Last month, Canadian biscuit firm Groupe Biscuits Leclerc expanded its presence in the US, with the acquisition of snack bar brand Go Pure. In the latest just the answer interview, Katie Smith discusses the acquisition and the biscuit company’s plans for the future with CEO Denis Leclerc, including setting up in the UK.
just-food: Why did you choose the Go Pure brand?
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Leclerc: We’re pretty strong in US and in Canada but we found that there are competitors offering some really different products on the market that we were not capable of producing with the equipment we had. We made our mind up to look at something more natural and Go Pure was a good bet for us. It was a small operation and, when you are doubling or tripling your sales every year, you put a lot of pressure on your cash flow, you put a lot of pressure on your innovation and it was really tough for them.
just-food: Is this a new category for Leclerc?
Leclerc: We feel that the bars that we’re producing are pretty good for your health but I think that we are doing something different with the new Go Pure brand.
just-food: What brands do you produce your products under?
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By GlobalDataLeclerc: We have three different divisions, we have our own brand, Leclerc, that we’re distributing all over Canada and in the US. We are producing private-label brands for nearly each food retail chain in Canada and the US. In Canada, it’s retailers including Loblaw, Metro Inc and Sobeys. In the US, you can find our products in every chain on the east coast and in Safeway, Wal-Mart and Target. We have another division where we are doing co-packing, which is under 5% of our entire business. Private-label is 50% and 45% is our Leclerc brand. We are growing three different divisions. We’re really aggressive on each market and that’s what’s making the difference for us.
just-food: Can you give me more detail on your branded business?
Leclerc: We are on the cookie side, the indulgent side, a pretty high-end product with a lot of chocolate. Bar-wise, we’re covering the indulgent part of it and good-for-you. We have a brand that we are pushing on for the last six years where we have antioxidants and some products that can help your digestive system. Go Pure is natural, it’s a different market and we are expecting to push that with our own brand and have those products available for a lot of people in Canada and the US.
just-food: Are consumers demanding healthier products?
Leclerc: Yes. In the US you can see this with Obama trying to bring good food to schools. I really really feel that we are going to have to straighten up what we are feeding our kids and the offer that we have for those kids at school and at home. I’m pretty sure that that can open new markets for us. We feel we are going to be ready to offer what our customers want and would like to eat and we are ready to be one of the first on the market to offer some interesting products. That’s the reason why Go Pure for us was a strategic acquisition.
just-food: Do you expect the US market to grow in the next five years?
Leclerc: Yes, last year was our best year for growth ever. We are expecting even better growth year next year and we have a lot of expectation. The market is growing and when the economy is not doing so well, people will make lunch for kids and they will eat more at home. It is a pretty interesting time.
just-food: What about Canada? Recent data shows that the Canadian economy is growing faster than other Western countries.
Leclerc: I am really surprised and that’s a good thing. I can see that the US economy is improving too and there is no doubt about that to a certain extent. We are still expecting major growth on the Canadian market. We are improving our distribution network and sales force every year, trying to reach some different markets.
just-food: Are you looking to make more acquisitions in the US?
Leclerc: The Canadian dollar is helping us a lot to look at acquisitions. The US market is a good market for us and we are are even looking to do some acquisitions in the UK if we can. Twenty-five per cent of our sales are in the USA, and 5% are in the UK and Australia. We are evaluating any strategic acquisition. If it fits properly with our strategy, we’re ready to buy.
just-food: Can you go into any more detail about where you are looking in the UK?
Leclerc: Right now, out of our Canadian operations, we are producing a lot of stuff for the UK and Australian markets but one of the challenges that we have on the international market and even in the US is the currency. All the currencies are crazy right now and it’s a challenge for us. Selling the level that we are selling in the UK and not knowing what the exchange rate is going to be is starting to be a challenge and if we can find something in the UK, we will be more than pleased to set ourselves up there. It’s a market we have been working on for more than 18 years. We have a lot of good customers in the UK and we’re looking to give them a better service and and better varieties of of product that can be made in UK – there is no reason why we can’t make some of our product directly in the UK. The products sold in the UK are only private-label products. We manufacture fruit bars and crunch bars
just-food: How soon are you looking to enter the UK?
Leclerc: Right now, we are already in discussions and because of that, I can’t say a word but we’re expecting to do something in the UK market. It will be to acquire a brand, distribution and production capacity. I have some people working for me working on that on a regular basis. Every time you do an acquisition like that, it’s a challenge and I can’t say if it will work or not but we’re working on that right now.
just-food: How have you been affected by the recent volatility in commodity prices?
Leclerc: That’s a challenge that we’ve been dealing with for years. There are new things happening right now on the commodity side. The fact that the New York stock exchange is not doing well means there are a lot of investors who are speculating on other stuff – that’s creating a new challenge. Commodity prices, exchange rates, there are a lot of issues but if you want to grow and to improve, you have to deal with that. We are making a lot of the effort to manage that properly. We are looking long-term, more long-term than ever and we’re not doing so bad. It’s a risk, it’s a challenge no doubt about that but there is a way to manage that.
just-food: Have you had to put your prices up as a result?
Leclerc: Of course. It’s inflation time and of course there is some of our product on which we have to put some price increases on, no doubt about that. It’s a challenging time.
just-food: Have you been successful in getting retailers to accept the price increases?
Leclerc: What we can see in Canada, in the US and even in the UK is that the news is so bad, people have a feeling that it is coming. They can see that on a regular basis – when they are doing their grocery shopping, when they put fuel in their cars, when they pay their electricity bill. We don’t have any choice but we have to be aggressive offering a really, really good product where the quality of your product and the price has to match. If your customers feel that it’s good, they are going to buy that. It means that you have to work hard to be more efficient and work on any saving that you can to try to raise your prices as little as possible to offer a pretty good quality of product at a pretty decent price.
