How Steve Murrells is making Hilton Food Group ‘a great British success story’

Hilton Food Group is the biggest food company nobody has heard of. Or at least, outside the grocery industry. So says CEO and former Co-op boss Steve Murrells, who took the helm last year.

Its lack of public recognition – despite racking up sales in excess of £4bn – is no failure of its PR team though. The company has always been happy to stay “under the radar”, says Murrells. But today, he wants to bring its transformation into the spotlight and “turn up the volume” on its successes.

Over the past decade-and-a-half, Hilton has become what Murrells terms “an international protein provider of choice”. It now houses 7,000 staff across 10 countries and 24 manufacturing facilities in five key areas: meat, fish, easy meals, foodservice and vegetarian & vegan.

It’s certainly come a long way since Murrells – then Tesco trading director – helped to establish the business in 1994. At that time, Hilton was entirely reliant on the UK’s largest supermarket and became only its second ever retail packing partner.

“When I stood down from Co-op, I had these grand intentions to take a bit of a breather. Then the calls started coming in”

“Back then we had one customer in Tesco, we were only in meat, we had just 160 employees and our revenues were quite small,” Murrells says. That relatively small scale continued for a while. Even at the time of its IPO in 2007, Hilton was valued at just £105m.

Fast-forward to the present day, and the business is in a very different place. Hilton topped the list of the UK’s largest food and drink companies by revenue last year [The Grocer OC&C 150] after doubling its turnover from 2021 to 2023.

And if its latest half year results, posted last month, are anything to go by, the supplier is set to reach further heights, having posted pre-tax profits up 25.3% year on year to £33.5m in the 26 weeks to 30 June of this year.

When Murrells took the hotseat of the business in 2023, however, it was a somewhat unexpected move after leaving his role at the helm of Co-op in May 2022. There, he ploughed through 10 eventful – and at times, scandal-hit – years for the retailer, including five as group CEO – where he was credited with playing a critical role in its turnaround. 

“When I stood down, I had these grand intentions to take a bit of a breather,” he says. “It’s only when you step down you realise you’re quite a bit tired in these kinds of jobs. Yet I got into about one month of starting to recuperate, and some calls started coming in.”

By October 2022, Murrells had become a non-executive director at egg giant Noble Foods. In the same month, he began advising Hilton in what he describes as a “Back to the Future” moment – one that ultimately led to him taking the role of CEO in July 2023.

He was already familiar with chair Robert Watson and co-founder Philip Heffer, who were there at Hilton’s outset. “And 30 years after I helped them do that they had done incredible things,” Murrells says.

Having already run a UK manufacturer in Tulip, as well as his senior roles at Co-op, Tesco and Sainsbury’s, the opportunity to oversee both an international firm and a plc presented the opportunity to “complete my CV”, he adds.

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For Murrells, Hilton is an example of “a great British success story”. And much of that has come down to a sharp focus on where opportunities lie.

“What I always admired about the business was they had created a business plan that was unique,” he says. Here was a company which – unlike most UK retailers that had attempted to expand internationally – had “very smartly” understood international cultures and successfully grown into global markets.

And unlike its fully integrated rivals and their ‘push’ business models – which focus on carcase balance and finding a market for an entire animal – Hilton’s is a ‘pull model’, and crucially it does not own its own farms or animals, instead buying its raw materials from long-standing partners.

That business model means it sits “right at the middle” of a retailer’s supply chain and develops “what customers are asking for”, such as the Tesco Finest steakhouse range, launched last month to cater to restaurant-quality ‘dine at home’ trends.

The company’s strategy has been complemented by massive expansion outside the UK in recent years. In addition to its ongoing partnership with Tesco for red meat, Hilton has deals with the likes of Woolworths in Australia, Albert Heijn in the Netherlands and Walmart in Canada for products ranging from meat to fish and plant-based.

In fact, some 75% of its revenues are now outside the UK.

Key to these retailer relationships are their long-term nature and Hilton’s investment in technology, Murrells says, adding no other business in its class has taken such a leap on such a scale.

The drive to automate is evident at its UK HQ in Huntingdon, where it has rolled out several pieces of robotic equipment assisted by AI – transforming the production of beef steak, mince and burger lines.

“Automation doesn’t mean we’ve made people redundant, either,” Murrells stresses. “Improvements in productivity mean we’ve instead been able to cut dependence on agency staff, which is probably at 10% of our workforce now, compared to 70% at similar businesses,” he claims, while pointing out such a shift also has benefits in terms of quality control.

“Our staff are also becoming more skilled as a result.”

Robotic packing machinery also aids uniformity, cuts waste and helps maintain a specific price point more consistently, he adds, while showing off a piece of kit at the Huntingdon plant which can manipulate each pack of steak to ensure the marbling is in the optimum position – to ensure better standout on shelf.

The tech is even more impressive across Hilton’s Australian business, he insists, and will be similarly advanced in its Canadian Walmart operation when it comes on stream in 2027.

Hilton’s strategic retail deals also include a hefty logistics operation. The business acts as a consolidator hub in Australia, its Danish business and will ultimately do so with Walmart, “so not only are we retail packing for our partner, but we bring in other fresh products, we reconsolidate those products to store orders, and dispatch those store orders out to their composite depots”.

The business also owns a software company called Foods Connected, which Murrells describes as a single “vault” for information on auditing, pricing, commodity trends and much more, that it sells to companies which don’t even buy protein from it, such as McDonald’s.

Meanwhile, its joint venture with robotics manufacturer Agito “powers our factories”, he says, and “means they’re the most modern and efficient” in the industry.

Beyond meat

But that’s not all. In addition to meat, its UK fish business (the former Icelandic Seachill operation it acquired in 2017), has been buffeted by a series of financial headwinds in recent years. However, it is now back on track “and I don’t like framing it as a recovery now, because we’ve gone through the recovery”, Murrells says.

“When it’s running right, the margins in fish are accretive. It’s on every restaurant menu and so there’s a real demand,” he argues. “Every retailer around the world, not just in the UK, is giving it more space, and it’s a big tick in the health box, and obviously has some sustainability credentials as well.”

There is a key challenge for Hilton looking ahead, though.

While it also operates in plant-based globally, it exited the market in the UK last year amid the downturn in the sector. And given it is still so heavily dependent on livestock, it is – like every other major meat business – it’s in a difficult position in the face of the growing spectre of climate change.

But Hilton is making moves. It has a fledgling cellular agriculture business in partnership with Bath University, and Murrells is set to taste its first lab-grown meat products shortly. “For us, the exciting bit is all in our patent [for new tech], because we’re not using tanks, we are using a coil system, which will bring parity on price that much quicker. So that’s very interesting for us.”

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More widely, Hilton is aiming to reduce scope 1 and 2 emissions by 90% by 2030, and scope 3 emissions by 45% – with a plan to hit net zero by 2050. That will be driven by efficiency gains from automation, plus work downstream with supply partners in areas such as specifications,

The question is how long Murrells will be there to see out that work. His vast experience means he has been touted by some as a potential candidate for the vacant Asda CEO job. “I’m flattered, but I’m very happy here,” he insists. “This is a very unique business and has significant growth opportunities.”