From here to beer to gummy bears

Jon Hughes is a lucky man and a hero to children everywhere – including the adult ones.The MD of Haribo UK tells Asian Trader what the brand’s magic secret is, and what their plans are in the UK

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Jon Hughes

Haribo MD Jon Hughes has what many people might envy as the perfect job – bringing joy to millions of children, including grown-up ones, with all the myriad Haribo sweets you can eat. He didn’t even mind swapping a role in the brewing industry to eventually become the candy king.

“I guess like a lot of people, I left school not really being sure what I wanted to do in life or career, and ended up studying business and finance and marketing” he explains. Landing a first job as a graduate salesman at what was then Scottish and Newcastle (later Heineken), set him a path to success.

“They had just acquired the Courage Beer Company and I thought, ‘Well, here’s a great opportunity: a job where they’re going to give me a company car, free beer, and all I got to do is drive around North London, meeting all these wonderful people and trying to sell them some beer.”

Jon admits he didn’t have the “faintest clue” about business or how it operated. “My father was a doctor so I grew up in a medical atmosphere.”

But then beer happened?

“Having been a student for the last few years, from a consumer point of view I was pretty well versed,” he laughs.

“I was the first to take a step into the business world but I actually loved it – loved meeting new people, especially all these brilliant entrepreneurial shopkeepers and wholesalers. The training was first class and I learned an awful lot, and my career really progressed from there.”

Jon spent five years at Red Bull between leaving Scottish and Newcastle and joining Haribo. He also worked at Kimberley Clark – this is a man with a wide experience of FMCG.

It was a decision to settle in Yorkshire that led to him taking up the opportunity to work with Haribo, which is a German company but completely at home in the north of England.

“There’s lots of great businesses up in the north in confectionery. You know, you’ve got Nestlé up in York and we’ve been operating in one guise or another in Pontefract for over 100 years.”

Haribo arrived in West Yorkshire when it bought the venerable firm of Dunhill’s in West Yorkshire, in 1992. “We started out as Dunhill’s of Pontefract making licorice cakes, Pontefract Cakes, and we still make them today. There’s a strong heritage in the region of both rhubarb and licorice, in the Wakefield-Pontefract-Castleford district,” says Jon.

Haribo is famous here for Starmix, Tangfastics, Supermix, and Maoam; but on the continent (and especially in salty-loving Denmark) licorice accounts for an amazing number of the wide variety of Haribo lines – so it was a good fit that their way into the UK market was through Dunhill’s marvellous “cakes”, which had been in production all the way back to the eighteenth century.

A family firm

Haribo does not reach as far back as the 1700s, but is just about to celebrate its centenary, after founder Hans Riegel (and his wife, Gertrud) set up shop in Bonn in 1922 with just sack of sugar, a copper pot and a marble slab to begin working their original gummy bear magic. The trade-name of Haribo is itself is a kind of acronym: HAns RIegel BOnn.

“Originally they sold their products locally, with a bicycle to make deliveries,” explains Jon. “The business flourished from there and the two sons, Hans-Guido Riegel is the current managing partner, a direct descendant from Hans Riegel through his father, Paul. So we’re in a third generation now and that very strong sense of family still runs right the way through the business.”

A famous anecdote recalls the Omaha-based US investor Warren Buffet approaching Haribo to buy the company, and being told flatly by Paul Riegel to go away quickly: “No shares, no bonds, no loans” remains key, with all investments being funded from profits in a reassuringly old-fashioned way.

“Our independence is important to us,” confirms Jon. “Being independent means being independent from banks, it means being independent from debt. And it creates a sense of pulling together as a worldwide organisation, because if we want to invest money, we believe we have to earn it first – and that’s how we’ve always operated.”

It’s a philosophy that works well, with Haribo avoiding leverage and the tyranny of producing short-term results and quarterly forecasts for hungry investors. It has expanded into new territories with new products and is now big all over the world, not least the USA.

Europe, though, is where it began and is Haribo’s spiritual home. It is surely one of the great Euro-brands, along with Lego and Playmobil, and in the UK has risen to be the leading sweets brand. What was the secret of success in this country? A simple innovation that opened a new market.

“Twenty-five years ago we launched a product called Starmix,” says Jon.“We took what were the bestsellers from the pick and mix you’d find in a local convenience store, put them into their own mix and then in a bag.”

Up to that point, Jon explains, confectionery had been very much dominated by count lines, single flow wraps and single product – pick and mix sweets from the local sweetshop dispensed from big jars on the shelf, weighed out and tipped into a paper bag.

