“Look, in the last 12 months, there won’t be nothing we don’t touch and improve with efficiencies in manufacturing,” said Klark Quinn, the 30-year-old in charge of overhauling the iconic confectionary maker Darrell Lea and making it profitable again.
Quinn, the son of VIP Petfoods owners Tony and Christina (whose fortune BRW this year estimated at $350 million), is no stranger to getting his hands dirty and to turning a factory’s operations around.
At the time of writing, Darrell Lea has just started to be stocked on the shelves of selected IGA supermarkets, and the Quinns are trying to get DL into Coles and Woolies, too. Are deals with other supermarket chains just waiting to be inked?
“Pretty much; first thing of all we set up meetings with all Australian retailers and we’re pretty open and public with the future of Darrell Lea,” said Quinn when Manufacturers’ Monthly visited the Kogarah plant, which opened in 1962, in Sydney’s south.
“The need for Darrell Lea from the Australian public – the prime minister talking about it on national TV [when it went into administration in July], the amount of media attention, proves how iconic and strong the Darrell Lea brand is. So we need to capitalise on that.”
When the 85-years-old, fourth-generation family-owned Lea – famous for products like its soft eating liquorice and Rocklea Road bars – announced its collapse in July, everyone from prime minster Julia Gillard to septuagenarians who had grown up with the brand were disappointed. Comments on another Australian icon gone and the sad end of an era – and more headlines involving a pun on “rocky road” than you could possibly count – were hard to miss. Sales of their products all shot up as consumers flocked to the closing retail outlets to stock up in what they thought was their last chance to do so.
Saving an Aussie brand
But in early December, DL found a buyer: the Quinn family, who stumped up an undisclosed sum (estimated at $25 million) to rescue the brand and its manufacturing operations. Not surprisingly, there was a lot that needed changing and will require further changes.
First of all, getting Lea into the supermarkets is a big step. Refusing to be a supermarket brand but not quite positioning itself as a premium confectioner (like Haigh’s, for example) meant Lea limited itself.
“Yeah, tradition killed them to some extent,” explained Quinn.
Further than that, there was a mountain of improvements that needed to be made to the way Darrell Lea cranked out its sweets.
“It was very fat and inefficient before, so we need to make it into a lean manufacturing process. With a mind to looking after the brand and not compromising the quality or upsetting any of the loyal Darrell Lea customers.”
What to keep?
When we spoke to Quinn last week, it was early days in the company’s revamp. He says they’ve only retained 186 out of 700 products, with many performing poorly and some, for example boiled lollies, being produced at a considerable loss. Despite the aggressive shedding of loss-making product lines, he’s moving cautiously in other ways.
“You can’t build Rome in a day, and you can’t make too many changes,” he explained. “You have to be mindful as well, that a lot of people have been here for over 40 years, and an exceptional amount of people have been here for 30 years, so people are part of the furniture, and if you start changing the furniture too quick, you’re going to upset a lot of people.
“But at the same time we have purchased machinery and equipment. And as soon as last week we started setting new equipment to help product efficiencies… So in the next six months we’re planning to touch 50 per cent of all production lines and improve them by 20 per cent. So that’s already happening. We don’t want to make too many quick decisions, too early.”
Also part of the rationalisation process was doing away with anything that wasn’t completely Australian-made. Quinn gave the example of Bo-Peeps. Despite their sentimental value with some, the foreign-made sweets aren’t part of the new Lea.
“And the way they’re produced and having them produced overseas is not part of our vision. So firstly, to keep them Australian-owned and Australian-manufactured is our number one priority.”
Quinn, who begins his day at 7 am and who often retires to his bachelor loft (the ironically-named “Penthouse”) around midnight, is currently spending as much time as he can, involving himself in all the aspects of the factory’s operations. “It’s extremely important that I understand every facet of the business.”
The general manager considers his experience in 2009, when VIP bought Bush’s International (now Australian Pet Brands) for $45 million, a valuable lesson. The family placed Klark at Bush’s Dubbo factory and brother Kent (at the Ingleburn site) in charge of reviving the troubled manufacturer.
“Being on the floor certainly helped and straight away we gained a lot of respect from the employees on the floor, and that helped change the business,” he stated.
“With that culture change, getting people to trust and respect you goes a long way. And that’s really important in any takeover of a business; you need to very quickly gain the respect and trust from the employees. And that, just by our natural demeanour that the family has; we’ve all worked on the floor, we all know what it takes to pack product into a box and drive a forklift and run a machine – we’ve all done this before – so we have a very healthy respect for what it takes to do that.”
After throwing himself into Bush’s, the Quinn brothers managed to stem the bleeding (the company was losing $400,000 a week, says Klark after five months. Within a year, it was turning a tidy profit again.
The Quinns now plan to relocate the factory’s operations. The factory, which currently sees 160 tonnes of liquorice (and is the largest liquorice producer in Australia) and 20 tonnes of chocolate produced each week, on a site with a 5,000 pallet storage capacity, won’t be doing what it does now in 18-24 months.
“Part of our sale and purchase agreement was to purchase the Darrell Lea site at Ingleburn, which it previously planned to relocate many, many years ago, but they had had the opportunity to.
“So we’ve got about a 7,000 pallet controlled environment warehouse on a 40,000 square metre block of land. We plan to build a world-class facility. And that will be a far more efficient and ergonomic plant.”
For the time being, Quinn will continue learning about the Kogarah site. He admits his current schedule is unhealthy but necessary for getting the job done properly. And for the time being, chocolate lovers should keep an eye out for Darrell Lea on supermarket shelves when they’re shopping for Christmas supplies.