Intersnack expands in "innovative" UK snack market

Intersnack expands in "innovative" UK snack market

Intersnack announced this morning (5 December) it has reached an agreement to purchase the snacks arm of United Biscuits, KP Snacks. The news ended months of speculation over who would acquire the unit after it was put on the block by its private-equity owners, Blackstone and PAI Partners. Intersnack international marketing director Bernd ter Glane spoke to Katy Askew about the German company's plans for the group. 

For privately-held German snack firm Intersnack, the opportunity to acquire KP Snacks was too good to miss. The company had been eyeing the UK market for a number of years, international marketing director Bernd ter Glane tells just-food. 

"We always were looking for a good foothold in the UK market and we saw that there is an ideal chance here," he reveals. "[The acquisition] expands our business in the UK market, which is the largest market in Europe and the most innovative one."

The UK savoury snack market accounts for a hefty GBP2.71bn (US$4.36bn) in retail sales and, according to data from Key Note, unlike many areas in the food industry and beyond, snack sales are benefiting from the economic downturn, with retail sales up 7.1% in 2011. 

In KP, Intersnack has certainly found its foothold. The acquisition, which was for an undisclosed sum, dramatically increases Intersnack's exposure to this comparatively high-growth category. 

KP Snacks is the UK's second-largest snack business, behind PepsiCo, with an annual turnover of GBP280m. Previously, Intersnack's UK turnover totalled just GBP80m. 

Initially, ter Glane says, Intersnack's "first priority" is to "ensure a smooth transition and proper integration" of the KP business and Intersnack's existing UK operations, which include private-label snack products as well as the Pom-Bear and Penn State brands. 

"First, we will create a joint management team. That joint management team will be under the guidance of the [KP Snacks] CEO Nick Bunker. They will have to work out a proper plan and see how we can come to one common platform for growth. But we take our time, so there is nothing immediate,"  ter Glane reveals. 

Intersnack has "full confidence" that it will retain the existing UK management team and, initially at least, it will be "business as usual" at KP, he adds. 

However, ter Glane is quick to emphasise this deal "is more for growth than synergies". When the integration of the business is complete, Intersnack intends to turn its attention to how it will drive the growth of KP's iconic brands. 

Potentially, this could mean KP will benefit from an increase in investment behind its household names, including such as McCoy's, Hula Hoops, KP Nuts and Skips. 

Indeed, ter Glane indicates the primary factor that attracted Intersnack to the acquisition was the possibility of taking on a portfolio of brands that are household staples in the UK. 

"We were attracted to KP first for its iconic brands. We have done some research and it has some very, very strong brands. Consumers love them, they have been there forever. That is the main thing: the strength of brands," he stresses. 

Intersnack therefore plans to leverage KP's brands strength through increased innovation, ter Glane confirms. This will be achieved through "combining their know-how with our know-how", he says. 

"This is cross fertilisation. For the group it is beneficial to have KP and for KP it is beneficial to be part of a major pan-European group."

Intersnack will also "check the potential" to roll out KP brands into markets that the pan-European snack group is strong in, leveraging its market knowledge and customer relationships, ter Glane suggests. 

According to his assessment, KP is therefore well-positioned to flourish under its new owners. "We are looking at the long-term run. We have a slightly different set up than private equity," he concludes.