Company Profile - Zuru

Zuru - Setting sights high

Zuru, one of the fastest growing toy companies in the world, entered 2023 as the UK’s No.7 supplier and is enjoying continued stellar performances from brands including X-Shot, Rainbocorns, Smashers, 5 Surprise and Sparkle Girlz. Toy World editor Rachael Simpson-Jones caught up with Zuru general manager UK & Ireland, Will Collinson, about the company’s growth plans, its approach to content and marketing, and why its focus on value is winning over consumers.

Founded in New Zealand in 2003 and now headquartered in Hong Kong, Zuru comprises three distinct businesses: Edge, Tech and Toys. While Edge focuses on the FMCG channel with brands such as Monday (personal care & beauty), Nood (pet care) and Rascal & Friends (baby care), Tech deals in design-it-yourself kit homes built with automated end-to-end production. You might be wondering what kit homes have to do with toys, but as Will explains, the sector of the business has resulted in a raft of proprietary technology that’s helping produce impressive new toys – but we’ll come back to that.

Of Toys, Edge and Tech, Toys currently remains the largest and most established business. Will has been with Zuru for eight of the company’s 20 years in the toy industry, during which time he’s seen it go from strength to strength. At the start of our interview, he played me a corporate Zuru video in which the company was variously described as agile, imaginative, disruptive and fast-paced. It also revealed that within a decade, Zuru aims to rank alongside the likes of Apple, Tesla and Google.

“We get that these could be considered lofty ambitions, but the owners set very high bar for success, believe in working at blistering pace, and that you never fail, you only learn; this mindset is one of the reasons Zuru has powered its way onto the toy scene over the last decade,” Will tells me. Zuru is family owned and operated, with Nick Mowbray (Zuru’s co-founder) very much the face of the business. Nick works closely with his older brother Mat (described as an engineering genius), to drive efficiencies from manufacturing, operational and product direction standpoint, as well the burgeoning product pipeline to discover the hottest next toy. From humble beginnings growing up on a dairy farm in Hamilton, New Zealand, the Mowbray siblings have created a toy empire worth billions.

Like many toy companies, Zuru has benefited in recent years from shifting consumer habits. Shoppers are spending less on experiences such as days out, and more on at-home entertainment such as toys and games.

Last year was one of Zuru’s best yet, finishing as No. 7 UK toy supplier (Circana), up from No. 10 four years ago, and although 2023 has been a little soft so far, the company is still showing double digit growth of +11% and is expecting big things from the second half.

Will explains: “We’ve got the ‘sexy’ stuff like Mini Brands (the No. 1 toy property on TikTok), which has been a huge success story over the past couple of years, as well as dominant core brand such as Rainbocorns, Smashers and X-Shot, all of which contribute to the sustainability and futureproofing of our business. Zuru is based on three pillars. Value - we look to disrupt a category and offer marketing-leading quality at highly competitive pricing; Innovation - we secure the global rights to major brands or develop them in-house; and Licensing - a small portion of our revenue, maybe 20%, but an area we’re leaning into more in order to realise what we believe could be significant share gains. We’ve expanded our distribution yet again, so our share of shelf is bigger than it has ever been, and while there are some other big players out there who are absolutely smashing it – I’m talking about the likes of Moose, Jazwares and some major newcomers in certain categories –we’re relentlessly focused on doing the things we do best.”

“The inflationary pressures the industry is facing are playing to our strengths in value offerings,” Will adds. “We operate the back end quite differently to other companies. When we identify a core category with a 5-7 year lifespan, let’s say, we tool that product to be made by machines, fully automated. Aside from Lego, we’re the only company to do so at scale and it pays off long-term.”

For Zuru, the little things are proving the biggest winners. Its best-selling collectible Mini Brands range has enjoyed three dominant years in the miniature toys space, arguably having paved the way for others to follow suit, finishing as 2022’s No.6 item in the total market.

Will feels that this year could see ‘peak mini’, though newcomers to the category, including MGA and Funko, will surely grow it further. Next year promises a refresh of Mini Brands, with surprising new partners and between 300-400 individual licences injecting fresh energy and excitement into the line.

Zuru’s Sparkle Girlz doll brand was acquired in 2018 from Hong Kong based manufacturer Funville. Since then, it’s been through various integration phases - the last of which takes place this year - and has also been considerably streamlined. Redesigned packaging and cleaner price points have turned it into a much more attractive proposition that’s been gaining market share year after year, at a time when the Dolls category has become increasingly competitive. According to Will, Sparkle Girls’ distribution will be doubling this year during the second half with the signing of two major new grocers, marking the jumping off point for significant brand extension that will offer consumers even more new designs and play patterns at even lower prices.

