Jeff van der Eems of United Biscuits on taking McVitie’s and Jacob’s into new markets

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United Biscuits

United Biscuits, the company behind McVitie’s and Jacob’s, is taking its snacks into new overseas markets, as chief executive of international operations Jeff van der Eems tells Director

Jeff van der Eems is in bullish mood. United Biscuits (UB), the business he joined nine years ago, last year achieved group revenue sales of £1.1bn. Accounts for 2012 show an operating profit of £130.8m.

In the UK, where its McVitie’s digestive is the highest-selling brand in the ‘everyday biscuit’ segment, market share, says Van der Eems, was “up half a point in 2013 and is up another half a point to date”. The biscuit category has grown almost every single year for 30 years, he explains. “Growing at just under five per cent globally, that’s the highest of any snacking categories – higher than chocolate or fried snacks.”

As chief executive of international operations at United Biscuits since last June, Van der Eems’s remit is to cover operations outside the UK and northern continental Europe (Benelux and France). He presided over 22 per cent growth last year – “already up 25 per cent this year” – but his previous positions as chief financial officer and latterly chief operating officer from 2007 (including responsibility for international before the current role was created) have given him a strong overview of the group as a whole.

Significantly, in the last two years United Biscuits – formed in 1948 following the merger of two Scottish family businesses McVitie & Price and MacFarlane Lang and owned since 2006 by the private equity houses Blackstone Group and PAI Partners – has refocused operations on its core output.

“We have had a number of changes over the past two years, including the sale of KP Snacks and the hiring of a new group CEO [Martin Glenn, former chief executive of Birds Eye]. Those two actions have given us a much better focus. We are very clear on our strategy and there are great signs of progress. We are in good growth both in the UK and internationally,” says Van der Eems.

Offloading KP Snacks (makers of Hula Hoops and Skips crisps) to Germany’s Intersnack for a reported £500m refocused UB on baked, rather than fried, snacks.

“We are a global player in baked snacks. We recognised that we had global expertise, and a brand and a set of products that travelled the world well on the bake side. We only did fried snacks in the UK.

When we sold KP we were selling a part of the business that we only did in the UK and by selling it we got a much better focus on the baked snacks side. As a company we firmly believe when you focus on something with a singular purpose you get a better result.”

As part of this renewed focus, February saw the start of a £12m advertising campaign to relaunch the McVitie’s brand, putting all of the company’s UK-manufactured sweet biscuits under the moniker.

“In the past we were trying to support multiple brands – digestives, chocolate digestives, Hobnobs, Jaffa Cakes – and when you do that you tend to fragment your efforts from a consumer messaging point of view. With the master brand we have a clear architecture that all sweet biscuits will be sold under McVitie’s, and with that master brand strategy we have a consistent look and feel for consumers whilst also giving a very specific message on each of the products themselves. It was a way of getting real focus and higher impact of every advertising pound that we spend,” says Van der Eems.

Significantly, in the last two years United Biscuits – formed in 1948 following the merger of two Scottish family businesses McVitie & Price and MacFarlane Lang and owned since 2006 by the private equity houses Blackstone Group and PAI Partners – has refocused operations on its core output.

“We have had a number of changes over the past two years, including the sale of KP Snacks and the hiring of a new group CEO [Martin Glenn, former chief executive of Birds Eye]. Those two actions have given us a much better focus. We are very clear on our strategy and there are great signs of progress. We are in good growth both in the UK and internationally,” says Van der Eems.

Offloading KP Snacks (makers of Hula Hoops and Skips crisps) to Germany’s Intersnack for a reported £500m refocused United Biscuits on baked, rather than fried, snacks.

“We are a global player in baked snacks. We recognised that we had global expertise, and a brand and a set of products that travelled the world well on the bake side. We only did fried snacks in the UK. When we sold KP we were selling a part of the business that we only did in the UK and by selling it we got a much better focus on the baked snacks side. As a company we firmly believe when you focus on something with a singular purpose you get a better result.”

As part of this renewed focus, February saw the start of a £12m advertising campaign to relaunch the McVitie’s brand, putting all of the company’s UK-manufactured sweet biscuits under the moniker.

“In the past we were trying to support multiple brands – digestives, chocolate digestives, Hobnobs, Jaffa Cakes – and when you do that you tend to fragment your efforts from a consumer messaging point of view. With the master brand we have a clear architecture that all sweet biscuits will be sold under McVitie’s, and with that master brand strategy we have a consistent look and feel for consumers whilst also giving a very specific message on each of the products themselves. It was a way of getting real focus and higher impact of every advertising pound that we spend,” says Van der Eems.

The current campaign, featuring fluffy grey kittens – “reminding consumers what a nice treat it is to have a wholesome tasting biscuit,” says Van der Eems – has seen a lift in sales of digestives, chocolate digestives and Jaffa Cakes. A similar £10m investment in marketing savoury products, including cream crackers, Mini Cheddars and Twiglets, under the Jacob’s brand, aims to grow the business by 20 per cent. Further investment in the Go Ahead! fruit biscuit brand is set for later in 2014.

“When you transform, in terms of selling off a big UK division of KP and hiring a new CEO, it gives you the opportunity to look at your strengths, your opportunities and revisit your priorities… That is why you see us focused on our big brands and investing more strongly behind international growth. There’s a much greater sense of where the productivity initiatives lie from our entire business operation,” says Van der Eems.

