How can independent foreign brands break into Britain? Julia Glotz reports
Imagine the olive oil fixture without Filippo Berio, the jam aisle without Bonne Maman, or the coffee section without Lavazza.
Unthinkable? They may have originated overseas but these brands have established themselves firmly at the heart of UK grocery.
Every year, hundreds of foreign companies look at success stories such as these and decide to take the plunge into the UK, hoping they can become the next Crespo olives or French's mustard. But few make it beyond their first conversation with a UK food importer fewer still secure listings with the mults. So what does it take for overseas brands to break into the UK successfully, especially those without the backing of a multinational?
The answer can be summed up in one sentence, suggests Simon Dunn of sales and distribution agency Product Chain: "Do your homework." Too many overseas companies harbour fantasies of "cracking Tesco" and using the UK as a launch pad for the rest of Europe, he says. "The reality is very different to how things might look in a spreadsheet. It's a very tough market."
Henry Amar, chairman of importer RH Amar, agrees. There is nothing more off-putting for a buyer than overseas suppliers who don't understand that what they're used to at home may not work in the UK, he says. Any supplier with serious UK ambitions needs to show it understands how retailers operate here and be clear about how it plans to position its products. That involves some serious research including the acquisition of third-party market data from suppliers such as Kantar and Nielsen to provide independent back-up.
"Buyers expect you to have already looked at the fixture and to be aware of the different price points," says Amar. Timing is also key, he adds. "Find out when the range reviews are so you can time your pitch when buyers are in a position to consider your product."
But there are limits to what desk research can do. When it comes to understanding the finer idiosyncrasies of the UK retail market knowing which barcodes to use, how to do EDI (Electronic Data Interchange) invoicing and why Europallets won't be much use in UK depots few brands find they can do without having someone stationed permanently in the UK. This can be done either by establishing a small UK marketing office or by appointing a distributor to market and develop their UK business. Smaller companies can benefit particularly from a full-service distribution and marketing deal with a specialist importer. "You need someone on the floor here who has the contacts and is fully conversant with how the UK retailers work," stresses Dunn. Others, such as Dutch dairy company De Zuivelhoeve, have taken the route of having a country manager fully committed to their values, in addition to a third-party distribution deal.
Few independent brands manage to go it alone successfully. "If you are selling a simple, mass-market, mass-volume product, it is possible to organise direct contact with retailers," says Amar. "But I wouldn't recommend it for anything else."
Aside from establishing contacts with buyers, having someone on the ground helps counteract misconceptions about market trends. John Giles, divisional director at Promar International, says many of the overseas brands that approach his business for advice initially want to target relatively small niches such as Fairtrade or organic because their research has given them the impression that's where a lot of commercial opportunities lie. "The amount of media coverage these sub-sectors get is disproportionate to their market size," says Giles. "That can be quite misleading."
Sometimes being the 'ears on the ground' for an overseas company can involve conveying some uncomfortable truths. When Steve Johnson joined De Zuivelhoeve as UK country manager, the first thing he had to do was tell his new bosses that no-one could pronounce the company's name. He helped them develop a new brand name Twekkelo which taps the Dutch provenance while being less of a tongue twister.
Then there's the cost of operating in the UK a factor many overseas contenders underestimate, says Amar. "You need to understand what will be expected in terms of discounts, gross incentives, tastings and in-store demonstrations," he says, adding that most Continental companies he has worked with are initially surprised by the margins sought by UK buyers.
Overseas suppliers also need to be able to demonstrate that they are financially stable and committed to exporting to the UK and aware of currency issues. "You need to have some kind of hedging strategy," says Johnson, "and your infrastructure needs to be set up to deal with peaks in demand."
The UK has one of the world's most sophisticated retail markets, and expectations are suitably high. Giles likens the first experience many companies have of UK retail to "moving from the cub scouts to the paratroopers".
A new brand has about six months to make an impact and start contributing to importer margins, he reckons. New products need to prove their worth quickly, agrees Dunn, delivering "at least three SKUs selling a minimum of eight or nine units per store per week".
Although overseas brands must be quick to pull their weight, they are also advised to prepare to be in it for the long haul and to develop some thick skin.
Dunn still remembers the first time he took Ecover the Belgian brand of environmentally-friendly cleaning products to one of the multiples in the early 1990s, when sustainability was far down the list of most people's priorities. "The buyer nearly fell off his chair, and then called me a tosser," he recalls. Twenty years on, however, Ecover has grown into a £21m business in the UK, giving Dunn and his client the last laugh.
Making it in the UK demands a lot of time and attention, agrees Giles, but the UK also offers rewards few other countries can match. "If your product is good enough, persevere. When you do get it right in the UK, it can be highly rewarding."
