Graham Whiley ir Margreet Westerhuis, „Eksporto galimybės maisto pramonės įmonėms Jungtinėje Karalystėje“

Embassy of the Republic of Lithuania to the UK

Lithuania Food Export Seminar

• 8.30– 9.00 Registration• 9.00– 9.20 Welcomeandprojectintroduction• 9.20– 10.00 UKfoodmarketoverview• 10.00– 10.40 Howthesectorsandsubsectorsworkand

purchase• 10.40– 11.30 Basicprojectentryrequirements• 11.30– 12.00 Break(coffee)• 12.00– 13.20 Categoryanalysisandproductpositioning• 13.20– 14.00 Summary:practicalexamples,Q&A


Project Introduction


UK Food Market Overview


UK food market overview

Retail ‐ Supermarkets(Multiples)‐ Independentretailers&Symbolgroups‐ Speciality foodoutlets‐ On‐lineretailers

FoodService‐ DeliveredWholesalers‐ Chainendusers‐ Independentendusers

Foodingredients‐ FoodManufacturers‐ FurtherProcessors(e.g.blenders,slicers)‐ Categorybrokersandimporters


Retail: Multiple market share

Stores %share•Tesco 2900+ 30.2•Asda* 550+ 17.9• Sainsbury’s 1000+ 16.7•Morrisons 500+ 12.2•Co‐op 3000+ 6.4•Waitrose 300+ 4.5•Aldi UK 500+ 3.5•Lidl UK 600+ 2.5• Iceland 900+ 2.1

*Netto UKpurchasedbyAsda in2011

• Sources:KantarWorldpanel totalsales12weeksending27/3/12


UK Retail Market Split

Multiples:

Tesco, Sainsbury Etc

Independents & Symbol Stores

5%

95%


Retail : Independents

• Departmentstores:Selfridges,Harrods,HarveyNic• Symbolgroups:Spar,Musgrave(Budgens &Londis),Mace,Premier,Costcutters

• SmallIndependentchains:Booths,WholeFoodsMarket,Neals Yard• HealthFoodStores:Holland&Barrett• Deli’s:LaFromagerie,• Farmshops:Windsor,Laverstoke,• Garageforecourts• Cash&Carry:Booker,Makro,Costco• GardenCentres:Wyevale,Dobbies,• Farmersmarkets• On‐line/homedeliveryretailers:Ocado,Amazon,GoodnessDirect


Retail trends & market drivers

• Trends� Organic,FairTrade� Foodmiles/local/Fresh/Seasonal� Provenance(storiesbehindtheproducts)� FreeFrom:Glutenfreebutalsowheat,dairy,refinedsugar� Cafesandfoodstationsinstores� Storerecipesendorsedbycelebritychefs� Newformsofpackaging;pouches,recyclability,lessismore� Noartificialcolourings,flavoursandpreservatives� Cupcakes,rawfood,superfoods� Readymeals&scratchcooking

• KeyMarketdrivers� Private/ownlabel(KVI’s)� Pricecomparisonswithotherretailers,moneybackoffshoppingincentives� Promotions:BOGOF,Multibuys,Mealdeals� Efficientretailoperations:merchandising,fulfilmentplanning


Tesco – Fresh Produce


Whole Foods Market – fresh produce

Embassy of the Republic of Lithuania to the UKWhole Foods Market

Embassy of the Republic of Lithuania to the UKPartridges ‐ charcuterie


Embassy of the Republic of Lithuania to the UKTesco Baby



The Food Service Sector

TheFoodservicesectoris:

• About30%ofUKfoodmarketbyvalueand10%byvolume• Extremelydiverse• Cosmopolitan• Notdevelopinguniformly• Sophisticatedandprofessional• About260,000outlets


Food Service

TheFoodservicesectorismadeupoflargesubsectors:

CostSector– foodpurchasedtofeedatlowestcoste.g.HospitalsSchools&UniversitiesMinistryofDefencePrisons

ProfitSector – serviceprovidedtoconsumersataprofite.g.HotelsPubsRestaurantsTravelandLeisure