United Biscuits: Overseas growth

With seven factories in the UK and four in northern Europe, United Biscuits exports to 100 markets. In 2006 international business [non-UK, northern Europe] amounted to five per cent of total revenue; this year Van der Eems forecasts it will be 20 per cent.

“International became a real strategic thrust for the business. It’s gone from being £50m of revenue to about £250m this year.”

The company has focused on McVitie’s as a global brand, digestives as a global product, and on four regions: Africa, the Middle East, India and China. “Rather than go broad, we’ve gone very deep,” says Van der Eems. “The beauty of the digestive is it travels well. It’s a lovely product; wholesome, with a balance of sweet and savoury – the most popular flavour in the world. It’s also very hard to copy.”

The digestive isn’t trademarked but United Biscuits can boast to its product being the original, baked 160 years ago at the bakery of Robert McVitie.

“We are the original and we advertise that quite proudly,” explains Van der Eems. “As we’ve focused our international strategy we’ve achieved scale in some of these markets. We’ve then reached the point where we’re comfortable investing in local manufacturing. In 2006 we had no factories outside of Europe. We now have a factory in India, a factory in Saudi Arabia, and two factories in Nigeria.”

Expansion strategies differ in each market; the factory in India being a wholly owned green-field investment and the others coming as a result of UB’s aforementioned investment in local manufacturers.

“Nigeria and the Middle East are markets where we’ve been selling imported or exported UK products for a long time. With our local commercial teams, we develop the brand there to a scale position and once we’ve developed the scale position we then go build a local factory,” says Van der Eems.

United Biscuits continues to export large 250g and 400g packs of digestives from the UK to India but concentrates production from its local factory on smaller, more affordable packs.

“In India, our factory will make a 10 rupee [10p] range of digestives. It’s a smaller diameter and a smaller pack. You can still get the UK 400g digestives but for a much more affordable price you can buy the locally made product. In every market we want the average consumer not to have to work more than 10 minutes to afford one of our products.”

The biscuit market in India is worth £2bn and dominated by local companies with many consumers having grown up eating basic glucose biscuits. UB’s strategy with the McVitie’s digestive is to offer a more aspirational product for rising incomes.

“The digestives category was very small in India. We launched in 2010 and the digestives category has outgrown biscuits by threefold. We now have half a share of the digestive market,” says Van der Eems, acknowledging that the biggest challenge when entering new markets is hiring the right people.

“Most of our markets operate through distributors. If we can get the right people and the right partners I’m always very confident we can succeed. We know how to make the digestive better than anybody… When we set up in international markets we transfer that expertise with the people and get teams to go out to the factories and replicate the UK recipe,” says Van der Eems.

He points out that local differences in water, climate and wheat all need to be overcome to produce biscuits that taste the same as their UK counterparts.

“The product isn’t hard to sell; biscuits are the most highly penetrated of all food products and 94 per cent of households around the world will have had a biscuit at least one point in the year. We don’t have to teach people what a baked snack is [because] they’ve been consuming that for generations. We have to teach them why a McVitie’s should be part of their daily repertoire.”

Interview Company Profile May 2014 McVitie's Digestives advert

McVitie’s cute kitten advert

Savouring the taste

Looking further ahead, Van der Eems expects more acquisitions and solid, organic growth. “We’ll grow well into double digits pretty organically, focusing on emerging markets. We aim to be the number one biscuit company in west Africa… and a sizeable player leading digestives in India.”

UB also sees an opportunity for growth with its savoury snack range, learning from experiences in the US where the company sells more of its 190-year-old Carr’s water biscuits than it does at home.

“It’s a very modern product, with low fat and low sodium. Savoury snacks account for 45 per cent of the biscuit market in the US but only around 18 per cent here. We have big hopes for the savoury business, which is under-penetrated in the UK. We expect the savoury biscuit range behind Jacob’s to grow 50 per cent higher than the rate [of] the sweet biscuits,” says Van der Eems.

The last decade has seen the nutritional value of processed food come under the microscope, with government drives to reduce fat and salt. Van der Eems describes health as a “complicated issue”, pointing out consumers have been snacking for centuries.

“Snacking is a mega trend that will only grow… but we recognise we have a responsibility to continue to make our products as healthy as possible.”

Four years ago United Biscuits changed the oil in the digestive recipe to make the biscuit healthier. Despite best intentions, there were many complaints about the new taste and texture.

“The fact was, it just wasn’t as strong a biscuit and people couldn’t dunk it as well. In the end you have to have the best product for the consumers and the consumers told us loud and clear they liked the old recipe and that’s why we switched back.”

Van der Eems insists United Biscuits didn’t lose any consumers over it, and it continues to sell the revised recipe under the McVitie’s Digestives Lights name. Perhaps the lesson proves that even for companies with a heritage of almost two centuries, whichever way the cookie crumbles, the customer is always right.

unitedbiscuits.com

About author

Richard Dunnett

Richard Dunnett

Richard Dunnett is an associate editor who writes about entrepreneurs, SMEs, FTSE 100 corporations, technology, manufacturing, media and sustainability.

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