Baking a Family Fortune: The Rise of Lotus Bakeries

In a world full of headlines about the latest industry disruptors and tech unicorns, there’s a snack company that’s been baking up a storm behind the scenes. Meet Lotus Bakeries, a family-controlled powerhouse that has turned heads with an impressive 17% compound annual growth rate in EBIT and an astounding total shareholder return of 177x over the past 20 years. Despite these remarkable numbers, this Belgian snack company remains surprisingly under the radar. So, let’s dig into the secret recipe behind Lotus Bakeries’ extraordinary rise and why this snack sensation deserves a spot in the spotlight.

• Steady growth: Lotus Bakeries has achieved a 10% annual revenue growth for 35 years, driven by quality and successful acquisitions.

• Iconic Biscoff: The Lotus Biscoff brand has had a 16% sales CAGR in the latest decade and aims to become a top 3 global cookie brand.

• Family ownership: The Boone family’s continued control, still with over 50% ownership, has ensured long-term vision and brand consistency.

• Healthy snacking: Lotus has expanded into the natural foods segment with brands like Nākd, TREK, and BEAR, growing this segment by 17% annually since 2015.

Lotus Bakeries, renowned for its delectable treats and iconic Speculoos cookies, was founded in 1932. Established in the quaint Belgian town of Lembeke, the company was founded by the Boone family with a vision of creating high-quality, traditional cookies that would enchant local taste buds. At the heart of their venture was the Speculoos cookie – a true Belgian treasure.

The Speculoos cookie is a spiced biscuit with a distinctive flavor from a blend of cinnamon, nutmeg, and other warming spices. What sets it apart is its caramelized sugar that gives it a deliciously crispy texture and deep, rich taste. Traditionally, these cookies are shaped using carved wooden molds that give them their unique, embossed designs, making each cookie a little work of art.

Back in those early days, Lotus was all about perfecting this beloved cookie. The Boones baked each batch with a lot of love and care, sticking to old-fashioned methods to make sure every cookie was just right. The Speculoos cookie’s unique flavor and crispness made it a hit, and it wasn’t long before the Boones started dreaming bigger.

By the 1950s, they realized their tasty treat had a chance to charm people far beyond Belgium’s borders. So, they set out to introduce their Speculoos cookies to the world.

In the 1950s, Lotus took a significant step forward by beginning to package their beloved Speculoos biscuits individually. This move was not just a practical change but also enhanced the cookies’ appeal and convenience. Individually wrapped biscuits maintained the freshness and crispness of the Speculoos and allowed for greater visibility and accessibility. This innovation made it easier for customers to enjoy a single cookie on the go, and it marked the beginning of a more refined approach to product presentation.

By 1956, Lotus had begun to expand its reach within Belgium. The company started offering its Speculoos biscuits in Belgian catering establishments, particularly alongside coffee. This pairing quickly became popular, as the spiced sweetness of the Speculoos provided a perfect complement to a rich, hot cup of coffee. This strategic placement helped introduce the cookies to a broader audience, making them a staple in cafés and restaurants. The pairing became a beloved tradition, with the Speculoos biscuits enhancing the coffee experience for many Belgians.

As the 1960s then rolled in, Lotus set its sights on expanding beyond Belgium. The company began distributing the Speculoos biscuits to neighboring countries, marking the start of its international journey. This expansion was driven by the growing recognition of the Speculoos cookie’s unique flavor and quality, and the high standards set by its founders ensured that the cookies made a positive impression abroad.

The 1960s expansion into neighboring countries laid the groundwork for Lotus’ future global success. As the Speculoos cookies crossed borders, they garnered new fans and established a foothold in international markets.

In 1974, Lotus merged with Corona, a respected Belgian bakery. At the time of the merger, Corona had established itself as a key player in the Belgian bakery sector, renowned for its expertise in producing a wide range of baked goods. The company had a strong reputation for quality and innovation in cakes and pastries, which complemented Lotus’ focus on Speculoos biscuits. The merger allowed Lotus to leverage Corona’s established market presence and production capabilities, integrating a new dimension into its portfolio.