Food Service

TheProfitSectorisyetmorediversified:

• Independentsabout40%• Chainsabout60%

Chainsthenbreakdownbetween

• Disciplined(e.g.Mcdonald’s,TRG,Tragus,JDWetherspoon)20%• Undisciplined(e.g.BestWestern,consortia)40%


UK Foodservice Market

Central distribution

Wholesale Distribution

Wholesale Distribution40%

40%

20%Disciplined Chains e.g. Mcdonalds

TRG, Tragus, JD Wetherspoon

Disciplined and Undisciplined chains

e.g. Greene King, Best Western

Independents


Foodservice trends & market drivers

• Trends� QSR’s performingstrongly� Brandedcasualdiningcontinuesolidly� BudgetHotelsgrowingwell� Ethnicdiversitycommonplacee.g.Mexican,Thai,Italian,Indian� AuthenticityandExperience� Pubswithlittlefoodrapidlydeclining� Workplaceandschoolfeedingunderpressure� Deskillinginthekitchen� Emphasisonretailskillsinfrontofhouseoperations� CostSectorunderpressurefromgovernmentausterity� CostSectorincreasinglyoutsourcedtoProfitSector� Increaseduseofpromotions(2for1)anddigitalmarketing� FollowUSAtrendse.g.‘fastcasual’

• KeyMarketdrivers� Macroeconomicconditionsmeanspendstagnating� SophisticatedoperatorsatChainandWholesalebuyingpoints� Only2nationaldeliveredWholesalers� Foodpriceinflationandgovernmenttaxationpolicieshavegreaterimpactinfoodservice� Concernsgrowingaboutobesityandalcoholabuse


Ingredients

ThereisasignificantmarketsupplyingproductmanufacturersintheUK.

TheUKFoodprocessingindustryiscomprehensive.Ingredientscanbeforfurtherprocessing(e.g.afunctionalingredient)oracomponentinafinishedproduct(e.g.cookedmeatinreadymeal).

Salescanbedirecttoproducersorviaspecialistwholesalers/brokersThekeyaspectsarethatyouringredientmusthaveauniqueattribute:Functionality– processorproductHealthclaim– e.g.sucrolosePriceAvailability


How the Sectors Work


How Retailers purchase

• Multiples– Directproducerrelationships– Categorybuyers,stockcontrollersandlogisticteams– Buyerschangeveryregularlyfromcategorytocategory– Verydifficulttogetfacetofacemeetingsandpricechangesthrough– Expectedfinancialproductsupport(promotions,adverts,tastings)– Brandbanklistings– Retailreadypackagingincreasinglyakeyrequirementbyallmultiples– Startingtospecifycasesizes:2pershelf– Forms,formsandmoreforms!– FinesforOOS,latedelivery,slowROS– Minimumdeliveries:pallets,layers.Somerequireoneproductperpallet– DeliveryintoCentral/RegionalDistributionCentres– Onlydirectdeliveryintostoreoflocal/regionallines– Consolidationhubs– FreshProduceretailerspecificplasticre‐usablecrates– Chep palletrequirement


How Retailers purchase

• Independents

– Fewerstaffsobuyersoftenresponsibleforwholedepartments– Purchasethroughdeliveredwholesalers(savestime&resources)– OrpurchasefromCash&Carryoutlets– Local/regionalproductsmaybepurchaseddirectfrommanufacturer– Newproductforms,invoicinganddeliveryalldonethroughwholesaler– Suppliersmaybeaskedtogettheirproductlistedbythepreferredwholesaler– Mayhavedirectproducerrelationshipswithkeysuppliers– Promotionsusuallythroughthetradepromotion&pricebooks– Cataloguesusuallyareupdatedevery2months(6perannum)– Crates&packagingoftenatthesuppliersdiscretion(oftennotusedinstore)– Manualre‐orderingprocedures(stockreplenishment)– Minimumcaseordersalthoughsomewholesalerswillsellinsingles


How Food Service purchases

CostSectorOftenbypublictenderWholesalersBuyingGroups(consortia)

