Peter Franks wants to run a £200m business by 2011. Siân Harrington hears about his plan to make it big in frozen, ambient and chilled
There's not much to connect Peter Franks and David Tennant - no sidekick in the form of Billie Piper, no Tardis, Cybermen or Daleks, although suppliers may be excused for arguing there's a close resemblance between the latter two and retail buyers. However, Franks and Tennant do have one thing in common. They both answer to the name of Dr Who?
For Franks this is a problem. As UK MD of the massive German food conglomerate Dr Oetker, he is resigned to people saying "Doctor who?" when he mentions the company for which he works.
"It is the first thing people say," he reveals with exasperation. "And even when they know who it is, they can't pronounce the name. We need to build Dr Oetker as a brand."
Certainly, for the UK audience the name does not have the same resonance it has on the Continent, where Dr Oetker represents a passion for food and quality. In its German heartland it is market leader in almost all its 350 food product lines and 96% of consumers know the brand. It also regularly comes in the top ten most trusted food brands in European polls.
Its original product, Backin baking powder, is still popular 115 years after being developed by pharmacist Dr August Oetker. He created 50g individual sachets - exactly the right amount for the German equivalent of the Pound cake - to ensure best quality, convenience and perfect results every time. His vision still informs the company today.
Franks is out to convince UK consumers of this and has set his sights high. "We admire and aspire to be like Danone," he says. "In five years' time I would like to run a £200m business. Dr Oetker wants to be number one and we behave in that manner. At the moment we just don't have a voice but we can accelerate that."
But, while there may be some branding issues on these shores they have not hindered the company's success to date. In just four years it has created a £70m business and its inaugural brand - Pizza Ristorante - achieved 14.6% growth last year in a market showing an overall drop of 3.3% (ACNielsen 52 w/e 1 October 2005).
This despite some scepticism among buyers at the news Dr Oetker was entering the UK market back in 2002.
Contrast that to today. According to MBL trading manager Miki Handzar: "They have led the way towards the premium end of demand, ensuring a successful year in, otherwise, a very poor year for frozen foods as a whole. Innovation seems to be the key to their agenda. All in all Dr Oetker is a supplier any company would like to work with."
The success to date is not bad for a company that has had just one brand in one product area for four years in the form of Pizza Ristorante. But it's been a hard slog, not least because the entry point was in both the poorly perceived frozen sector and the most promoted category within it: frozen pizza. "Some 75% of all products are being promoted and there is surplus supply and fierce competition," says Franks. "And now even chilled pizzas are being promoted, which is not good news. We don't want to trade the brand through bogofs or half-price promotions. We are on a quality footing."
But trying to sell quality in a cost-driven environment is not easy. "People don't want to talk quality," Franks concedes, "and UK retailers are obsessed by cost. But there is a wind of change."
However, he adds: I am not convinced consumers trust food manufacturers. We need to overcome that and build trust, together with the retailer. Retailers and manufacturers need to work more collaboratively. But I don't sense that. It is a very aggressive marketplace, with three players all vying for the Tesco scraps."
This tough trading environment has not prevented Dr Oetker from pursuing its strategy to create a UK business based on three temperature regimes: frozen (pizza), ambient (bakery and cereals) and chilled (yoghurts)."Our objective is to be number one in the market in each of these areas. True, it is like pushing water uphill but Dr Oetker can take a long-term perspective as it is a family business,"says Franks.
With pizza already covered off, step two was the acquisition of dairy company Onken in 2004. The family-owned company is a good fit, having a similar culture and quality standing. It also gives Dr Oetker more manufacturing ability in Europe.
Integrating the two companies has been one of the biggest challenges. Foremost has been the issue of location, with Dr Oetker in Leeds and Onken in Richmond,Greater London. The decision to headquarter in Leeds brought its problems. While Franks was keen to keep the Onken team, no logistics or finance personnel wished to relocate and neither did Onken MD Julie Plant. The Onken sales team is still in place but Franks had to build new teams from scratch.
This month the integration was completed with 13 new jobs ( the total now 34 including three in the Republic of Ireland) and Dr Oetker launches the first TV advertising for Onken in four years with a £1.5m campaign. Now that is out of the way Franks can proceed with his longer-term plans. Increasing penetration of Pizza Ristorante is one plank. "We have got to protect our crown jewels. While Ristorante has the highest loyalty of any branded pizza, penetration is only 9% compared to the brand leader at 15%. I want Ristorante Mozzarella in every shop in the UK," says Franks.
There are 16 lines in Germany but only eight here so far, with most retailers stocking four or five. Mozzarella and Speciale are the best sellers while Funghi recently walked off with a British Frozen Food Federation gong. Dr Oetker intends to bring other products into the category and in March launched the baguette-style Bistro range.
Convenience has been one thrust, with the company working to help c-store operators manage the category. Now, says Franks, attention is turning to wholesalers and forecourts.
There are also plans to create Dr Oetker Ireland. In 2004, Pizza Ristorante was rolled into the Republic, using third party agent Allied Foods. The acquisition by the Dr Oetker group of Unilever's frozen business in Benelux, Austria, Spain, Portugal and Ireland in 2004 brought the £4m Gino Ginelli brand into the portfolio. Meanwhile, Onken is marketed in the Republic by SHS. So Dr Oetker now has a £6m business in the Republic and markets through Allied, SHS and directly with some customers.
The company will begin to research the ambient sector now it has a foothold in frozen and chilled. Acquisition is a distinct possibility,so it isn't just looking for a larger slice of the pizza.
