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Charlie's takes another gulp of Australian market

Tuesday 5th April 2011

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Charlie's Group is stocking its drinks with another major retailer across the Tasman later this year in a multimillion dollar deal expected to boost Australian earnings ahead of New Zealand.

From August, Charlie's drinks will be sold in Woolworths stores across Australia, with the Old Fashioned Lemonade quencher to spearhead the range.

Demand for the quencher is expected to eventually make up about 70% of the total volume of Charlie's product sold in Australia, chief executive Stefan Lepionka said.

Charlie's signed a multi-million dollar deal last year to stock its drinks in 750 Coles supermarkets at a time when the Australian subsidiary contributed more than 50% of total pretax earnings.

"We now have a very big foot in the Australian market and this latest deal will undoubtedly make our Australian business bigger than New Zealand for us," Lepionka said.

It took two months to get the Woolworths contract, with a key element the success with Coles.

In Australia's $5 billion non-alcoholic beverage market, Charlie's was now distributed by the two largest retailers. The company accounted for 11% of the chilled market category in Coles, beating internal expectations by a long shot.

"We're really pleased about Coles - it's blown them away and it's blown us away, it's a success story for them as much as it has been for us," Lepionka told NZPA.

"Eleven percent share is unheard of in that beverage category or any category in food, to do that overnight, so we're really happy."

Infrastructure and management in Australia had been in place for the last few years, and Charlie's could also tap into the supermarkets' comprehensive warehouse distribution systems.

Australia remained a big source of fruit, but fruit was now also sourced from elsewhere including Sicily, Argentina and the United States.

"Our demand is now of a scale and size that we can't rely on down under anymore, we're now having to think about a world programme for supply."

The goal of a few years ago was to reach $50 million in revenue a year, and Charlie's is now looking to $100 million annual revenue in the next one to two years. Success was in large part due to careful planning over every aspect of the business, and the high quality product.

"It's always been part of our strategy from day to one to achieve what we've achieved to date," he said.

Following a trial at Hong Kong's largest food retailer, the ParknShop supermarket chain, Phoenix Organics range has just become a permanent product line.

The drinks have not been tailored to Australia, where the company had been since 2001, Lepionka said.

"We've been designing products and testing products in the New Zealand market and I guess it's such a great market for that because we're able to do that."

Other beverages have found success in Australia, where Oyster Bay is the biggest selling white wine and V energy drink is the biggest selling energy drink.

Shares in Charlie's hit a six-year high of 28c in afternoon trading, up 6c.



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