ProfitSectorDisciplinedChainsdirectlyfrommanufacturerUndisciplinedChainsfromwholesalersIndependentsfromwholesalersandCash&CarriesSpecialistwholesalers(e.g.ethnic,meat,fish,)BuyingGroups(consortia)


How Food Service purchases

CostSectorCentralisedpurchasinginsomeform.PriceiskingBrandsirrelevant

ProfitSectorChainshavecentralisedpurchasingIndependentscanonlybereachedbywholesalersBrandsrelevantonlyif‘FrontofHouse’ConsumersdonotwelcomeRetailbrandsatrestaurantpricesDedicatedrecipesorproductscommonConceptfoodsolutionsincludingequipmentcanbeinteresting


Marketing


Cost of Retail Marketing

Multipletrade Listingsfees(canbeupto£500perproduct,althoughtheremaybescopefornegotiation)Compulsorypromotionalprogramme(startingcost£3000perannum)Advertisingspendintheirin‐housemagazines(onceagainstartsat£1,500)Allproductimagesmustbeonbrandbank‐ £80peritem

Independenttrade Newlistingadvertcostsfortradecatalogues(10maintradewholesalers,eachonewillcharge£200– 500dependingonsizeoftherange)Advertisingapromotioninthetradecatalogueswillcostanother£200‐ £500perwholesaler(plusthelossinmargin!)Ifyoudon’thavein‐housedesignoptionwillneedtopay£50foraddesigncostsperwholesalerEachwholesalerswillwantsamples£50Retailerswilloftenrequestforsamplingeventsin‐store.Wholefoodsforexamplewillcharge£100fora2hoursamplingsessionplusthecostofproducts.Youwillgetaveryusefulsamplingreportaspartofthiscost.Somestoreswillaskforfreefillsforthestockingofanewstore(1‐2cases)

Embassy of the Republic of Lithuania to the UKTypes of promotions

• BOGOF ;BuyOneGetOneFree• 3for2multi‐buys• 2for£X• %off(normallyaminimumof10%)• BuyonegetXhalfprice• Linepromos– Naturalremediesorbabyfood• Vouchers‐ redemption

Embassy of the Republic of Lithuania to the UKWaitrose –half price

Embassy of the Republic of Lithuania to the UKTesco – Line promo

Embassy of the Republic of Lithuania to the UKWaitrose –Buy 2 for £5

Embassy of the Republic of Lithuania to the UKTesco – Line promo

Embassy of the Republic of Lithuania to the UKPromo communication

• Shelftalkers• Banners• Flyers(bagstuffing)• Tillreceipts• Shopwindowdisplays• Producttastingsinstore• Stafftraining&involvement(tastings)• Newspaperadsandinserts• Storemagazine• A‐frameboardsoutsidethestore• Merchandisingoutsideofthestoreifthereisspace(onwheels)

Embassy of the Republic of Lithuania to the UKOutside store

Embassy of the Republic of Lithuania to the UKShop window


Consumer Product Marketing

• IndustryAwards EntrycostforGreatTasteAwards&industryawards.Roughly£100perproductpercompetition.

• Competitions Runcompetitions&offeryourproductinhampersasprizes(£100)

• Samplemailouts EspeciallytotheGroceryteamsofthoseretailersyourhavelistingsintheywillactasyourbrandambassadors(£50perstore)

• AttendTradeShows Naturalproductshow(April)fororganic/naturalproductsInternationalFoodExhibition,London(£4000)forastandBBCGoodFoodBirmingham

• Consumeradvertising;Foodmagazines(startingfrom£500upto£8,000foranarticleinJamieOlivermagazine)

• SocialMedia Samplemailoutforfoodiestoreview

• PR


Foodservice Marketing

Unbrandedproductsstraightforward:

• Wholesalercatalogueadvertising• Wholesalersupportinthefieldfordemonstrations• Promotionalsupportforlaunche.g.pricediscountorvalueoffers• WholesalerDepottelesalesteamincentives• Samples• Wholesalerexhibitionsupport


Foodservice Marketing

‘FrontofHouse’brandsmateriallymoredifficultandexpensive:

