UK herbs and spices business The Bart Ingredients Company has gone through something of an overhaul since ex-Kerry Group and Glisten executive David Collard took the helm two years ago. Dean Best met with Collard to discuss the relaunch of the Bart brand and the broadening of its portfolio amid what he called the most competitive trading conditions in 20 years.
just-food: The move into barbecue products – the company’s first major piece of NPD since it was renamed – was interesting. It allows you to move into an area where there is more added value. The herbs and spices category in the UK is fiercely competitive.
David Collard: Only 65% of what we manufacture is herbs and spices. We are in Thai, Indian, home baking, bread crumbs and are more of an ingredients-based business. The herbs and spices market is competitive but there’s huge opportunity for us within it. At the same time, we wanted to develop an ingredients business. The barbecue range has dry products so they inherently sit with herbs and spices. The wet fixture – sauces, marinades – was a step outside the norm but close enough for us to be the right thing to do. We have a very clear target audience and they don’t just cook with herbs and spices, they cook with ingredients. If we can work with the food enthusiasts in a breadth manner rather than vertically, that allows us to move away from some of the commodity herbs and spices and allows us to grow.
The business historically had been a volume business. There wasn’t a long-term strategy. We created a new board that looked at this together and thought we needed a very strong positioning before we grew. We put on hold all the NPD that was previously planned and said: ‘What do we want to be? What was going to make us different from brand and own label?’ We identified the niche we wanted to be in, the core consumer and then we set about relaunching the brand.
just-food: Home cooking has obviously seen a resurgence but that may not translate to the consumer opting for a brand, certainly one at a higher price point. They may stick to own-label herbs and spices. Have you seen those trends impinge on your branded business but help your own-label business?
Collard: Is the market in growth? Yes it is and notably in spices. There is a trend to hot foods. Spices and blends are driving the category growth at the moment. Blends come through innovation; there aren’t new herbs and spices that suddenly exist. Consumer demographics are very broad. Food enthusiasts – our target audience – sit in every demographic. If you look at the performance across different retailers, they are all performing well.
just-food: Is it a price and promotion-driven category? Or can you hold a price point?
Collard: Ironically, there has been a significant amount of promotional activity in the past 12 months – not from ourselves. That is mortgaging your sales. Promotions should be on niche areas to try and bring people in. People are bored of the three-for-two promotions. It’s not a direction we believe is correct for the category. We think we should be promoting innovation and creating trial but on a more isolated basis than a complete category angle. Is it price sensitive? To a point yes but actually when you look at the cost per pinch per meal it’s not that expensive.
just-food: Do you think consumers think about it that way?
Collard: There was quite a lot of inflation in own label during the last 12 months and that hurt volume. Without a doubt that affected the volume going through the marketplace, there is a price elasticity, particularly around own label as there is an expectation around value for money. I think brands have held up through that but our competitors and [their] significant amount of promotional activity has probably muddied the water as to what the underlying position is. There is inflation and in the current climate that is tough to recover.
just-food: That was cited as the main reason for the year-on-year fall in profits in Bart’s latest annual accounts.
Collard: Yes, recovering that as been very difficult. The world has moved on significantly in the last three years. The retail market is probably as competitive as I’ve known it in 20 years. You have to be a lot shrewder and smarter. In anyone’s basket, retail price point is always top of mind. People who think that isn’t the case need to watch out. People are frugal.
just-food: Often, though, value means different things for different people.
Collard: Look at the performance of the different retailers: Waitrose are flying. Our brand has grown, we fundamentally believe off the back of the relaunch. Own label is growing stronger for us but not in a manner that concerns us. We’re delighted with both when you’ve got a brand at 18% growth.
just-food: You say the business is split right now 50/50 across brands and own label.
Collard: Give or take.
just-food: If you were take a three-to-five year outlook, would you be looking for one side of the business to inch ahead?
Collard: The strategy is to grow both clearly. We’ve relaunched the Bart brand and we’re looking for the brand to grow. As long as the brand grows to the right level within the business plan that’s fine, if own label goes for or against that, that’s less of a concern. We would need and have a desire for both parts of the business to grow.
just-food: How have the demands of retailers evolved?
DC: In my 18 months with the business, we have strongly recommended not promoting from a consumer perspective. We think it’s the wrong thing to do. Yes, there’s been margin pressure throughout the period but the biggest demand has been around availability. Our customer base are absolutely focused on 100% availability. KPIs for us would be availability, standards and innovation – innovation allows differentiation. Eighteen months ago when we started, the Bart NPD team was an amalgamation of the marketing team, we now have a stand-alone team of five people in NPD and they are split equally in brand and own label.
just-food: You seem to have led a team that has overhauled the business.
Collard: It’s been a challenge but it’s been fun. We could see the opportunity. We’ve not true to run before we could walk. It’s taken us 18 months to make sure the foundations are right. We now have a foundation from which we can grow. It’s been a challenge. You come into a family-owned business that’s been run in quite an autocratic manner to a business that has a very different reporting and financial structure. It’s a massive task and the team were up for it. The opportunities are there. Langholm are there to build premium challenger brands. They were willing to invest.
just-food: You’re seeing signs sales will recover year-on-year?
Collard: Without question.
just-food: Profits as well?
Collard: Absolutely. We’re delighted with the perf of the relaunch. We have a very strong foundation now. It’s a bit like David and Goliath. The market needs a challenger brand. McCormick & Co. is a great business but we want to do something different
just-food: What do you think you do differently?
Collard: We target a slightly different consumer. Our brand attracts and talks to different people. We’re a smaller, faster business and we have a licence to go broader. We are an ingredients business, not a herbs, spices and packet mix business. The early signals from the work we have done is that is understood and wanted. Having a challenger brand with an extremely strong blue-chip team behind it can bring an objective view to the category that didn’t exist before.
just-food: Are there ambitions to expand the business outside the UK?
Collard: There would be an aspiration. We have a multi-dimensional growth model that looks at new channels and new markets. What we have to do is be patient and do what we do well and not try and do too much. We have a presence but it’s only two or three per cent of the business, in Spain, Portugal, Canada. There is something to work from but it has been unminded. We have somebody working on it now. There will be a level of work on growing that foundation, rather than a step-change in doing that. The vision is there but it’s phase two of the journey.
just-food: When could we see tangible initiatives to expand outside the UK?
Collard: 2014. We hope so. It’s a tough market. The challenges remain the same. It’s about our brand bringing something different. It could be either existing or new markets but it’s always easier to start where you are.
just-food: Five years is around the average PE ownership. Do you have one eye on the shape of the business when Langholm Capital goes to market?
Collard: There’s an outline plan of what we would like. We’ve done a lot of modelling around the different channels, marketplaces, where the opportunities are. We have a pretty clear view of what the next three to five years could unfold like.
just-food: Would Bart fit a trade buyer or another private-equity owner?
Collard: I don’t know. It’s too far off to even have a view. There’s no discussion about exit. The whole discussion with Langholm is about growth. We have put a very strong team in place that would enable the business to be twice the size.
just-food: It is often said privately-owned businesses can take a longer-term view.
Collard: That’s absolutely true and that’s why you shouldn’t read too much into our accounts. We’ve taken a lot of long-term view on a number of initiatives, putting resources in early. We have put significant amounts of investment in the brand. Pre-acquisition there was no investment and that is a straight hit to the bottom line.
It is an exciting time. The private-equity world is tough, the retail world is tough, the commodities market is tough. It’s challenging but we are up for the challenge.