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Bon Bon Buddies sizes up Asia after hitting record sales

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Douglas Yu

By Douglas Yu+

25-Jan-2017
Last updated on 25-Jan-2017 at 13:04 GMT2017-01-25T13:04:24Z

Bon Bon Buddies is one of the largest confectioners that focus on licensing business in Europe.  Photo: Bon Bon Buddies
Bon Bon Buddies is one of the largest confectioners that focus on licensing business in Europe. Photo: Bon Bon Buddies

UK confectioner Bon Bon Buddies plans to expand its footprint in Asia after reporting a “record-breaking” financial year.

During the 2015 to 2016 period, Bon Bon Buddies experienced a 13% increase in turnover to £44.4m ($55m) and a 125% increase in profit before taxation to £2.04m ($2.5m).

The company also achieved its five-year goal of making year-round sales (as opposed to seasonal sales) account for 60% of the business revenue.

Bon Bon Buddies said in a statement that the results followed a new distribution model implemented in the Nordics and Germany, which generated a 12% sales increase in its European market. The UK alone also saw a 13% sales increase.

Why implement a different business model in the Nordics and Germany?

Managing director at Bon Bon Buddies, Justin Thomas, said the company’s business plan for was to appoint its own people and build the business from scratch, which worked very well in both the UK and France.

“We came to accept that the one-size-fits-all approach doesn’t work for all market,” he said. “In other markets, such as the Nordics and Germany, a distribution partner proved the most successful option.”

“We implemented this model simply because our current one was not working. We are not afraid of change or the need to make big decisions quickly to fix things that aren’t quite right.”

Even though finding distribution partners is key to success when venturing into new markets, Thomas added, finding the right ones who share a similar outlook and values is a challenge.

“It’s equally important to match up the partner with the right people internally. As an executive team, we take the time to ensure we have the right general managers managing the right partners,” he said.

Turning China, the ‘graveyard,’ into opportunity

Bon Bon Buddies said, during the same financial year, it opened its first Asia office in Hong Kong, opening the door to the Chinese market for the first time. This new budding market, the company added, has contributed to a “substantial boost in rest-of-the-world sales by 165%.”

But the licensing candy business has had long-term supply partnerships in China stretching back over 20 years, Thomas mentioned. Licensing accounts for 80% of Bon Bon Buddies' global business. 

Managing director at Bon Bon Buddies, Justin Thomas

“Asia currently represents a single digit percentage of the total Bon Bon Buddies business, but we expect this to rise to around one quarter within five years.”

“At present, we are more focused on physical store distribution but, in the coming year, we will be putting together a full e-commerce plan. This will be particularly important for our China business.”

“While the [Chinese] market has proved a graveyard for many businesses, we see it as a further opportunity to develop and entrench existing relationships whether they be with licensors, distributors or on the supply side,” he said.

Currently in the second year of its five-year plan, Bon Bon Buddies has expressed satisfaction with the size and scale of the opportunity the Chinese market presents.

“As a business, we learn and adapt very quickly, so our ability to absorb cultural nuances into our new product development process came naturally,” Thomas added.

“We are about to launch a China-specific range of products post Chinese New Year (Jan. 28, 2017), which is a clear demonstration of our flexibility and ability to learn en route.”

What can China offer while it is dominated by confectionery giants?

Although Asia only accounts for a single-digit percentage of the Bon Bon Buddies’ overall business, the firm said it has a “growing business” in some South East Asian countries, such as the Philippines.

“And China provides us with the platform needed for us to tap into untouched markets,” Thomas said.

“At present, we’re more focused on physical store distribution, but in the coming year, we’ll be putting together a full e-commerce plan. This will be particularly important for our China business.”

Major confectionery giants in the world, such as Mondelēz , Mars and Nestlé , have tapped the booming e-commerce space in China. They subsequently opened their online retail stores on the biggest domestic e-commerce channel, Alibaba, this site previously reported.

On top of that, market analysts have also pointed out around 70% of China’s chocolate market is dominated by big western players, making it difficult for local brands and other international brands to enter.

But there are exceptions. For example, Sweden-headquartered confectioner Cloetta, which Bon Bon Buddies helped produce its Chewits Easter egg under a two-year licensing deal last year, has just launched a “test-and-learn” store on Alibaba’s Tmall Global earlier this month.

Similar to Bon Bon Buddies, Asia also represents around 1% of Cloetta’s overall sales.

Asked if Bon Bon Buddies is pressured by the competition from other major confectionery companies in China, Thomas said Mondelēz and Mars have been doing a fantastic job.

“There is no intention of competing like-for-like on space or product type with either. Our business is about innovation in our own space, which we hope to bring in abundance to the Chinese market.”

Bon Bon Buddies expects Asia to rise to around one quarter of its overall business within five years.

Growing against Brexit

Thomas said Bon Bon Buddies has always taken a step-by-step approach to developing new international markets, and it has a “healthy relationship” with all of its international licensors, suppliers and distributors.

“This is testament to the success we’ve experienced over the last year,” he added. “We’re confident that this will continue after the UK’s departure from the EU.”

In 2017, Bon Bon Buddies expects to stay focused on its five-year plan, while responding to new opportunities. It also hopes to achieve 15% top-line growth in the next financial year.

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