Corona was owned by the Stevens family, whose deep roots in the Belgian bakery industry contributed to its strong reputation. Integrating Corona’s expertise and established market presence allowed Lotus to diversify its offerings. The Corona product lineup included specialties like fruit cakes, spongy cakes, and assorted pastries, which Lotus began to market alongside its original Speculoos biscuits. This expansion into cakes and pastries not only attracted new customers but also strengthened the company’s position as a versatile and comprehensive bakery brand.

The merger with Corona also provided Lotus with several operational advantages. The integration of Corona’s state-of-the-art production facilities and distribution networks allowed Lotus to enhance its production efficiency and reach a wider audience. And, thanks to Corona’s established supply chains, Lotus was enabled to expand its market footprint by smoother distribution of the newly introduced products

Moreover, the combined expertise of both companies fostered innovation in product development. The merger enabled Lotus to adopt new baking technologies and techniques, improving the quality and variety of its baked goods. This operational synergy was instrumental in maintaining high standards while scaling production to meet growing demand.

After being a staple in Belgian households for decades – and an important part of people’s coffee routines – Lotus undertook a significant transformation in 1986 by rebranding its classic Speculoos biscuit as “Lotus Biscoff.” The name cleverly combines “biscuit” and “coffee,” underscoring the product's intended purpose as a delightful accompaniment to a cup of coffee. By focusing on this synergy, Lotus aimed to elevate the biscuit from a regional treat to a premium global snack.

From the early days, Lotus adeptly tapped into the growing trend of coffee consumption by positioning their Speculoos biscuits as the perfect sweet complement. They recognized that as coffee drinking surged, so did the desire for a delightful treat to enjoy alongside it.

A key to their success was forging strategic partnerships with major airlines, such as United Airlines and Delta Airlines. By including Lotus Biscoff in their in-flight service, Lotus not only reached a global audience but essentially became synonymous with the coffee break experience. This clever move helped embed Biscoff into the travel routine of countless passengers.

This would through the years become an invaluable treat for travelers, and – as a United Airlines passenger stated when the company briefly removed the biscuits in 2020 – “You can take my legroom, but you can never take my Biscoffs.”

In recent years, Lotus has made a splash with a series of exciting brand collaborations. You might have seen the buzz around Biscoff’s partnerships with major names like Nestlé, Krispy Kreme, and McDonald’s. These collaborations have led to some deliciously innovative creations, such as the indulgent Lotus Biscoff McFlurry at McDonald’s and the irresistible Lotus Biscoff doughnuts at Krispy Kreme. These high-profile tie-ins have not only showcased the versatility of Lotus Biscoff but also delighted fans by bringing their favorite cookie flavor into new and unexpected treats.

Now, let’s try to further uncover the business side of things.

Lotus has grown beautifully over a long time while never compromising on quality. Historically, doing this appears quite challenging while scaling a consumer packaged goods (CPG) business. The usual route typically involves taking shortcuts to drive revenue – often after being acquired by a larger conglomerate – sacrificing the brand’s premium image and product quality in the process.

In Lotus’ case, maintaining high quality has been a guiding principle since Jan Boone Sr. founded the company with his brothers Emiel and Henri, creating the first caramelized biscuit using all-natural ingredients.

Since 2011, the company has been led by Jan Marcel Matthieu Boone, a member of the third generation of the Boone family and the grandson of the founder Jan Boone Sr. The family’s continued ownership and control – still retaining over 50% of the shares and voting power – has likely been a crucial factor in preserving the brand’s quality and enduring success.

One could imagine that being family-owned is a great perk for these types of companies where continuously honing the heritage and quality is a core part of the success; it simply allows for much longer-term thinking, instead of focusing on “pleasing Wall Street”, although Lotus seem to have managed both.