• Wholesalercatalogueadvertising• Menucardsortabletalkers• Trademagazineadvertising• PR• Tradeexhibitionpresence• Wholesalersupportinthefieldfordemonstrations• Promotionalsupportforlaunche.g.pricediscountorvalueoffers• WholesalerDepottelesalesteamincentives• WholesalerFieldsalesteamsincentives• Samples


Business Relationships


Retail relationships

Directretailrelationships• Commercialmeetings; Supplyissues

AnnualpromocalendarSalestrends/categorySalestargets&rebatesGapAnalysis/NPD

• StoreMarketing In‐storetastings;freestock&personMagazine/leafletsfeatures,Supplierstoryboards,ShelfedgelabelsWindowdisplays

• Training; DMmeetingsProductFayresSuppliervisits

Embassy of the Republic of Lithuania to the UKWFM Supplier Board


Retail relationships

Wholesalerrelationships• Commercialmeetings; Supplyissues

AnnualpromocalendarSalestrends/category/retailerPlacementofproductsinthecatalogueSalestargets&rebatesNewproductslistings/delists

• Marketing SamplingtotheirtopcustomersLeafletsinwithinvoicesCataloguefront/backcoveradvertisingProductdisplaysattrade/consumershows

Note:Mostindependentwholesalersdonothavetelesalesteams


Foodservice relationships

ThemanufacturermustselltotheChainendusersandtheWholesalerThewholesalermustselltotheindependent

ThemanufacturermustdevelopsimultaneousrelationshipswithChainsandWholesalers.

WithWholesalersrelationshipsarewith:CategoryBuyerFieldSalesManagers(independents)BusinessDevelopmentManagers(Chains)DepotTelesalesteam(Both)TechnicalandMarketingteams

WithChainsrelationshipsarewith:CategoryBuyerExecutiveChefTechnicalandMarketingteams


Supply Chain Links

TheUKFoodindustryhaswellestablishedefficientlogisticssystemstogetproductstoconsumers.

Therearedifferencesbysubsector.


Supply Chain Links

Retail

MultipleRetailManufacturerdeliversinmultiplepallet/containerquantitiestoupto6RDC’s.RetailerbuysatRDCanddeliverstoshops

Independent/SpecialityRetailManufacturerdeliversinpalletquantitiestowholesaler/cash&carrydepots.Wholesalerbuysatdepotanddeliverstoshops

Supplywillusuallyrequire:• StockintheUKfordeliveriesoflessthan1container• Automatedlinktocustomer’sorderingsystem


Supply Chain Links

Foodservice

CentralDistributionManufacturerdeliversinmultiplepallet/containerquantitiestoupto2RDC’s.LogisticscompanybuysatRDCanddeliverstorestaurants

ChainsandIndependentsManufacturerdeliversinpalletquantitiestowholesalerdepots(upto35)ortoaconsolidationcentre(1).Wholesalerbuysatdepot(ordeliveryfromconsolidationcentre)anddeliverstorestaurants

Supplywillusuallyrequire:• StockintheUKfordeliveriesoflessthan1container• Paymentofconsolidationcostsbymanufacturer• Underwritingofstockatwholesaleruntilsold


Margin Expectations

Embassy of the Republic of Lithuania to the UKPricing; Multiples margin aspirations

• Itisnowillegaltospeaktobuyersaboutthesettingofrecommendedretailprices.

• Mostsupermarketspriceaccordingto‘pricematch’programmes(www.mysupermarket.com)

• Verydifficulttogetpriceincreasesthrough– oftenonlypossibletohavethesediscussiononceayear(infactsometimesnegotiationcanlastfor8months!)

