Butterkist - KP Snacks route back into the popcorn market

Butterkist - KP Snacks' route back into the popcorn market

Germany's Intersnack, already the second-largest savoury snacks supplier in the UK, has sought once again to expand its position in its largest market outside its own backyard through M&A. Last week, Intersnack, which owns UK crisp and nut business KP Snacks, announced a deal to buy the Butterkist popcorn brand from the private-equity-backed Tangerine Confectionery. just-food's Andy Coyne caught up with KP Snacks sales director Andy Riddle to find out more about the rationale for the company's move for Butterkist.

Intersnack, the Germany-based savoury snacks giant, has sought to add a little sweetness to its UK portfolio.

Last week, Intersnack the owner of UK crisps and nuts supplier KP Snacks, announced it had struck a deal to buy the Butterkist popcorn brand from local firm Tangerine Confectionery.

KP Snacks, the business behind brands including McCoy's crisps and KP nuts, said acquiring the UK's market-leading popcorn brand and its range of sweet and salty products is part of a strategy to "offer consumers and customers a comprehensive, UK snacking category proposition".

Moreover, the acquisition of Butterkist - sealed for an undisclosed sum but widely reported to be tens of millions of pounds - gives KP Snacks a second chance in a segment in which it was once present, through the now discontinued Phileas Fogg brand.

Given Butterkist's position in the UK popcorn market - and with popcorn one of the fastest segments of the snack market - KP Snacks can be forgiven for feeling upbeat about its chances of success.

IRI data for the year to 20 May 2017, showed Butterkist's sales reached GBP46.6m (US$60.72m), up 3% on the previous 12 months. It is steady, if not spectacular, growth. Total UK popcorn sales rose 11.5% over the same period to GBP131.3m, indicating the Butterkist brand is lagging the growth of the market.

UK supermarket shelves are heaving with popcorn brands and KP Snacks faces competition from a number of brands owned by other scale players. In the last year, the Metcalfe's Skinny brand has become part of Snyder's-Lance, while another US snacks group, Amplify Snacks Brands, is using its newly-acquired UK muscle through its acquisition of crisp brand Tyrrells to launch its own Skinnypop brand in the market. PepsiCo, meanwhile, entered the UK popcorn market last year with a brand called Pop Works & Company. At the other end of the UK popcorn market, there are fast-growing independents such as Propercorn and Joe & Seph's. Moreover, the UK popcorn category is, in common with the savoury snacks sector as a whole in the country, one marked by promotions.

However, Andy Riddle, the KP Snacks' sales director who now has Butterkist as part of its portfolio, welcomes the challenge.

"There is lots of competition and the different brands have different reasons to exist," he tells just-food in the wake of Intersnack's Butterkist announcement.

"We've only had the business for three days but it looks an overcrowded fixture for the consumer to me. It can be simplified. With the core brand proposition Butterkist has, we can look to strengthen our franchise."

It is Butterkist's standing in the market - number one branded popcorn, 100-year heritage - that attracted Intersnack, which has owned KP Snacks for the past five years. Riddle argues Butterkist can thrive as part of the KP Snacks portfolio.

"The brand has great growth potential if you are bringing it into a snacks-centric business," Riddle says. "We've also bought the largest popcorn factory in Europe [in Pontefract, West Yorkshire]. There is fantastic production capacity."

In recent years, popcorn has appeared to be a gaping hole in KP Snacks' portfolio, one that must have felt more pronounced as the segment grew and every time a new brand was launched onto the market by a rival. 

In terms of snack sectors KP Snacks did not cover, Riddle says popcorn was "the most obvious one", adding: "We can now offer full-service portfolio. We are the market leading brand in nuts, have the fastest-growing crisp brands in McCoys and Hula Hoops and now we've bought the leading popcorn brand in the UK. Within the traditional snacks segment, two of the fastest growing sub-categories are popcorn and nuts. So we now have a market-leading presence with KP in nuts and Butterkist in popcorn."

Popcorn also represents unfinished business for KP Snacks. The company previously dabbled in popcorn when it took one of its existing snacks brands, Phileas Fogg, into the segment. However, that product has been discontinued (in fact, there are no longer any Phileas Fogg products on the market).

Riddle says the "Phileas experience" - notwithstanding it being a less popcorn-friendly era - showed the company it was a difficult market to penetrate as a new entrant. "That's why we are now going into popcorn in a branded way, a scaleable way," he asserts.

Just days after the acquisition was completed, Intersnack and KP Snacks are not ready to unveil grand plans for Butterkist brand but, despite all the health-conscious offerings on the market, Riddle does not believe the future of popcorn is just a skinny one.

"If you look at most snacking categories there is an expanding offer for indulgence and treats. So I don't think popcorn is taking us solely down a permissable or healthy path," he says.

Intersnack's presence outside the UK could offer potential for Butterkist but. However, while Riddle says it is too early to say what the companies' plans are for exporting the Butterkist brand he does indicate any possible moves outside the UK have "not been a priority reason for the opportunity".

Riddle hints "putting in a media investment" will play a part in the early work on Butterkist. The KP Nuts brand is enjoying its first TV advertising outing for 30 years and Riddle sees such efforts as a way of "regenerating awareness of iconic brands".

And does filling such an obvious gap in the portfolio mean Intersnack will be avoiding the acquisition trail in the UK for a while?

"We'd never say never. We're a business that wants to grow and develop," says Riddle.