It s a Beautiful Dia. Nestlé. The Swiss Superstars. Country Report - Ireland. The Food Island Goes Greener. Private Label in Europe SPECIAL REPORT

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1 THOSE PUSHY PEOPLE AT P&G Pushy, arrogant, demanding But very good at what they do It s a Beautiful Dia Nestlé The Swiss Superstars Country Report - Ireland The Food Island Goes Greener Private Label in Europe SPECIAL REPORT WALMART AT 50 SHOPPER INSIGHT NEW STORE ON THE MOVE GREECE: CARREFOUR EXIT POS REVOLUTION MORE MON DIEU

2 Commercial Feature Lifebrands EVOLUTION is Brewing Tea isn t the first thing that comes to mind when you think of smart technology, innovation and pushing boundaries, but through his company LIFEBRANDS, Lars Ellerbrock has had the foresight to reinvigorate a growing and increasingly diverse category. Sadhbh Connor speaks to LIFEBRANDS founder and tea royalty Lars Ellerbrock about the family business, innovation and good German efficiency.

3 After water, tea is the most widely -consumed beverage worldwide. In 2010, some 70 per cent of tea traded in Europe passed through Hamburg according to the German Tea Association. While an unlikely hub for the international tea trade, no. 9 Pickhuben in the port city s historic warehouse district probably has quite a lot to do with Hamburg s importance in the tea industry. Home to one of the world s largest tea traders and processors, Haelssen & Lyon, since 1879, it is the world s largest storage facility for speciality teas and where a young Lars learned the family trade succeeding as the fourth in a line of Ellerbrocks to co-own the tea company. Coming from a tea trade dynasty it was only natural that Lars follow the footsteps of four generations of Ellerbrock men into the tea trade. He sees his experience in the industry as a twofold learning experience; in order to be able to advise supermarket chains and private label clients on tea products he felt it important to know about the tea plant itself and spent time in Sri Lanka and the UK with tea producers learning the trade. Growing up in the family business at Hamburg s docks he learned about value-adding processes like flavouring and blending tea, fruit and herbal infusions. Bringing these two educational experiences together saw the birth of LIFEBRANDS in 2000, sure to be Ellerbrock s own dynasty. He set up the company because he wanted to work closer with the end consumer product rather than in the industrial import and export of bulk material. Despite the influx of herbal and fruit infusions and various speciality blends, the tea industry is generally slow to innovate and it doesn t progress enough internationally as far as Ellerbrock is concerned. It must be pointed out however, that he is somewhat a tea visionary, although, in true German fashion he most likely sees it as simply being efficient. Any process that can be streamlined, simplified and speeded up should be done so in his view. Ellerbrock has brought tea into the modern age, from his concept of total cost innovation (TCI) to identifying and indeed, creating trends ahead of the posse. While retaining a 50 per cent stake in the Haelssen & Lyon business, Ellerbrock is not involved in the day-to-day running of the business, instead leaving that to the management the family brought in externally. When LIFEBRANDS started in 2000 the focus was on organic tea and food products which were bundled together from various European producers for supermarket retailers such as Migros in Switzerland and the Rossmann drugstore chain in Germany. The core of the company developed later on when a second business unit was opened in 2005 to focus on corporate brand products in coffee, tea and hot chocolate which now make up 50 per cent of the business. Around this time Ellerbrock also acquired licenses for several brands in the European speciality food segment and this division now represents seven international brands, four licensed brands for which LIFEBRANDS does the sales and marketing and three of his own brands, including just t and Le Chocolat. The company has been a great success for its founder and while turnover figures are not Tea culture is growing incredibly quickly so the Ayuverda and Yoga teas have been successful over the last 10 years as they just weren t available before then. publicly disclosed, Ellerbrock does concede that he supplies the leading international supermarket chains with their private label brands, indicating the sizeable reach of the business. As Ellerbrock talks ESM through LIFEBRANDS methods, it is clear that he is doing much more than just selling tea bags to supermarkets. The company has conducted research in forming its unique concepts and the German tea maestro has found ways in which it can be innovated and reinvented, We have done research internationally and on different continents to identify the most successful concepts in the tea industry and we divided that into three levels - entry, value and premium. The reason supermarkets love to work with us is because we offer a concept, not just a product, he explained. Ellerbrock s use of the TCI concept (Total Cost Innovation) enables his company to easily and speedily adapt the The reason supermarkets love to work with us is because we offer a concept, not just a product. retailer s private label needs into a saleable product up to 50 per cent quicker than the normal time to market. Ellerbrock defines the model as, a transparent margin and cost structure process where the retailer defines the concept he wants, including his retail price point and margin expectations, which alters the usual supplier-retailer relationship to a more equal cooperation. The buyer is provided with an e-book which offers a huge selection of tea divided up by retail price range of entry level, value and premium, offering among others, single origin teas, herbal infusions and unique LIFEBRANDS innovations such as Juice teas, which have granulated fruit juice to naturally sweeten and flavour tea. LIFEBRANDS own label options also include the popular Ayuverda teas which Ellerbrock says weren t available 10 years ago in Europe but is a growing category that LIFEBRANDS has a leading position in. Sophisticated offerings for the more discerning tea drinker include extracts such as the increasingly fashionable Chai which comes in powdered form and intriguing confiserie teas such as Rooibos with nougat and pistachio which sounds more July / August 2012 ESM 53

