Burton’s Biscuit Co., the UK’s second-largest biscuit maker, has undergone a transformation since private-equity owners Apollo Management and CIBC took control of the business in 2009. The buy-out houses are now understood to be looking at options for the business, including a potential sale. Burton’s has refused to comment publicly on the review but chief marketing officer Stuart Wilson spoke to just-food about how management plans to drive continued growth in the biscuit sector.
just-food: Which brands are you focused on to drive growth?
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Stuart Wilson: Our power brands – including Cadbury’s Biscuits, Wagon Wheels, Jammie Dodgers and Maryland Cookies – are iconic and well-known treat brands that are rooted in enjoyment and fun. This is encapsulated by our strapline: “making every day more of a treat”.
A key focus for our business is to continue to expand the footprint of these favourite brands through new products and formats, as well as strengthening our domestic capabilities and expanding our distribution base. This strategy has progressed Burton’s significantly – our power brands have grown by 16% since 2009.
just-food: What are the key initiatives you are implementing to grow your “power brands”?
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Wilson: Our power brands are central to Burton’s position as a leading biscuit manufacturer, both domestically and internationally. Our investment priorities remain focused on brand building, manufacturing excellence and R&D for new product development.
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By GlobalDataThanks to this, we’ve been able to build our core power brands – Maryland, for example, remains the nation’s favourite cookie and saw GBP7.5m (US$11.4m) growth in value last year to become the sixth biggest brand in sweet biscuits. Our focus on NPD has also allowed us to gain significant value from new brands – we’ve built Cadbury’s Fabulous Fingers into an GBP8m brand since our autumn 2011 launch, achieving household penetration of 8.5%.
just-food: How significant is your marketing expenditure? Are you stepping up consumer communications?
Wilson: Our marketing expenditure is appropriate for our ambitious growth strategy, both in the UK and abroad. We have increased the investment behind our brands each year since 2009 and remain committed to supporting our brands with our proven marketing programmes.
We’ve already invested GBP1.1m in our latest Maryland Cookies campaign in 2013 and have recently invested GBP3m in an ATL Jammie Dodgers campaign which included TV ads, and GBP2.5m in our award-winning Wagon Wheels campaign last year.
just-food: While the UK remains your largest market, it seems you are also working to grow your power brands internationally. How significant is the overseas opportunity for Burton’s?
Wilson: Part of our transformative business strategy is to continue to expand our international footprint across our market leading brands, with a particular focus on our Cadbury biscuit portfolio, which we manufacture under license.
In 2011, around 15% of the company’s turnover came from overseas markets. This is after an annual growth rate of 15% since 2009, which the company is looking to maintain over the coming years.
The past years have seen many milestones in our international journey. Burton’s distribution agreement with the world’s largest retailer, Wal-Mart Stores, continues to evolve and extend. We have also signed a distribution deal with Loblaw in Canada. In Russia, Wagon Wheels have proved so popular that distribution is rolling out from Moscow to reach new cities, including St. Petersburg.
The global appetite for quality British products is still strong, with events such as the Olympics and Diamond Jubilee only reinforcing it. Burton’s is now focused on solidifying the foundations of its international footprint, and ensuring its network and partners can meet increasing demand so that its international strategy will continue to support growth well into the future.
just-food: How important is NPD to drive sales growth?
Wilson: As a market-leader in innovation, we’re constantly evolving and adapting our power brands to cater for new tastes and occasions. We’ve recently invested in enhanced R&D capabilities to ensure that our R&D team, consisting of 20 dedicated staff overseeing functions ranging from innovation to packaging development, makes Burton’s the fastest innovator in the marketplace.
This team has been working to make our packaging more convenient to allow for on-the-go consumption of products such as Cadbury Mini Fingers. In our quest to re-design consumption occasions and bring biscuits into the dessert category, we’ve also invested in treat-focused NPD such as Maryland Big & Chunky, and Cadbury Fabulous Fingers – these are really luxurious biscuits that consumers can enjoy as a pudding or a special treat.
just-food: With consumer spending coming under continued pressure, how would you describe the health of the biscuit category?
Wilson: The UK biscuit market is currently in growth. Sweet biscuits have seen year-on-year volume growth of 3.1%, pushing values up by 4.5% year-on-year. Mintel predicts the biscuit market value overall will grow by 21% to reach GBP1.7bn by 2016, demonstrating significant room for growth remains in the market. In particular, per capita consumption of biscuits is highest in the premium sector and treat biscuits are continuing to out-perform the market, as consumers remain keen to enjoy an everyday treat.
As the only biscuit maker that focuses solely on biscuits, Burton’s is in a strong position to take advantage of this, as demonstrated by our ongoing success.
just-food: Have you invested in price and promotion? Do you see an increase in promotional activity in the category?
Wilson: Like all FMCG categories, price and promotion are strong drivers in biscuits, and we’re dedicated to ensuring that we remain competitive on all fronts without compromising on quality.
just-food: Where do you see your main competition coming from? Do own-label biscuit sales represent a threat?
Wilson: The biscuit market is certainly competitive, but thanks to our power brands we operate in a market space that is not particularly affected by private label brands, as consumers buy Jammie Dodgers, Wagon Wheels or Cadbury Fingers specifically, so brand loyalty is high.
just-food: Are you able to give an indication of how successful this strategy has been? Are you growing UK market share?
Wilson: We feel we’re facing the future in a strong position. Our power brands are enjoyed by consumers across the UK and abroad, we occupy close to 10% of the UK sweet biscuits market, demonstrating that consumers are enjoying our innovative NPD.
Thanks to this sales growth and our improvements in operational efficiency, we’ve now met, or exceeded, the expectations of our shareholders for 10 consecutive quarters, with turnover in 2011 – the latest year for which accounts are available – increasing by 6% to GBP342m. Our EBITDA also grew GBP1.8m to GBP27.8m, a 9% growth over three years. Burton’s strong results and continued growth speaks for itself.
just-food: How are you balancing the need to invest in driving top-line growth with the drive to also grow the bottom line?
Wilson: Both profitability and top-line growth are crucial components of our development strategy. By investing significantly in our manufacturing operation and supply chain, we have become a more agile, faster-paced business. We recently invested GBP12.5m in our supply chain capabilities to ensure that we are able to swiftly respond to changing market dynamics and organisational requirements, as well as bring new products to market quickly through a responsive supply chain.
