Lewis Road Creamery proves New Zealand's future lies beyond commodities
Chocolate liqueur is the latest fearless strike into a new market by Peter Cullinane, best known for Lewis Road Creamery's chocolate milk.
"Chocolate liqueur is a pretty bold thing for a little company to pull off, but it's gone nuts," says the company's founder.
The liqueur was boldly launched on the understanding Baileys was the number one liqueur in the world, selling around 82 million bottles annually.
Cullinane's Lewis Road Creamery brand had a humble beginning in butter in 2014, but what catapulted it to stardom was its Whittakers chocolate milk which forced supermarkets to hire security guards and created a black market selling it for double the price.
From here the products came thick and fast for Lewis Road; flavoured milks, artisan breads, ice creams, custards and a decadent chocolate butter.
Cullinane says innovating across these different categories shows New Zealand's creative potential hasn't been fully realised.
He believes New Zealand should be focusing on making products no one else does and doing this the best.
"Consumers here and worldwide are crying out for quality and authenticity - just look at the prices being paid for organic milk powder," he told 100 business people at a Tavendale and Partners luncheon.
"We need to develop a true duel strategy and not just pay occasional lip-service to added value."
He says New Zealanders have a lot to offer the rest of the world but are missing opportunities.
Cullinane describes himself as a "bread and butter type of guy."
"But I'd given up on New Zealand butter - it was so changeable - sometimes it was good, sometimes it was bad," he says.
"We have this belief that we have the best dairy in the world - I certainly thought it was. But it's not true.
"In fact, I was listening to the talk-back radio and someone called in and said they had just returned from Japan where the butter was brilliant and asked why New Zealand butter wasn't.
"That's a bloody good question considering Japan's is a boutique dairy industry."
Forced to buy full-fat Danish butter at a premium to satisfy his taste, Cullinane was compelled to try making his own. After all, his father had told him as a child not to whip the cream too hard, or it would turn to butter.
"It was relatively easy to make - just difficult to make it good," he says.
"New Zealand butter is not top shelf and I wanted to produce a premium product. But it took two more years and various disasters to get it right. But we persevered."
There are more products to come, Cullinane says.
"There are a lot of innovations but these new products are under wraps. But we've got milk, we've got bread and an extension of farms could be meat products. We've got all sorts of things brewing."
It is obvious Cullinane isn't content to sit back on his heels and bask in his success. Instead, he is keen to disrupt New Zealand's food and beverage industries that have consistently done things "one way" for so long - and he reckons this is part of the reason the public loves Lewis Road.
The best way to build brand loyalty is to be constantly innovating, he says.
"We [at Lewis Road] do things differently with fewer resources but the ability to be nimble and quick and stay ahead is where the advantage lies."
"We don't start by thinking how can we beat someone else at their own game. Product ideas come from an unravelling of a strand of curiosity.
"For instance, our rose ice cream is beautiful, exotic and expensive. As a small company, we can't compete with Fonterra on price so we don't. The price may be expensive but worth every cent."
From the beginning, Cullinane's intention was to shake up the local dairy industry, in particular, Fonterra. Comparing Lewis Road with Fonterra is something Cullinane does with good reason.
He thinks the dairy giant makes the dairy industry too focused on commodity, technology and pricing, rather than a high-quality homegrown product.
"They add permeate, a bi-product of cheese, to milk to standardise the milk content. It's utter madness.
"The advantage of the New Zealand dairy industry is its ability to be only grass-fed," he says.
"Grass-fed is the best you can get, followed by organic. This is where the focus should be."
"Our [Lewis Road's] fundamental belief is that New Zealand has enough stainless steel [in production plant]; we just don't have enough imagination, that's what we really lack," Cullinane says.
For this reason, Cullinane has backed away from the original plan to manufacture the Lewis Road product in-house and is focusing instead on the branding and idea behind the company.
Lewis Road is described as being more creative than corporate.
After all, marketing and branding is what Cullinane knows. Born and raised in Wellington, he went to work for advertising agency McKay King which eventually merged with Saatchi and Saatchi. His career includes roles as chief executive of Saatchi and Saatchi New Zealand and chief operating officer, Saatchi & Saatchi Worldwide. He is a director of Skycity Entertainment, STW Communications and APN News and Media.
A country-style kitchen in Lewis Road's small Auckland CBD-based office is where most of the research and development is carried out, and this moves at quick-fire pace.
"No two years for us will be even vaguely like each other," Cullinane says.
"It's very difficult to know what the hell's going to happen, so you've just got to be prepared to ride with your attitude and company culture. I think it is enormously good fun."
Even as the business grows in size, Cullinane reckons Lewis Road can permanently be a challenger brand. Challenger brands are categorised by a mindset which sees them have business ambitions beyond conventional resources and an intent to bring change to an industry. Because of it, the company does not shy away from taking risks, Cullinane says.
Take the open letter to Fonterra's chief executive published in the NZ Herald that caused it to back down on a deal to take up most of the supermarket chiller space.
Cullinane says being able to take these gambles gives Lewis Rad an advantage over bigger brands.
"I think being a challenger brand is a state of mind and it's viable for as long as you can maintain it. Where we go off the boil is when things become too predictable and there are too many rules and regulations," he says.
"If Lewis Road proves anything it's that New Zealand's future can lie beyond commodities and we're genuinely capable of producing world-class products."