Q&A
There's not much to connect Peter Franks and David Tennant - no sidekick in the form of Billie Piper, no Tardis, Cybermen or Daleks, although suppliers may be excused for arguing there's a close resemblance between the latter two and retail buyers. However, Franks and Tennant do have one thing in common. They both answer to the name of Dr Who?
For Franks this is a problem. As UK MD of the massive German food conglomerate Dr Oetker, he is resigned to people saying "Doctor who?" when he mentions the company for which he works.
"It is the first thing people say," he reveals with exasperation. "And even when they know who it is, they can't pronounce the name. We need to build Dr Oetker as a brand."
Certainly, for the UK audience the name does not have the same resonance it has on the Continent, where Dr Oetker represents a passion for food and quality. In its German heartland it is market leader in almost all its 350 food product lines and 96% of consumers know the brand. It also regularly comes in the top ten most trusted food brands in European polls.
Its original product, Backin baking powder, is still popular 115 years after being developed by pharmacist Dr August Oetker. He created 50g individual sachets - exactly the right amount for the German equivalent of the Pound cake - to ensure best quality, convenience and perfect results every time. His vision still informs the company today.
Franks is out to convince UK consumers of this and has set his sights high. "We admire and aspire to be like Danone," he says. "In five years' time I would like to run a £200m business. Dr Oetker wants to be number one and we behave in that manner. At the moment we just don't have a voice but we can accelerate that."
But, while there may be some branding issues on these shores they have not hindered the company's success to date. In just four years it has created a £70m business and its inaugural brand - Pizza Ristorante - achieved 14.6% growth last year in a market showing an overall drop of 3.3% (ACNielsen 52 w/e 1 October 2005).
This despite some scepticism among buyers at the news Dr Oetker was entering the UK market back in 2002.
Contrast that to today. According to MBL trading manager Miki Handzar: "They have led the way towards the premium end of demand, ensuring a successful year in, otherwise, a very poor year for frozen foods as a whole. Innovation seems to be the key to their agenda. All in all Dr Oetker is a supplier any company would like to work with."
The success to date is not bad for a company that has had just one brand in one product area for four years in the form of Pizza Ristorante. But it's been a hard slog, not least because the entry point was in both the poorly perceived frozen sector and the most promoted category within it: frozen pizza. "Some 75% of all products are being promoted and there is surplus supply and fierce competition," says Franks. "And now even chilled pizzas are being promoted, which is not good news. We don't want to trade the brand through bogofs or half-price promotions. We are on a quality footing."
But trying to sell quality in a cost-driven environment is not easy. "People don't want to talk quality," Franks concedes, "and UK retailers are obsessed by cost. But there is a wind of change."
However, he adds: I am not convinced consumers trust food manufacturers. We need to overcome that and build trust, together with the retailer. Retailers and manufacturers need to work more collaboratively. But I don't sense that. It is a very aggressive marketplace, with three players all vying for the Tesco scraps."
This tough trading environment has not prevented Dr Oetker from pursuing its strategy to create a UK business based on three temperature regimes: frozen (pizza), ambient (bakery and cereals) and chilled (yoghurts)."Our objective is to be number one in the market in each of these areas. True, it is like pushing water uphill but Dr Oetker can take a long-term perspective as it is a family business,"says Franks.
With pizza already covered off, step two was the acquisition of dairy company Onken in 2004. The family-owned company is a good fit, having a similar culture and quality standing. It also gives Dr Oetker more manufacturing ability in Europe.
Integrating the two companies has been one of the biggest challenges. Foremost has been the issue of location, with Dr Oetker in Leeds and Onken in Richmond,Greater London. The decision to headquarter in Leeds brought its problems. While Franks was keen to keep the Onken team, no logistics or finance personnel wished to relocate and neither did Onken MD Julie Plant. The Onken sales team is still in place but Franks had to build new teams from scratch.
This month the integration was completed with 13 new jobs ( the total now 34 including three in the Republic of Ireland) and Dr Oetker launches the first TV advertising for Onken in four years with a £1.5m campaign. Now that is out of the way Franks can proceed with his longer-term plans. Increasing penetration of Pizza Ristorante is one plank. "We have got to protect our crown jewels. While Ristorante has the highest loyalty of any branded pizza, penetration is only 9% compared to the brand leader at 15%. I want Ristorante Mozzarella in every shop in the UK," says Franks.
There are 16 lines in Germany but only eight here so far, with most retailers stocking four or five. Mozzarella and Speciale are the best sellers while Funghi recently walked off with a British Frozen Food Federation gong. Dr Oetker intends to bring other products into the category and in March launched the baguette-style Bistro range.
Convenience has been one thrust, with the company working to help c-store operators manage the category. Now, says Franks, attention is turning to wholesalers and forecourts.
There are also plans to create Dr Oetker Ireland. In 2004, Pizza Ristorante was rolled into the Republic, using third party agent Allied Foods. The acquisition by the Dr Oetker group of Unilever's frozen business in Benelux, Austria, Spain, Portugal and Ireland in 2004 brought the £4m Gino Ginelli brand into the portfolio. Meanwhile, Onken is marketed in the Republic by SHS. So Dr Oetker now has a £6m business in the Republic and markets through Allied, SHS and directly with some customers.
The company will begin to research the ambient sector now it has a foothold in frozen and chilled. Acquisition is a distinct possibility,so it isn't just looking for a larger slice of the pizza.
Q&A
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