The wider Asia Pacific is on Little Moons’ radar as the UK business prepares to roll its mochi dough ice-cream balls into New Zealand and Hong Kong, building on a positive reception in Singapore and Australia.
Little Moons has evolved from a UK start-up, set up in 2010 by brother and sister Howard and Vivien Wong, into a multi-million-pound company with distribution across western Europe. A new factory is on the cards early in the new year, its first outside London, following a minority investment from L Catterton in 2022.
Mike Hedges, the former Proper snacks and Tyrrell’s crisps executive, is Little Moons’ CEO. Speaking to Just Food, Howard Wong says he’s in charge of new product development, while ‘Viv’ is the “cultural guardian of the business”.
Just Food: What sparked the idea of setting up Little Moons?
Wong: We started the company in 2010 but the roots of the business went way back beyond that. My parents ran an Asian bakery that distributed and made patisserie products for Asian grocery stores in the UK. One of their hero products was traditional mochi, wrapped around red bean paste.
I’d grown up with the product but I knew it didn’t have a mass audience when combined with bean paste. We had the vision of combining it with really high-quality ice cream and bringing it to a more mainstream audience.
At the time, Japanese cuisine was beginning to take off in the UK and we saw that people hadn’t really discovered the dessert side of Japanese cuisine.
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Just Food: Do you also make the ice-cream component yourselves?
Wong: Absolutely. We make everything from scratch.
Just Food: Why have the mochi balls proved so popular?
Wong: For the ice cream we make, we always try and benchmark it to be the best ice cream possible. Beyond just making mochi ice cream, it’s really important to us that if you have a pistachio flavour, we want the ice cream to taste as good, if not better, compared to pistachio ice cream you’d find in a general gelato shop.
Then you combine that with this added textural dimension, which is quite polarising. Format-wise, it’s allowing you to eat ice cream in a portion-controlled, permissible way. Rising interest in international cuisine and more openness to try different things and different textures have made it a popular product and brand.
Just Food: Do you do anything to control the calorie content?
Wong: When we develop products, primarily, the most important thing is taste. We use really high-quality purees and ingredients, and we use fresh milk and cream and milk powders. The calorie point of our products is generally down to the size and format.
We didn’t formulate things to be low calorie. That’s not our ethos. But we did develop a range of HFSS-compliant ‘refresho’ balls, formulated to make sure we hit certain attributes. And they tend to be about 60 to 70 calories per ball.
Just Food: Does Little Moons supply foodservice?
Wong: We started off supplying restaurants, that’s really our heritage. Places like Wagamama, Wasabi, Itsu and lots of high-end restaurants. Now grocery is definitely the dominant part of our company but we still do a lot of foodservice. It’s probably more like 80% grocery now.
Just Food: When and where are you launching in New Zealand?
Wong: We’re going into Countdown – the sister company of Woolworths. It’s an imminent launch.
We’re doing really well out in Australia. Australians love ice cream. They eat three times as much as the average Brit even though they only have a third of the population. It’s quite an interesting market for us.
Just Food: What about Asia given it’s a Japanese-style product?
Wong: We are already in Singapore and we’re launching into Welcome supermarkets in Hong Kong. That’s happening probably early next year.
We use Italian-style gelato machines, fresh British milk and cream. So when I compare it to mochi ice-cream products in Asia, obviously cheaper, but the quality of the ice cream is a lot better. So there is a potential opportunity in Asia, but we’re yet to see just how big it could be.
Just Food: Any plans for further European expansion?
Wong: Our core markets are Germany and the DACH countries – Germany, Austria and Switzerland. We recently got into Portugal, we’re growing in Italy, Belgium is a really big market for us; we’re almost in every major retailer in western Europe. The UK is our biggest market and then France.
Just Food: How do exports stack up for Little Moons?
Wong: It’s about 50%, we’re quite a rare company in the UK to have that much business outside of the UK.
