Brennan says it is "logical" companies would be interested in the meat alternative category

Brennan says it is "logical" companies would be interested in the meat alternative category

There is speculation over the future ownership of UK-based meat-free business Quorn Foods. It is hardly surprising. Quorn has been owned by a private-equity firm since 2010 and is a business enjoying continued solid growth in a challenging industry. Dean Best spoke to Quorn CEO Kevin Brennan about the sale rumours and his plans for the business this year.

During a week in which the future ownership of Quorn Foods has become the subject of speculation, CEO Kevin Brennan has been in the US visiting customers and analysing the latest trends in the country's food industry at the Natural Products Expo West show in Anaheim.

Back in the UK, just-food caught up with Brennan today (13 March) to discuss the talk surrounding the business. Last weekend, it was reported US group WhiteWave Foods had held early talks with Quorn owner Exponent Private Equity to buy the meat-free supplier.

An unnamed source told Sky News the negotiations were "highly preliminary" and WhiteWave had not tabled a formal offer.

Exponent, which acquired Quorn from Premier Foods plc in 2010, was preparing an auction of the business, Sky News said.

However, Brennan says while Exponent has hired advisers to weigh up how and when it could sell Quorn, there has been no talks with any potential suitors.

"There isn't any sales process. Exponent has not discussed with anyone at this stage but they are a private-equity company that will one day sell the business. What they did do is hire Houlihan Lokey as an adviser because they need to look at how and when they sell," Brennan says. "We obviously are a business that will ultimately get sold; that's the nature of private-equity ownership. I stay focused on growing the business, work the strategy out and later in the year they will tell me what the best way to do it is and when."

Brennan, who joined Quorn in 2010 when the business was still owned from Premier Foods plc, claims there has been "inbound interest" in the company "almost from the start" of Exponent's ownership. "We've been clear to anybody that has contacted Exponent that the business isn't for sale. They are happy to keep people informed when there is a process but there's no need for them to respond. It's too early."

Quorn saw enjoyed another year of sales growth in 2014, seeing revenues increase 6.5% to GBP150m. The company claims it saw growth at home and international, with double-digit growth in the UK and "surging growth" in all of its 15 overseas markets.

That performance, Brennan contends, is why there would be interest in the business. "It's not surprising that people are looking and would expect to see a high interest is in us. If you look at most multi-country food companies, they are struggling to find growth," he says. "We are far and away the most successful global business in our space as we operate in more countries and had more success in more countries. A lot of companies are now talking about alternatives to meat protein more than they would have five years ago. Everyone is seeing that as a space. Lots of other companies could logically be interested in the space."

Brennan, who insists the aim is for Quorn to be a "$1bn business one day", plans to continue the company's international expansion in 2015. Last year, Quorn added Germany, Denmark and Finland to its markets in Europe and Brennan says the company would look to expand further in the region this year.

"There are so many markets that are starting to grow very strongly and get enough scale for an entry - you can look at Asia for that, South America and Europe. But given our location and the margin structure of European businesses, I fully expect the next activity to be in Europe, it's just a matter of which market because there are plenty of them," he says. "We're already in many European markets but there's a lot of markets we're not in. There will be at least one in this calendar year."

Brennan is sanguine about the varied trading conditions in Europe and insists macro-economic considerations are not a significant factor in Quorn's decisions of where to move next.

"In the scheme of food consumption or any economic dynamics, our space tends to be growing very rapidly so it doesn't really massively affect the decision-making. It's more about whether the category is growing, whether we have a retailer, a marketplace that's supportive. We need to be able to partner with retailers to maximise the growth potential. If those things were all in place, it's an exciting opportunity for us, regardless of the poor economic environment," he says.

One international market where Quorn appears to have enjoyed something of a rapid turnaround is the US. In 2013, Quorn's US sales fell amid intense competition from the likes of meat-free business Lightlife. However, towards the end of the year, Quorn secured listings with Wal-Mart and, at the start of 2014, opened an office in Chicago to try to better manage its business in the market. Brennan says the team in the Windy City has helped Quorn, which had first launched into the US natural channel, improve its performance with mainstream grocery retailers.

"We had some early success [in grocery] but found we didn't have the set-up to optimise. For me, I was convinced: where we were listed we were doing well, our products are good, our non-GMO status in the US is a really powerful point of difference to the market leader but we really needed to put an organisation in place to maximise it. They have been winning new distribution, expanding our space in existing retailers and managing better commercial programmes with them."

Brennan insists Quorn can continue to compete in the US with rival brand Gardein, which was last year acquired by Pinnacle Foods. He describes Quorn and Gardein as the "young turks", who are competing with the "big bear" category leader, Kellogg-owned Morningstar Farms, as well as the number two in the sector Kraft Foods Group-owned Boca. And he insists US retailers are welcoming the moves Quorn and Gardein are making.

"There's room for two new players. Gardein is a great business. We think we've got superior food to bring to the market and no-one can match us in the world with the breadth of food we can deliver with mycoprotein," Brennan says. "It's a market that needs stimulation because the market leaders are not investing, not doing product development."

Quorn's NPD plans for 2015 include the launch of 30 products for domestic and international markets, including its first specifically gluten-free lines and its first vegan products, in a bid to further grow sales. The gluten-free range will be a mix of chilled and frozen lines, with the vegan portfolio "predominantly" frozen.

"Quorn is inherently gluten-free but obviously we can put coatings or things like that on the products. It's more about factory processes and then in certain cases actually getting different coatings. We're getting a whole array of prds that start in the market from late spring in the UK but that roll out all over the world. It's a really big trend, a great example of something at Expo West was high up on the agenda," he says.

"Vegan has been a bugbear of mine for years. I've been campaigning in this business that we can make the products but it's making products of the right quality. Without be able to use egg and whey, it's hard to optimise texture, which is why if you eat vegan products anywhere in the world they are not great. We've got products that are really really good. They're very close to standard products but compared to what vegans can eat around the world they are amazing. They will start to roll out from Q3. They will both go into most markets because both trend needs exist pretty much everywhere we trade."

With Exponent having hired advisers, it could only be a matter of months before an auction of Quorn starts and, on the face of it, the company looks to be a business performing well in an on-trend category. Quorn could attract a number of potential suitors but Brennan says his focus is on the day-to-day running of the company.

"They have hired advisers. That's what their job is. My job is to make it successful for them."