Foodvest wants to build Findus UK into a £120m brand. Should Birds Eye be worried about competition in the frozen food aisle? Alex Beckett reports
The history of Findus and Foodvest is a Scandinavian saga that has had more twists and turns than an episode of Britain's Got Talent. But last week marked a denouement that could usher in a new era of clarity for the Findus brand.
Foodvest, the owner of the Findus brand on the Continent, purchased the licence to make Findus-branded products in the UK from an entirely separate company called Findus UK.
With Findus UK now part of a European powerhouse, Foodvest CEO Per Harkjaer's prediction that its current value of £40m would triple to £120m by 2011 is not unrealistic. So does Birds Eye, which saw sales rise 5% to £545m last year, have anything to worry about?
Even if Findus UK is able to triple its sales, it would still be dwarfed by Birds Eye. But Foodvest certainly has the scale to take on the frozen food giant. The Scandinavian company owns Britain's biggest seafood brand Young's and own-label supplier The Seafood Company, and has 40% of the UK's fish market under its control. What's more, the economic slump has provided strong sales results for frozen food manufacturers, as recent performances from McCain and Birds Eye testify.
It seems those private equity boys at Lion Capital spotted an opportunity in a Crispy Pancake hue of gold when they snapped up Foodvest for £1.1bn last July.
But, insists, Harkjaer, Findus UK is not seeking to steal share from Birds Eye - rather work with it to grow the whole frozen category, emulating another famous rivalry.
"We will compete alongside Birds Eye, like a Coca-Cola and Pepsi rivalry," claims Harkjaer, stressing that Findus UK will offer different consumer benefits than Birds Eye. "If we simply produced the same type of products Birds Eye currently offers, it would be difficult to get retailers to list them because they wouldn't want two of the same products."
Harkjaer accepts Findus UK is still synonymous with Crispy Pancakes, but says the business will be rolling out some exciting new NPD over the coming year. "The stronghold of the Findus brand today is pasta meals and Crispy Pancakes. It's about convenient, tea-time products and I think we can expand on that."
With all frozen food now seemingly having to ooze with omega-3, surely new innovation around healthy eating is the way to go?
"I don't see ourselves going out there with a big health message," says Harkjaer.
Plans for the ranges
The range of frozen beef lasagnes, French bread pizzas and filled wraps will continue to carry the Findus logo, but Harkjaer plans to relaunch the actual products.
One Findus UK-owned brand set for further investment is GO3. The omega-3 enriched range of frozen ready meals boasts endorsement and a stakeholding from one of the category's least likely entrepreneurs, David Beckham.
Launched last October, the GO3 range is set for big things in 2009, according to Vidar Engen, managing director of Findus UK, who believes it will play a major role in reaching Harkjaer's £120m target.
"GO3 has listings in Tesco, gained a recent listing with Sainsbury's and is in discussion with other multiples - it's a very exciting time for the brand and Beckham remains a big part of it," he says. "We will be releasing some NPD for GO3 shortly and have plans for a high-profile media launch in September."
The other Findus UK frozen meal range, backed by Jean-Christophe Novelli, is less of a success story. Along with the other Findus UK products, the Novelli range was manufactured by Newcastle Productions - a subsidiary of Findus UK that went into administration in January. A fire destroyed a large part of the Longbenton plant a week before the arrival of administrators from Zolfo Cooper. But while the nation's Crispy Pancakes, frozen pasta ready meals and Beckham-branded lines have been outsourced to third party co-packers in Europe and the UK, the Michelin-starred chef's range ceased production.
"The range was performing very well, but there was a small downfall at the end of last year, and they proved quite difficult to sell," says Engen. "Supermarkets are now selling the range on stock and a manufacturer has not yet been found."
More broadly, the extra manufacturing requirements will be handled by a mixture of contract manufacturers and Foodvest's 21-strong estate of manufacturing plants across Sweden, Norway and France among other European countries.
