While Australia has a very public discussion about the future of manufacturing and anxious bricks and mortar retailers continue to bite their nails, one Adelaide manufacturer-retailer breezes on by, making business look easy.
“The most recent big jump was when we opened the first store in Sydney,” shouts the man wearing a white coat, white hairnet and matching white beard net. Well, he’s not really shouting at CityMag but exclaiming in order to be heard over the drone of century-old machinery churning away behind us.
Alister Haigh is a fourth-generation chocolatier and, here, in the company’s newly-expanded Mile End facility, he’s in his element. We’re in the guts of the operation where the raw cocoa beans, piled high in stacks of hessian sacks, are split open and poured into an old German machine with the date 1890 embossed on its side. This machine heats the cocoa bean to loosen and remove the husks before the cocoa nibs are sent onto the next stage of the process which ultimately results in one of the world’s most addictive and desirable substances: chocolate.
Haigh’s Chocolates is approaching $50 million in turnover and employs around 400 people. It owns and operates 14 stores nationally, but the move to Sydney in 2005 marked a point in the company’s history that effectively doubled their turnover and employment.
“That ended up being a lot bigger than expected,” says Alister, raising his eyebrows so they disappear beneath the elastic band of his hairnet. “Instead of a controlled growth that was a bit of an out-of-control growth for about 12 months or so.”
Alister tells CityMag that the company knew there was demand for their product in Sydney but he did not know they had “that much” demand. “It was just emails in those days,” says Alister explaining to us how the Sydney market had indicated their want of delicious Haigh’s chocolate. “I don’t think we had Facebook in 2005 did we?” He’s joking now with the company’s elegantly dressed but similarly white-coated-and-hairnetted communications manager, Kylie Turale.
The mention of Facebook by Alister – even as a joke – is particularly poignant – not because of the number of fans Haigh’s have (23,123 at time of writing), but because it demonstrates how different retail used to be and how different the internet was too.
Nine years on from that first Haigh’s Chocolates store in Sydney, and drastic changes are being felt throughout the world’s economy. We’ve been through (or, according to some – still are in the midst of) a global financial crisis that irrefutably proves we are operating in a single global economy. Websites and software like iTunes, PayPal and Square, rather than banks, are processing more and more financial transactions and making the act of buying and selling more convenient than ever before.
It’s fair to say that when Haigh’s Chocolates decided to set up shop in The Strand Arcade in downtown Sydney ‘s George Street they were not planning a range of delectable chocolate downloads. Instead they were following a simple (albeit strict) formula that they’ve stuck to since Alfred E. Haigh opened the company’s first store on King William Street, Adelaide in 1915.
“We don’t wholesale our chocolates for someone else to run it in a concession,” says Alister – explaining that Haigh’s product is only sold in Haigh’s stores. When asked why it has been the company’s approach to manufacture as well as retail their product, Alister takes a moment.
“We want, not exclusivity but, we make boutique chocolates…” he says. The company’s communication manager Kylie chimes in while Alister pauses, “It’s all about the Haigh’s experience,” she says. “It’s not just putting the effort into making the chocolate but it’s servicing the customer a certain way. They know what to expect when they come to see us.”
And, if you’ve ever walked into a Haigh’s store, you know exactly what Kylie and Alister are talking about.
Everything you see and touch upon entering the store speaks to the quality of the chocolate held inside the box; it’s wood not aluminium, it’s glass not plastic, and it’s white-cotton-gloved humans delicately placing your purchase into a paper bag at the cash register.
These materials and their combination though are not as fascinating as the fact they seem so far removed from where CityMag currently stands, in a concrete-floored and tin-encased factory in the middle of a large industrial area to the west of the city. Haigh’s is one manufacturer that continues to increase profit, turnover, employment and product offerings even 100 years on from establishment and that is something worthy of a closer look.
Late last year, Holden chief Mike Devereux delivered devastating news to South Australia and the company’s employees at Elizabeth. Holden’s parent company, General Motors (GM) had decided it would close its manufacturing plants in Australia by 2017 and eliminate close to 3,000 jobs. “The bottom line for General Motors,” said Mr Devereux, “is that building cars in this country is just not sustainable.”
A definitive statement, obviously self-exonerating for GM, Devereux’s words reverberated around the nation. Beyond cars, Devereux seemed to be issuing a wake-up call for our little island nation, so far removed from Europe and the US and so disengaged from Asia. These words weren’t just about manufacturing, but also allude to the powers of Facebook, iTunes and PayPal.Devereux was talking about the modern, border-less consumer.
Apple – the creator of the iPhone and iTunes – is busily opening up shopfronts the world over. Why would the world’s pre-eminent designer of digital devices invest in a bricks and mortar business? Because it’s something the internet can never do. And done right, a store-front will win you more fans and followers than all the social media accounts and digital strategies put together.
Nespresso is another brand that continues to have customers lining up in the store and out the door. Looking at their shop design and service model CityMag wonders whether this newcomer to the retail scene hasn’t borrowed a few ideas from Haigh’s – the humble Adelaide chocolatier.
