UK premium desserts manufacturer Gu has seen stratospheric growth, going from inception to a GBP50m (US$80m) business in five countries in just seven years. However, since Gu’s sale to Noble Foods earlier this year, its founder James Averdieck has focused his attentions on expanding the brand internationally. Petah Marian spoke to Averdieck about the dessert manufacturer’s international ambitions and how it is “growing up”.
just-food: You’ve just come back from trips to Australia and New Zealand, what are your plans for launching Gu abroad?
Averdieck: Since the sale, I’ve taken on responsibility for international, so I’m looking at Gu further afield. We launched in Australia three months ago and that seems to be going really well. We’re launching in New Zealand in January and that’s very exciting.
just-food: What sort of penetration are you looking at in those countries?
Averdieck: We’re currently at around 60% distribution in Australia. We’ve got Woolworths Ltd and Coles. We’re in 550 Woolworths, and we’re about to be in about 600 Coles stores. As you know, there are only two retailers that count down there and we’re in both of them. We’ve had an amazing reception there which has been great. New Zealand, we’re just presenting at the moment. We’ll be in two chains there. One is called Progressive and the other is owned by Woolworths, and is called Countdown. We think we’ll be probably have about 60% distribution there as well. We’ll probably be between a GBP1.5m and GBP2m business in the two countries in the first year, which I think is pretty good.
just-food: What other countries are you focusing on at the moment?
Averdieck: We’ve got a big business in France, which is growing very rapidly. Ireland, which we’ve been in for some time, is a mature business, and we’ve just launched in Germany. It’s early days, we launched last week, but it’s exciting times.
When we launch in any market, we look to get the trade excited about it, we get the magazines and food editors excited about it, so we get a lot of coverage. We do a lot of sampling – what we call edible advertising – and that’s the way people get to know and love the brand. They see it in the right places and they hear people talking about it and that’s how it works well. It’s obviously quite targeted, it doesn’t work everywhere.
In the UK, it’s changing, because we’ve grown to a certain critical mass. When we started in the UK, it was very much Sainsbury and Waitrose and very much London and the South East but it grew from there as a base. And the same thing happened internationally, so in France, it’s very much Paris, in Australia, it’s very much Sydney and Melbourne, in Germany we are focusing on big cities like Hamburg, Berlin, Frankfurt and Munich. That’s where it starts and grows from there.
just-food: With your recently-launched cookie range in the UK, retailers will be baking them in-store. This is a new concept for you. How did you set up the agreements?
Averdieck: That’s a licence agreement with a company called Bakemark. They’ve got an infrastructure to manage the in-store cookie business and they’re already doing that with a number of brands. We’ve worked with them on the product development and we have been into the trade and helped them with the presentation and so on. We’re an active licensor. That’s how I would describe it.
just-food: Are there plans to move into any other areas, such as ice cream?
Averdieck: Not at the moment. We would never say never. New product development has always been the lifeblood of the business. It’s always been a big part of the business and now, one of the interesting things as the company gets bigger and with the acquisition by Noble, it’s a lot more disciplined now than it used to be. We’re doing fewer launches but they’re having a bigger impact.
For instance, we relaunched Fru in the UK this May and it had a really, really good launch. We basically changed the packaging, we tweaked the positioning, and market share has increased, so it’s done really well. In the old days it was more, ‘what have we got, what can we launch in a couple of months time?’ It’s become a lot more disciplined and research-based, which I think is now appropriate. It’s a bit more grown up.
just-food: Aside from the longer lead time on product development, how is life at Noble Foods following the acquisition?
My role has changed. I used to be the chief executive of the business, and I’m now looking after international. My interest has always been in new markets, starting new things, and so on. So in that sense I’m playing to my strengths.
From the UK point of view, the business is doing really well. It’s growing share, we’ve got a new team in, who are making some really good progress. When the acquisition was made, they appointed an MD and they brought in a new finance director. So the company has grown up, and this is what happens, and it’s totally appropriate and good for the business. I’m in a role that I’m happy with. One of the issues for me was that when I was running the business, I was becoming more and more of a traditional managing director, and actually, we weren’t doing so much business development. So I’m now back to doing that. For my part I’m still very much a shareholder in the business. And I’m now looking at growth opportunities, so it’s very good.
just-food: How are increasing commodity prices impacting the business?
Averdieck: We’re looking at everything, but primarily the way we’re overcoming this is by becoming more efficient. And again, that’s one of the benefits of the acquisition, there’s a lot more rigour in terms of driving production efficiencies and they’ve made really good inroads. The other thing is on the purchasing front. We’re actually buying much better. So we have had to increase our prices, yes, but we’ve also had to become a lot more efficient. I think, that with our competition, the good thing is that everybody is in the same boat.
just-food: Where are the main areas that you’re finding efficiencies?
Averdeick: It’s the benefits of scale. One of the things we do really well as a business is that we find a way of automating and scaling up an artisanal product. When I started the business seven years ago, it was very much ‘hand-o-matic’, with lots of people. It was a bit of a French kitchen, to be honest, but as the business has grown and volumes have grown, it has allowed us to automate, but what we’ve done is kept the integrity of the product. Gu is better now than it used to be when I first launched it, and there aren’t many companies that can say that. We don’t look at taking costs out of the products, we are actually making the products better and fresher and technically better the whole time. We’ve made great inroads on that.
just-food: Where would you like the business to be five years from now?
Averdieck: Well, we’d like it to be a GBP100m brand. At the moment, in terms of brand value, we’re probably at around the GBP50m mark, but we want to turn that into a GBP100m brand.