Diane Foreman: A woman of substance

Diane Foreman's NZ Natural has 680 stores worldwide; another one opens every nine days. Photo / Richard Robinson

If Diane Foreman gets her way, the first thing foreigners will think of when they think of New Zealand is "the country with the fabulous ice-cream".

Yes, folks, we really are becoming the Switzerland of the South Pacific. We're already quite good at chocolate and other dairy foods, so watches and army knives can't be far behind. Because there's one thing everyone agrees on about Foreman - she nearly always gets her way.

To the public, she is probably best known as the wealthy businesswoman who somehow managed to make Don Brash seem sexy. But Foreman's real secret is one she has so far kept mostly to herself: over the past four years she has helped build a burgeoning ice-cream business that is rapidly becoming an internationally known brand, and has led to her being nominated for two major business awards.

New Zealand Natural is not particularly well-known in its native land, partly because Kiwis seem to have a higher regard for foreign brands than we do for home-grown products, and partly because the business itself has such mixed parentage.

Although the original idea for an all-natural Kiwi-made ice-cream was born in Christchurch, the recipe had passed through several hands before Foreman bought it.

The Kiwi who created the business sold it to a South African he met on a plane, who took it to Australia. By the time Foreman heard about it, the business was based in Sydney and she didn't have too much difficulty persuading its owners to sell.

Although the franchise had nearly 200 stores in nine countries when she bought it, the business was losing money, and its 60-something owners were losing interest.

Foreman's master plan was to merge the business with her own company, the Emerald Group, which already made ice-cream for Swiss giant Movenpick and also had the Killinchy Gold brand. But the plan had to be executed swiftly - Emerald was also losing money and the Movenpick contract was for a trial period of only one year. Foreman feared that without another strong brand, her own company might not survive.

That was in 2005, and since then Emerald Foods' turnover has more than tripled. These days New Zealand Natural has 680 stores in 21 countries and opens a new store every nine days, on average. Its aim is to hit 1000 stores over the next couple of years.

Interestingly, the busiest store in its entire global network is in the Auckland suburb of Mission Bay, which operates under the Movenpick brand.

"Fonterra have told us that it's the busiest ice-cream store in the world. Nestle [which owns Movenpick] also say it's the busiest, and one other international company has confirmed it. Nestle have actually sent people down here to see how we can do it."

Foreman recently signed a new four-year contract with Movenpick. As well as Killinchy Gold, which is New Zealand's top-selling premium ice-cream, Emerald also owns the Zilch! brand, which leads the low-fat category. It also used to have Heavenly Treats, but canned the brand because it was simply too expensive to make.

Foreman admits turning both businesses around has not been easy.

"It's been incredibly hard. What turned it around was amalgamating the two and being able to put Emerald Foods and NZ Natural together. Obviously we took people out of both lots of admin, so there were immediate savings. And we were able to get closer to the customer. For example, we've gone into countries where the people in Australia would never have had the opportunity, because they didn't have the R&D and food technology infrastructure that we have."

Another crucial move was hiring former Kapiti Cheeses and Heinz Wattie executive Shane Lamont as managing director. Lamont has a food technology background and an MBA, and Foreman attributes much of the company's recent success to the fact that it has been able to develop specific products for specific markets.

It already spends around $1 million per year on R&D, and plans to boost that to $2 million in the next year.

The company is especially proud of its kiwifruit and pavlova ice-cream, as it proved particularly difficult to get right, says Foreman. Initially, the pavlova chunks kept disintegrating.

"It's all pathetic," she grins, "but it's all the little bits that add up and add up, and they turn into new products which we can sell offshore."

In the Middle East its ice-cream is halal-compliant and in India it is oestrogen-free. In Asia, NZ Natural has 16 per cent of the market and outsells major rivals such as Movenpick, Ben & Jerry's and Haagen-Dazs.

From a standing start five years ago it already has 44 stores in China and hopes to open 30 more over the next two years, including a new cafe-style store it developed specifically for the Chinese market.

It will be the only Kiwi ice-cream brand at the Shanghai Pavilion for next year's World Trade Fair and has also nailed an exclusive contract for the Staples Center in Los Angeles, which is visited by more than 4 million people a year.

New Zealand Natural already sells in 2000 supermarkets in California, and by the end of the year Foreman hopes to have tripled that. She is also excited about the potential of the Japanese market, where it already supplies 1000 restaurants.

Because it is a franchise model, such ambitious global expansion has not required a huge amount of capital, says Foreman. The franchisee has to pay for the licence for each country and has to build the stores.

"Our people fly up there and train them and help them build the stores, then obviously we sell them the ice-cream, so that is a big advantage to our ice-cream business. We also get a percentage of the sales, so we have very strict training guidelines and so on to make sure our percentage keeps up there."

All the ice-cream is made at its factory in East Tamaki, Auckland - except for the 150 or so stores it has in Vietnam, which are supplied from Malaysia because of high tariffs. The Auckland factory employs around 100 people, but all up, around 4000 people are employed across the franchise.

Because it is a private company, Foreman is reluctant to reveal Emerald's turnover. However its success in this month's New Zealand International Business Awards, organised by NZ Trade & Enterprise, gives some clues. It won the category for best international business with a turnover of between $10 million and $50 million.

The company beat some classy contenders, including furniture manufacturer Criterion Group, power solutions company Enatel, noise-cancelling earphone company Phitek, animal health company Simcro Tech and fitness empire Les Mills.

