Private equity firm Quadrant has purchased 91-year old chocolate maker Darrell Lea, with the reported $200 million acquisition closing a six-year chapter of revival for the brand after it collapsed in 2012.
The purchase means the confectionery brand could be set for new global markets, reports Fairfax, with Quadrant’s executive chairman Chris Hadley saying the brand was attractive because of its strong market share and “iconic” status as a liquorice and chocolate producer.
However, just six years ago Darrell Lea had fallen into the hands of administrators, with 700 staff members facing uncertainty amid store closures and the sale of the business.
After administrators were appointed, half of the company’s stores closed, with hundreds of staff losing their jobs.
The company was bought by Queensland’s Quinn family, with serial entrepreneurs Tony and Christina Quinn embarking on a significant restructure of the brand.
So how did Darrell Lea go from collapse to a $200 million business? Here are three key stages.
The sale and closure of stores
The Quinn family purchased the business in September 2012, for an amount Fairfax reports was in the vicinity of $25 million.
The sale meant Darrell Lea products would continue to be produced and sold to wholesale customers as well as 1200 licensed retailers, SmartCompany reported at the time.
However, administrators PPB Advisory said they did not receive any meaningful offers for the company-owned Darrell Lea stores during the sale process, and as a result the remaining 27 “Darrell Lea” branded company-owned stores closed in September 2012, resulting in 418 redundancies.
At the time, administrators said this situation represented “the best outcome for Darrell Lea going forward”.
Fairfax reports that since the company was bought by the Quinns six years ago, staff numbers have been reduced from 800 to close to 200.
At the time they purchased Darrell Lea, the Quinns were already seasoned entrepreneurs, having built VIP Pet Foods into a multimillion-dollar operation — a business they also sold to Quadrant in 2015, for $410 million.
Discussing the acquisition of the brand in 2012, a spokesperson for the family told SmartCompany the purchase was a good opportunity to tap into an interest they had had for a while in local, recognisable food brands.
“The Quinn family have long held an interest in entering the Australian confectionery market, with the acquisition of Darrell Lea that interest become a reality,” the spokesperson said.
Tony Quinn also reflected at the time that rescuing a well-known brand was a satisfying experience, telling AAP he was keen to jump in and build the operations back up.
“Let’s have some fun. Let’s fix this thing,” he said.
This process involved further consolidating the size of the Darrell Lea team, as well as doing supermarket distribution deals with the likes of IGA. The brand now lists the big two supermarkets, as well as IGA, David Jones, Big W and Australia Post, as stockists, and independent distributors also sell Darrell Lea’s well-known treats.
Maintaining a brand with a “huge amount of heritage”
Speaking to the Courier Mail, Quadrant’s Chris Hadley said Darrell Lea is attractive because the strength of the Darrell Lea brand has been maintained as the company has been built back up.
“It really is an iconic Australian brand with a huge amount of heritage and good will from consumers,” he said on Monday.
This, combined with an “extremely strong position in the liquorice market”, led the firm to consider Darrell Lea as a strong growth prospect, he said.