Britain’s ‘special’ relationship with the US has never been stronger, at least when it comes to the exchange of food and drink brands across the Atlantic. Samantha Lyster and Nick Hughes report from both sides of the pond on why so many brands are taking the plunge
You’d think the fragile global economy would put British brands off chancing their arm in the US, but no.
A whole host of brands have grabbed themselves a piece of the action over the past decade Dorset Cereals, Green & Black’s, Quorn and Cathedral City, to name but a few.
This year, the Brits have upped the ante again with Burton’s Foods, Prestat, Ella’s Kitchen and Tyrrells either entering the market or significantly boosting their distribution often via direct supply deals with big national or regional retailers. And American consumers can expect yet more British brands to hit their shelves in the next year, with Levi Roots’ Reggae Reggae Sauce gearing up for a launch and Gü Puds also eyeing the market.
Far from deterring exporters, the economic climate has, if anything, spurred them into action. Lured by the vast potential of the US market and a desire to spread their assets and risk beyond their sterling and euro homelands, British food and non-alcoholic drink brands exported more than £390m worth of goods last year to the US, according to the latest HMRC export statistics. That’s 29% more than in 2009 and comfortably in excess of that year’s 17% growth. “UK businesses have managed to grow interest in British products in one of the most demanding and competitive markets in the world,” says Charlotte Lawson, Director of Member Services at the FDF.
And it could just be the beginning, believes David Wilson, founder of consultancy Green Seed Group and former head of Food from Britain’s North American operation. “I think the US will become a growing priority for British brands. It’s almost as if the food cultures are coming closer together. The perception is that concepts can be quite easily translated.”
More importantly, there are fewer barriers to entry than there once were. In the past, while household brands such as Heinz Beanz have been able to leverage existing relationships with global retailers, many smaller players have been restricted to specialist outlets. They could not otherwise justify the high retail prices they had to charge as a result of using margin-hungry importers and distributors and having to physically import the product.
Now, however, although distributors are still responsible for bringing in 94% of products, more manufacturers are dealing direct with retailers cutting out the expensive middlemen and allowing them to charge less premium prices and secure mass-market listings.
Oiling the wheels of this foreign exchange is the increasingly global nature of grocery retail. Walmart, through its ownership of Asda, Whole Foods Market and Tesco through Fresh & Easy are undoubtedly opening doors across the Atlantic for brands with existing listings with them in the UK. Last month, Burton’s Foods ramped up distribution of its Cadbury Fingers in a deal with Walmart, and over the past few weeks Tyrrells has won listings with leading North East chain Wegmans and Texan market leader HEB enabling it to charge $3.99 a bag compared with $7 in the specialist stores it’s listed in.
Other manufacturers are slashing their costs by establishing manufacturing bases in the US or, like Ella’s Kitchen, using manufacturing partners. Having entered the market in 2009, Ella’s is now generating $11m of business in the US and it hopes to boost this from 20% of its total turnover to 50% in the next 18 months.
Ella’s and Tyrrells are typical of the entrepreneurial and often private equity-backed companies breaking into the US. Many are targeting premium sub-categories such as granola, tea, biscuits and chocolate (Prestat made its US debut this June). Others are targeting categories that are less developed in the US. Gluten-free bread brand Genius, for instance, hit eight major US supermarkets including Whole Foods, Safeway and Target earlier this year in a frozen format to get around the transport issue.
There’s also growing interest in ethnic foods, which bodes well for Reggae Reggae Sauce. “Americans like a good story,” says Wilson. “Reggae Reggae Sauce has a good story. I can see it doing very well here if it has the right support.”
And realistic aspirations. Many brands assume that if they’ve generated £10m in the UK with its population of circa 60 million they can generate five times that in the US. They should instead be focusing on the 30 million premium consumers in the North East, Midwest and West Coast that represent their real market, says Wilson.
They also need to be in it for the long haul, adds Jim Walker, who launched his Scottish shortbread biscuit into the US in 1978. “It takes perseverance and patience. It takes time to build relationships.” Jeremy Stoker, international commercial controller for Dorset Cereals, agrees. “It’s a steady, gradual build and you need to be prepared to invest in distribution and marketing.”
After launching into Whole Foods Market in 2007, Dorset Cereals has won listings in a host of other retailers. “You need to choose a good importer with an engaged broker network that can work with distributors and retailers,” says Stoker. “This is crucial to a successful entry.”
So having the backing of a powerful retail partner helps, but you don’t have to eschew traditional routes to market. The growing ranks of those that are, however, could signal a tipping point for British brands in the US. As Wilson says: “The stakes are a lot higher in the US, but so are the rewards if you can crack the market.”
Or when, as many British brands will now be thinking.
We’re the kids in America…
Veggie mince in the home of hamburgers? You’d better believe it. Since launching in the US in 2002, Quorn has built a single listing with Whole Foods into a real American success story. Today it’s stocked in more than 7,000 stores from supers to indies such as Publix and City Market across the 50 states.
Dairy Crest began chasing the American dream last year, launching the cheese brand in Meijer and Texas supermarket chain HEB. Dairy Crest says that although international sales are currently a small part of Cathedral City’s total sales, they will be increasingly important in the future.
The breakfast brand hit the US in 2007 and is now in Whole Foods, Kroger, Harris Teeter, Fresh Markets, Publix, Duane Reade, Cap Stores and independents. North America represents 26% of international business. The brand shifted $1.1m in sales in the year to July 10 2011 [SymphonyIRI].
Bulk-bought by indie distributors and shipped west to speciality stores and supers, McVitie’s main US business comes from holidaymakers and expats. The brand hasn’t hit the mainstream yet, its cookies racking up just $2.5m last year [Symphony IRI 52w/e July 10 2011].