Chocolate pricing

‘They have no idea what a Bakewell is’: Baker Mr Kipling’s plan to crack the US

From distinctive pink and yellow Battenbergs to neat Cherry Bakewells, Mr Kipling’s cakes are about as British as they come.

But the brand is set to make a bold bid to break into the US, taking a range of its sweet treats to the Twinkie’s home.

Premier Foods, the UK-listed consumer goods group that owns Mr Kipling, is launching packaged cake products in up to 300 stores across the US by early April.

Battenbergs and Cherry Bakewells are not making the trip yet; Instead, the trial will include four slices of uncontroversial Mr. Kipling cake in caramel, lemon, chocolate and vanilla flavors, after the products proved popular in a similar trial in Canada.

“Americans have no idea what a Battenberg is. They might think it has something to do with the war,” said Marcia Mogelonsky, director of food and beverage analytics at market research provider Mintel. “They have no idea what a Bakewell is; it’s completely different terminology.

The move will open up a much larger market for Premier, which has a large product portfolio in the UK, from Ambrosia custard to Bisto gravy powder, but has generated less than 10% of sales overseas. last year.

“[It could be] a real game-changer,” said Alex Whitehouse, chief executive of Premier. “If you do the math; the US cake market is about five times larger [of the UK]. With a relatively small market share, as long as it is sustainable, it could become even bigger than our UK market.

But breaking into the US is a challenge that has proven difficult for many other UK consumer companies.

British grocer Tesco suffered nearly £1 billion in losses at its Fresh & Easy supermarkets, which it launched in the US in 2006 and sold in 2013, for example.

Those who settle are often prepared for heavy losses. Snack company Graze, which expanded to the United States in 2013 and made $200 million in sales there from 2016 to 2020, suffered “multi-million dollar” losses in the same period, said former general manager Anthony Fletcher.

“Local holders are more relaxed about it than probably a UK company and I would say the shareholders of a UK public company might be,” he added.

David Wilson, who introduced the Quorn alternative meat product to the US 20 years ago and now runs a consultancy which has helped UK companies such as Green & Black chocolate enter the market, advises customers to not to exaggerate the British character of their products. “Playing quirky British recipes is limiting in terms of the market,” he warned.

Alex Whitehouse, head of Premier Foods, said: “The US market for cakes is about five times larger [of the UK]. With a relatively small market share, as long as it is sustainable it could become even bigger than our UK market” © Andy Parsons/Parsons Media

Premier Food’s international expansion is limited to two brands with “obvious legs”, Whitehouse said: Mr Kipling and Sharwood sauces. Both are already selling in Australia, New Zealand and Canada, while Sharwood is available in the United States.

Mr. Kipling cannot rely on nostalgic appeal in a market where his products are unknown. But Premier’s research shows there’s an opening in international markets for cakes that are higher quality than shelf-stable products, but last longer than in-store bakery offerings.

In Australia, Mr. Kipling gained 14% of the branded cake market. After a successful trial of its cake slices in several hundred stores in Canada in 2020, where a full rollout is now planned, Whitehouse is following the same approach in the United States.

Premier Foods is tweaking its British chocolate recipe for American consumers, who are more used to Hershey’s than Cadbury’s Dairy Milk.

The packaging will also change: Angel Slices will be renamed “Vanilla Slices”, as they compete with popular vanilla incumbents such as Twinkies.

The six-packs will replace the usual UK eight-pack to entice customers who are hesitant to buy unfamiliar products.

The sector targeted by Mr. Kipling is large and growing. Although sales of cakes and pastries in the UK fell 1% in 2020, amid a boom in home baking, sales in the equivalent category of $11.3 billion in the US fell. rose 6.3% as in-store and stand-alone bakeries closed and shoppers turned to packaged goods, Mintel found.

But the research group expects growth to slow to 4% from 2022 to 2026 as shoppers focus on their health and spend less time at home.

Inflationary pressures are also biting. Andrew Csicsila, managing director of consultancy AlixPartners, which advises consumer brands, said most of his clients were “not thinking about growth, acquisitions or new markets, they were thinking about growing current markets and were trying to manage supply chain disruptions, from transportation, to component shortages to cost inflation.”

The company has to deal with “short-term price swings,” Whitehouse said.

Mr Kipling will initially make the cakes in the UK, freeze them and ship them to the US, where Canadian bakery company Weston Foods will distribute them to US supermarkets. If the test proves successful, the company would consider investing in manufacturing facilities in the United States, Whitehouse said.

Mr. Kipling's Chocolate Slices, with American Mark

Chocolate slices from Mr Kipling, with American trademark © Premier Foods

He did not reveal how much Premier Foods will spend on the US trial. During the pandemic, the group benefited from customers seeking comfort in its familiar brands, which provided excess cash.

One of the top 10 shareholders said the company’s recent performance had helped “provide a stable base” for moving into the United States.

Whitehouse took over in August 2019 and in the two years to October 2021, the company reduced net debt by 30% and increased sales by 7.5%.

“The brand will play in an underdeveloped category and has a good pedigree,” added the shareholder. “If they succeed, there is a substantial prize to be won.”