China spells global success for Zed

Friday, 27 February 2009

At ISM 2009, Suzanne Callander caught up with two irish entrepreneurs, who started producing bubblegum products late in the 1990’s under the Zed Gum brand, and finds out how their go-getting attitude has brought them huge success – right across the globe... In 2002 Kennedy’s Confection interviewed a pair of Irish entrepreneurs who had set up a confectionery company site near Dublin in Ireland. Determined to turn the tables on the multinationals, who at the time, were buying up small companies at an alarming rate, Zed Candy was founded by Donal Kavanagh and Brendan Roantree. Both of the company founders already had many years of experience between them in the confectionery industry and they finally made the decision to become masters of their own destiny. As a result, Zed Candy was born in 1998. Initially the company was called Zed Gum and it produced a variety of novelty ball and bubblegum products. By 2002 the company was already beating the big players at their own game. Two years after the company was formed it took over its bigger rival in the Irish market – Leaf – and moved the Zed Gum production facilities onto the Leaf site in Kilcock, county Kildare. At this point the company changed its name to Zed Candy. The company raised funds for the acquisition through a mixture of venture capital, loans and director equity. It also benefited hugely from a boom in property prices in Dublin since it built it first facility on a green-field site here. Selling the original Zed factory in Dublin and moving production into the Leaf facility hugely benefited the company finances too – a move which was successfully repeated when the company later moved production to China and sold the Kilcock site at a profit too! Today, all loans and investors have been paid off. When I met up with the Donal and Brendan, at ISM 2009 recently, I was interested to find out how this pair of innovative thinkers were getting on in today’s more difficult market. I was pleased to see that they have not only survived, but have positively thrived. They have opened a new, purpose-built production facility in China and have moved much of the Zed Candy production to this site. The road to success Looking at the twists and turns taken by the company since Kennedy’s last sat down with them, I found out that the company acquired a traditional boiled sweet company, Tilley’s Sweets in 2002, and followed this with the acquisition of Oatfield Confectionery, an Irish-based producer of traditional toffees, in 2007. The dynamic-duo also acquired the Fizz Bomb brand from Penguin Confectionery, and purchased several businesses and a factory in China, with a view to amalgamating its Chinese business and moving Zed candy production to the region, to offer it a gateway into new market areas. The middle east, Phillipines, Japan and the elusive Chinese domestic market are some of the regions it now supplies, thanks to its bold decision to move production to China. “Many people said that we were mad,” Donal told me. “But we were confident that it was the right move for us and, happily, we have been proved right!” Marketing is key Zed Candy are the makers of jawbreakers (hard candy with a gum centre) as well as a huge variety of bubblegums, pressed dextrose and jelly beans – designed specifically to appeal to children – with favourites such as snot shots, gum powder and terror eyes to name but a few! Commenting on the company’s marketing strategy for these products Donal said. “With so many confectionery brands vying for consumer attention, it is important to focus on what the consumer wants. With our target market – children aged between 7 and 12 – it appears to be that the more novel a product is, the more likely they are to want it. We have taken this principal on-board in a big way with our Zed Candy products! We are also always looking for new and exciting flavours and innovative product ideas to thrill our consumers and keep them coming back for more.” Brand building is also important to the company and is seen as vital to its success. Packaging graphics across the Zed range are animated, lively, colourful and fun – designed to grab the consumers attention – and all Zed products are very distinctively ‘Zed’. There is, however, also a serious side to the Zed portfolio. The Oatfield range consists of traditional irish toffees and boiled sweets and Tilley’s, which is based in England, offers a variety of traditional british favourites such as aniseed twist, rhubarb & custard and pear drops. Talking about production of these sweets, Donal said: “We believe it is very important that traditional products such as these should remain true to their origins.” A world-class facility The opening ceremony for the new Dong Guan chinese facility took place in October 2008, signalling to the confectionery industry that this purpose-built, world-class facility was really up and running and working efficiently. Today, the facility is being run by a mixed international management team which ensures a culturally harmonised and efficient environment for the employees, many of whom were employed by the company at one of its original confectionery factories in the region, so the workforce already have a wealth of experience and knowledge of confectionery production. The impressive Dong Guan site includes facilities to house employees on site and also caters for the dietary and entertainment needs of the workforce – with an on-site canteen, swimming pool and basketball court too. To ensure that 24-hour production at the site can be maintained on a continuous basis, the facility is also able to work independently of the local power supplies and is immune to any local extreme weather conditions, thanks to the high-tech air-conditioning system. “The Zed facility is the only one in the region to boast conditions which can be maintained to such finite levels,” said Donal. Production