It has been a rollercoaster 18 months for Premier Foods, what with the Sudan 1 saga, takeovers of both Marlow Foods and Cauldron Foods, the launch of Branston Baked Beans and rumours of involvement in a potential bid for United Biscuits and brands within the Campbell Soup Company's UK portfolio.
On the day of my interview with chief executive Robert Schofield at Premier's St Albans head office, news breaks that United Biscuits UK has formally put itself up for sale, sparking speculation of a bidding war. Days later, Kraft Foods announces that it is preparing a bid for UB's southern European division, potentially leaving the door open to a bid from Premier for its UK operations. Unsurprisingly, Schofield won't say much: "The press speculation has been around for a number of weeks and we said in our strategy to the market a few weeks back that we were at the early stages of evaluating. That's where we are."
However, if Premier's recent track record is anything to go by, a bid could well be on the cards. His strategy is well known: to pick up quintessential British brands often from larger houses and give them TLC. Several brands in the UB portfolio fit the profile perfectly and he knows them well - he used to be UB UK's MD - but they're not all he's eyeing. "There are a number I'm interested in - I'd say above a dozen - but it takes two to tango."
That's not the only potential obstacle. Schofield admits that Premier, which has a turnover of nearly £800m and a presence in 35 categories, has become a victim of its own success. "We have had a reasonably unchallenged run so far but since we've been successful, other people have thought: maybe we can do that too."
Hence the curve ball last June that was the £172m acquisition of Marlow Foods, the maker of Quorn. Schofield plans to use its entry into chilled to create leverage for broader expansion into the category. "In my view, if you move into chilled in a small way and then expect to walk into a supermarket, you'd have no clout. One of the things Quorn has bought is that we are now seen seriously in the chilled arena with a major brand."
Thanks to new products and a high-profile marketing campaign, there has already been a step change in Quorn's performance. "It's growing like topsy. Basically it was a vegetarian brand. Now we're marketing it increasingly as a healthy brand. We're trying to broaden its appeal and the advertising campaign behind it is doing exactly that."
After its acquisition of Cauldron at the end of last year, you'd be forgiven for thinking that Premier was suddenly going vegetarian. But it is the brands' healthy credentials that primarily interest Schofield. "It's one of the trends that's here to stay. We did some research a few weeks back to find out who's reading back-of-pack information. A few years ago, it was ABs - now it's Cs and Ds."
By beefing up NPD and introducing more modern practices at Cauldron, he believes that the brand can grow from £17m to more than £20m within two years. He is even more bullish about Quorn: he'd like to double its value to £200m. That would require a significant expansion of production facilities and Schofield reveals that Premier has bought a £4m site in Methwold, East Anglia, which it will spend more than £10m kitting out.
It is no secret that he was interested in acquiring HP Foods from Danone, which it had made beans under licence from since 1996, but there were limits to how much he was prepared to spend: "We determined the price that would give us a decent return. When it went beyond that, we dropped out." Unfortunately Heinz didn't and he describes its subsequent acquisition of HP as "the worst thing that could have happened to us because it had the ability to make beans. It was pretty clear that our licence would be revoked."
That was last June and the licence was due for renewal this March. Schofield says: "We had a few hastily convened and hotly debated sessions and came up with the brand that could do it for us."
That brand was, of course, Branston. Schofield recalls: "We had a helluva challenge. We had made a bean that was better than anyone else's and had a brand that could work. The problem was: could we get it to market before the March deadline?"
Factoring in Christmas, that deadline became even tighter. Premier eventually presented Branston Baked Beans to the trade in late August, less than three months after it had first come up with the idea. Schofield reckons that the brand that was worth £22m when he bought it in May 2002 will be worth £40m by the end of the year.
The brand's success, along with the acquisitions of Marlow and Cauldron, have helped consign Sudan 1 to distant memory - but as the Cadbury recall illustrates, danger is always lurking. "We don't believe certificates any more, I can tell you," says Schofield wryly. "We do far more testing. We looked at the whole supply chain."
Though the onus is on manufacturers to ensure food is safe, he remains unimpressed by Premier's treatment by the national press. "The press went bananas: you would have had to have three tonnes of Worcester sauce to get to comparable levels to those that affected mice!"
If the press was cleverly tapping into consumer anxieties over the health of food, Schofield professes not to be worried. Most of Premier's portfolio is relatively healthy, he insists, which is partly why he hasn't yet decided which way to jump on traffic-light labelling. "We do feel that traffic lights are overly simplistic. We'll make a decision in the not-too-distant future. I'd like to see the debate go further. It seems to have polarised."
