One-on-One with pladis CEO Cem Karakas
Global synergies, speed to market propel sales for year-old company.
pladis is a London-based global biscuit and confectionery company founded in 2016, which brings together Yildiz Holding’s iconic brands Godiva, McVitie’s and Ulker under one umbrella. Candy Industry chats with its new ceo, Cem Karakas, about goals and strategies.
CI: Earlier this year, you outlined pladis’ strategy for becoming the fastest growing leader in the industry, doubling chocolate sales and increasing biscuits by 50 percent in a few years. In general, the strategy focused on “creating high quality synergy products, expanding its iconic brands in new growth geographies and investing in excellence across R&D and talent.” You cited China as one growth area for Godiva products. What’s propelling your success in China, which some see as a less than robust economy?
Karakas: We’re seeing increased demand for our products in the Asia-Pacific region. China is our next growth target in both the biscuit and chocolate categories — it’s the fourth largest biscuit market and eight largest chocolate market in the world.
For pladis, China is a long-term business strategy with significant growth potential. Godiva is the top-selling premium chocolate in China and contributed $60 million to Yildiz Holding’s $100 million sales in 2016 (our parent company). We expect our Godiva business in China to grow to be an approximately $350-400 million business in four years.
In response to growing demand and changing shopper behavior in China, Godiva will open 50 new boutiques this year, adding to its already existing 107 stores. The Godiva chocolate boutiques, especially in the Middle East, China and Japan, offer consumers a luxury and bespoke experience, with product sampling, seating areas, personalized options, and a range of delicious products, such as ice creams, cakes and chocolate drinks. As well as this, to make Godiva’s luxury chocolate more accessible to Chinese consumers, pladis will roll-out the new Godiva Masterpieces range in selected grocery channels in the coming months.
CI: The MENA (Middle East North Africa) region represents another area for strong growth for the Godiva and McVitie’s brands. The press release cites Ulker’s historic strong presence as well as changing consumer behavior. Can you elaborate on those changes in consumer behavior? And do consumers connect that Godiva and McVitie’s are connected to Ulker?
Karakas: Throughout the Middle East, Ulker is a market-leading brand and the best known of pladis’s three iconic brands. We will continue to build on Ulker’s heritage and also strengthen the presence of Godiva and McVitie’s by capitalizing on changing consumer behavior. One example of this is the rollout of our Godiva Masterpieces collection, which launched in selected supermarkets across Turkey and Saudi Arabia in March 2017.
Over the last three years, biscuit and chocolate consumption has risen across the MENA region and we predict that 15 percent of our total growth between 2016 and 2019 will come from this region. Our ambition is to make MENA region the third biggest market of pladis, with the target of more than 20 percent growth in the region for 2017.
If you look at Saudi Arabia, one of the Middle East’s key regions, where the biscuit category is growing at a compound annual growth rate (CAGR) of 11 percent between 2011 and 2018 (Euromonitor, 2016). The same rate of growth (11 percent CAGR) is forecast up to the year 2020. This is being driven by an extremely large share of younger consumers in Saudi Arabia; 66 percent of the population is aged 15-40 (Euromonitor, 2016).
We conduct extensive research into people’s snacking habits in different locations and respond to new trends to offer consumers a wider choice of products. We will continue to develop high quality synergy products and introduce new formats for consumers in the MENA region to enjoy.
CI: The North American market is another region that offers pladis growth opportunities, specifically in chocolate and savory snacks. Can you share with me some initiatives that are being rolled out this year that promise to generate additional sales?
Karakas: We grew quickly during the second half of 2016 in North America, which is also one of our priority regions. This year we will accelerate demand for Godiva as well as expand our McVitie’s portfolio across the region. We expect sales in the United States to account for around a fifth of our market growth in the next two years — predominantly through premium chocolate.
We recently introduced Godiva Masterpieces to the U.S. market, which brings our iconic chocolates like Dark Ganache Hearts and Caramel Lion of Belgium to the supermarket aisles. We will also continue to expand our North American regional chocolate brands, Turtles and Flipz.
CI: What investments, if any, are planned for existing production facilities in the United States?
Karakas: We recently completed a significant investment program at our chocolate facility in Big Flats, where we expanded production and purchased new equipment resulting in increased capacity and headcount. We are also in the process of investing in our Reading plant.
CI: Ferrero recently announced it will acquire Fannie May Brands and has worked out a partnership with 1-800-Flowers to participate in their e-commerce gifting program. What are pladis’ plans for e-commerce in North America?
Karakas: Growing e-commerce is a key priority for pladis. We are working with the e-commerce properties of our key retailers like Walmart, Costco and Target as well as online retailers such as Amazon.com and on our owned online property at Godiva.com
CI: Whenever companies reorganize key iconic brands under one umbrella, such as Godiva, McVitie’s, and Ulker, there tends to be much discussion about taking advantage of synergies. Nonetheless, capitalizing on potential synergies tends to be very difficult to execute. What steps are you taking to transform synergistic potential into actual new product launches?
Karakas: We’re continuing to explore cross-category innovation and we’re collaborating strategically across our different geographies and brands to ensure we’re offering the best products to consumers. We’re aligning our people, using the right mix of skills within our business to speed up our manufacturing processes and to roll out new products.
Consumers are responding positively to new products such as McVitie’s Digestives Nibbles, which fulfill new consumption moments of sharing or after-dinner biscuits. Since our global launch, the launch of McVitie’s Digestives Nibbles in February 2016 has been one of our key milestones. It was the first innovation of its kind for the U.K. biscuit category and we have further global launches planned for this “bite-sized” format of our much-loved Chocolate Digestive. We launched McVitie’s Digestives Thins in January this year, which are a thinner, crispier version of our classic Chocolate Digestive and provide a greater ratio of chocolate to biscuit per bite. The differentiation here is in our quick speed to market.
CI: Do you see “better-for-you” products in the pladis portfolio?
Karakas: Today’s consumers want great tasting products and they also want choice — from treats to snacks. At pladis, we are committed to improving the nutrition credentials of our portfolio and providing a wide range of wholesome choices for consumers. We have a dedicated team of expert nutritionists who are actively driving a program of improvements through our product range and expanding our portfolio with new options for consumers.
CI: In your GOYA statement, you set the goal of being No. 1 or No. 2 in each category that you compete. How hard will that be to accomplish?
Karakas: We have a 300-plus year heritage that differentiates us from other global snack players. Our portfolio is made up of some of the world’s most established brands.
As well as being the No.1 or No. 2 in each category, we will become the fastest-growing leader in our sector through consumer-driven innovation and tapping into these new ‘consumption moments’ I’ve previously mentioned.
Since becoming a global organization, we have seen the successful launch of many synergistic products. As a global company, working together as a truly global workforce, we understand the local needs well and operate through different geographies. Our agility comes from our speed of transforming local consumer insights into the product on the shelf.
CI: Are there any acquisitions on the horizon for pladis?
Karakas: We are always ready to talk but we don’t have any current plans for acquisitions. Our parent company, Yildiz Holding, has recently invested in the supply chain, having bought a cocoa manufacturing plant in the Ivory Coast.
We are looking at lots of ways to grow our business — we are on track to becoming the fastest growing company in our sector.