Australian artisanal chocolate brand Koko Black is riding the pandemic-induced online shopping boom, after recording a 250% increase in digital sales last year.
Despite the impact of COVID-19 across the chain’s 14 retail stores, the spike in Koko Black’s yearly online sales is a text-book example of how to turn a crisis into an opportunity.
“I remember March 23 in 2020, when lockdowns were announced,” Koko Black chief executive Nicolas Georges tells SmartCompany.
“It was two weeks from Easter, my warehouse was full of products, and literally we were thinking ‘how are we going to survive this?’” he says.
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Artisanal chocolate meets gifts
Koko Black started building its online sales channel in late 2019.
By the time the government imposed nation-wide restrictions in March 2020, the business had already done three quarters of the work, Georges says.
“It really jolted us into movement, and we ended up with a massive week over Easter, the biggest we’ve ever had online,” he says.
“Pretty much everybody in the business ended up in the warehouse packing the products.”
The business, which is owned by the founder of the Grill’d burger chain Simon Crowe, has 300 staff, with 100 at its Melbourne site, and 200 working in stores across Melbourne, Perth, Adelaide, Canberra and Sydney.
When it became clear that online sales would dominate the business’ focus for the better part of the year, Georges says he started to think about how to drive the e-commerce channel in off-peak periods.
“We tried to offer people a real reason to come to us, because whilst we’re a chocolate business, we’re also a gifting business,” he says.
Koko Black ramped up its giftbox range and offered customisable options to customers for a host of occasions.
On top of selling chocolate, the brand partnered with the likes of Four Pillars to deliver packages of chocolate, which keep for 16 weeks, and gin all over Australia.
Georges says he worked with companies such as Spiff to help streamline the online store and come up with a unique “Koko Black solution”.
The overall strategy proved successful. Christmas trading was up 15% year-on-year, making Koko Black ineligible for JobKeeper wage subsidies by the December quarter.
Expanding to Asia
Koko Black’s chocolate falls under the luxury end of the chocolate and confectionery manufacturing industry.
The entire industry is expected to total $6.3 billion in 2020-21, according to IBISWorld data.
After Koko Black successfully tackled the holiday trading season and restrictions eased in Melbourne, Georges says he shifted his focus to international markets.
“Once we felt quite strong on the domestic e-commerce side, we thought we’d have a crack at international,” Georges says.
Prior to COVID-19, most of Koko Black’s in-store customers were affluent tourists from Asia.
Expanding the brand’s online reach to Asia was a way to reach those consumers who were largely restricted to living in their home countries.
Koko Black is now working with a buying platform to figure out how it can best sell its products to Asian shoppers.
“So, we have started that experiment through a partner called Extender,” Georges says.
“We just started that in time for Lunar New Year, and it seems to have worked relatively well.”
Online sales in food retailing will continue to be higher than pre-pandemic levels, according to IBISWorld senior industry analyst Nathan Cloutman.
Cloutman says online food retailing accounted for 6.7% of total sales in January 2021, which is an increase of 2.5% from the same period one year earlier.
However, this positive outlook for online sales will be constrained by a downward pressure on consumer incomes caused by the economic effects of the pandemic.
Total revenue in the the chocolate and confectionery manufacturing industry is forecast to drop by 3.1% in 2020-21.
But these gloomy predictions are not getting in the way of Koko Black’s growth strategy.
This year, Georges aims to revive the retail stores to their ‘new normal’, expand new channels such as ‘click and collect’, and continue to build international sales.
“We’ll focus on building all that and making the most of what the COVID-19 forced us to go after,” he says.
“We’ve got a brand that’s very loved by people who are in it, but there’s not enough of them just yet, so we need to grow it.”