“What we did was with something slightly different,” explains Jon, “in that we tried to put that mix into a much more convenient format, which made it easier for shopkeepers handling products and much easier in terms of supply chain distribution. But what we really did was try to create the much-loved brand.”

It is this brand-identity creation where the heritage and the family ethos acts as a supercharger.

“We took everything that is the essence of the Haribo brand –the idea that there is a child inside all of us – and focused on trying to create products and marketing that reminds everyone about the joy of being a child.”

It is a simple insight that unifies every aspect of the Haribo appeal – not least in its TV adverts, which are unforgettable for having adult actors dubbed with children’s voices.

“So sharing a couple of sweets with loved ones helps you to remember when you might have enjoyed a trip to the sweet shop or the trip to the cinema or a bag of sweets with your friends you bought with your pocket money.”

It is rare for a consumer product to have that sort of emotional power, especially when it is tied so strongly to a specific brand identity.

“I would say we’ve spent a lot of time and money developing that position,” agrees Jon. “It hasn’t come through luck. The team before me did a fantastic job of developing this brand over the years, and did it through working really hard with all trade sectors across all channels.”

Conquering the market

“We’ve always had great relationships with the convenience channel and UK wholesalers, really working on building distribution and making sure our products are available wherever we can get,” says Jon. But although the progress has been impressive, he feels there is still further to go.

“We’re probably a little bit behind France and Germany,” he explains, “because of the sweet confectionery products that were around at least when I was growing up. There were already some fantastic products in the UK: pineapple chunks and pear drops, jelly babies wine, gums and fruit pastels …”

Britain has always had a sweet confectionery tooth, perhaps unlike on the continent, where traditionally they had more of a patisserie tooth and got their sweetness that way, or from fine chocolate. Haribo filled a big niche in Europe that was already well-supplied in the UK, which only makes their progress here even more impressive.

“Nowadays when you talk to families with young children, it is Haribo has that pride of place and is the product of choice and the brand of choice for them. And that’s a wonderful place to be.”

The number of product lines in the UK remains relatively narrow compared to mainland Europe, where NPD and fresh candy themes seem to spring up all the time. How does the company even keep track of the sweets they produce?

“Thankfully we have a super skilled production and supply chain team who managed to keep on top of all that, but variety is part of the magic of Haribo!”

It is now that I mention the amazing variety of licorice lines available abroad, from sweet and soft – among which class Haribo’s Pontefract cakes would belong – to the mouth-puckering and pretty chewy salty examples, such as “Super Piratos”. Why can’t we get those here (actually a rhetorical question)?

“I think it’s the different tastes for different countries,” Jon laughs. “Palates are different and people do like different things in different countries, no doubt about that. Licorice is a very acquired taste, particularly the salty licorice that you get in Holland or Denmark. If you try that with the majority of UK consumers, there would be very little appetite for it.”

Part of the Haribo mission, however, is to encourage the adoption of new products, so Haribo UK is using a certain number of exclusive retail outlets to showcase sweets that are not on sale here … yet.

“We have started to open some of our own shops, and in them we have, obviously, a little more space, so we can showcase the International range in those stores. That gives us an opportunity to promote more of the foreign products that perhaps you might not otherwise see.”

But the retail strategy remains in service to the cardinal insight of reaching the child within us all. Jon emphasizes that the outlets are not a blueprint for a full-scale retail operation.

“Our own shops are not about trying an alternative route to market but creating experiences, being able to deliver some of that variety that perhaps you can’t find in the convenience store or, or in the supermarket.”

The retail showcase will whet shoppers’ appetite for more and different Haribo where it counts: in convenience.

“It’s about trying to create the feeling you get as a kid in a sweet shop, and that’s the essence of the brand for us,” Jon sums up. “As for the long-term plan, the new investment we’re putting into our factories in Yorkshire [£22m this year into a purpose-built facility in Castleford] is about making the UK a Centre of Excellence for manufacturing for the Haribo group. We want to consolidate our position as the market leader in the UK because it’s hard work getting to number one, and it’s even tougher staying there.”

Opening up a new era

The centenary is almost upon Haribo, and it must surely be a time of great celebration – but not too much self-congratulation, Jon counsels.

“Staying at the top of the game is the real challenge. I think if you ever start to act like number one, instead of thinking like number two, you can get into trouble pretty quickly. So we are continually pushing ourselves. We’ve got lots and lots of new innovation because Innovation is the lifeblood of this category, and whilst there will always be firm favourites like Starmix or Tangfastics or Giant Strawbs, there is always a place for great innovation.”

