As Godiva celebrates its 90th anniversary, few would contest the heritage of the Belgian chocolatier.
But since Turkish food manufacturer Yildiz Holding acquired the firm from Campbell Soup in 2007, it has been given a new lease of life. Now, chief executive Mohamed Elsarky has his sights on Asia.
Since entering the Chinese market in late 2009, nearly 70 stores have been opened across 18 cities. While analysts have soured on the likelihood of China’s sweet-tooth staying as sweet as in recent years, Elsarky is undeterred by the slowing performance of Asia’s largest economy. “When we talk about growth going down, we talk about a shift from high single digits to six per cent,” he says. “We think it’s a short-term view. The rate of Chinese urbanisation is increasing, and the numbers joining the middle class are higher than most countries.”
Before it expands into a new market, Godiva uses stores in airports to gauge a country’s appetite for the product before fully committing to the domestic market. “Our travel business is worth around eight to 10 per cent of our revenue, it is the brand’s window to the world,” says Elsarky. Godiva now has stores in more than 110 countries, largely because of these travel retail locations.
The strength of Godiva’s brand is something Elsarky doesn't take for granted. “You need to treasure the fact that consumers recognise your brand, and then bring it to life in a meaningful way,” he says. After all, consumers may rate a brand highly, but not actually engage with it, something Elsarky discovered with Japan five years ago.
To rectify this, Godiva recruited a designer to embellish its standard gold chocolate box for Valentine’s Day – when around 25 per cent of the country's annual chocolate purchases are made – and advertised on TV to boost awareness of the new product.
Prior to the sale, Campbell Soup had put Godiva on the back burner. Its decision to sell came because the luxury chocolatier didn’t fit Campbell’s shift in focus to simple meals. “Godiva had been left by itself to do what it could with limited funding,” says Elsarky, who joined from Lion Capital a couple of years after the acquisition, having specialised in the consumer sector.
“Retail is an expensive business. You’re committed to leases. You’ve got to build stores, hire people: it’s a multi-year commitment. You do that across a large number of stores, and you’re talking substantial amounts of money. Being privately held, and by a company with a tremendous belief in the brand has been a key driver of our growth.” There can be no compromises in quality, Elsarky says. “We have guard-rails. Whether we have 700 stores or more, the recipes won’t change.”
As Godiva enters new territories, it must cater to an increasing range of local tastes. “The US market likes products a little sweeter; Asia likes them darker. But Belgian chocolate is all about variety; a box will always contain many different varieties. So you select the products you use to cater to certain markets.”
The US is taken with Godiva’s new organic Belgian truffle, he explains, while a green tea truffle, originally for the Asian market, is selling well in other regions. “We don’t change the DNA, or make a piece of truffle differently from one market to another. That piece of truffle is available and we sell it in the areas where there is demand.”