Its super consistent, around 10% sales CAGR paired with increasing margins for three and a half decades is incredibly impressive in such a competitive category. Carefully selected acquisitions in more recent years, plus an expansion of the Lotus Biscoff brand, have resulted in an even higher growth rate. The Lotus Biscoff standalone has grown 16% on average over the past decade, and there seems to be continued room for growth, as CEO Jan Marcel Mathieu Boone concluded in the H2 2023 earnings call:

Lotus’ portfolio is organized into three main brand segments, each with its own focus and growth trajectory. These segments – Lotus Biscoff, Lotus Natural Foods, and Lotus Local Heroes – illustrate the company’s multifaceted approach to capturing different market opportunities and catering to varied consumer preferences.

1. Lotus Biscoff: As the crown jewel of Lotus Bakeries, the Lotus Biscoff segment is a major revenue driver, accounting for 54% of branded revenue (revenue generated from the company’s proprietary brands) in 2023. This segment has experienced impressive growth, with a 20% annual growth rate and a historical CAGR of 16% from 2013 to 2023. The strategic ambition for Lotus Biscoff is elevating it into one of the top three global cookie brands, and a recent partnership with Mondelēz aims to expand the brand in India and create co-branded chocolate innovations in Europe.

Here’s Mondelēz CEO Dirk Van de Put in the Q2 2024 earnings call, talking about the partnership:

2. Lotus Natural Foods: Representing 24% of branded revenue, the Lotus Natural Foods segment has also shown remarkable growth, with a 25% annual growth rate and a historical CAGR of 17% from 2015 to 2023. This segment focuses on expanding its footprint through internationalization, innovation, and strategic acquisitions. Key brands under this segment include Nākd, TREK, BEAR, and Kiddylicious. These brands cater to the growing demand for healthy, natural snacks.

3. Lotus Local Heroes: Contributing 22% to branded revenue, the Lotus Local Heroes segment experienced a 15% growth rate in 2023, with a historical CAGR of 3% from 2013 to 2023. This segment is dedicated to securing market leadership and ensuring strong cash flow. It encompasses beloved regional brands that have established themselves as favorites in their local markets, such as Dinosaurus, Annas, Peijnenburg, and Snelle Jelle. The segment’s strategy focuses on leveraging their established reputations while driving consistent performance.

Among the cherished brands in the Lotus portfolio is Annas, known for its thin gingerbread cookies. For Swedes, these crisp, spiced treats are more than just a holiday indulgence – they’re a tradition. 90 years after the two sisters Anna and Emma Karlsson opened their home bakery in Stockholm, Lotus acquired the company in 2008 intending to expand Annas’ reach beyond its Swedish roots and propel its popularity into the global markets.

The integration of Annas into the Lotus family was a game-changer for the brand. With the backing of Lotus, Annas gained access to enhanced resources, production capabilities, and global distribution networks. This support allowed Annas to scale its operations and amplify its marketing efforts, turning a beloved Swedish brand into an international sensation.

Annas' ginger thins, celebrated for their light, crispy texture, and rich, warming spice, quickly won over taste buds around the world. By 2022, Annas had expanded its footprint to over 20 countries, including major European markets like France, Germany, and the UK, and emerging regions in Asia and Latin America. Today, approximately 60% of Annas’ production is exported, with key markets including the United States, China, and Japan.

Lotus Bakeries is a prime example of how long-term vision, family ownership, and a commitment to quality can powerfully shape a company’s success. While many companies in the consumer packaged goods space opt for shortcuts or sacrifice product quality to scale quickly, Lotus has taken a different path. By maintaining control within the Boone family and focusing on thoughtful expansion – both through strategic acquisitions and organic growth – Lotus has managed to grow impressively while staying true to its roots.

The company’s steady revenue and EBIT growth, bolstered by its iconic Biscoff brand and a carefully curated portfolio of natural and local favorites, demonstrates that success doesn’t always have to be loud. From humble beginnings in Belgium to becoming a global snack powerhouse, Lotus continues to prove that staying true to your core values can yield remarkable results – even in one of the world’s most competitive industries.