Frozen food has become one of the more maligned sectors in the food industry in recent years, particularly in the UK. The seafood category, while enjoying growing consumer awareness of the importance of a balanced diet, faces its own challenges over sustainability. In this month’s just-food interview, Dean Best met Mike Parker, an experienced seafood executive and part of the team behind the Young’s and Findus brands.
After almost 30 years in the food business, Mike Parker laughs as, in a moment of self-mockery, he likens himself to the “old sage” of the industry.
But, for all the self-deprecation, Parker’s experience means he has a central role to play in the future of one of Europe’s leading food processors.
Last month, Parker became deputy chief executive of Foodvest, the food company behind UK-based seafood group Young’s and – in many markets across Europe – frozen foods specialist Findus. Private equity firm CapVest, which bought Young’s in 2002 and the Findus business in France, Scandinavia and Eastern Europe in 2006, has largely run the two companies separately. Now, it has decided to bring the two firms together under the Foodvest umbrella and create a group that generates GBP1.1bn (US$2.2bn) in sales each year.
Under the plans, the Young’s business has been split into two; Young’s Seafood is focusing on branded seafood, while a new business, The Seafood Company, is producing own-label chilled seafood for UK retailers. Foodvest’s Findus operations remain focused on developing the brand’s presence along freezer aisles across the Channel, in Scandinavia and fledgling markets like the Czech Republic and Slovakia.
Food inflation was part of the rationale for the move. “That was a key factor,” the former Young’s executive tells just-food. “The industry is seeing significant food inflation over a number of categories at the moment so business is under a bit of pressure. We have to look to how we are going to reflect that across our business.”
However, Parker says the idea to bring the two businesses together had been in the pipeline since the company’s private equity backers bought Findus two years ago. Potential synergies, including an increased power to purchase and source seafood, had been identified. “We’d been progressively working closer and closer together anyway. We see this change as the logical next step. We want to project Foodvest as a significant European food company. We want to increase its profile. As a corporate brand, this is now a substantial group.”
Foodvest, with 40% of fish sales in the UK, a strong presence in the frozen food markets in France and Scandinavia, and a promising business in Eastern Europe, is a lucrative business for its private equity backers. Private equity invests heavily in the food industry but has attracted negative headlines, particularly in recent months, over claims of asset-stripping and piling huge amounts of debt on businesses and selling them on for huge profits. Parker, however, has little time for such claims and insists the private equity sector had merely not been effective in communicating the benefits it can bring to businesses.
“Most of us, me included, have worked for plcs in the past and we’ve found that private equity involvement has liberated our business,” he says. “It’s liberating in that sense that the decisions that our business takes in terms of strategy are ours. The private equity model places of a lot of emphasis on management to run the business, which is more enlightening because we know our industry and we know our sector.”
Mike Parker, deputy CEO, Foodvest
Two key trends having an impact on the seafood sector are health and sustainability. Fish is one of the categories that can benefit hugely from drives encouraging consumers to adopt a more balanced diet. Parker realises the potential is there but warns that concerns over sustainable stocks could drive some consumers away from fish category. “As a protein, seafood is the growth protein. It presses all the consumer buttons about health,” Parker says. “The one thing that could destabilise that is the whole sustainability argument and it’s very, very important that we get that right. It would be crazy to undermine what is a fantastic opportunity as a business.”
That is not to say Foodvest takes issues around sustainability lightly. For Parker, the subject must focus his mind continuously, with his place on the board of the Marine Stewardship Council and “driving Foodvest’s sustainability agenda” identified as one of his key roles at the company. He insists that the seafood sector must continue to drive the agenda on sustainable fish stocks, not least because the issue is becoming more important to consumers. “We can have a massive influence. We are one of the biggest buyers of seafood in the world. More and more consumers want us to have done the work so that the product they are buying from us has been procured and processed in a sustainable way.”
Of course, developing and processing products produced in a sustainable way, and sold in packaging that promotes those credentials, could be an excuse for seafood firms to look for a mark-up. Parker admits that sourcing from sustainable stocks can costs more but he insists that, while other brands may look for a higher retail price, the extra cost to Foodvest is not passed on to consumers. “It’s more about what we want to say with our brands – this is not about premiumisation. What we sell is food that appeals to the mass consumer. In the UK, we sell fish pies that sell below GBP1 and we use sustainable fish in those products. These are value items and it’s not about pushing sustainability as a premium product.”
Keeping an eye on price has become even more pertinent to all food manufacturers in recent months. Rising input costs has led suppliers to look for their retail customers to up their prices but concerns over the economy has made supermarkets reluctant to ask shoppers to pay more. For Parker, the ensuing negotiations between supplier and retailer is nothing new, although he concedes that it is now tougher to win a price increase. “It’s tough but it’s our job to put the right propositions together to make it work,” he says.
Parker acknowledges the “big challenge” of operating in a climate of food inflation but he remains optimistic on the potential for seafood and frozen foods in Foodvest’s markets, despite the latter being almost written off in the UK. Aggressive discounting led to the poor perception of frozen food in the UK, Parker says, and he believes the category, particularly seafood, remains strong in the country. “Seafood is clearly in a terrific position from a health point of view,” he says. “We don’t necessarily have to work too hard to push that message.”
In Foodvest’s European markets, frozen food remains “very, very strong”, Parker says. “Frozen food has intrinsically got a lot of growth and it’s been interesting for me, who has historically worked in the UK, to see those other markets.”
It seems, perhaps, that the potential for Findus in markets from Sweden to Slovakia, as well as Young’s robust position in the UK, is keeping the old sage feeling young. “The sectors we’re in have got organic growth potential and that’s great in the food sector. A lot of food sectors with high growth are relatively small sectors. These are very, very big sectors with strong growth potential – that’s fantastic.”