UB eyes UK expansion

UB eyes UK expansion

United Biscuits has embarked on a strategy it believes will grow UK biscuit sales over the next three years. The company is unifying its offering under two "master brands" - McVitie's and Jacob's - as well as stepping up investments in production and marketing. Jon Eggleton, MD for United Biscuits' UK business, spoke to just-food about the group's domestic expansion drive.

United Biscuits is the largest biscuit maker in the UK. According to the company, it makes over 40% of all biscuits sold in the country and owns the four top-selling brands: McVitie's Digestives, Go Ahead, Jaffa Cakes and Jacobs.

In 2013, United Biscuits accounted for 25.1% of sweet biscuit sales in the UK and 28% of cracker sales. In other words, the company is taking a sizeable bite out of a large pie. Market research from IBISWorld suggests the market generates revenues of GBP4bn (US$6.5bn) annually and grew at a compound annual growth rate of 1.3% between 2009 and 2014.

United Biscuits believes that growth rate will accelerate in the coming three years - during which time it plans to drive the growth of the category, as well as picking up market share, UK MD Jon Eggleton tells just-food.

"We think we can grow the market itself. Over time, we think we can take share from other adjacent categories. And yes, we think we can also take share within biscuits... We want to grow ahead of the market and the market is going to be growing by 2-3% a year now," Eggleton says. "We'd like to get to a 30% share. We have a very compelling package to deliver greater sales and ultimately brand share."

While Eggleton concedes United Biscuits faces some stiff competition in the sector - from private label as well as the brand stable of number two player Burton's Biscuit Co. - he appears confident the company can deliver on this goal.

"We have just received our highest ever share of the sweet biscuit market. In 2013 we have increased our share despite some strong competition. We think we can continue to do it. The trick is how. There is strong competition in our categories."

In order to drive growth, United Biscuits is ramping up its marketing investment and improving its point of sale visibility, Eggleton reveals.

"There are two fundamental things we are doing at a marketing level. We are investing more in media. There is no question about it - we will be outspending our competitors and we are investing much more than we have done in the past behind out portfolio. Secondly, we are trying to increase our distribution and the quality of our distribution in terms of how we lay our products out on shelf to make them more visible."

United Biscuits hopes a new approach to its brands will allow its marketing investment to go further. The company aims to spend more money in a smarter way to maximise the impact of its advertising budget.

It is adopting a "master brands" strategy that will see it bring the majority of its sweet and savoury offering under two key brands - McVitie's and Jacob's.

"We believe that fundamentally if we invest in the master brand it is a more efficient way of supporting our brands, so there is an economic benefit with that," Eggleton explains.

The McVitie's and Jacob's brands were selected for their "great" reputation - but also for their as yet unexploited potential, he claims. "We realised that the awareness of McVitie's and Jacob's is quite low, so there is an opportunity to build on that. They have great reputations but... we want to increase [awareness]. It is a different model for us but we believe that it is the right thing to do - hopefully by advertising McVitie's we get a halo effect across the whole portfolio."

The company's move to extend the McVitie's brand was kicked off today (3 February), when it launched a GBP12m advertising campaign behind three of McVitie's core sub-brands - Digestives, Chocolate Digestives and Jaffa Cakes.

The company is also extending the McVitie's brand to include a number of other products. "Club will become McVitie's Club, Happy Faces will become McVitie's - it is currently Jacob's and Ice Gems, which you might remember from your childhood [will become McVitie's]," Eggleton details.

Go Ahead, the companies better-for-you sweet biscuit offering, will remain a stand-alone brand, he added.

United Biscuits will launch Jacob's as a master brand later this year. "Our packaging on Jacob's is being lined up very shortly. Mini Cheddars and some of our other products that are currently McVitie's will become Jacob's very soon. Later in the year we are going to be telling you about our new advertising campaign for Jacobs."

Like Go Ahead, the more upmarket Carr's cracker brand will continue on a stand-alone basis. According to the company's assessment, these brands target a different segment of the biscuits market to UB's master brands and will therefore operate more effectively alone. 

As United Biscuits looks to expand biscuit sales - stealing share from competing snack categories - the company seems intent on leveraging the message that biscuits represent a "wholesome" snacking option.

"We believe our products are wholesome. We talk about store cupboard ingredients. Fundamentally the ingredients - whether its flour or sugar or milk - are things that most households in Great Britain have in their store cupboards. They are wholesome," Eggleton insists.

He is also confident that biscuits can stand up on health issues - as long as they are consumed "as part of a balanced diet".

"We are well aware of the debate about sugar and we believe that our products offer a good nutritional dimension. Let's talk about numbers. When you look at our products a chocolate digestive has just over five grams of sugar in a biscuit, a Hobnob has lower than four, a Digestive has 2.5 grams of sugar. Now if I compare that with fizzy drinks or confectionery - they have a lot more... Its all about having a sensible balanced diet. We don't think that there is anything wrong with offering people an everyday treat that is quite low in sugar compared with other snacks."

Eggleton argues that, on this basis, there is little need for UB to reformulate its products. "We are led by our consumers and we want to do things responsibly. Those two things come together with the products that we offer. I have two young kids, I am very happy to give all of our products to them - not necessarily at the same time. Therefore we don't need to reformulate."

However, he also emphasises the group does offer choice. "We have the Go Ahead range, we have a Lights range of products that are lower in fat - so we do give choice to consumers... [In savoury] we are very proud of our baked heritage. All our crackers are baked - and are again very nutritious for people."

United Biscuits' drive to expand the top line is also being backed up by investments in its production. UB plans to invest GBP54m this year to expand capacity in Digestives, Club and Mini Cheddars and increase its ability to deliver products in different pack sizes.

In order to reach more retail customers in different channels the company, Eggleton says United Biscuits must be able to deliver a wider range of pack sizes. "We have requirements from different customers, for different channels, to have different pack sizes... We do need to have the flexibility [to meet this demand]," he stresses.

Meanwhile, some of the group's capital expenditure will go on a more general upgrade. "We've got six biscuit factories and a cake factory and they need upgrading in some cases - we are spending GBP15m on upgrading," Egleton says.

"Its about efficiency," he continues. "We are trying to make biscuits faster in effect. At the moment we are slowed down by the ability to package the products... As we sell more and more biscuits we have to make sure our packaging element in the factories is in line with that so we are speeding up how we wrap the products. There is a slight efficiency cost saving per tonne."

United Biscuits has a clear strategy to expand its top and bottom lines over the next three years. The company, which is owned by private-equity firms Blackstone and PAI Partners, has come under scrutiny in recent weeks with media reports suggesting it could be put up for sale. However, Eggleton plays down these rumours and insists that management is focused on delivering on its mid-term strategy.

"We are a privately-owned company. Invariably you get speculation - but we are focusing on growing the business over the next three years."