at the facility is always undertaken within a strictly temperature and humidity controlled environment and it features epoxy floors throughout. It also employs state-of-the-art, automated processing and packaging equipment wherever possible, as well as a sophisticated kitchen and gumbase production facilities and fully computerised and automated coating systems. All-in-all Zed certainly appears to be building for the future with its huge investment in both time and money at this facility. With all of the Zed Candy product range now being produced under one roof, in the 120,000 sq ft Dong Guan facility, the company is now able to develop products faster and is able to bring its quirky and innovative ideas to life more quickly as all production equipment is immediately available to the research and development teams. The company produces its own gumbase, and pressed dextrose and jellies production take place in the same dedicated facility. Indeed, Donal told me that 200 tonnes of candy are now being produced at the facility every week – that is a whole lot of Jawbreakers and gum! Votes of confidence By happy coincidence, just as Donal was telling me about the importance of ensuring high standards of hygiene and quality at the new facility a third-party was able to verify his cleanliness claims. Mohamed Sharief Gaibie, chief executive officer at Capital Tobacco & Distribution, a South African-based distributor of Zed Candy products, stopped by to say hello. Mohamed had attended the official opening ceremony and had toured the site, so I took the opportunity to get his opinion of Zed’s new production facilities. I was surprised by his enthusiastic reply. Completely unprompted by Donal or Brendan he told me that, initially he had reservations when he was told about Zed’s move to China. He said: “I was fortunate enough to be a guest at the opening ceremony and I got the chance to take a good look around the facility. I admit that I arrived with pre-conceived ideas about production in China. However, I was totally wrong, and I am happy to admit that! Indeed, having seen the production facilities, I would be happy to let my children eat food off the floor there! I left with a sense of awe at the standards that these guys have managed to achieve, and I think that many world class players could learn a thing or two from Zed. I am very happy, and indeed proud, to represent the brand in South Africa.” As if this was not praise enough, before he left the ISM stand Mohamed had more to say. “Really, the facility is nothing short of a miracle and I truly believe that Zed gives new meaning to the word innovation!” Another customer of Zed Candy happened by the stand while I was talking to Donal. Gerrit van Rijsewijk, international controller at Star Sweets in Holland. He told me how refreshing it is to see such passion and optimism, especially in such challenging times. “My technicians have visited the new facility in China and came back enthusing about how fantastic these facilities really are. They believe it to be one of the most modern and efficient facilities that they have seen in the region,” he said. Meeting BRC requirements Donal continued on the subject of hygiene at the Dong Guan plant and was keen to point out that essentially, it is a western factory...that just happens to be based in China! “We are expecting to get BRC quality accreditation for the new facility very soon,” he said. Indeed, the factory is already operating to BRC requirements. The existing Oatfield and Tilley’s sites in Ireland and England already posses BRC grade A accreditations, so Donal does not believe there will be a problem in gaining it for the new site too. “It is an important step for us,” he told me. “BRC accreditation gives our customers the confidence that, wherever in the world the product is made, it will still meet the highest possible quality standards.” No time to rest! Today, Zed Candy is the number one novelty gum brand in France and Norway, is number two in the UK and South Africa and is comfortably in the top five in most other countries. In the bulk vending market it is the number one novelty gum brand right across Europe. The current successes being experienced by this quintessentially entrepreneurial pair does not seem to have quenched their thirst for success. Not content to rest on their laurels, Donal and Brendan are still very acquisitive and are keeping their eyes open for further opportunities. “We are looking to double our turnover within the next three years through whatever means necessary, from a base of 50 million US dollars ex-factory,” said Donal. Donal and Brendan have also found time to oversee a complete redesign of the Oatfield packaging design and branding and even had new products on display at their ISM stand. Most notable on the stand was the new Zed Mammouth Super Sucker, a frighteningly large hard candy with gum and a powder centre. Donal has been more than pleased with the reaction of buyers to this recent launch. “They are flying off the shelves,” he told me. So, what’s next, I asked Donal before I left him. “I am off to Dallas in a few weeks to ‘speed-date’ with buyers at the ECRM show, and we will be back in the US again in May when we will be visiting the All Candy Expo in Chicago,” he said. “We now truly feel that we are global-players, selling in 45 countries worldwide...We have come a long way since we last spoke to Kennedy’s Confection.” True words indeed! I was certainly impressed at the positive attitudes of both Donal and Brendan. They both displayed real passion and a desire to keep their already successful company moving forward at a rapid pace... They did not seem at all worried by the current global economical problems and I am certain that Kennedy’s Confection will be reporting again soon on further successes from these international players in the confectionery world. www.zed.com

 

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