• Grocerymarginexpectationisbetween35– 45%(categorydepending)

Embassy of the Republic of Lithuania to the UKTrade margins; Wholesaler margin aspirations

• WholesalersprintBi‐monthlypricecatalogues

• Intheseproducttradepricesarelistedaswellasrecommendedretailprices

• Awholesalerisgiven25%offtradeforgroceryand33%forNaturalRemedies

• Wholesalermaythengivetheircustomersdiscountsandover‐ridersbasedonagreedtargetsalesvolumes(canbeupto20%)&willnegotiatesimilardiscountwithmanufacturer

Embassy of the Republic of Lithuania to the UKPricing; Independent retailer margin aspirations

•NatRem 50%+,•Ambient35– 45%,• Chilled30– 35%,• Frozen35‐ 40%,• Foodservice50%+•KVI’spricing;competitoranalysis•Valueaddedproducts;juices,guacamole85%GM


Supply Chain Margin Expectations

MultipleRetail

RetailSellingPrice £2.00

RetailMargin(30%to45%) £0.75

ManufacturerSellingPriceatRDC £1.25

Note:therecanbelistingfeesandoverridingdiscountsandpromotionalpricingseparatetostandardpricing.



Independent/SpecialityRetail

ManufacturerSellingPrice £1.25

Wholesaler/cash&carryMargin(25%‐ 35%) £0.54

WholesalerPrice £1.79

RetailerMargin(30%) £0.77

RetailSellingPrice £2.56

Note:therecanbelistingfeesandoverridingdiscountsandpromotionalpricingseparatetostandardpricing.



Foodservice Independent ChainCentralDistribution£ £ £

ManufacturerSellingPrice 1.00 1.00 1.00

Wholesaler/Margin 0.54 0.33

LogisticsCompanycost 0.15

RestaurantBuyingPrice 1.54 1.33 1.15



UKStockholdinglogisticscostsvarydependingonstockrotationbutareintheregionof:

Ambient 7%Frozen 12%

(thiscoversreceipt,storage,pickinganddeliverytoRDC/Wholesaler)

UKConsolidationcostscanbeveryhigh5%‐ 8%


Basic Project Entry Requirements


There are minimum operating standards

Allproductsneedtobecorrectlylabelled.ThisincludesingredientsandnutritionalinformationAllproductsneed2barcodes:1fortheouterand1fortheretailpack.InFoodservicetheouterwillneedabarcode.Forsomeretailershighvolumelinesmayneedacodeonthepallet.AllproductsmustnametheproducerorhaveaUKcontactaddressAllproductsmusthaveBBEorSellbyDateonboththeouterandinnerpack.AllproductsmustentertheUKsupplychainonUKChep pallets.ThiscanbedoneatsourceorconvertedinUKProductpackagingmustbetamperproofAccuratedeclarationsonweightandprotein,fatcontentLabelsonouters andinnercartonsmustbeinEnglishTherearedetailedrequirementsonproductdescriptionsthatmustbeaccurate(e.g.Ham,addedwater,natural,organicmeatcontent)



AllmajorbuyersinRetailandFoodservicewillinsistthat:

YourfactoryhasBRC/EFSISapprovalYouacceptandpayforfactoryvisitsandtechnicalauditsYouprovidedetailedproductspecifications– evenifyouconsiderthiscommerciallysensitiveYousellinGBPsterlingYouadheretotheirdemandingtimetablesonsupplyofsamples,pricing,technicalquestionsandattendingtastepaneldatesatshortnotice



TheUKconsumerhasspecifictastesandconcernsbothinRetailandFoodservice.Eachcategoryhasspecificissuesandyourcategoryauditmustincorporatethese.

Herearesomeexampleslikelytobeunacceptable:• MechanicallyRecoveredMeat• Crossspeciesmeatproducts• Excessaddedwater• Excesssalt(legallimitsforschools)• Excessfat• Artificialcolourings• Artificialflavourings• Excessiveaddedsugar• MostOffalproducts• Productstobedeepfatfried• Previouslyfrozenproductsoldaschilled


Brand v Own Label

TheUKmarkethasaproportionofownlabelinbothRetail(30%)andFoodservice.Itmaybepreferabletodevelophavecontrolofyourownbrandbutasanewentranttherearerisks:

• Launchcostswillbehigher• Theretailermightcopyyourideaandproduceanownlabel• Allstocksofproductandpackagingareyourrisk• Theburdenofcommunicatingtotheconsumerisallyours

Thebiggestriskswithownlabelare:

• Theproductisnotyours– theyowntherecipe• Costsaremoretransparent• Marginsarelower• Thecustomerwillbecomeveryresourcedemanding


Category Analysis and Product Positioning


Category analysis

“Youdonotgetasecondchancetomakeafirstimpression!”