4 Commercial Feature Lifebrands like a dessert than a beverage. Crafty Ellerbrock has even designed a perfumed tea range just for women due to launch this autumn. This French-inspired odour tea uses organic white teas flavoured with floral aromas such as oriental touch and chypre of lemon and comes as beautifully-packaged gift items, illustrating Ellerbrock s inherent understanding of the direction the industry is taking with tea gradually ascending to the glorified heights of coffee where roasts, flavours and brewing methods are taken incredibly seriously. Lars agrees that the tea-drinking demographic is changing, Tea culture is growing incredibly quickly so the Ayuverda and Yoga teas have been successful over the last 10 years as they just weren t available before then. Aside Traditional values meet modern methods - Total Cost Innovation (TCI), a new cooperation model between supermarkets and industry is revolutionizing the international tea trade. from traditional tea-drinkers, his company is focusing on the new generation of teadrinkers who are young, discerning and in search of something a bit different. This is reflected in LIFEBRANDS diverse product offerings and stylishly minimal packaging. The retailer can chose between the standard filter paper, elegant nylon, sustainable and biodegradable non-woven or chic cotton teabag which come in an assortment of shapes. If this array of choice wasn t dizzying enough, the retailer still has to pick a packaging format which offers several fresh, modern designs to compliment the individual teas and teabags chosen by the retailer. These choice tiers, combined with the retailer s margin expectations, allow LIFEBRANDS to tailor-make a product to precisely suit each individual retailer s own label needs. Ellerbrock sees this process as creating ready-to-sell concepts retailers can easily market under their own brands. The detailed e-book is particularly useful for buyers without an in-depth knowledge of the industry as LIFEBRANDS is often ahead of its competitors in identifying new trends, It helps buyers and retailers to understand what s going on in the industry in different countries and what s suitable for their local market. Within 48 hours of selection, the buyer has a sample and a price based on the chosen options in the e-book. No other supplier in the international tea industry has prepared such a standardised and systemised supply offer based on the Total Cost Innovation model, Ellerbrock states confidently, Usually when a retailer does a tender and selects a supplier the time to shelf is a year but we have cut that down by about 50 per cent with our new concept. With 50 per cent of LIFEBRANDS turnover coming from private label, the development of this online selection platform is clearly a sound and necessary investment. Using centralised, automatic systems Ellerbrock has managed to speed up the process while reducing waste and mistakes, all the while making ordering easier for the retailer. Some customers are supplied on an ECR level (Efficient Consumer Response) where LIFEBRANDS take responsibility for warehouse stock levels and based on transparent weekly stock-take, ship once it dips under a certain level. In an effort to keep the business lean and efficient, all invoicing and delivery documentation is processed electronically meaning less paper is used and administration costs are minimised, and cost of freight is reduced for the retailer by combining the delivery of LIFEBRANDS slow and fast-moving items which are all produced in factories selected by the company. In order to keep distribution costs low, packaging or production may be outsourced depending on the location of the customer s headquarters. As the laborious reprint process for change of packaging design, intellectual knowledge or pack text details is necessary almost every three months, 54 ESM July / August 2012

5 LIFEBRANDS has introduced an online system which allows all parties of the project to work on the same document concurrently, eliminating the hassle and time spent sending it back and forth. Ellerbrock says he has found that using this centralised system has made reprinting much quicker and it doesn t allow for mistakes. From speaking to the articulate Ellerbrock, ESM gets the feeling that he doesn t make mistakes very often and expects the same level of accuracy and focus from everybody else. There is no doubt that he runs a well-oiled, streamlined ship at the LIFEBRANDS offices at Hamburg s docks. From ESM s conversation with Ellerbrock we can tell that he is a true professional, a tough negotiator and inherently decent which is why when he talks about the importance of sustainability and the need to secure fair standards for producers in India and Sri Lanka we believe he s not spouting the usual ethical spiel. He doesn t seem like a man who would waste his words. 70 per cent of the business is already either organic or sustainable and the increasing quantity of products already fulfil the requirements of the UTZ sustainability certification which ensures the sustainable cultivation of raw materials and fair conditions for tea farmers. It s not something that I do because I have to do it, the motivation has always been in the family business and that s another reason that people like to work with us. Ellerbrock recently travelled to India s Darjeeling region to do a photo shoot for Lufthansa s in-flight magazine, the imaginatively-named Lufthansa Magazin. This Autumn, he will feature in an article about a tea plantation in Darjeeling which was founded by a German priest over 100 years ago and his firm will be exclusively providing the German airline with a white Darjeeling blend sourced in the area. While this high-profile coverage may cement his place as the poster boy of the tea industry, Ellerbrock is much more excited about the tea itself which he says is his personal favourite at the moment, I plucked the tea myself and right away they put it into the fire oven and I tasted it 10 minutes after the firing. It was a very nice feeling to have my special tea made in front of me. Ellerbrock is confident in his company and the unique concepts LIFEBRANDS offers to retailers and tea-drinkers worldwide, and while he recognises the innovations his company are making in the industry, you get the feeling that it s all just a day s work for this efficient German. LIFEBRANDS Natural Food GmbH, Holzdamm 28-32, Hamburg, Germany, Tel.: Fax: Contact: Nina Mertens Key Account Manager Private Label Sales, nme@lifebrands.de, Tel.: Coming soon in ESM A directory of Europe s top consultants and service providers An exclusive interview with Stefan Bomhard, Europe regional president at Bacardi An exclusive interview with Bert Swartsenburg, managing director at AMS Sourcing - which has members such as ICA, Delhaize, Booker, Jeronimo Martins and Esselunga. The world s leading fresh fruit, vegetable to the European market. July / August 2012ESM 55