Genius Joyfull artisan loaf

Genius

Genius Foods will continue the push to pivot into the mainstream bread category with its new focus on gut health following the takeover this week by German confectionery group Katjes.

The deal is the largest struck to date by Katjes Greenfood, the wider group’s investment arm, which backs sustainable next-generation food businesses as the parent group diversifies outside of confectionery.

Edinburgh-based Genius – founded in 2009 by Lucinda Bruce-Gardyne after her son was diagnosed with coeliac disease – has grown to become the number-one gluten-free brand in the UK, with its range stocked by all the mults and across the foodservice channel.

It also has a leading presence in France, as well as a smaller representation in the US, Australia and Germany.

However, the brand has struggled in recent years as Warburton’s and other traditional rivals expanded further into the free-from category, with retail value sales down 9.1% to £30.4m last year, according to The Grocer’s annual Top Products Survey [NielsenIQ 52 w/e 11 September 2021].

Genius has sought to reposition itself in the functional bread market in a bid to restart growth, tapping into growing consumer interest in gut health.

In 2021, it launched what it claimed as a UK first with a range of bread baked with active cultures. The five-strong range, including loaves, rolls and brioche buns, is high in fibre, vitamin and minerals, as well as remaining gluten-free.

Shaun Browne, co-head of UK corporate finance at Houlihan Lokey, which advised Genius on the sale, said Katjes could help position the brand as a mainstream bread product for consumers looking to improve gut health.

“Genius has moved its positioning from purely gluten-free to gut wellness, which is a much bigger category and gives the brand a broader appeal,” he added.

“The market for gluten-free is relatively modest, whereas gut health products are more in demand. The new focus can see Genius moved from the free-from aisle in the supermarkets to the bread aisle, next to brands such as Warburton’s, Kingsmill and Hovis as a mainstream bread product that happens to have an angle of differentiation in gut wellness.”

Browne said that family-owned would be a good owner of Genius as it was able to take a long-term perspective, supporting the incumbent management team.

“Through the Katjes investment arm, the firm has invested in a number of other new-generation products and brands in food - and gut wellness is a good strategic fit.”

Genius generated revenues of €40m (£34m) last year, according to Katjes.

Katjes Greenfood managing partner Tobias Bachmüller said the global market for gluten-free products was growing at double-digit rates year on year.

“This makes gluten-free an ideal category for Katjes Greenfood, which, as a legally independent part of the Katjes Group, is investing in the future of nutrition outside of confectionery.

“The opportunity to become the market leader in a future category purchase is a unique opportunity for us.”

Genius CEO Peter Quinn said: “We believe that Katjes Greenfood is a strong investor, who will support us in leveraging our great market and brand potential in short-term. At the same time the family-owned company also shares our long-term values of creating a healthy and sustainable future of the food industry.”