US food firm plots UK gluten-free market invasion
Boulder Brands’ UK md Simon Hazlett has the ambition to grow the firm’s UK turnover to in excess of £50M within the next three years.
It cost Boulder Brands a mere £2.5M to enter the UK market through the acquisition of family-owned Davies Bakeries from Frank Roberts and Sons, which had specialised in gluten-free (GF) baked goods for 14 years.
But the buyout has spurred Hazlett, who was md of Davies Bakeries, to set his sites on GF market domination across the UK and Europe.
“There is no secret,” he says at the UK headquarters in Chester. “I want us to be the captain of the GF sector in the UK and then Europe this decade.”
The brand name Hazlett aims to push across the UK and Europe is Boulder Brands’ Udi’s, which is the current US GF market leader, followed by the company’s second GF brand, Glutino. “Between the two brands we have over 57% market share in total free-from in the States,” he says.
Udi’s share of the UK’s GF market, however, is a drop in the ocean compared with its business in the US and its potential business in Europe. Kantar Worldpanel figures indicate that competitor Genius Foods holds 48% of the market share for GF bread in the UK alone. But that’s not putting Hazlett off, who says: “Our American partners use the phrase ‘stay ahead of the curve’ and that’s what we’re going to do to become the leader in the UK.”
The plan is to push Udi’s in the UK, make it successful and use that success as a “stepping stone for Europe”, he says. “The UK is very much seen as the destination market of choice for GF in Europe for Boulder Brands, as it is the largest and has affinity with the US.
“We’re trying to push the Europe side of the business, but it’s very much in early development,” he explains. “The opportunity we see in Europe is very clear and very big. It will be country by country and key retailer by key retailer.”
New products (Return to top)
Staying ahead of the curve means bringing new products onto the market as often as possible and Hazlett paints a picture of the future GF market as one frequently bombarded with new products. Although to do this successfully, he says, the sector needs to pull away from its “medicated” appearance.
“I think the days of GF foods being perceived as “medicated” have gone. Now there’s a need to bring packaging and design into the mainstream as new products are launched," he says. “New product development (NPD) will hook shoppers and keep them excited about GF foods.”
One of Hazlett’s secret weapons to take some of the GF bread market from rivals, such as Genius, is a new range of breads with a fat content of less than 3%. “The word ‘healthy’ is going to be associated with GF more and more,” he predicts. “Our strategy will be to try and make products as healthy as possible,” he adds and highlights that some other market offerings have fat content of 6–7%, which is no competition for Udi’s, he says.
Removing gluten from a product presents one set of problems, but reducing the fat content adds to those problems, explains Hazlett. “It’s true, taking the gluten out means you have to replace it with something else.”
Ingredients such as xanthan gums, maize and rice flours, as well as other starches, are often used to substitute gluten, he says. But the bigger issue that GF food manufacturers face is a reduced shelf-life, as GF products “tend to go stale a lot quicker”, he says. “It’s just coming up with alternatives to prolong shelf-life, but that often means additional oils and fats, which we want to avoid.”
Finding replacements for gluten doesn’t seem to have an effect on Boulder Brands’ ability to produce new products. The company has a portfolio of more than 250 GF products and an international turnover of more than $600M (£358M) annually, half of which is generated by GF, says Hazlett.
Out of those 250 products, Boulder Brands UK has placed only 15 on the UK market at the moment, in order to build up a strong presence, he says. “If you look at the GF market across the UK it’s quite fragmented, there’s no one stand-out brand that transcends all of the categories, which is where Udi’s comes in.”
Although Hazlett says there isn’t one strong brand covering the whole category, some of the bigger brands have “commoditised” the market, “which is only a good thing as it has driven more fixture space in supermarkets for other brands”.
Filling the gaps (Return to top)
Hazlett plans to capitalise on GF launches from the likes of Warburtons, by “filling in the gaps” they leave. “The recent addition of GF bagels in the UK, GF toaster pastries and the low-fat bread are all focused on a priority area for us – breakfast,” he says.
Along with creating a strong GF brand for the breakfast market, Hazlett says Udi’s is looking to launch into the snacking and “handbag” categories. “Our aim in the next two years is to become category captain, he explains.”
“We’ve got up to 50 products – including GF muffins and tortilla chips – we want to launch in the UK this year, which are mostly coming in from the States, but will soon be manufactured here in the UK by us.”
While Boulder Brands UK currently imports some products from its operations in the US, its 1,486m² UK site is capable of meeting the growth Hazlett wants here. He says there is sufficient space to enable its UK facility to grow before the company needs to acquire additional production capacity elsewhere.
Until then, production floors at its existing factory can be reorganised to meet demand increases, he explains. “There are power-points hanging from the ceiling so we’re not constrained by one set-up, which means we have a flexible operation system.”
Fifty employees currently work at the company’s UK facility, but more will be taken on as the business grows.
Growth through acquisition is a key part of Boulder Brands’ strategy, says Hazlett. “We recently acquired another company in the US called Evol, which is love spelled backwards.”
Evol, which was bought for $48M (£27M), manufactures natural and organic frozen ingredients. “We have also just found a new 9,290m² factory in the US,” he adds. “It’s the biggest GF factory in the world.” The factory is highly automated, which dramatically reduces staff costs and raises efficiency. “It puts us here in the UK to shame a little,” he adds.
Products from the new US factory will soon find their way into the UK if demand grows above the UK factory’s capacity to supply.
High expectations (Return to top)
Hazlett admits his US principals have high expectations of what he can achieve in the UK. He travels to the company’s New Jersey headquarters about four or five times a year to report on progress, he says.
“My bosses, first and foremost, want to be the number one brand in the UK and then Europe by replicating their success in the US,” says Hazlett. “And, as you can see, they are not afraid to spend the money to do this.”
Boulder Brands is a big believer in the merits of social media. In the US Udi’s has 1.4M Facebook ‘likes’ and 88,100 Twitter followers. “It’s something we are trying to replicate here in the UK too," he says. "Udi’s in the US has a better interaction rate than Coca Cola.”
While still having a long way to go, Udi’s UK social media stats are impressive with 20,000 Facebook ‘likes’ and over 4,000 Twitter followers. “We need this to keep consumers informed and onside,” he says.
However, the company is very much “riding the wave at the moment”, he confesses. The question now for the GF sector is whether the industry can sustain growth through new and frequent new product launches.
The need for regular new product development and innovation arises from one simple fact: only 1% of the consumers in the UK have medically diagnosed coeliac disease. 12–13% of consumers choose to avoid gluten for lifestyle reasons, says Hazlett. ”So it’s keeping them interested that will drive the market.”
Hazlett believes social media is critical for food businesses to communicate with their customers. He explains why in our exclusive video.
