European natural and organic food group Wessanen entered into an agreement to acquire UK gluten-free baker Mrs Crimble’s last week. Patrick Cairns, CEO of Wessanen’s UK arm, speaks to just-food about the group’s plans to accelerate growth at the business.
When Dutch food group Wessanen acquired UK gluten-free baker Mrs Crimble’s, the company took control of a UK business that meets its strategy, which focuses on expanding “healthy sustainable brands”. As Patrick Cairns, the head of Wessanen’s UK business, notes, the Mrs Crimble’s brand is a good fit with Wessanen’s existing UK business.
“We are present in the UK market with Kallo, which is a rice cake and stock cube brand, Whole Earth, which is peanut butter and a range of other products, and Clipper Tea. We are clearly focused on healthy, natural, nutritious products and we have been looking at ways of being able to enter the fast moving free-from category,” the executive, who has worked at Wessanen for the past five years, reveals.
In Mrs Crimble’s, Wessanen saw the ideal opportunity to do just that. “Mrs Crimble’s is clearly one of the pioneers of that category having traded for more than 30 years. It has a very strong presence in terms of distribution and profile with consumers. We feel it is an excellent base to help innovate and develop the free from category and gluten free products elsewhere in the store,” Cairns says.
The deal will expand Wessanen’s UK business, the company’s second-largest market by sales after France. “The UK is broadly about 15% of group turnover. [Mrs Crimble’s] is adding around about GBP14m (US$18.6m) in sales. That will add 20% to our UK revenues.”
While Wessanen is not releasing the financial details of the transaction, Cairns says the deal will “absolutely” enhance the bottom line. “At the end of the day, that is the reason for doing it. It clearly gives us benefits of scale: Wessanen becoming in the UK more of a leader in the healthy natural nutritional food space. It will disproportionately improve our profitability.”
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The acquisition is also about growth, Cairns continues. “We see huge potential in the free-from category going forward. It is coming higher and higher up the priority of the retailer. And more and more relevant to consumers. We think Mrs Crimble’s is well-placed as we leverage it to deliver that growth,” he predicts.
According to Cairns, the Mrs Crimble’s brand is delivering a “fantastic” top line performance. “At the moment on the back of the overall growth in the free-from sector, Mrs Crimble’s is seeing double-digit growth. The main priority is to make sure that that continues. “[The] free-from sector is quite diverse. I think they are performing very well….Mrs Crimble’s is growing very well compared to its peer group of [free-from] baked goods.”
To maintain momentum Wessanen is treading lightly to start with. For example, Wessanen will initially operate Mrs Crimble’s on an independent basis as the group evaluates the best way to execute the integration process. “We will look to integrate the whole operation into our business in the medium term, but we want to do that in a way that doesn’t disrupt the fantastic growth that Mrs Crimble’s is enjoying,” Cairns says.
The former Unilever and Plum Baby executive believes Wessanen is a safe pair of hands to take the Mrs Crimble’s brand to a next phase of growth, as it has it has successfully done with other UK brands such as Whole Earth. “We hope to make that growth sustainable. To make sure that it is not just this year, but that we maintain the brand’s growth. We see great potential for the brand going forward. They have taken the first step, we need to continue that going forward.”
Wessanen’s plans to achieve this are twofold. Firstly, the company will step up innovation on the brand and, secondly, Wessanen will evaluate how to make Mrs Crimble’s more “contemporary”. Cairns explains: “It’s a combination of product development and brand development. We need to work closely with our consumers and customers to understand how to do that in the most relevant and appropriate way. It will be a combination of looking at the brand and making sure it is contemporary and relevant to consumers and making sure that the products we are developing are the products that consumers want. We will work very closely with our retail customers to make sure it is good news for them as well.”
Wessanen plans to develop the Mrs Crimble’s branding. The macaroon maker currently has a traditional, homely image. Cairns wants to refresh the brand’s appeal. “We need to find a way of making it contemporary and relevant to the modern consumer. That is one area that we will look at and that we recognise that we need to develop further.”
He says this means more than a brand facelift. “It is more fundamental than that. It is really looking at how we take the overall brand and make it more relevant. If you look at what we have done on Whole Earth, for example, over the last few years, that was probably a brand that people thought of as being a little old fashioned and now its market leader in the peanut butter market. Its grown this year by more than 20%. That is the sort of blueprint we would expect to take with Mrs Crimble’s going forward.”
Wessanen is also well-placed to leverage its existing networks and capabilities to step up efforts around innovation at Mrs Crimble’s, Cairns predicts. “We are looking forward to work with the existing supply base and with other suppliers that we use across Europe to really improve the brand’s innovation rate.”
Wessanen will also use its existing distribution infrastructure to expand the international sales of Mrs Crimble’s, which account for about 12% of the group’s revenue and are focused on the European and US markets. “International is an area of the business that we think as part of Wessanen we can accelerate as well because clearly we are working with a network of distributors of all our brands across the group is in more than 50 markets. That is a real opportunity for us,” Cairns says.
Wessanen would look to expand Mrs Crimble’s in new markets as well as stepping up distribution in countries where the brand has already established a presence.
“International always takes a little but more time than domestic growth. I think certainly during the course of the next year we should be able to see that coming through strongly,” Cairns predicts. “We would hope [international revenue] it keeps track with the overall growth in the UK. I think for the foreseeable future it will be predominantly a UK brand.”
An obvious question mark over these plans is the impact the UK’s recent referendum decision to exit the European Union will have. As a pan-European group, Wessanen is watching the developments with some trepidation.
Cairns says: “The thing about Brexit is nobody is entirely clear what is going to happen next. The trade deal that we work out with Europe is going to be fundamentally important, not just to this acquisition but to our overall business as we are buying and selling products with European customers and suppliers all the time.
“In the short term there is obviously going to be volatility in terms of the currency markets. That is unhelpful. We are just hopeful that we can get a clear signal from the politicians over what is going to happen next and what directions things will move in. At the moment it doesn’t seem that anybody is hugely clear in terms of where it’s all heading.”