UK baker Walkers Shortbread generates over 40% of its sales outside its domestic market. The family-owned biscuit firm’s largest export market is the US. Dean Best spoke to Steve Dawson, CEO of Walkers Shortbread’s US arm, about the company’s business across the Atlantic and plans for growth.
Steve Dawson says he is “proud” the US is Walkers Shortbread’s largest export market. The family-owned company does not provide figures by market but, in its most recent publicly-available accounts, for 2011, some 41% of its GBP119.1m (US$180.1m) sales were made outside the UK.
Dawson, who joined Walkers in 2007 from running the now defunct Food From Britain’s US office, says the company has built a presence at all major US retailers and in all “main metro markets” – from Seattle to New York. A US consumer can also find Walkers products at natural retailers like Whole Foods, in club stores (at holiday times) like Costco and general retailers like Wal-Mart Stores.
However, Dawson says Walkers is careful not to extend its presence in mainstream supermarkets in the US too far and has instead set its sights on growing in two distinct ways – in the natural channel and outside holiday seasons.
“We have about a 50% distribution in the supermarkets nationally. I think 50% is about as high as we want to go; it’s diminishing returns after that,” Dawson tells just-food. “We found out, through experimentation, which customers are good and through which we don’t get the return. The goal isn’t about penetration, it’s about purchase frequency. We have a huge holiday business. I’d like to grow our business in the other three-quarters of the year.”
Dawson says a third of the US consumption of shortbread is made in the last month of the year. “That gives an indication of the importance of holiday for us,” he says. To try to build its business further outside of Christmas, Walkers has launched bagged snacks – so, Dawson says, consumers can “grab and go”.
The company is also hoping to grab more sales in the US’s natural channel. Dawson says it can be difficult to accurately define the channel, explaining it includes retailers like Whole Foods and Sprouts Farmers Market, as well as independents and the natural “sets” within supermarkets. However, he estimates 5-10% of Walkers’ US sales are made through the natural channel.
“You just have to look at the demographics of the customers in that channel,” Dawson explains as he sets out why Walkers is looking to expand sales in that part of the US market. “They are overwhelmingly higher-educated, affluent, well-travelled people and that’s exactly our target. The customer is right and generally there’s been this trend away from processed foods to more simple foods – from margarine back to butter – and from big corporations to entreprenurial or family companies.”
Dawson says Walkers is “positioned as something that is simple, natural and produced by a family company” and insists the company has thrived despite being at a “healthy premium” to brands like Bahlsen and Mondelez International’s Lu “within our direct competitor set”, as well as “mass market brands” like Kraft Foods Group’s Lorna Doone cookies. “Obviously people think we are good value,” he insists.
Dawson joined Walkers just before the onset of the economic downturn, which, he admits had an impact on the business, not least as it was dealing with volatility in a key commodity – butter – at the time. However, he says the business has bounced back. “We did okay but it certainly had an effect. Back in ’07, butter prices spiked and we put a price increase through because we had to [but] right at the time when the stock market crashed and then the economy went into a tailspin in ’09 and that had an effect. But we recovered from that and grown from that as the economy’s rebounded.”