January 16, 2018

Sydney, Australia-based Quadrant Private Equity has acquired Darrell Lea, an iconic Australian confectionery company, from the Quinn family for A$200 million (US$159 million).

Best known for its soft licorice and Rocklea Road chocolate products, Darrell Lea has been in business since 1927. However, the company ran into a rough period of time when it entered into voluntary administration in 2012, after which the Quinn family acquired the company in September 2012 for about A$25 million (US$30.6 million).

Once at the helm, the Quinn family invested an additional $30 million into the company, streamlining the organization by cutting employees from 800 to 120, and building a new Sydney-based factory. Their measures paid off. Darrell Lea saw a significant turnaround over the ensuing years, posting sales of more than $110 million and earnings of $23 million for its last financial year.

At the time, a Quinn family spokesperson told SmartCompany that the purchase of Darrell Lea was reflective of the family’s focus on known food brands, saying, “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.”

Today, the brand has re-emerged, and is well positioned for growth, selling 14,000 tons of confectionery each year across Australia, the U.S., Canada, and Britain.

“It really is an iconic Australian brand with a huge amount of heritage and good will from consumers,” Chris Hadley, executive chairman, Quadrant Private Equity, told the Courier Mail.

It is this standing that Quadrant plans to build upon to foster continued growth for Darrell Lea.

“Our intention is to make it one of the largest private confectionery companies in Australia,” Hadley told MSN. However. Plans for the brand go beyond borders, to international expansion as well, as Hadley that the brand “has the potential to go into more overseas markets”.

A Sweet Outlook

Having control of a respected Australia-based confectionery brand will also place Quadrant in a good position to capitalize upon expected growth in Asian markets.

The Asia-Pacific region is expected to be the engine driving growth for the confectionery category, according to Technovio. Global sugar confectionery sales are forecast to jump from $65.11 billion in 2015 to $78.31 billion in 2020, reflecting a CAGR of 3.76 percent, reports Confectionery News.

And although the greatest growth is expected from more emerging markets, the confectionery category is still gaining headlines in Western markets. TechSci Research forecasts that the U.S. chocolate market will exceed a value of $30 million by 2021, driven by higher demand for dark chocolate and sugar-free products.

Less than a week ago, Food Dive reported that family-owned Italian confectionery company Ferrero is on the verge of announcing the acquisition of Nestle’s U.S. business for $2.8 billion. Other parties rumored to have been in the running for the business include Hershey, Mars, and Lindt/Ghiradelli.

Round Two

This is not the first deal between Quadrant and the Quinn family. In June 2015, Quadrant struck a deal with the Quinns to acquire a minimum 85 percent stake in VIP Petfoods, a chilled pet food business founded by the Quinns in 1994, for $410 million.

“VIP has built up an impressive position in the Australian pet food industry and has established a truly leading manufacturing capability. We believe there are opportunities to further implement growth and strategic initiatives to enhance the brand and product in Australia and throughout the world,” said Hadley at the time.

VIP was subsequently renamed Real Pet Food Company and was sold to a consortium of Chinese and Singaporean investors the following year in a deal that valued the company at A$1 billion (US$781.9 million).

“For the past two years Quadrant has supported us to grow strongly in our home markets. Now our Asia-Pacific partners are ideally suited to support us as we look to take our success to the Chinese and North American markets,” said David Grant, CEO of the Real Pet Food Company, reported Deal Street Asia.

-Lynda Kiernan