From the source: Alister Haigh, Haigh’s
BIO: Alister Haigh is the chief executive at Haigh’s Chocolates, Australia’s oldest family-owned chocolate maker, which celebrated its centenary in 2015. He is the fourth generation to work in the business and began cleaning floors and scrubbing pans, before eventually moving up. Alister became joint managing director with his brother in 1990 and in 1995, he became CEO.
COMPANY PROFILE: Haigh’s was established in 1915 by Alfred E Haigh. The company specialises in making premium quality chocolates from raw cocoa beans that are sold in its company-owned network of 15 retail stores and online.
IRW: Can you tell me about the new processing plant that’s under construction at Haigh’s? How will it benefit the business?
AH: It’s a new chocolate-making production line that will start processing from raw cocoa beans.
Basically, we’re running out of capacity, so we decided to increase the capacity and build a completely new line to set the company up for many decades to come. Roughly speaking, our capacity was 700 tonnes a year from the old line, but the new line will be triple that when it’s up and running. It’s still being put together as we speak and it should be done by Christmas.
Our production has always started from the raw cocoa bean, which differentiates us from most companies in the world, where they just buy the finished product for processing. We start from the raw bean and make the chocolate to our recipes.
IRW: How many stores do you have at the moment?
AH: We’ve got 15 – six here, six in Melbourne and three in Sydney – plus online. I’ve seen so many companies grow quickly and go broke. It’s better to grow slowly and profitably rather than to burn cash and just chase turnover. Having said that, we’ve ended up doubling in size every ten years – it’s not been slow growth.
Because we make our own products, the problem is that the more we open stores, the more production capacity we have to build, and so it just keeps chewing up capital. Our emphasis is on finding good sites that are profitable that continue to grow and pretty much all our stores, even our oldest store, has growth every year. So when we’re retaining growth within existing stores, there’s no need to open new stores. Of course, online is satisfying a lot of demand in areas where we don’t have a lot of stores.
We’re in the process of building a new shop on Elizabeth Street, which will set us up really well for the future in Melbourne. We hope that will be open by Christmas. It’s an old shop and requires demolition and quite extensive work, so it’s definitely probably our biggest investment in a retail site, probably since we redeveloped the historic Beehive Corner store in Adelaide – that was over a decade ago. We’ve got a nice landlord there who understands retailing and has given us very favourable terms to sign up for the long-term. We’ve got access to multi-levels there.
IRW: Do you see Haigh’s growing overseas in the future?
AH: We know our customers are overseas, but at the moment, we’re going through all the bureaucracy to export products overseas and be able to sell to countries online, so again, we’re dipping our toe in the water and we’ll go from there. Running stores overseas would be a big ask, so we see the future being online at this stage.
IRW: What’s the chocolate retail landscape like at the moment in Australia?
AH: We keep hearing about all these other chocolate cafes that are planning to open 50-60 stores and it doesn’t seem to happen. There is a significant growth in those, there’s always a new brand in that area popping up and I guess that’s because chocolate-loving customers are appreciating high quality chocolate. There’s room for everyone in that market.
The Australian market overall is fairly mature. I think we’re in the top 10 countries in the world as far as consumption per capita goes. We do consume a lot of chocolate and the emphasis is now on high quality chocolate and identifying the origins of the cocoa – you can even see it with big companies.
Not only is Australia a mature market, I would say chocolate customers’ tastes are maturing and they want something different, special and better quality than what they’ve had in the past. That suits us, because that’s where we pitch our products.
IRW: What’s it like taking a heritage brand like Haigh’s into the future and what are the challenges that go with that?
AH: Being fourth generation along with my brother Simon, I guess the challenge is not to stuff it up! Because we’ve built a reputation for high quality chocolates, we’ve just got to ensure that we meet those expectations of customers. And I guess as we grow and are very labour-intensive, it is a challenge to make sure that all those in the workforce appreciate that’s our goal and to not get complacent, thinking near enough is good enough.
Finding new sites that we think will be profitable is a challenge. There are plenty around, but most landlords don’t see their value in the same way as we do. People sometimes fall in the trap of chasing turnover and volume, regardless of whether a site is profitable or not and we just won’t do that. Sometimes the hardest thing to do is to say no. We’ve been doing that a lot.
IRW: Where would you like to see Haigh’s in the long-term future?
