How easily will Arla achieve its goal of making a hefty brand impact in foodservice? Siân Harrington reports
Dairy giant Arla is planning sector domination in foodservice, with a strategy to double this side of its business to £100m by 2007, and to become the one-stop shop for dairy. In doing so, it joins a growing list of major brand manufacturers upping the ante when it comes to foodservice activity.
But this is a notoriously difficult market for retail brands, being highly fragmented and difficult to control. And it is made up of two very different parts: front of house (the consumer-facing element) and back of house (where food is cooked). Brands play a more obvious role in the former but, as one operator says: "Dairy is a commodity product back of house and it is all about price."
So is Arla likely to be the cat that gets the cream, or will its strategy turn sour?
The company is bullish, having already achieved a £50m operation in the 18 months since it launched Arla Foodservice. It thinks it can translate its expertise in category management and consumer understanding to foodservice. "We believe we have the toolkit to answer consumers' needs in this market," says director Chris Edge.
He says Arla's £30m retail marketing support creates a halo effect, driving brand preferences into foodservice. "With this value of marketing support, the foodservice sector cannot be immune to heightened brand awareness and consumer demand."
Arla has appointed a dedicated customer marketing manager, Emma Williams. In October it formed a partnership with Peter's Food Service to deliver direct to smaller hospitality operators. It is sponsoring the Federation of Chefs Scotland's bid to host the World Association of Cooks Societies Congress 2008.
Paul Willington, buying controller, fresh food at foodservice operator 3663, says Arla faces a tough task catching up with companies like Müller and Unilever, but nevertheless has potential. "Arla is holding a serious hand of cards," he admits. This month 3663 launches Lurpak into its business.
The area that may prove most difficult for Arla to penetrate is cheese. Foodservice relies on bulk block Cheddar, particularly mild. Arla will have to work hard to convince operators to take its speciality cheese brands.
But it is taking the market seriously and is listening to the industry. "Arla is bringing retail sophistication to foodservice," Willington says. "In retail customers are faced with a choice of products in each category but catering provides a captive market for brands. So, foodservice is a key opportunity for retail brands, generating exposure and trial."