Executive column: Dairy Queen chilling the heat in Indonesia
“Even if the economy is difficult, people will find a way to go out and buy a Blizzard or buy a cone,” said John P. Gainor, the CEO of International Dairy Queen Inc., the makers of soft serve treats, Dairy Queen.
The meltdown of the US economy has prompted International Dairy Queen Inc. — the maker of soft serve treats since the early 1940s in Illinois — to find the cool relief in the growing economies of the Asian region, notwithstanding Indonesia.
The Jakarta Post’s Mariel Grazella spoke with John P. Gainor, Jean Champagne, Dairy Queen Canada Inc. International Groups operations chief, and Johnny Liando, the CEO of PT Lumbung Reksa Arta, Dairy Queen’s local franchise holder, on the prospects of the Americana brand in Indonesia since the first outlet was set up in 2004.
Question: How many outlets are you running and what are your expansion plans this year?
Johnny Liando: We currently have 12 stores. Jakarta has 10 stores and in Bandung, as well as Surabaya, we have one store each. We plan to open four new stores in the third and fourth quarter in cities such as Bali. We might add Makassar and Medan to the list next year.
We are planning to open more stores because the economy is stabilizing. I think Indonesia has many great cities besides Jakarta. We want to be everywhere, but this takes time.
John P. Gainor: I have traveled through Asia, and I must say, the country has definitely developed. You have many shopping malls which I call ‘A’ malls because of the upscale brands found in it. You also have many Western brands in the food industry as well as in the retail industry. We just believe that Indonesia can be a very strong market for our brand.
Certain stores of yours could be found in relatively upscale malls in Indonesia. What does this say about your target market and how does your Indonesian target market differ from those in other countries?
Johnny Liando: Dairy Queen is unique in a way that our customers range from the young people to old. We have seen more and more young people and even housewives going for our ice-cream cakes. These are the people following the new trends in the market.
Jean Champagne: The target market is really the 13 to 35-year-olds, 60 percent skewed to female. Within that range, we have young mothers as well as children with their grandparents.
John P. Gainor: In Asia, we have a much younger skew in terms of target market compared to North America. This is because we are a 72-year-old brand in the US but in many other countries, we have been around for only 12 years.
The economic crisis has hit the US hard, causing household consumptions to slump. Has this caused you to turn more of your focus to Asia, including Indonesia, where the growth story is?
John P. Gainor: The Asian market is our fastest growing market worldwide. We now have 800 stores across Asia. We have just opened 500 units in China and we already have 265 units in Thailand.
We are looking into Indonesia because it is the fourth most populated country but we only have 12 units. We know the potential to grow here is quite large so over the next five years, we are thinking of having more than 50 units.
The key to franchising (in Indonesia) is to find the right group to work with and our job is to support that group in Indonesia.
So, currently, China has the most Dairy Queen stores in the Asian region. Will you grow your Indonesian market to the size of your Chinese market, given that Indonesia has a large population and a rising middle class too?
Jean Champagne: The answer to that would depend on how the economy would evolve. We had 50 stores in China until probably 2005 and because our target market – the emerging class – grew so rapidly; that afforded us the opportunity to for our franchise to grow rapidly.
However, as you know, the economy in China is slowing down and other markets are picking up from an economic perspective and the market has been strong here in Indonesia over the last two years.
How do you adapt the flavors of your ice-cream to regional likings?
Jean Champagne: Our brand of soft serve is made with exactly the same recipe regardless which dairy manufacturer in which country made it. Nothing changes.
What we do is we localize (certain) flavors in the Asian market, the North American market and the Latin market. For example, we have many products that are made of one of our base product, which is green tea ice cream. In China, we add red beans to the green tea ice cream whereas we introduce other nuts and fruits with the green tea ice cream in other markets depending on the local flavor profiles. I think we are doing honey in this (Indonesian) market.
John P. Gainor: In North America, people like chocolate more than fruits.
This is the strategy we have employed with our brand. People are looking towards our brand, which is Western, because they know it is high quality. It is very important to customize the menu to appeal to what the consumers want. So we spend a lot of time figuring out what the consumer in each market wants instead of having us decide what to give to each market.
It is fair to say that the number one selling Dairy Queen Blizzard is the one with Oreo [cookies] no matter what country you are in. Oreo just mixes well with Dairy Queen soft serve.
And what may be Warren Buffet’s favorite flavor?
John P. Gainor: Warren likes a variety of things. Warren lives Omaha and he probably goes to Dairy Queen if not every week, every other week. So when Warren goes to Dairy Queen, he normally has food and treats, but he is known to eat Dilly Bars and Vanilla Orange Bars.