Kiwi beverage maker Shott is making a name for itself internationally as Starbucks favours it over its own syrups for its premium cafes in Asia
After 14 long months of delays, Kiwi beverage manufacturer Shott has opened its second factory this week, dedicated solely to its growing international market.
Shott Beverages chief executive David Shearer says the syrup maker has seen significant growth over the past year and is all set to launch in the United States this year, a country of 300 million that consumes four times more coffee than New Zealand.
“It’s a huge opportunity. But we actively didn’t go there until we knew we had capacity because there are a lot of horror stories of companies going there and not having the volume expected of them. Your reputation is mud once you do that,” Shearer says.
At the opening of the Massey factory on Tuesday, Shearer said the plant had 300 percent more capacity than its first factory in Wellington.
The Wellington factory reached full capacity 12 months ago, after strong growth of its Quarter Past brand, which is its syrup range sold in supermarkets for households.
Shearer says Quarter Past ended up being the “saving grace” for the company last year as consumers were forced to make their coffees at home while cafes shut during lockdown.
Shott’s Auckland factory will manufacture syrups for its South Korean, Europe and now US markets.
The 14-month stall in opening the factory was due to shipping and factory delays as the equipment was built in Wuhan, China and Germany.
“Once we got the machinery, we found out we couldn’t get containers in 12 weeks to ship it here.”
Unlike most other beverage manufacturers, Shott doesn’t heat treat its syrups, which means the company has had to account for shipping delays by booking containers in advance and using more finished goods in its ingredients.
“We’ve increased our ingredients through finished goods by 30 percent to allow an extra month in the supply chain. It’s a huge amount of capital that we’re whacking into ingredients and we book our containers 12 weeks out before making products to ensure we’ve got that space.”
The company has also spent three years trying to get FDA approval in the US to sell to ensure its syrups were safe to consume without heat treatment.
“Heat kills all the nutraceutical value and the natural flavours of the fruit. Consumers are chasing things that haven’t been overly manipulated by manufacturers. It is an art form when you take heat out of the process … and we’ve done that.”
Shearer says the brand’s unique flavour of drinks has led to multinational cafe chain Starbucks using Shott’s syrups for 10 specialty drinks in its high-end cafes Starbucks Reserve in Asia.
“[Starbucks’] exact reason for using Shott was because they wanted something better than their standard Starbucks.”
Shearer says Shott was among a select few international brands the cafe chain uses for its range of premium drinks.
“It’s another win for us.”
“[Starbucks’] exact reason for using Shott was because they wanted something better than their standard Starbucks.”
– David Shearer, Shott Beverages
But with the ongoing pandemic, Shearer says he is curious to see how things play out with freight challenges.
Shott buys fruit from all around the world, cranberries from North America, mangoes from Queensland, citrus and pip fruit from New Zealand and South Africa.
“The biggest headache in the world, by the way, is getting fruit all year around. It would be a lot easier to drip colours, but our business has spent a heck of a lot of time to secure food.
Labour shortages in horticulture around the world has also impacted fruit picking.
“Beverage manufacturing deals with seconds fruit, which is blemished fruit. But pickers are prioritising first grade fruit and second grade doesn’t even get picked. So that’s reducing the amount of fruit available. Tie that into getting it here in a reasonable amount of time.
“The Americans have obviously got so much buying power, they’re buying capacity around the world and no one’s going to say no to a large US company if they throw their weight around.”
Shearer says these prices are likely to hang around for at least 12 months.
“We’ve already passed on a price increase. We’ve given everyone as much notice as we can but margins are declining every month as the cost of goods increase and it’s all related to the actual freight price.”