While Harkjaer doesn't plan on building more factories to cope with the addition of the Findus UK business, new capabilities and processes will be extended across existing factories, he says. "I would bet that over time, more and more lines will be produced internally in our own factories."
Harkjaer is keen to point out that Findus UK will be managed separately from his other British brand interest Young's, which posted sales growth of 21.4% to £185m last year [Nielsen].
"Young's and Findus UK will co-ordinate, but they will have two different management teams," he says. "One of the things we are looking for is a synthesis. "
Ambitious yet confident
Harkjaer recognises the £120m target is ambitious and acknowledges Findus UK will be growing from a relatively small base. However, he says, market conditions are more favourable than they have been for years, he says.
"It would be much more difficult if frozen food was in decline, but it's not," he points out. "In the present financial environment, people are looking for better deals and you can do better deals in the frozen aisle than you can in the chilled aisle."
Harkjaer knows all about a good deal. The Findus UK takeover is part of a wider trend of consolidation in the frozen industry. "Companies across Europe are consolidating and making the most of low buy-out prices," notes Simon Peacock, head of mergers of food and drink at Catalyst Corporate Finance. "Frozen in particular has a lot of synergies across the pan-European market and Foodvest's products transfer across the different countries very well."
Tripling Findus UK sales by 2011 won't be easy. But the recession-related retro revival will no doubt help the Crispy Pancakes owner. As will Foodvest's already considerable expertise in the frozen arena. Harkjaer is certainly pretty bullish about the brand's prospects. "If we can't do this, nobody can and we definitely have the muscles for the job," he says defiantly.
The history of Findus and Foodvest is a Scandinavian saga that has had more twists and turns than an episode of Britain's Got Talent. But last week marked a denouement that could usher in a new era of clarity for the Findus brand.
Foodvest, the owner of the Findus brand on the Continent, purchased the licence to make Findus-branded products in the UK from an entirely separate company called Findus UK.
With Findus UK now part of a European powerhouse, Foodvest CEO Per Harkjaer's prediction that its current value of £40m would triple to £120m by 2011 is not unrealistic. So does Birds Eye, which saw sales rise 5% to £545m last year, have anything to worry about?
Even if Findus UK is able to triple its sales, it would still be dwarfed by Birds Eye. But Foodvest certainly has the scale to take on the frozen food giant. The Scandinavian company owns Britain's biggest seafood brand Young's and own-label supplier The Seafood Company, and has 40% of the UK's fish market under its control. What's more, the economic slump has provided strong sales results for frozen food manufacturers, as recent performances from McCain and Birds Eye testify.
It seems those private equity boys at Lion Capital spotted an opportunity in a Crispy Pancake hue of gold when they snapped up Foodvest for £1.1bn last July.
But, insists, Harkjaer, Findus UK is not seeking to steal share from Birds Eye - rather work with it to grow the whole frozen category, emulating another famous rivalry.
"We will compete alongside Birds Eye, like a Coca-Cola and Pepsi rivalry," claims Harkjaer, stressing that Findus UK will offer different consumer benefits than Birds Eye. "If we simply produced the same type of products Birds Eye currently offers, it would be difficult to get retailers to list them because they wouldn't want two of the same products."
Harkjaer accepts Findus UK is still synonymous with Crispy Pancakes, but says the business will be rolling out some exciting new NPD over the coming year. "The stronghold of the Findus brand today is pasta meals and Crispy Pancakes. It's about convenient, tea-time products and I think we can expand on that."
With all frozen food now seemingly having to ooze with omega-3, surely new innovation around healthy eating is the way to go?
"I don't see ourselves going out there with a big health message," says Harkjaer.
Plans for the ranges
The range of frozen beef lasagnes, French bread pizzas and filled wraps will continue to carry the Findus logo, but Harkjaer plans to relaunch the actual products.
