Premier Foods plc’s decision to sell its meat-free business was seen as a move to reduce a debt pile at the UK’s largest food group that, last summer, reached over GBP1.3bn (US$2.1bn). The unit, renamed Quorn Foods, is now in the hands of Exponent Private Equity. Dean Best spoke to Kevin Brennan, the former Kellogg executive that Premier appointed to run its meat-free operations, and who is now CEO of the new firm.
just-food: Looking at Premier’s meat-free operations specifically, what kind of business did you find when you joined the company last year?
Brennan: What was great was that there was a recognition that there was some problems with the business that needed fixing. It wasn’t growing, there were some supply chain challenges that have been well articulated, particularly around the Methwold site and their third-party manufacturing. [Premier] were in the process of turning it round. They had a good supply-chain plan and needed a good commercial plan, which is what I got very involved in both in the UK and internationally.
As I dug into that, I realised that this was quite an amazing business. Other than in the last 18 months, it has grown very consistently under Premier and the previous owners and actually, if you look at the trends globally – be it vegetarian/meat reduction, weight management, the issues with health around heart and cholesterol – then it fits those trends and it delivers something that no-one else can do, which is the ability for people to carry on eating their favourite meals. You talk to consumers – doesn’t matter whether they are a vegetarian, a shape manager or someone that has told them they have heart problems and need to cut down – and it’s a big issue as they can’t have their normal meals. We are part of the solution to that.
just-food: To some industry watchers, the market that Quorn operates in has been a victim of recession. What can you and your team do to improve the performance of Quorn under private-equity ownership?
Kevin Brennan CEO Quorn foods
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Company Profile – free sample
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
Brennan: It declined in the UK specifically. We didn’t decline in most of the other markets. It wasn’t a victim of the recession. It was a victim of the fact that commercially it had lost its way. From mid ’09 through to late last year, the two priorities really were to fix the supply chain because there were huge issues there. There is no point growing a business that isn’t going to make any money if you grew it. The second thing was to get the right commercial plan in place, particularly in a market like the UK, where [Premier] weren’t clear what the direction was for the business. It sort of pretty much changed direction every year, so it was a very active decision to say ‘Let’s not invest until we know what we are doing. Let’s not invest until the supply chain is fixed’.
just-food: What specifically were those issues in the supply chain?
Brennan: The biggest and single ones were around the Methwold facility where we were making both Cauldron and Quorn products and the costs were way above what was anticipated when the site was constructed. We had to look at taking a large amount of the Cauldron products and some of the Quorn products, move them into a third-party manufacturer and then restructure the Methwold site to make it efficient and run well. We have also been doing a lot of work on the other sites to improve manufacturing processes, retendering logistics where costs were too high. We had a ten-point supply chain plan in 2010 that really was the number one priority for the business. It’s worth noting during all that time that in markets like the US we had double-digit growth. We entered Australia and took market leadership in six months. It was the UK where there was this put-your-foot-on-the-ball moment to say ‘let’s make sure we get the commercial strategy right’.
Then what we did was get everything ready for January this year. We got back on TV advertising on 6 January. The ready-meals range was launched in January. We had a business that was in 7% decline but from a week after we went on air, we had a business that is now growing every week by 5-7%. The category now is growing and we are growing faster than the category. There were issues with the business but, once fixed, it’s amazing to see how quickly it’s bouncing back.
just-food: How are you marketing the Quorn brand in the UK?
Brennan: It’s an amazingly healthy food ingredient but what we are trying to do is turn that into consumer benefits. You can have your favourite meals and still eat healthier with Quorn. It is hugely relevant for vegetarians, hugely relevant for meat reducers but very relevant to specific audiences like people managing their shape and their weight. From an innovation point of view, we need to deliver big new food platforms. We’ve replicated the favourite ready meals in the UK but provided a Quorn version of those and we’ve got lots of other innovation to come. A third area for the UK specifically is around category management. It’s a category that needs category management. It’s not like bread or cereal where everybody will buy it every week and know where to find it. You’ve got to help people find the category, help people find Quorn. The broader agenda is we want to create the world’s leading meat-alternative business.
just-food: The newly-formed Quorn Foods has already emphasised its plans to expanding internationally. The company has said it already has a rapidly-growing business in the US. How do things stand there now?
Brennan: It’s a small business over there but it’s a rapidly growing one. We primarily operate in the natural channel, in places like Whole Foods Market. We’ve predominantly provided chicken-style products, in simple terms. The two big thrusts are we have launched a burger range – red meat-alternative is half the market, so that gives us a whole new segment to go after. Also, there are lots of outlets like Kroger over there that actually have a natural organic meat-free type section – almost replicating a quasi-natural store – and we are focusing on getting into outlets like that, where we perform well, rather than trying to be in a mainstream freezer aisle competing with pizzas and ready meals and where you would never find us. Those are the two big focuses in the US. We are already doing well but we think we can transform the US opportunity.
just-food: When Premier announced that it was in talks to sell Quorn, US consumer group Center for Science in the Public Interest urged reported suitors like Nestle not to buy the business. It claimed, among other things, that Quorn’s ingredients made people ill. What do you make of that?
Brennan: The CSPI is someone who have had a go at most major food companies. They don’t actually have that great a reputation. What they say about Quorn is wholly inaccurate. That’s not just an opinion. That’s a fact. They make completely inaccurate statements. Our business is growing and growing and growing. So I don’t think it’s a problem because it’s not affecting consumer sales.
just-food: Which other markets are you focusing on?
Brennan: We entered Australia eight months ago, we took leadership and grew the category by three by entering. We’ve got more innovation coming out there in June. And in Europe we already have an existing business so obviously continuing to grow that. Those are the big areas of focus.
just-food: Which of your overseas markets have the most potential?
Brennan: There’s potential in Europe but the biggest two would be Australia and the US. We already invest quite heavily in markets like Sweden and Belgium and Holland and we will continue to put in that investment and try to improve it.
just-food: Do you have plans to take Quorn beyond the current ten markets in which it is present?
Brennan: Not in 2011 but we do have plans. We are evaluating several markets for 2012.