Store-cupboard secrets

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To step into Premier Foods’ Hertfordshire headquarters is to take a trip down memory lane; imagery and marketing materials for brands such as Mr Kipling, Smash, Bisto, Oxo, Angel Delight and Bird’s – to name just a few – line the walls. It feels like peering into my granny’s kitchen cupboard.

Despite the obvious history, however, Premier’s brands are far from consigned to the past; a staggering 96% of UK households buy one of the company’s products each year, and the annual household penetration of its four largest brands ranges from 48% (Batchelors) to 60% (Mr Kipling). Bisto ( 59%) and Ambrosia ( 50%) complete the power quartet.

Keeping track of the activity of many of these brands is Pat Thomas, head of insight for the grocery business (Premier’s brands are split into two main groups: grocery and sweet treats). Thomas has been at Premier Foods for 14 years. Before that, he worked at companies such as Unilever, Mars and Coca-Cola, but has stayed at Premier longer than anywhere else. He puts this down to his role there being “endlessly fascinating”.

“It’s changed a lot over the years,” he says. “The stable of brands we own now and in the past – and, hopefully, in the future – is very interesting to work on.”

All change

Thomas’s talk of change is not an overstatement; the business has undergone significant restructuring in recent years, most drastically since current CEO, Gavin Darby, joined in early 2013. Darby inherited a bloated business with debts of almost £1bn, and one of his first big moves was to split off Premier’s Hovis bread business to The Gores Group, a US investment firm. Darby also sold off household staples Branston pickle, Sarson’s vinegar and Hartley’s jam to foreign buyers.

“Premier Foods’ trials are well documented in the press – how we got too big and too far in debt,” says Thomas. “We had to manage it and some things had to go. Sadly, one of them was Branston pickle. We held onto most of the good stuff, though, and things are now more stable.”

Though there are fewer brands to keep track of, the diversity of the remaining portfolio – especially in terms of their target markets – is still very broad. But Thomas doesn’t believe this makes gathering insight on customers any more complex.

“Our brands have such wide appeal and strong heritage that we have no problem finding consumers with opinions on them. People really want to talk to us about what we could do next with Bisto or Mr Kipling, and so on,” he says.

“There are still an amazingly large number of people with strong opinions about Angel Delight. Like many other organisations, we have developed segmentations to group people into similar typologies based on shopping, cooking and eating behaviour, and attitudes to food – and this helps us select the right people to talk to depending on the job in hand.”

Nevertheless, having such a wide range of brands means that some of them will receive more attention than others.

Focus on innovation

The next stage of Darby’s plan, after the streamlining phase, was to focus on developing and marketing some of the business’s top brands, including Mr Kipling, Oxo, Bisto and Cadbury’s cakes. Last year, Premier announced that it would continue to double its spend on product innovation and marketing, having raised its advertising budget by 86% in 2014, to £8m.

“Premier Foods has, historically, had a low rate of innovation, for various reasons,” says Thomas. “This was partly financial, and we now seek to grow the business by making that [innovation rate] at least as good as, if not larger than, the average. This means generating lots of new things for our consumers with brands that we have under-used for a number of years.”

Many of the ideas for these innovations – whether they are improving an existing product or launching a new one – will grow from insight.

Background data to inform this process comes largely from providers such as IRI, Kantar and Mintel, says Thomas. This is used to understand, at a large scale, which categories are growing, which are shrinking, and how consumers’ needs and tastes are changing. Premier also works on understanding its core macro categories in detail, he adds.

“[We do a lot of work on] understanding the occasions and needs, where our strengths and weaknesses are, and where the opportunities are. From that, we can start to say, for each individual brand, what are the areas in which we can make progress, either through innovation or elsewhere?

“We’re really getting behind innovation. We used to have lots of good ideas – now we’re seeing a lot more of them put into action.”

The distribution of the insight team across the business is intended to help this innovation process. Insight team members sit within the marketing department, in both grocery and sweet treats. Within grocery (Thomas’s domain) they are split into four category marketing teams. Each of these teams contains an innovation specialist and an insight specialist, who work together to develop strategy, decide on the specific projects that should be pursued, and what specific insight work will be needed.