“Um,” Alister begins, looking away and shuffling his feet. “I don’t know. It would be nice to think that wouldn’t it? I guess so,” he says. Alister goes on to tell us that he, personally, is a customer of Nespresso and loves the different flavours and product innovations they continue to come out with. To his understanding however, the company was originally mail-order heavy until they “pinched” the Haigh’s manager in Sydney to run Nespresso’s first store.
“That was their first concept store (in Australia) really,” he continues. “Now they’ve rolled it out in Melbourne and pinched our Toorak manager from Melbourne… so, obviously they think we must be doing something right.”
More than just “right”: Haigh’s is spot on.
While Devereux decries manufacturing in Australia amid slumping Holden retail figures, the Hyundai Motor Company posted its best sales year since establishing in Australia 27 years ago. Admittedly, Hyundai doesn’t manufacture cars here — they’re designed and built in Seoul, South Korea — but CityMag doesn’t believe for a second that the growth and appeal of their brand in Australia is because of that fact.
Hyundai is a success here and around the world because its business model is much closer to the example of Haigh’s than of Holden. “Modern premium” is a concept Hyundai Motor is currently investing heavily in, and it reads like a recipe from the Haigh’s kitchen. In a recent interview with Monocle magazine, chief marketing officer for Hyundai Motor, Wonhong Cho, explained the concept of modern premium as relating to affordability and experience.
“It’s the premium value that modern consumers expect at a reasonable price,” he said.
“Another aspect is that modern premium is about the total consumer experience, not just the product itself. That’s the big difference between modern premium and typical luxury.”
What the above quote doesn’t tell you is of the vast sums and considerable effort the carmaker has gone to in creating “modern premium” experiences for customers in their themed dealerships. In Yeouido, a district in the South Korean capital of Seoul, the dealership’s interior fit-out takes inspiration from European outdoor cafés, and across in Seocho district, the dealer contains an elegant flower shop. Other dealerships have art galleries, golf clinics and childcare staff and play equipment for toddlers, so Mum and Dad can take the new ix35 out and properly put it through its paces.
It pays to look globally at these kind of strategies. After all, looking and travelling globally is exactly why Haigh’s is still here today.
In 1946 Alfred E. Haigh’s grandson John joined the company with ambitions to make world-class chocolate. He first travelled to Europe and trained in Switzerland with Lindt and Sprungli, and went on after that to tour the US and see how they were producing, packaging and retailing chocolate there. John is credited with revolutionising the way the company manufactured as well as sold its chocolate.
“When Dad came back from Switzerland we had probably 30 theatre concessions,” says Alister, explaining that back then the company was selling the bulk of its product through vendors at movie theatres around Adelaide. Alister recounts how the 1960s came and with it, television. Television of course had a drastic affect on movie theatres, many of which simply closed.
“We had to find alternatives, so we expanded our shops and that’s when my father and grand-father decided to expand into Melbourne. If it wasn’t for television we may never have gotten to Melbourne,” says Alister.
From the moment John Haigh took the reins in 1959, the chocolatier moved to differentiate itself in the market. When people are eating chocolates in the dark of a movie theatre, packaging and branding are hardly a factor but, out in the sun on the city’s main streets,design was seen by John Haigh as a way to boost sales.
The stately Haigh’s crest which now sits on every wrapper and box looks like it was taken from some original insignia that adorned the first Haigh’s Chocolates store. Rather, the crest was invented in the ’60s by John. “I guess it was Dad who decided to do this,” says Alister when asked about the importance of the Haigh’s aesthetic. “It’s evolved from that until our brand manager has now taken it pretty well across the whole range. Before we used to have different logos for different categories of chocolate and he’s standardised all that.”
There’s room for growth in the affordable luxury market. Examples like Haigh’s Chocolates and Nespresso show that shopfronts aren’t dead and that people still love to buy themselves a treat and indulge in a little retail therapy.
Based on South Australia’s position, climate and affordability, manufacturing stands a good chance in this state if the product and price point are right. While “Made in Adelaide” might not mean much to the world, a perfect product will always excite customers.
Indeed it is a brand that can be found in absolutely every facet of the Haigh’s Chocolates business. Yes, the logo is worn on the white shirts of factory workers just as it’s printed on every box and sticker in every store. But the company’s success isn’t due to something as simplistic as a lovely logo.
The Haigh’s brand and its continuing success is because they take pride and have patience in what they do. Their brand is more than pretty packaging or polished shops. Their brand is the time they take to conche and make the chocolate. Their brand is the care they take to select ethical ingredients. Their brand is in the cocoa sourced direct from Ghana, Papua New Guinea and Peru. It’s that great droning beast of a machine from Germany that roasts the beans and separates the husks. It’s the awfully bitter pure cocoa liquor that they thankfully add sugar to and turn into powder, which is finally squashed into chocolate that is decorated, boxed carefully by hand and shipped to each store.
The Haigh’s secret to success is in that cheerful little truffle, sitting in a row lined-up with the others on a crystal clear counter waiting – waiting for you to discover just how delicious a little luxury can be.