AH: Long-term, I’d like people to still think of Haigh’s as they do now – it’s something special, high quality and readily available, but not easily available, I guess. I’m sure there’ll be advances in online distribution that enable us to get products quicker to the customer than we can at the moment.
Down the track, it’d be nice to have a shop in every capital city if that’s viable. There’s plenty of scope for the next generation to concentrate on, as well as being freely available overseas. Initially, it will only be available in a few countries where demand is coming from emails and websites, but to be available worldwide would be nice.
IRW: What was it like when online retail was first introduced to Haigh’s three years ago and how did it impact the business?
AH: Obviously it involved a lot of management time to set it up and there were a lot of expenses to make sure the systems worked, while doing trial shipments using various logistic companies to find a good one. We took a lot longer to go online than some others in the industry, but by all reports, we got it right and we don’t have too many products that melt or go missing, which is our main aim.
Online has been good growth for us. In our first year, we got caught short a bit with the demand – normally you get around a five-fold increase in sales from a good week but at Christmas time and online, it’s a 10-fold increase. So it caught us a bit by surprise that first year, but we’re dealing with it now and there’s still good growth.
We expect online to be the equivalent of our good medium-sized stores in the near future and we talk about the possibility of it representing 10 per cent of all sales down the track, but it’s a long way off. That’s the ultimate goal once we get overseas up and running.
IRW: People have been talking about experiential retail a lot. What are your thoughts on that and how is Haigh’s responding to that? Do you see a cafe happening in the future?
AH: We do raise the issue every year, but it’s not our forte and we’ve got too many products to go in a cafe. We’d need such a big site and then we think a cafe would distract from our products and we don’t want that – we want to focus on our products. That’s our strength, so we don’t want to play in that.
As far as interactivity goes, we have the business centre on Greenhill Road in Adelaide, where visitors can come and push their faces up against the glass wall and watch the chocolate being made. It seems to satisfy a lot of people, we’ll grow that experience over time – that’s better than trying to replicate that in every store, paying high retail rents for a bit of theatre is an expensive way to go.
IRW: How did you enter the family business?
AH: It was in the very early school days that Dad said I was the oldest of the next generation and the expectation was I’d come into the business. When I left school, I spent six months jackarooing up north of Adelaide, and I was on a New Zealand horse stud for a year.
Then I came back, gave the factory a try and it went from there. It was in the mid-1970s when I made the conscious decision to stay with the chocolate and not go back on the farm.
I started on the bottom in the business. We didn’t have a formal apprenticeship but I was treated like an apprentice, so I spent the first few months cleaning floors, scrubbing pans and watching the confectioners, asking questions and learning how to make the chocolate.
Then I moved on from that to the office side of things. I started off with bookkeeping, then moved more to the retail store side of admin. Then our factory manager retired, so I moved back to the factory for awhile and then that grew, so I appointed a factory manager and moved into general management of running the stores and it went from there.
IRW: What was the chocolate retail landscape like when you entered the business?
AH: Vastly different. There were quite a few chains of chocolate shops, but not that many that were interstate like us. At that stage, we were in Melbourne as well as Adelaide and of course, there were no chocolate cafes, so there were very few high quality chocolate shops like ourselves. Of course, there was also the biggest chain, Darrell Lea, which no longer exists.
It was a very underdeveloped market in the high quality area, whereas now, all the cafes have jumped on the bandwagon and do chocolates as well as drinks. There has been a slight customer preference to dark chocolate, but I noticed in some figures around the world that milk chocolate still outweighs dark by far.
People are now interested in a higher cocoa content in chocolate, everyone now makes at least a 70 per cent cocoa chocolate and is more interested in single origin chocolate, where it’s made from one particular country or area. At the moment, I think we have single origin chocolate from Madagascar and Vanuatu.
I guess those people are the chocolate connoisseurs as opposed to those who just buy chocolate in bulk. But the average supermarket shopper who is buying Violet Crumbles for their kids doesn’t really worry about it.
You only need to look at the cooking shows on TV and see there’s a lot more interest in food to a select audience. More people should take an interest in where their food comes from.
IRW: What kind of impact do you think you’ve had on Haigh’s since you took over the reins?
AH: The company’s grown. Twenty years ago, we had eight stores, one factory and 60 people working for us. Now we’ve got 16 stores, 500 people working for us and we’re online so we can sell anywhere in Australia. It’s grown tremendously. I’ve learnt to hire well and we’ve got some great executives running the department and I guess that’s part of leadership – employing people better than yourself to fit the culture.