One Findus UK-owned brand set for further investment is GO3. The omega-3 enriched range of frozen ready meals boasts endorsement and a stakeholding from one of the category's least likely entrepreneurs, David Beckham.
Launched last October, the GO3 range is set for big things in 2009, according to Vidar Engen, managing director of Findus UK, who believes it will play a major role in reaching Harkjaer's £120m target.
"GO3 has listings in Tesco, gained a recent listing with Sainsbury's and is in discussion with other multiples - it's a very exciting time for the brand and Beckham remains a big part of it," he says. "We will be releasing some NPD for GO3 shortly and have plans for a high-profile media launch in September."
The other Findus UK frozen meal range, backed by Jean-Christophe Novelli, is less of a success story. Along with the other Findus UK products, the Novelli range was manufactured by Newcastle Productions - a subsidiary of Findus UK that went into administration in January. A fire destroyed a large part of the Longbenton plant a week before the arrival of administrators from Zolfo Cooper. But while the nation's Crispy Pancakes, frozen pasta ready meals and Beckham-branded lines have been outsourced to third party co-packers in Europe and the UK, the Michelin-starred chef's range ceased production.
"The range was performing very well, but there was a small downfall at the end of last year, and they proved quite difficult to sell," says Engen. "Supermarkets are now selling the range on stock and a manufacturer has not yet been found."
More broadly, the extra manufacturing requirements will be handled by a mixture of contract manufacturers and Foodvest's 21-strong estate of manufacturing plants across Sweden, Norway and France among other European countries.
While Harkjaer doesn't plan on building more factories to cope with the addition of the Findus UK business, new capabilities and processes will be extended across existing factories, he says. "I would bet that over time, more and more lines will be produced internally in our own factories."
Harkjaer is keen to point out that Findus UK will be managed separately from his other British brand interest Young's, which posted sales growth of 21.4% to £185m last year [Nielsen].
"Young's and Findus UK will co-ordinate, but they will have two different management teams," he says. "One of the things we are looking for is a synthesis. "
Ambitious yet confident
Harkjaer recognises the £120m target is ambitious and acknowledges Findus UK will be growing from a relatively small base. However, he says, market conditions are more favourable than they have been for years, he says.
"It would be much more difficult if frozen food was in decline, but it's not," he points out. "In the present financial environment, people are looking for better deals and you can do better deals in the frozen aisle than you can in the chilled aisle."
Harkjaer knows all about a good deal. The Findus UK takeover is part of a wider trend of consolidation in the frozen industry. "Companies across Europe are consolidating and making the most of low buy-out prices," notes Simon Peacock, head of mergers of food and drink at Catalyst Corporate Finance. "Frozen in particular has a lot of synergies across the pan-European market and Foodvest's products transfer across the different countries very well."
Tripling Findus UK sales by 2011 won't be easy. But the recession-related retro revival will no doubt help the Crispy Pancakes owner. As will Foodvest's already considerable expertise in the frozen arena. Harkjaer is certainly pretty bullish about the brand's prospects. "If we can't do this, nobody can and we definitely have the muscles for the job," he says defiantly.
What's next for Geir Frantzen?
A former senior manager at Findus in Sweden, Geir Frantzen bought the Findus UK business in April 2006 from then-owner EQT, a Swedish private equity company. Prior to last week's deal with Foodvest, the Norwegian - who has been romantically linked with the Duchess of York - was the sole shareholder in Findus UK, while the day-to-day business was managed by MD Vidar Engen. Frantzen now has shares in Foodvest and will work with the group "on friendly terms," Engen says.
A former senior manager at Findus in Sweden, Geir Frantzen bought the Findus UK business in April 2006 from then-owner EQT, a Swedish private equity company. Prior to last week's deal with Foodvest, the Norwegian - who has been romantically linked with the Duchess of York - was the sole shareholder in Findus UK, while the day-to-day business was managed by MD Vidar Engen. Frantzen now has shares in Foodvest and will work with the group "on friendly terms," Engen says.
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