Creating a global yoghurt culture
The Collective has always had great tasting natural yoghurt at its heart. Within a year of launching in New Zealand, the business was a huge success story, and the founders began looking for expansion opportunities. Today The Collective yoghurt range can be found in New Zealand, Australia, and the UK. Kea spoke to offshore Kiwi Sarah Smart who runs the UK and Europe operation to talk about what the company has learnt along the way, how they are applying that advice to the current challenges they are facing and what her advice would be to other Kiwi companies eying an entry into the UK/Europe market.
The Collective was founded by two chefs on a mission to bring great tasting natural yoghurt to the New Zealand market. The company has a strong history of innovation and when it launched in 2009, Sarah says their gourmet yoghurt offering was quite different to anything on shelves at the time.
“Back then most yoghurt was more like goop in a tub. The market was dominated by big players and there wasn’t a lot of real natural yoghurt on offer. Our founders saw an opportunity to bring something different to Kiwis and within a year we had carved out a space for ourselves as the New Zealand premium yoghurt category pioneers.”
After their success at home, The Collective began looking at expansion opportunities and saw the UK as a natural next step. But while there are a lot of similarities between the two markets, they quickly learnt that it’s not as simple as a lift and shift.
“One of the biggest things we have learnt is that the UK is the same, same but different. Some things you can replicate. For example our suckies. We launched our kids’ pouches in New Zealand and they were basically an overnight success, we were selling the equivalent of 10 million dollars of annualised retail sales within a matter of months. We were able to replicate that success in the UK because we took something innovative that we had tried and tested in New Zealand. But it doesn’t always work like that. For example, our split pots which we have just released in New Zealand, where you have yoghurt on one side and a topping on the other, are very innovative because there is nothing similar on the market at home but here in the UK there is already a developed split pots market dominated by Müller Corners, so we can’t expect the same overnight success. Another example is our dairy free yoghurt pouches for kids that we have recently launched in the UK and are a really strong seller for us but we don’t believe are quite right for our New Zealand market yet.”
Along with what products do and don’t work, Sarah says The Collective has also learnt a lot about market entry and when and how to cut your losses.
“We’ve tried to enter France twice. The first time could have gone better and there were a lot of learnings. Our second entry into the market went beautifully. We had an amazing distributor partner and got listings across the top 11 grocers nationwide. But then we were hit with the double whammy of Brexit and Covid. And all of a sudden we couldn’t follow our playbook, we couldn’t have people on the ground, running samplings and tasting and we had all this extra paperwork because the UK was no longer part of the EU, it was a nightmare, but because of our earlier experience we were better prepared. We went to retailers and were upfront. We said we are going to exit but we will be back to talk to you later and we gave them time so that the removal of products worked for both of us and we were able to protect those relationships.”
Today The Collective has almost 20% of the yoghurt market share in New Zealand and around 17% of the premium yoghurt market share in the UK. A lot of their success has come from their strong ethos of innovation, but Sarah wants other businesses to realise that their hits haven’t come without a few misses along the way.
“We are founded by chefs and chefs love innovation. We have had some crazy ideas along the way – we once launched a dip that was really delicious but it was so thick you couldn’t put a chip in it, and no one is buying dip you need to eat with a spoon. We have also had products like breakfast pouches and smoothies which haven’t lasted in the market for long and were likely ahead of their time, but I think as long as you keep learning from what works and what doesn’t then it’s all valuable experience.
It’s that lived and learned experience which Sarah says is important to draw upon when you face challenges. Sarah worked for Innocent Drinks in the UK during the 2008 GFC and says drawing on past experience and having upfront conversations with your team and customers is what will help businesses ride out the current climate.
“I am lucky enough to be able to spend a lot of time with very senior people in the industry. We had the CEO of Waitrose, James Bailey in our office the other day, which is amazing for such a small player. He engaged with us for an hour and a half, and ate yoghurt and talked about our strategies. Everyone is saying the same whether it’s Waitrose or Tesco, none of them know, and no one has a crystal ball, but everyone is saying the next year or so is going to be really really tough. Very early on we got our board signed up to the fact that to navigate this, we need to continue to invest behind our premium brand positioning and stay true to that and to do that we are going to need cash. The team has got this mentality of, yes, every week there’s going to be new news but we know our strategy, we know the direction we’re going, we’re not going to pivot from that. However, week to week the tactics we use may change.”
Despite the challenges, the global climate presents Sarah says Kiwi businesses looking to enter the market shouldn’t be put off by this and there are still plenty of opportunities for companies which are in the right position to grab them.
“Don’t be scared off because this current climate is not going to last forever. It’s going to be tough, but there’s going to be opportunities for businesses as well. I think the one thing that New Zealand brands and businesses can bring is that agility and that number eight wire approach. To be able to think creatively around this. Business processes and structures which are not performing well in the current market are those which are struggling to adapt. So I actually think that there’s an opportunity for New Zealand businesses, but just don’t underestimate the amount of investment that is needed and make sure you have a solid base to cushion any losses.”
Despite the challenges on the horizon, Sarah says she’s excited about the year ahead and the possibilities for the future. There are several other markets she has her eye on but her focus is on getting the UK market into good shape before expanding further. One thing is certain though – there is still a lot more to come for this Kiwi yoghurt company making waves around the world.