East Auckland-made bagels a hit across the Tasman

Saturday, 19 October 2024

Abe’s Bagels has had a delectable year, definitively cracking the Australian convenience goods market in a move that has proven notoriously difficult for New Zealand companies.

Abe’s sells through Australia’s two major supermarkets, Coles and Woolworths, and is now the market leader within the bagels category in both Australia and New Zealand.

Jesse Newson, chief executive of Abe’s Bagels, said the company was on track to exceed $50 million in revenue over next couple of years, as a result of growing demand across the Tasman. Revenue grew 16% last year and was destined to do a further 12% this year.

The East Auckland bagel maker has doubled in size and spent $6m on expanding manufacturing capability in its Mt Wellington bakery.

It makes about 1 million bagels each week ‒ equivalent to about 7000 an hour, of which at least 70% are shipped to and sold in Australia.

Newson, who joined Abe’s Bagels as chief executive in January, said the successful and growing business in Australia was one of the reasons he was interested in joining the company.

“We've had a steady year in both the Australian and New Zealand market, but certainly the Australian market is outperforming New Zealand,” said Newson, who was previously chief executive of Coffee Supreme.

He put Abe’s success in Australia down to being a market leader and having a significant shelf space footprint.

“It takes a lot of hard work and spending time on the ground in market, understanding what it is that consumers are wanting and working to support the retail partners. Those are probably the two key elements of success for Abe's in Australia,” he said.

“Growing our awareness and having physical product availability for consumers is a big part. Bagels wrestling its fair share of shelf space has been a crucial part of the success.”

In New Zealand, the parmesan bagel is a top seller for Abe’s, whereas in Australia it is the plain bagel. “We’ve tried cheese three different ways in the Australian market and it has never taken off the same as in New Zealand.

“I don't know that we've ever quite worked out why that is, but it’s an interesting insight given the many market similarities between Australia and New Zealand,” said Newson.

Abe’s Bagels operates out of a 3000m² bakery in the Auckland suburb of Mt Wellington and employs 130 staff which run a 24/7 operation.

The company first expanded into Australia in 2015, and by 2017 sales in that market had overtaken New Zealand.

Abe’s once had a cafe in Auckland’s Shortland Street, that was shut down in 2006 in favour of focusing on wholesale distribution. At that time the brand had caught the eye of Pak’nSave Albany and the company then decided to pivot into grocery. It is sold in both Foodstuffs and Woolworths stores today.

The brand was founded 28 years ago in 1996 by Megan Sargent and Brent Milburn, inspired by the bagel scene in the United States. The name Abe’s was chosen as a nod to the Jewish origin of bagels.

Newson said Abe’s introduced a new production line this year to manufacture thin-style bagels.

The company had been working to increase its operational capacity over the past four years, including investing in two 20-tonne automated flour silos that allow it to store flour and distribute it into the baking process without needing to lug round bags of flour, and a cooling tower that allows bagels to be baked, cooled and packaged within 30 minutes.

It had recently invested in “a new piece of kit” coming from Canada that will allow it to increase its production capability and consistency, to be commissioned in December. That will boost its output from about 7000 bagels an hour to about 12,000 an hour.

Newson said the cost of living crisis forcing people to eat out less and instead cook more at home had contributed to an increase in sales for Abe’s.

“Like everyone, our business was materially disrupted through Covid, particularly on the supply chain side. We've had headwinds since then as well, but planning ahead and introducing several years ago our everyday bagel, … a value offering, has meant that people who are buying bagels can trade down in terms of the range and buy them every day. That was an intentional product strategy to see us fare well in times like this.”

Abe’s sees huge potential for further growth in Australia.

Newson said household penetration of bagels in the US was 60%; that had grown to about 19% in New Zealand and was less than 12% in Australia.

The company exports to the Pacific Islands and Singapore, and this year conducted several research trips through Canada and the United States.

“The Australian opportunity we still see as being a big one for us to continue to, I guess, leverage the market advantage that we've got. And so one of the things that we're doing at the moment that could be partly contributed to our success and tougher economic times is continuing to invest in marketing,” he said.

“Raising the profile for the humble bagel is something that we're laser-focused on, and doing that in Australia is key to our growth plans.”