The man from Del Monte, UK MD Peter Miller, says he can grow its £140m UK food sales by more than 10% over the next year now it has outsourced a large chunk of its UK business to food broker Jenks.
It's a bold statement of intent but will Jenks, which has handled elements of Del Monte's business for the past 11 years, really be able to reverse a decline in fortunes at the food business? And what are the pitfalls of surrendering so much control?
It's easy to see what motivated the move. Del Monte's sales from its juice business slid 30% in one year [Nielsen 52 w/e 7 October, 2006], and its brands have struggled to compete with an aggressive own label market. Outsourcing is tried and tested. Mars UK and Kerry Foods are just two of the big brand owners that have handed over elements of their sales and marketing to Jenks. Equally, food brokers like Jenks have been widening their nets to take on more big brand business.
But Del Monte has arguably gone further than most, outsourcing all its sales, marketing, logistics, administration and finance roles of its canned fruit, juice drinks and snacking portfolio, including Fruitini and Fruit Express. The only parts of the business that Del Monte retains control of are its whole fruit, dressed salad and fresh cut fruit businesses.
Jenks joint MD Ross Beattie says it makes sense to solicit the help of a third party to exploit new sales channels, such as railway stations. "We are structured to provide a greater breadth and depth of coverage of the UK market than most brands can deliver. Our expertise lies in the sales channels."
Miller stresses that cost savings were not part of the rationale and that budgets would increase. "Getting in bed with Jenks will make the business bigger," he says, adding that the move would reinvigorate staff, who are expected to move over to Jenks' head office in Aylesbury. Beattie says the trend for brand owners choosing to outsource to food brokers and other third parties has picked up pace in recent years as they seek greater business efficiencies.
"We get enquiries every week from companies of all sizes, many of which are small with no brand support. We say no to those brands as we are now gearing the business towards catering for large brands."
As well as working with Mars UK and Kerry Foods brands, Jenks looks after Ryvita, Mr. Tom and Ritter Sport, among others. It also picked up Johnson & Johnson in August, and now handles the logistics and marketing for its C&C, wholesale and convenience channels. Rival firm SHS also has major brands on its books, including Beverage Brands, Reckitt Benckiser, Danone and Merrydown.
Merrydown outsourced its sales operation seven years ago. "It simplified the business," says MD Chris Carr. "I'm still absolutely the brand owner, but SHS offers a national sales force that as a brand we don't have."
The only downside, he says, is that rather than having a dedicated sales force, people have responsibility for a number of brands. "But the benefits far outweigh any negatives, in getting Merrydown out to more customers," he adds.
Richard Onion, chief executive of the European Sales & Marketing Association, adds that food brokers can become victims of their own success.
"We used to call it the penalty of success," says Onion. "You could launch a brand and build it, then the manufacturer would decide it suddenly had a sizeable brand and wanted its own sales force."
Other struggling brands will be watching with interest to see whether Jenks can achieve what the brand owner could not.