Dare Foods says theres more competition coming from countries like Colombia and China

Dare Foods says there's more competition coming from countries like Colombia and China

Dare Foods is a Canadian manufacturer of biscuits, crackers, bread products and confectionery with a clear focus for growth. In the first of our SIAL just the answer series Michelle Russell talks to Dare Foods' chairman Bill Farrell about the company's growth strategy and the challenges and opportunities it sees in the global food sector.

just-food: What brings you to the SIAL exhibition in Paris?

Bill Farrell: We've been coming to SIAL for a long time and it's an opportunity to meet with our international customers. It's been really busy. We've got an international sales person and a group supporting her. She is on the telephone to them throughout the year so it's really an opportunity to meet with them face-to-face.

j-f: Which markets are your main customers from?

BF: North America is our main market but we've been selling outside of North America for over 25 years so we sell to 30 different countries around the world. We have big customers in Mexico and Scandanavia, we've sold into Australia for many years and we sell into a lot of the South Asian countries.

j-f: Are there any countries you are targeting that you haven't yet entered?

BF: International for our business, it has always been there but it's never been something that has been a focus so we've never put any emphasis on it. [The international business] has more or less run itself and it's a very small percentage of our business base. If you look at the categories we compete in, we're in cookies, crackers, we're in confectionery ... it's tough to get conventional growth domestically, so there is certainly potential for growth internationally. It's one of those things that strategically we are going to be more focused on because we've got wonderful brands.

j-f: Which markets would you like to have a presence in?

BF: Russia in a bigger way, so the BRIC economies. Brazil in a bigger way, India in a bigger way and China in a bigger way because there's a growing middle class there and they've just got an enormous appetite for branded products. We're fortunate in the sense that Canada has a reputation for offering a higher-quality products when it comes to foods, so it's whether we can leverage that. It also comes down to whether you can get the right price points to start making it all worth while. So we think there could be a big opportunity in international. But like anything else, you've just got to work at it.

j-f: In order to enter these markets, would you look at M&A, partnership and joint ventures or licensing deals?

BF: A combination of everything, and we have done a bit of everything in the past, so we had a licensing deal with Arnotts in Australia and then Campbell came in through the Pepperidge Farms division and bought Arnet. Arnet was independent at the time and it made sense but as soon as Pepperidge bought it there was no way they were going to support our brand and they brought their own brand and portfolio in and leveraged their own distribution. So, yes, we'll do more of that, we're prepared to work with groups and partners and do whatever it is that we need to do.

j-f: You've talked in the recent past about M&A being a focus for Dare Foods, particularly in crackers and snacks. Are you close to signing any deals?

BF: We're not holding any discussions at the moment. My background is as an investment banker and I've been chair of the board for four months. We've got a very effective new president, Peter Luiz, who started two weeks ago, so we really need to do an off-site with our executive team, which is happening in November, and we need to establish a plan mid-term about where we want to go and really what categories we want to be in. We know, we will really have to grow through M&A so we will have to be focused on it. And right now, the general feeling is that it will be North America-based and probably in speciality crackers, something that is providing us with capability. We've got a very robust supply chain right now, we've got field selling, we've got supply, it really is about trying to put volume through that infrastructure, which is key in providing us with some capability that we don't have right now.

j-f: You have also said in the past that confectionery is a category you are not looking to place much focus on going forward?

BF: It's such a competitive space that is dominated by some very large players. There has been massive consolidation in that segment and if you look at the North American market, there's more competition coming from countries like Colombia and China. We're branded, by and large, all of our businesses, and what's happened over the last couple of years ... clearly private label has become very dominant to the point where more than 50% of all sugar confectionery sold in the next handful of years is likely to be private label. It's difficult to differentiate yourself in this space.

j-f: How then do you go about trying to differente yourself?

BF: We're continuously innovating. You've got to always have product in the pipeline.

j-f: Are you finding any challenges trading in the current economic climate?

BF: Certainly we feel it is more competitive, as opposed to what is happening in the economy. Having said that, we have been impacted by the economic situation in Canada as much as the US. But we've been fortunate in that we've come out of the financial crisis in better shape than the rest of the G7 and we are in pretty good shape. As long as you've got a strong brand, a loyal following, as long as you continue to innovate and as long as you continue to provide some value-add ... and by and large we have been able to do that.

j-f: With some of the smaller companies facing challenges in the current trading enviroment, would Dare see this as an opportunity for M&A?

BF: That wouldn't be the number one criteria, because really what you want to do is to buy a business that is on an up tick and one that is growing and has got something innovative - that's when you can command a bigger price and get a bigger margin.

j-f: Would Dare Foods consider looking at an IPO?

BF: No. The company is 125 years old and it's always been owned by the same family, we've got no inside shareholders and the intent is to continue with that sort of structure into the next century. We've got another generation of family members and it really has no interest in ever selling either through going public or any other way.

j-f: On Peter Luiz's appointment, Dare said he has been brought on board to lead the company through a "new and exciting" growth plan. Can you add more to colour to this?

BF: It's going to be a combination of international growth into some channels we don't have as big a presence in right now, call it alternative channels. It will also be about growing our domestic business and growing through innovation. They're not mutually exclusive, it'll be something we'll be doing contemporaneously. So it really would be those four pillars, if you like, that will grow the business. Peter is on top of it already in the few weeks that he's been here.

j-f: Where do you see the company in five years time?

BF: I'm hoping it's significantly larger. With Dare, we've got a phenomenal brand across all the categories and we've got a loyal following. I was in Stockholm meeting our distributor for Scandinavia earlier this week and he's been handling Bretton crackers for 25 years. We've got those kinds of markets ... we've got that as a base to build on and we've certainly got the infrastructure in place to be able to scale quickly so that really is the key, to get some scale and grow the business. But the trick is to stick with what has made us successful until now, which is good tasting, high quality food that people love. As long as we don't lose sight of that.