Foreman is also up for another award next week - she is a finalist for this year's Ernst & Young Entrepreneur of the Year, having already won the "best product" category.

She has previously been a judge for the award and has a previous award winner, Michael Whittaker, to thank for getting her into the ice-cream business in the first place. However the process has been tougher than she expected.

She says she entered the awards because she thought it was about time the company raised its profile.

"This was the year to give everything a go, because it's all going pretty well. And a lot of people don't know about New Zealand Natural.

"It's also about attracting really good people to the business, and the more people know about you, the more they are going to want to come and work with you. We just thought it was a bit of an undercooked story."

In almost the same breath, however, she admits the company is cursing the current strength of the New Zealand dollar. Fortunately, it has foreign exchange cover until the end of the year, but took its bankers' advice not to hedge its bets after that.

Like most exporters, Foreman is frustrated that the dollar has again moved in the opposite direction to what most economists predicted.

"We're profitable today but that's because we've got cover in place. When I look out to next year I'm really nervous because we haven't got cover, so we'll just have to take the dollar as it falls."

The downside of sourcing almost all its ingredients from New Zealand is that it can't offset its lower income with lower costs. And in fact, the higher dollar means the milk it buys from Fonterra is also likely to be more expensive.

"For a truly New Zealand manufacturing business, a dollar like this is doom - it's really hard, and when the dollar is going up and the Fonterra payout is going up, it just gets harder by the day. So the [NZ Natural] story is great and we know we can do it, but the thing that holds us back is the dollar. The dollar is just a disaster, and if it goes to [US80c] it could be a tragedy."

The last time the dollar was so strong, Emerald Foods managed to survive only because Foreman was able to subsidise its losses from her other businesses. This time the company is far too big to subsidise, she says, and the only thing it can do is be as efficient as possible and keep very tight control over its costs.

Given that she is a former vice-chair of the Business Roundtable, you might expect her to have an opinion on how the Government might tackle the issue, but Foreman is surprisingly reluctant to suggest a solution.

"All I know is that I don't know, and is it right to be tied to the US dollar? I don't know. I cannot believe the New Zealand dollar is worth what it is - that can't possibly be right. So is it being built up and inflated outside of New Zealand? I don't know, but I think wiser heads than mine should sort it out."

In fact, she admits, her time on the Roundtable was more about networking and learning how public policy works than trying to change the world.

Foreman says she still has enormous respect for Roundtable chief executive Roger Kerr, and says working with its chairman, Rob McLeod, was "amazing". "But I spent a lot of time lobbying and at the end of the day I've come to the conclusion there's only so many windmills you can tilt at".

The Government is probably being lobbied by importers as well, and the truth is that it probably has no idea what it should do, she suggests.

Foreman has previously been involved in other organisations, including charities such as the Robin Hood Foundation, but says she has deliberately cut back in recent years to enable her to put more time into Emerald Foods.

However she remains involved with Global Women, the mentoring group founded by lawyer Mai Chen and former Prime Minister Jenny Shipley.

As a mother of four (her youngest is 12, the oldest 29), and step-mother of two, she is also acutely aware of how little time she spends with her children - something she believes men in her position don't feel quite so guilty about.

That said, she is encouraged by the current generation of young male executives, who seem to be far more demanding than their predecessors about having family time.

But Foreman still despairs that so few women are choosing business as a career. She believes it is largely due to women's innate conservatism, but worries that some of the attitudes that make it difficult for women to succeed in business are not going to change unless more pioneers are prepared to pave the way.

"Boys need to see strong female role models and often they don't. I really don't understand it. It fascinates me, but I think women need to be different mothers, and I think schools need to teach boys differently.

"Our women are out there - they're strong in the medical schools and in the professions, but what I'd like to see is more women in business. The really bright ones want to be a doctor or a lawyer, but they're missing out on this whole sector and until we get more women in business they're not going to be role models to their sons."

She has spoken publicly about the years when she struggled as a single parent, before she met and married businessman Bill Foreman, who encouraged her to take over the family business, plastics manufacturer Trigon. With her husband's blessing, she eventually sold Trigon to US company Sealed Air Corporation, for $130 million in 1996.

"I'm eternally grateful because he gave me a stage on which to dance. He's been a fantastic mentor. He's never questioned anything I've done and although we're separated now we still have a great relationship."

After Bill retired she invested in several businesses, some of which she admits have been disasters, such as an attempt to set up private hospitals in Australia. But she remains optimistic about the potential for the Emerald Inn in Auckland, which she bought out of receivership 15 years ago. It is now surrounded by other properties she also owns on the Takapuna beachfront, and she hopes to one day turn the block into an upmarket retirement village.

She also retains an interest in the MercyAscot private hospital group, and is a partner in recruitment company Emergent. The best thing about owning a recruitment company, she notes, is that it means she gets first dibs on the talent.

While Emerald Foods will remain her main focus in the near future, Foreman does not expect to keep the business forever. But she does not yet have an exit strategy.

"There will be a day when I say 'enough' and I don't know when that will be. But it's probably within the next five years."

She is even contemplating moving overseas eventually. But in the meantime there are more houses to be renovated and more ice-cream to be sold.

"I really don't know what will happen. I haven't got a plan - maybe a management buyout or something like that would be great, but it's not on a scale to do that yet. We've still got a lot of growing to do."