Imagine the olive oil fixture without Filippo Berio, the jam aisle without Bonne Maman, or the coffee section without Lavazza.
Unthinkable? They may have originated overseas but these brands have established themselves firmly at the heart of UK grocery.
Every year, hundreds of foreign companies look at success stories such as these and decide to take the plunge into the UK, hoping they can become the next Crespo olives or French's mustard. But few make it beyond their first conversation with a UK food importer fewer still secure listings with the mults. So what does it take for overseas brands to break into the UK successfully, especially those without the backing of a multinational?
The answer can be summed up in one sentence, suggests Simon Dunn of sales and distribution agency Product Chain: "Do your homework." Too many overseas companies harbour fantasies of "cracking Tesco" and using the UK as a launch pad for the rest of Europe, he says. "The reality is very different to how things might look in a spreadsheet. It's a very tough market."
Henry Amar, chairman of importer RH Amar, agrees. There is nothing more off-putting for a buyer than overseas suppliers who don't understand that what they're used to at home may not work in the UK, he says. Any supplier with serious UK ambitions needs to show it understands how retailers operate here and be clear about how it plans to position its products. That involves some serious research including the acquisition of third-party market data from suppliers such as Kantar and Nielsen to provide independent back-up.
"Buyers expect you to have already looked at the fixture and to be aware of the different price points," says Amar. Timing is also key, he adds. "Find out when the range reviews are so you can time your pitch when buyers are in a position to consider your product."
But there are limits to what desk research can do. When it comes to understanding the finer idiosyncrasies of the UK retail market knowing which barcodes to use, how to do EDI (Electronic Data Interchange) invoicing and why Europallets won't be much use in UK depots few brands find they can do without having someone stationed permanently in the UK. This can be done either by establishing a small UK marketing office or by appointing a distributor to market and develop their UK business. Smaller companies can benefit particularly from a full-service distribution and marketing deal with a specialist importer. "You need someone on the floor here who has the contacts and is fully conversant with how the UK retailers work," stresses Dunn. Others, such as Dutch dairy company De Zuivelhoeve, have taken the route of having a country manager fully committed to their values, in addition to a third-party distribution deal.
Few independent brands manage to go it alone successfully. "If you are selling a simple, mass-market, mass-volume product, it is possible to organise direct contact with retailers," says Amar. "But I wouldn't recommend it for anything else."
Aside from establishing contacts with buyers, having someone on the ground helps counteract misconceptions about market trends. John Giles, divisional director at Promar International, says many of the overseas brands that approach his business for advice initially want to target relatively small niches such as Fairtrade or organic because their research has given them the impression that's where a lot of commercial opportunities lie. "The amount of media coverage these sub-sectors get is disproportionate to their market size," says Giles. "That can be quite misleading."
Sometimes being the 'ears on the ground' for an overseas company can involve conveying some uncomfortable truths. When Steve Johnson joined De Zuivelhoeve as UK country manager, the first thing he had to do was tell his new bosses that no-one could pronounce the company's name. He helped them develop a new brand name Twekkelo which taps the Dutch provenance while being less of a tongue twister.
Then there's the cost of operating in the UK a factor many overseas contenders underestimate, says Amar. "You need to understand what will be expected in terms of discounts, gross incentives, tastings and in-store demonstrations," he says, adding that most Continental companies he has worked with are initially surprised by the margins sought by UK buyers.
Overseas suppliers also need to be able to demonstrate that they are financially stable and committed to exporting to the UK and aware of currency issues. "You need to have some kind of hedging strategy," says Johnson, "and your infrastructure needs to be set up to deal with peaks in demand."
The UK has one of the world's most sophisticated retail markets, and expectations are suitably high. Giles likens the first experience many companies have of UK retail to "moving from the cub scouts to the paratroopers".
A new brand has about six months to make an impact and start contributing to importer margins, he reckons. New products need to prove their worth quickly, agrees Dunn, delivering "at least three SKUs selling a minimum of eight or nine units per store per week".
Although overseas brands must be quick to pull their weight, they are also advised to prepare to be in it for the long haul and to develop some thick skin.
Dunn still remembers the first time he took Ecover the Belgian brand of environmentally-friendly cleaning products to one of the multiples in the early 1990s, when sustainability was far down the list of most people's priorities. "The buyer nearly fell off his chair, and then called me a tosser," he recalls. Twenty years on, however, Ecover has grown into a £21m business in the UK, giving Dunn and his client the last laugh.
Making it in the UK demands a lot of time and attention, agrees Giles, but the UK also offers rewards few other countries can match. "If your product is good enough, persevere. When you do get it right in the UK, it can be highly rewarding."
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