“The marketing, innovation and insight people work closely with sales and category teams to ensure that the innovations we’re bringing to market – or any other initiatives that we’re doing – not only grow Premier Foods, but also fall in line with category strategies that we have agreed with retailers, as well as the drivers of growth that they would see as relevant to the category,” says Thomas.

“That way, what we’re doing ends up helping our customers rather than just us. Which is the way it should be.”

The product-innovation process will typically take six months to a year, from start to finish. Often, the length of time it takes will be dictated by how quickly the equipment can be obtained to make a new product, rather than the gathering of insight itself.

The qualitative stages of a project, Thomas explains, would be carried out by a number of agencies, including innovation and qualitative research agencies. Premier favours smaller companies, he says, because there is greater opportunity to build a personal relationship.

“It’s especially important in the qualitative area [that agencies have that relationship with Premier] because they have to become sensitised to what we’re looking for, and the things they need to look out for that would ring a bell with us.”

From the concept stage through to the volumetrics stage, however, the work would normally be done by one agency to ensure consistency. “Concept writing is quite difficult; if you get the same agency to do it for a regular period of time, it can help you understand what works and what doesn’t,” Thomas says.

“We work with Nielsen Bases on ours. It’s probably the largest company in the world that does that kind of work.”

Hollywood glamour

Another indicator of Premier Foods’ push to remain current is a collaboration with celebrity baker Paul Hollywood, which launched in Morrisons supermarkets in February of this year. The company was apparently approached by Hollywood’s agents to see if it was interested in working with him; and, according to Thomas, this was seen as a good opportunity to put together a range of baking mixes to liven up its baking category.

“The home baking – or baking category, as we now refer to it – has been a bit tired for a number of years,” says Thomas. “We have a number of brands within it – McDougall’s flour, Be-Ro flour and Atora suet – which, incidentally, has a 99% share of the suet market.

“We spent time looking at what sorts of products would be successful. From an insight point of view, it’s been quite easy because he [Hollywood] is such a standout personality and represents something very clear. So it was quite easy to get a positive response to: ‘What would you think about a range of products from Paul Hollywood and would you buy it?’ It fell into place quite quickly.”

In fact, Thomas says, most of the brands within Premier’s stable are relatively easy to research.

“They are such everyday things, it’s really easy to talk to people about them. Everyone’s got an opinion and most people have heard of the products. In some cases, because of a lack of investment, our brands need a bit of bringing up to date – but, again, that’s usually pretty easy to get to from an insight point of view.”

Given the rich heritage of Premier’s brands, it seems likely that loyalty would play a big part in its success. But Thomas insists this is not necessarily the case.

“We all imagine that there are people who buy the same brand of sliced bread every week, and it’s taken for granted that that’s what they’ll do for the rest of their life. But when you look at the data, it’s amazing how few people do that.

“With any brand in food and other groceries, look at the most frequent number of purchases per year and it’s invariably one. More people buy it once a year than any other frequency,” says Thomas.

“There are a very small number of people who account for a huge amount of your volume – and a huge number of people who occasionally buy your brand. If you’re not constantly refreshing these occasional buyers, then your brand will decline, because you’re only left with a very small number of people who buy all the time.”

The eyes have it

Just as Premier’s brands keep refreshing and innovating, the company also tries to keep on top of modern approaches to gaining perspective on its customers.

It has recently installed its own on-site, eye-tracking facility – so new, in fact, that Thomas has yet to visit it. The technology it uses allows the category management team to project products onto a wall – made to look like a supermarket shelf – to understand what they would look like in a competitive environment; something, Thomas claims, that has become more urgent in recent times.

“We came to the conclusion, from a number of places, that we needed to do a bit more diligence on what our products look like ‘on shelf’, and how they look in a competitive environment,” he says.

“That’s probably become even more urgent in the past year or so, with most of the major retailers going through range optimisation programmes – trying to get rid of things from the shelf because they’re not selling enough.”

Given Premier Foods’ own ruthlessness in getting rid of under-performing brands in recent years, those retailers could do worse than take a leaf out of its book.