The company’s blaster brand, X-Shot, has enjoyed enormous growth over the past few years, doubling since 2019 with around 35% share of the market. X-Shot continues to push the boundaries of blaster play with innovation in water and darts. It also caters to a wide range of demographics, from Kidult, with its licensed Skins blasters, to X-Shot Excell, which encourages kids to hone their skills by blasting targets, not each other (something Will says is popular with parents).

“We heard feedback at September’s LA previews that we’re driving developments in this space,” Will tells me. “We launched X-Shot Skins last year, which is where our Tech home business has come in handy. We’ve drawn on our proprietary tile printing technology that uses special ceramics used to reproduce marble and wood effects, and this lets us print amazing patterns directly onto the blasters to add an element of collectability. Licensing has also been key to X-Shot Skins. We’ve seen phenomenal performance from Sonic, and we’ve picked up a lot of distribution for summer this year that should result in big things from our seasonal lines. I believe the best is yet to come on this brand.”

As with all its other brands, value is key to the success of X-Shot. Will claims the blasters offer the same quality and performance as other leading brands, but at a significantly lower price: this draws consumers in, and the quality turns them into loyal X-Shot fans. New for this year is the world’s first lockable blaster (perfect for kids wanting to stymy their siblings’ efforts to get in on the action) as well as the modular blaster range, Insanity. One of Will’s favourite launches, kids can collect all four SKUs to create a tripod-mounted dart-gatling complete with a dart ‘hoop’ and tactical scope. However, Will says that what competitors are trying to compete on is price - something he finds telling. He says: “You can only stick your head above the parapet for so long before people start shooting at you, excuse the pun.”

As most of us are aware, the media landscape has shifted and fragmented in recent years, and, like all toy companies, Zuru is having to reconcile that with its approach to content and marketing. Will has been working in toys for a little over 14 years and is still getting used to the fact that things have progressed to the point where Zuru is planning no terrestrial TV advertising for its major launches – instead, it is focusing on digital activation, leveraging the power of TikTok, on which Zuru is a leader. The company is working with the team at KidsKnowBest to gain insight into child and family marketing, and from this believes that digital marketing is the way to go.

Similarly, Smashers and Rainbocorns content is driven largely by webisodic content. Both are among Zuru’s longest-standing brands within the company’s Innovation pillar and lend themselves to quirky, storydriven, engaging content that hooks kids into the brand and holds them there. Smashers content, produced by Moonbug (the studio behind CoComelon and Blippi) has just arrived in over 70m households via Amazon Prime, whilst Rainbocorns webisodes are supported by a brand-new music album, which is available to listen to on Spotify. This year also sees Zuru double its output of Smashers and Rainbocorns shortform content, with 23 and 24 new pieces on the way respectively.

Zuru’s retail partnerships have a part to play in its future success. The company works closely with the field marketing agency Expd8 on in-store merchandising in non-toy channels such as grocers and is also collaborating with toy specialists directly on experiential shopping, giveaways and launch events. It’s critical to recapture the magic of the toy shopping experience, says Will, be it in nationals or indies. Zuru has plenty planned for this year, including a Rainbocorns giveaway at Smyths which took place over the Easter weekend, and more on the way with X-Shot.

Zuru produces its own POS fixtures in-house. All retailers have to do is strip the carton off and the fully stocked unit is ready to go. Will says this is an example of how Zuru tries to solve common issues for its retailers, such as making full use of modest floorspace. Showcloud and Salsify, meanwhile, host assets which retailers can download and use as they see fit.

Zuru has clearly set its sights high. The company is already well into its spring/summer product development for 2024 and expects to realise significant growth – though Will does note that the waters of the toy industry are still somewhat choppy. Zuru is the only Top 10 toy manufacturer with a purely FOB business (no domestic warehousing) and while this has always been one of the company’s most competitive aspects, inflated container pricing has posed a challenge in recent years. Thankfully, container prices are now reverting to pre-pandemic levels. Elsewhere, economic uncertainty is still impacting the sector, though for value-driven businesses like Zuru, which leans heavily into the sub£20 bracket, this also presents an opportunity to attract new consumers.

“I wish I had a crystal ball – I’m sure we all do –but despite the economic uncertainty, we expect to strengthen our position even further in the coming years,” Will tells us. “Long-term, our ambition is to break into the Top 5 suppliers. That might seem an arbitrary goal, but many in the toy industry will know that we’ll have to overtake some very big names to achieve this. Zuru is lean on the ground in terms of the way we operate. We’ve got a lot of small satellite offices across the globe, the UK being no exception, bolstered by bigger offices in LA, China and New Zealand, and a global workforce of over 5,000 full time team members. We’re all about having the right people on board, and we’ve assembled a world-class team of individuals who have a real passion for what we do, as well as our long-term vision, so we’re excited for what’s to come.”