We’ve always been a really international and outward-looking company. Even in the first two years, I was doing trade shows in France and Germany, seeing those as equally as important as the UK, which goes against the advice of loads of people who say, ‘stay really focused on your home market because international is a massive distraction’. There is definitely some truth to that but I’m glad we took that policy.
Just Food: Are you and Vivien still the majority shareholders post the L Catterton investment?
Wong: We don’t actually disclose the terms of the deal but Viv and I are still heavily involved and part of the company. We started very small and basically invested everything back into the company for about a decade.
Just Food: Why did your recent results compare 12 months to 18 months?
Wong: That’s just because our financial year-end was June and we realised for an ice-cream company it really doesn’t make sense to have a financial year ending in June because all your activities are in the summer.
Trying to plan your budgets for the next year and you don’t really know how July or August have landed, which makes it really hard to commit to spend and advertising. So we switched the year-end to December.
Just Food: Did you see any volume impact from the relatively poor summer in Europe?
Wong: We’re seasonal, like any other ice-cream business, maybe slightly less seasonal. But the bad summer did impact our results.
Just Food: How has Little Moons fared through the inflationary cycle?
Wong: It’s definitely been really challenging. Ingredients prices shot through the roof, labour costs are going up – it’s been really difficult.
I think on the ingredients side, we were quite lucky that we were scaling so fast and growing. We were able to mitigate some of the inflationary pressure by buying smarter and going up the chain as we scaled, so that was positive.
But it still definitely impacted us. We were really lucky to have signed quite a long-term energy contract but that came to an end. We’re now [seeing] much more expensive energy.
Just Food: Did you have to raise your commercial prices?
Wong: Yes, we did. With our product, you can’t really engineer the product. A lot of brands had shrink-inflation. We’re not going to offer five mochi balls in our pack instead of six or make them any smaller because I think they’re the perfect size.
Just Food: I guess you’ve had a consistent growth trajectory with some stumbles?
Wong: Absolutely. Obviously, there’s so many ups and downs of business but, through the last 13 years, we’ve been consistently growing and performing well. Even before we went viral on TikTok, we were one of the fastest-growing food brands in the UK.
The last few years have been rapid growth. We’ve won a few awards and we’re doing really well in exports. And I think it’s just good timing.
Just Food: Will labour costs and shortages be a challenge going forward?
Wong: Depending on the season, [we employ] anywhere between 300 to 400 people.
We already pay our staff pretty well and so we don’t have a problem with retention when it comes to our production staff. Inevitably, it will be an issue as inflation continues to be, not double digits, but quite high.
I think when we move into our new factory it’s a whole different marketplace outside of London but yet to tell how much it will impact our cost base.
Just Food: What’s your outlook for inflation?
Wong: We’re not at a deflationary point, it’s just rising at a slower rate. I think it will continue to be an issue over the next 12 to 18 months, who knows, I don’t have a magic ball. But I think retailers are now beginning to really push back on any price rises.
Just Food: What does L Catterton bring to the table?
Wong: Catterton has been a great partner, they understand consumer spaces. They’ve been very supportive of our plans, with the new factory build. They have a black book of contacts and people that can help you when you have challenges. They help lubricate the ease of doing business.
Just Food: Do you have any competitors given Little Moons’ unique proposition?
Wong: Obviously, we’re competing against handheld ice cream in general and I think that a lot of the big players are looking to develop, or have already launched, competing bite-sized ice cream. There are rumours that some of the big guys might be launching a mochi SKU themselves.
It’s probably coming – whenever you have success people will try and get a piece of the pie.
Just Food: What about, then, ice cream mochi balls on a stick?
Wong: We’re looking at different formats and different eating occasions – we just launched a two-pack impulse product. We’re always looking at exciting NPD, which is a big part of our future plans but I can’t give anything away at this point.
There is a lot of opportunity. We have a dynamic, exciting, youthful, colourful ice-cream brand. And a lot of the big brands have been around for 30-40 or maybe more years, so there’s room to develop products that bring in new consumers or bring excitement to the category.