Marketresearch/Gapanalysis:whyisitimportant?• Productdifferentiation• Resourceallocation:time&£• Clarityregardingbusinessstrategy&direction

Whatshouldyoulookfor ‐ competition‐ flavourprofiles‐ pricepoints(lowesttohighest)‐ size‐ packagingtype‐ USP’s

Don’treinventthewheel– learnfromothers


e.g. Product Packaging analysis

• Packagingthatstandsoutonshelf(Why?)• Strongbrandtoencouragecustomerloyalty;instantrecognition(font,colour,imageetc)

• CommunicationofUSP’s(doesnotmeaneverylogounderthesunshouldbedisplayed)

• Languageonpacktoreflecttargetcustomer• Packagingtosuit&protecttheproduct• Packaging;loose,re‐use,recycledorrecyclable• Shelfspacerequirements(units&casesizetofitfixtures)• Legalcomplianceofpackaging– meetingEU&localEHO


Product Positioning

Usingdetailedcategoryanalysisresultsdecideonyourbrandpositioning:

Value lowmarginsVhighvolume

Midrange

Luxury/Premium highmarginsVlowvolumes

‘Productbasedpricing’versus‘Marketbasedpricing’


So you want to come to the UK?

1. Retail,foodservice,industrial2. Categoryaudit3. WillIadaptproductstotheUKmarket?4. DoIunderstand:

1. Logistics2. Customerbase3. Theconsumer

5. DoIhavefinancialandtechnicalcapacity?6. WhatUKresourceswillIhave?7. CanIrelyonagents/importers/distributers?


Real Life Examples


Retail Summary

• Anexampleofagroceryproductconcepttolaunchintheindependentretailsector(throughawholesaler)

– Productsampletastingsin‐houseandinfocusgroups– Categoryanalysis:taste/flavour,size,price,packagingoptions,USP’s– Packagingdesignconcepts– Draftingofconcisebutimpactfulproductpresenters– WebsitedesigntoassistwithUSPcommunication– Buyermeetingwithwholesaler(timings)– Buyermeetingswithkeyretailers(push&pullapproach)– Formfilling:newlineforms,packagingdetails(weights,size,recyclability)– Launchplan:promotions,tastingevents,trade/consumershows,PR,awards– Stafftraininginkeyretailers– Getfeedback– Revisestrategyiftherearemajorissueshighlighted(learnfromyourmistakes)– Workonlineextensions&NPD

Abovetakesanaverageof9months.


Real Life Example ‐ Ingredient

January2006USsnackingredienttechnologysharedinJVwithDanishproducerProducesaporksnacknotcurrentlyavailableinEUNewtechnologyutilisesexistingsnackmanufacturingequipment

2006UKLaunchtosnackproducers2007LaunchintoSpain2009LaunchintoEasternEuropeandNordiccountries

Nowamulti£m productwithlimitedpricesensitivity


Real Life Example ‐ Foodservice

June2010UKLaunchprecookedfrozenpasta

1. Productreviewtoestablishkeyfeaturesandbenefits2. Categoryaudittoidentifycompetitiveposition,pricingandrange3. Buildofsalesmaterials4. Appointmentswithlargeenduserstodemonstrateproductand

establishkeycompetitiveadvantages5. Listingsgainedwithendusersforcingwholesalerstostock6. UKlogisticsplatforminplace7. Productlaunchedlate20108. Subsequentassociatedproductlaunchesoffrozenprecookedrice


Real Life Example ‐ Foodservice

Keyaspectstoprecookedfrozenpasta:

Producthadlittledirectcompetition– mainlyambient

Cleardifferentiators–nowaste,lesslabour,higherqualityconsistency,easiermenuvariation,higherfoodsafety

MainObjections–Price,storage


Questions