A more pressing question is how to keep the sales line marching upwards. At its agm in May, chairman David Kappler announced that it was working on "cost reduction programmes and pricing improvements." Regarding the former, it is on track to reduce controllable costs by 4-5% a year. As for the latter, its icon brands are really beginning to pay their way, says Schofield: "We have got quite a lot of brownie points livening up dull categories and the business is now growing."
Premier's latest trading update this week seems to confirm that, revealing positive sales development across the portfolio and like for like sales in line with growth targets. Indeed, Quorn's sales growth has been double digit over the past year. Own label continues to play its part, adds Schofield, though he plans to adjust the current 60/40 ratio of branded to own label to 75/25.
In short, Schofield's tactic of revitalising icon brands appears to be working. The next to get the treatment is Smash, though he laughs when asked whether its relaunch will mark the return of the robotic Martians. A new acquisition could elevate Premier to another league again.n
Q&A
How did you get where you are now?
For my sins, I started in United Biscuits as a graduate trainee and I stayed there four or five years on the production side. I actually worked in a biscuit factory. Then I went overseas for eight years with Nestlé, mainly in Malaysia and Brazil. My last job was a greenfield project setting up a cocoa manufacturing joint venture between Nestlé and the Malaysian government!
Why did you come back?
I'd been there about eight years and I had children. It was time to come back and I came back to work with United Biscuits again. I became operations director for McVitie's and then MD for KP and McVitie's - and then I came across to run Premier Foods (becoming CEO in 2002).
What has been your proudest achievement?
Taking the ragbag business that was Hillsdown Holdings and turning it into Premier Foods. Hillsdown had all manner of stuff. It was more of a disparate business than it is now.
What do you do to relax?
I played loads of soccer until I was 35. Now I do squash and the gym, but only half an hour at a time. I hate the gym. I absolutely detest it.
What did you make of England's effort in the World Cup?
I think the manager needed to get injured and sent off.
Who did you support, other than England?
I'm patriotic. I sent out a memo here in the week that the match kicked off at 5pm. It said that anyone who wanted to leave could leave at 4pm; anyone with a flag prominently displayed on their cars could go at 3.30pm and anyone who was ethnically English and did not wish to watch could stay at work, prior to resigning!
On the day of my interview with chief executive Robert Schofield at Premier's St Albans head office, news breaks that United Biscuits UK has formally put itself up for sale, sparking speculation of a bidding war. Days later, Kraft Foods announces that it is preparing a bid for UB's southern European division, potentially leaving the door open to a bid from Premier for its UK operations. Unsurprisingly, Schofield won't say much: "The press speculation has been around for a number of weeks and we said in our strategy to the market a few weeks back that we were at the early stages of evaluating. That's where we are."
However, if Premier's recent track record is anything to go by, a bid could well be on the cards. His strategy is well known: to pick up quintessential British brands often from larger houses and give them TLC. Several brands in the UB portfolio fit the profile perfectly and he knows them well - he used to be UB UK's MD - but they're not all he's eyeing. "There are a number I'm interested in - I'd say above a dozen - but it takes two to tango."
That's not the only potential obstacle. Schofield admits that Premier, which has a turnover of nearly £800m and a presence in 35 categories, has become a victim of its own success. "We have had a reasonably unchallenged run so far but since we've been successful, other people have thought: maybe we can do that too."
Hence the curve ball last June that was the £172m acquisition of Marlow Foods, the maker of Quorn. Schofield plans to use its entry into chilled to create leverage for broader expansion into the category. "In my view, if you move into chilled in a small way and then expect to walk into a supermarket, you'd have no clout. One of the things Quorn has bought is that we are now seen seriously in the chilled arena with a major brand."
Thanks to new products and a high-profile marketing campaign, there has already been a step change in Quorn's performance. "It's growing like topsy. Basically it was a vegetarian brand. Now we're marketing it increasingly as a healthy brand. We're trying to broaden its appeal and the advertising campaign behind it is doing exactly that."
After its acquisition of Cauldron at the end of last year, you'd be forgiven for thinking that Premier was suddenly going vegetarian. But it is the brands' healthy credentials that primarily interest Schofield. "It's one of the trends that's here to stay. We did some research a few weeks back to find out who's reading back-of-pack information. A few years ago, it was ABs - now it's Cs and Ds."