Part of that innovation has to be influenced by regulatory headwinds – such as the impending HFSS restrictions, coming on top of the recent sugar levy. I put it to Jon that compared with the massive amounts of sugar consumed via other types of products – up to 20 sugar spoonful- equivalents in some take-away coffees, for example, or the starch-becomes-sugar content in pizzas, donuts and French fries – candy seems very innocent: it is a self-declared (rather than camouflaged) sweet treat, and we just don’t eat very much of it by volume.

“I think there’s no escaping the fact that there is a challenge in the UK and many other countries in terms of health and obesity. I think the root causes are extremely complex and there’s been a lot of very conflicting studies made around that,” he answers.

“Whether you look at diet, exercise, working life or at transport, there’s a whole host of stuff that could be included  in terms of what’s happened to metabolic health over the last ten or 20 years.”

The salient point is indeed that the recent explosion in obesity and metabolic dysfunction is just that: recent. It is likely the result of lifestyle changes and perhaps new products, rather than the fault of old ones.

“We see ourselves as a treat, we’re there to be enjoyed on occasion, in a family setting,” says Jon. “We have never put ourselves forward as being suitable for breakfast, lunch or tea. We’re not a major food group, we don’t position ourselves in meal deals. We don’t see ourselves as an everyday products.”

Haribo undertakes extensive consumer consultations, and the feedback they get is that parents are (guess what?) perfectly well aware that sweets contain sugar. “They understand the challenges around sugar and diet,” says Jon. “’We’re not stupid’ – they say to us. ‘What really shocked us,’ they say, was how much sugar there was in the pasta sauce they were buying, or the fact that manufacturers are putting sugar in bread. ‘Why are they doing that? Why all the sugar that’s in my breakfast cereal?’ That’s what really surprised and shocked parents, particularly when this debate became very public.”

That has not stopped Haribo from responding to concerns by offering reduced-sugar Haribos, though. Haribo products were not super-sweet in the first place, with a lot of the mouth-feel and satisfaction coming from texture and chewiness (“We’ve always developed our products to be to be lower in sugar than the rest of the category”).

“But a small minority [of parents] said to us that, it’d be great if we had an alternative, if we did have a lower-sugar version. And that’s what led us to develop Fruitilicious.”

Again, buzz words and trends can encourage producers to add sugar for the very good reason that it makes people buy more. “One of our competitors recently converted their products to vegan,” Jon confides, “but at the same time increased the sugar by ten per cent. So there’s a suggestion that somehow vegetarian or vegan means healthier, but people will need to look a little more carefully.”

Jon says Haribo’s customers (or their parents) manage consumption through portion and occasion. “They particularly say to us that our mini bags are brilliant, ‘Because we can give a very small treat, 16 grams – perfect – and we don’t have to worry about the whole packet getting eaten.’ And a lot of parents also say, ‘I don’t have to worry about eating the packet after I give my kids a few.’

Jon points out that Haribo’s jelly babies are now 25 per cent lower in sugar than their competitors’, and that Starmix, and Tangfastics, “our leading brands”, are also significantly lower in sugar than the rest of the category: “But we don’t think that it delivers a compromise on taste or texture.”

It sees a good middle course to steer. Giant Strawbs are a Haribo vegetarian bestseller, and its Strips are vegan.

“We’ll continue to develop products,” says Jon, “but the key thing for us, is first and foremost, they have to be fun, they have to taste great, they have to have the right texture. They have to be great Haribo products.”

Is there anything special for Hallowe’en?

Jon laughs again: “We do a huge amount of seasons, whether it’s Easter, Halloween or Christmas, so it’s a really big important part of the year for us. Halloween particularly is one of our biggest trading periods. We look at the formats that people really want, particularly for trick or treat. So lots of easy-to-share mini bag formats. We also like to have a play on some of our classics. So we have Scaremix, which is instead of Starmix, with different colours and flavours, and then Tangfastics where we sneak in a spicy piece into the into the bags and plastic – a little bit of trick or treat jeopardy for people, nothing too horrible, but certainly a little bit more sour than normal!”

And above all, you can buy all these great products above all in the convenience channel, correct?

“We’ve had fantastic support, honestly, from the convenience channel over the years,” says Jon. “We’re not a business that is completely reliant on supermarkets. We have a longstanding history with the convenience channel and lots of great relationships with people in the channel as well. We’re extremely grateful for the support that we get from the channel. I know everyone who works in the channel loves it and enjoys it,” he concludes. “We’re really grateful for the support that we get.”