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June 5, 2009

In The Spotlight – Findus Group

UK frozen food sales have benefited from the recession, with cash-conscious consumers turning away from chilled foods to the freezer cabinet. Young's and Birds Eye have enjoyed success and now another household name - Findus - wants a slice of the action. Young's and Findus are stablemates in the newly-named Findus Group and, under a new CEO, the business is aiming high. Dean Best reports.

By Dean Best

UK frozen food sales have benefited from the recession, with cash-conscious consumers turning away from chilled foods to the freezer cabinet. Young’s and Birds Eye have enjoyed success and now another household name – Findus – wants a slice of the action. Young’s and Findus are stablemates in the newly-named Findus Group and, under a new CEO, the business is aiming high. Dean Best reports.

The recession has meant that, in recent months, things have been heating up in the UK frozen food category.

For most of this decade, frozen foods have had something of a bad press in the UK: they were perceived as low-quality products and inferior to their counterparts in the chilled category in terms of taste and health.

Since the onset of downturn, however, consumers have warmed to the value frozen food can offer. Intensive marketing campaigns by the likes of Young’s and Birds Eye have also succeeded in convincing shoppers that frozen can offer quality, too – as well as meeting green concerns on food waste and sustainability. In the year to 22 March, frozen food sales in the UK were up 7% year-on-year at just under GBP5bn (US$8bn).

The likes of Young’s and Birds Eye have enjoyed success and now another household name, albeit one with a chequered past – Findus – wants a slice of the action. Trying to understand the corporate history of the Findus business ranks somewhere just below cracking the Enigma code but the brand seems to have found a settled home alongside stable-mate Young’s.

The rights to the Findus brand were, until recently, split between the continent and the UK. Findus’s continental operations were, like Young’s, owned by private equity firm CapVest. At the start of 2008, CapVest brought the businesses – plus UK private-label seafood business The Seafood Company – into a new holding company: Foodvest.

In July 2008, Lion Capital, another private equity firm, bought Foodvest from CapVest. Foodvest’s then chief executive Per Harkjaer said the deal was the “logical next step” in the development of the business.

Fast forward to this April, and the UK rights to Findus were acquired by the Foodvest family. For the previous four years, the Findus brand has been operated in the UK by a separate company outside the Foodvest Group, Findus Ltd, under a license arrangement. However, in the wake of the collapse of Findus’s UK manufacturing partner in January, the UK rights moved across to Foodvest.

All seemed set fair for Lion Capital to put the full weight of the frozen food giant behind revitalising the Findus brand in the UK. Consumer awareness of the Findus brand remained high – even if shoppers could only link the label to crispy pancakes. Chief executive Per Harkjaer set out some ambitious targets for sales growth for the Findus brand but, with frozen food sales in the UK riding high, some industry watchers argued those targets seemed attainable.

“Our ambitions are to take the brand to a new level by combining Findus in the UK with the strength of our wider Findus operation in Europe,” Harkjaer said in April. “We believe Findus has great promise to become a resurgent British brand, capitalising on the flourishing market for frozen food.”

Harkjaer, however, will not be at the helm as Lion looks to breathe fresh life into Findus. In a surprise announcement, Harkjaer was replaced on Monday (1 June) by ex-Numico executive Chris Britton. Harkjaer, Lion said, was replaced as chief executive due to “differing perspectives” with the private equity group over how to manage the business – which was renamed as Findus Group.

A source close to Findus Group has said that, under Britton’s stewardship, it will be “business as normal” but not everyone is convinced the firm will have success managing the Young’s, Seafood Company and Findus businesses.

Findus may claim to be the number one frozen food brand in Sweden, France, Norway and Finland but, according to one industry source, the Findus Group will have to work hard to turn its namesake brand around in the UK.

“The Findus UK business has been a tired, unprofitable business for some while and whilst one can imagine it will be turned around it will take time, money, new products and some luck to make it happen,” the source told just-food. “Some of the figures I have seen mentioned in the trade press on their ambitions [are] widely optimistic.”

The source argues that the business as a whole could suffer if there is a lack of focus on the Young’s brand, which is the largest seafood brand in the UK. “The Young’s business is very focused and highly successful and needs to stay single-minded,” the source said.

For all his success at Numico, Britton, then, seems to have a lot on his plate as he looks to revive Findus.

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