A Kiwi twist on an Italian classic

James Grigg hasn’t precisely sold ice to Eskimos by cracking the Italian market with his Kiwi-made version of the traditional Italian lemon liqueur limoncello. But he reckons he’s convinced many — including a few Italians — that his Lemon Z brand is superior to any limoncello produced in its country of origin.

“One of our reps in Australia is Italian,” says Grigg. “He said ‘this is the best limoncello. We can’t make anything like this in Italy’.”

Grigg and his wife Bronwyn launched Lemon Z, which is produced from their base in the Bay of Islands, in October 2005. The company featured as a ‘Startup’ in Unlimited a year later and rode a wave of domestic demand after the liqueur won ‘best in class’ (for a lemon citrus liqueur) at the International Wine and Spirits Competition that July.

Grigg admits he would have expected the company to be further down the growth track by now. “We’re having to grow organically,” he says, “which is a polite way of saying we’d like to be able to fund more investment but we’re not able to.”

Growth this financial year, however, is pegged at an impressive 30%. And with gains now being made offshore, the company’s next likely step is to seek outside investment to scale up the business.

“Limoncello is a growing category and there will end up being two or three brands that are top in the world and we have a chance of getting [there]. But over the next three or four years we need to get our skates on to get there.”
Since speaking with Unlimited in 2005 the company has begun exporting, and 60% of its total annual production of around 50,000 bottles now goes offshore.

Growth has been particularly strong in Australia, where supermarket giants Coles and Woolworths also control about 70% of the liquor market, says Grigg. Lemon Z has been available through Coles’ Vintage Cellars and First Choice stores since the beginning of 2008 and the company is in discussions with Woolworths, which owns the massive Dan Murphy’s chain.

In mid-2008 the company appointed an Australian distributor, who has also focused on getting Lemon Z into bars and restaurants. The on-licence market is not huge, says Grigg, but it helps forge the company’s reputation.

“Any bar that the reps go into, they change straight away to using our limoncello instead of any Italian limoncello they are using because the flavours are so much stronger and they say ‘this is just much better quality’.”

In 2009 another coup was a deal with the Nuance Group that saw it break into duty-free stores in the major Australian airports of Sydney, Melbourne, Brisbane, Cairns and Perth, where Lemon Z is the only limoncello sold.
The UK is another major Lemon Z market, where it is available in the Oddbins retail chain, and the company recently sent its first pallet of product to China, where it has appointed a Shanghai-based agent.

With no advertising budget, the company’s main promotional tool has been exhibiting at food shows in New Zealand and Australia. Grigg says the tremendous feedback the company gets on its product at the shows has helped buoy the couple’s confidence during the difficult startup phase. It also spurred the company’s latest product — Lemon Z ice cream — launched in January in response to feedback from the food shows that customers loved to pour the liqueur over ice cream.

The ice cream is being made by James Oliver of Auckland-based Artisan Gelato, who trained under master gelato makers in Italy, and it will sell in supermarkets as well as gourmet food stores. “The idea of putting an ice cream out isn’t just to start another business,” says Grigg, “but it will also help cross-fertilise our marketing. People looking at the ice cream will see it comes from a liqueur.”

When it comes to advice he’d offer others thinking of starting a business, Grigg emphasises the need to keep your head down and your spirits up.

“If you’ve got an idea that you think is going to work, don’t listen to the negative comments,” he says. “Don’t spend a fortune on research because you might end up with the wrong answer. Just go for it.”