Itsu grocery range

Itsu hold two product development meetings every week to come up with new products and ranges for its grocery arm, with many more launches lined up for next year

Sales of Itsu in supermarkets are booming as the Asian-inspired brand accelerates its NPD into new categories.

Founder Julian Metcalfe told The Grocer the “extremely rapid” growth of the group’s grocery arm to continue in 2022 and beyond despite soaring costs and a squeezed consumer.

The move further into grocery was essential to the reinvention of Itsu following the pandemic when it was forced to agree a CVA to secure rent cuts across its restaurant estate.

Revenues at Itsu Grocery, which supplies the grocery, convenience, online and wholesale channels, increased 39% to £29.1m in the 53 weeks to 31 December 2021.

Stripping out the sale of core products to the wider Itsu group, the grocery division racked up growth of 51% last year, which followed a 59% jump in 2020 as the pandemic heightened demand for its wide range of noodles, broths, miso, gyoza and bao.

Its 2021 performance was driven by new listings, distribution gains, the success of its new frozen ranges and new launches, such as its first foray into chilled food-to-go, as well as growing exports, with international sales rising 450% to £630k.

The success also fed into the grocery division’s bottom line, with EBITDA growth of 56% to £2.2m and pre-tax profits almost doubling to £2.1m.

Metcalfe told The Grocer the grocery success was a tribute to the team around him and the relentless focus on innovation and quality.

“It is all about innovation, innovation and innovation in this extraordinary Asian-inspired space,” he said. “It is unlimited what Itsu Grocery can do. This style of food is the future. We’re looking at another 50% growth this year – and we see no reason why the growth rate of 50% a year should change over next few years, which puts the division on the way to sales of £100m very quickly.

“The opportunity for high quality, beautifully branded, affordable, Asian-inspired food, here in the UK and in Europe and the US, is enormous.”

Metcalfe added Itsu holds two product development meetings every week to come up with new products and ranges, with many more launches lined up for next year, including a new noodle range with broth to which shoppers can add their choice of protein.

He said rising costs across the board have been a challenge but, ultimately, shoppers are willing to pay more for the quality of Itsu’s products.

“We’ve been knocked [by input cost inflation] but it doesn’t stop our resolve or our success or the fact consumers want to buy our products,” he added. “If they have to go up 20p then they go up 20p, it doesn’t seem to stop our relationship with our customers. If you can offer the best noodle pot on the market, shoppers are going to buy it.”

Revenues in the retail operation started a recovery in 2021 despite ongoing lockdowns, rising from £41.4m to £58.7m, but still way down on the more than £100m generated pre-pandemic.

Operating losses also reduced at the group from £18.9m to £8m, with pre-tax losses of £8.3m versus £19m in 2020.

Itsu returned to its shop opening programme in second half of 2021 focusing on regional towns and shopping centres where footfall has flourished compared with city centres.

The group also sold a 30% minority stake to PE firm Bridgepoint in 2021 to help with its ongoing turnaround.

Itsu will discuss its pivot into grocery at a new conference co-hosted by The Grocer, with Itsu UK CEO Ganan Kanagathurai one of the speakers at the event. For tickets see