he says.
Walker says in an economic downturn people often “trade down” to cheaper gifts like chocolates and costume jewellery, but this does not appear to be the case at the moment.
“People aren’t consuming at the level they [Darrell Lea] required and it is a tired looking brand ultimately and you get a recipe for failure,” he says.
5. Keep up with the competition
Suzie Wharton, founder of Chocoholic Tours, has been leading chocolate tours in Melbourne since 1995 and told SmartCompany she had seen a lot of change in the industry in that time.
Wharton believes Darrell Lea failed to keep up with the increasing competition from premium chocolatiers like Max Brenner, Cacao, Koko Black, Ganache and Lindt.
“What has happened is Darrell Lea used to dominate our chocolate world for quite a while, but over the years more people are looking at different chocolates and being more adventurous and trying different things,” says Wharton.
“More people are experimenting with the taste of chocolate. The diversity nowadays is interesting and a lot of people are using really good quality base chocolates to make their chocolate.”
Wharton compared Darrell Lea’s purely store offering with that of Lindt, which has expanded into Lindt cafes to heighten the experience of buying chocolate.
“What Lindt has done is quite interesting. They have been going since the 1840s but have started importing more chocolates here and setting up cafes,” she says.
“More chocolate is being imported into Australia and so there is more diversity in what is available,” she says.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