By beefing up NPD and introducing more modern practices at Cauldron, he believes that the brand can grow from £17m to more than £20m within two years. He is even more bullish about Quorn: he'd like to double its value to £200m. That would require a significant expansion of production facilities and Schofield reveals that Premier has bought a £4m site in Methwold, East Anglia, which it will spend more than £10m kitting out.
It is no secret that he was interested in acquiring HP Foods from Danone, which it had made beans under licence from since 1996, but there were limits to how much he was prepared to spend: "We determined the price that would give us a decent return. When it went beyond that, we dropped out." Unfortunately Heinz didn't and he describes its subsequent acquisition of HP as "the worst thing that could have happened to us because it had the ability to make beans. It was pretty clear that our licence would be revoked."
That was last June and the licence was due for renewal this March. Schofield says: "We had a few hastily convened and hotly debated sessions and came up with the brand that could do it for us."
That brand was, of course, Branston. Schofield recalls: "We had a helluva challenge. We had made a bean that was better than anyone else's and had a brand that could work. The problem was: could we get it to market before the March deadline?"
Factoring in Christmas, that deadline became even tighter. Premier eventually presented Branston Baked Beans to the trade in late August, less than three months after it had first come up with the idea. Schofield reckons that the brand that was worth £22m when he bought it in May 2002 will be worth £40m by the end of the year.
The brand's success, along with the acquisitions of Marlow and Cauldron, have helped consign Sudan 1 to distant memory - but as the Cadbury recall illustrates, danger is always lurking. "We don't believe certificates any more, I can tell you," says Schofield wryly. "We do far more testing. We looked at the whole supply chain."
Though the onus is on manufacturers to ensure food is safe, he remains unimpressed by Premier's treatment by the national press. "The press went bananas: you would have had to have three tonnes of Worcester sauce to get to comparable levels to those that affected mice!"
If the press was cleverly tapping into consumer anxieties over the health of food, Schofield professes not to be worried. Most of Premier's portfolio is relatively healthy, he insists, which is partly why he hasn't yet decided which way to jump on traffic-light labelling. "We do feel that traffic lights are overly simplistic. We'll make a decision in the not-too-distant future. I'd like to see the debate go further. It seems to have polarised."
A more pressing question is how to keep the sales line marching upwards. At its agm in May, chairman David Kappler announced that it was working on "cost reduction programmes and pricing improvements." Regarding the former, it is on track to reduce controllable costs by 4-5% a year. As for the latter, its icon brands are really beginning to pay their way, says Schofield: "We have got quite a lot of brownie points livening up dull categories and the business is now growing."
Premier's latest trading update this week seems to confirm that, revealing positive sales development across the portfolio and like for like sales in line with growth targets. Indeed, Quorn's sales growth has been double digit over the past year. Own label continues to play its part, adds Schofield, though he plans to adjust the current 60/40 ratio of branded to own label to 75/25.
In short, Schofield's tactic of revitalising icon brands appears to be working. The next to get the treatment is Smash, though he laughs when asked whether its relaunch will mark the return of the robotic Martians. A new acquisition could elevate Premier to another league again.n
Q&A
How did you get where you are now?
For my sins, I started in United Biscuits as a graduate trainee and I stayed there four or five years on the production side. I actually worked in a biscuit factory. Then I went overseas for eight years with Nestlé, mainly in Malaysia and Brazil. My last job was a greenfield project setting up a cocoa manufacturing joint venture between Nestlé and the Malaysian government!
Why did you come back?
I'd been there about eight years and I had children. It was time to come back and I came back to work with United Biscuits again. I became operations director for McVitie's and then MD for KP and McVitie's - and then I came across to run Premier Foods (becoming CEO in 2002).
What has been your proudest achievement?
Taking the ragbag business that was Hillsdown Holdings and turning it into Premier Foods. Hillsdown had all manner of stuff. It was more of a disparate business than it is now.
What do you do to relax?
I played loads of soccer until I was 35. Now I do squash and the gym, but only half an hour at a time. I hate the gym. I absolutely detest it.
What did you make of England's effort in the World Cup?
I think the manager needed to get injured and sent off.
Who did you support, other than England?
I'm patriotic. I sent out a memo here in the week that the match kicked off at 5pm. It said that anyone who wanted to leave could leave at 4pm; anyone with a flag prominently displayed on their cars could go at 3.30pm and anyone who was ethnically English and did not wish to watch could stay at work, prior to resigning!
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