UK meat processor Cranswick increased revenues and profits over the past year, despite economic headwinds that have blown others in the food industry off course. Unveiling a “record” second-half last month, chief executive Bernard Hoggarth announced plans to go out on a high. In this month’s just-food interview, Katy Askew catches up with incoming CEO Adam Couch to discuss his priorities for Cranswick and his plans to drive further growth.
In a tough economic environment, UK meat firm Cranswick has continued to bring home the bacon. Over the past 12 months, the upmarket manufacturer of own-label pork products has driven underlying growth amid a food sector that has seen a year of declining volumes.
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Cranswick’s volume gains cannot be chalked up to a low-price strategy. Far from chasing unprofitable volumes, Cranswick has focused on delivering differentiated, high-quality products that have proven as popular with consumers in bad times as they were in good.
While the company saw a blip in first-half profits due to a delay in price increases needed offset higher input costs, it rebounded in the second half to the end of March to book a 10% increase in underlying sales. The strongest growth was seen in sales of bacon, fresh pork and sausages, with sales increasing by 39%, 15% and 12%, respectively.
When CEO Bernard Hoggarth confirmed his plans to stand down, then, he could do so confident he was leaving the company well-positioned.
From the beginning of August, Adam Couch will be the man responsible for steering Cranswick’s strategic direction.
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By GlobalDataWith 20 years experience at Cranswick, Couch comes to the post with an intimate knowledge of the company and the pork industry. His appointment as CEO has been well flagged and last year he took up the post of COO as part of Cranswick’s succession planning.
Indeed, Couch is the first to emphasise that his appointment highlights Cranswick’s commitment to a consistent vision for the future of the group.
“We are a strong business with an excellent management track record. I’ve been in the business for over 20 years. We have a high number of very experienced long-serving guys who have been with the business for 15 to 20 years and have been responsible for the growth of the business today,” Couch tells just-food.
As he takes up the reigns as chief executive, Couch says his priority will be to deliver “more of the same”, insisting: “We are very much focused on business as usual.”
Cranswick plans to focus on the key growth driver of innovation, working to bring new products to the market by using its consumer insights and unique relationships with “food heroes” – artisan food makers who, by partnering with Cranswick, gain mass production and distribution scale without – Couch claims – losing touch with their artisanal routes.
“Our modus operandi is to locate a food hero, get to know the food hero and understand how artisan the products are. We then look to add our skills and our knowledge of factory efficiencies to be able to produce that on a mass scale. You will never make them long-line runs of course, because then it becomes automated and the normal run of the mill type of products that people buy. We look to identify artisan products and make them in a more efficient manor adding some Cranswick know-how,” Couch reveals.
“This [strategy] goes back to the sausage days when we got in bed with a gentleman called Martin Heap who owns Simply Sausages. We were able to really reinvest the sausage category at that time and I am going back 15 to 20 years. We aren’t some large conglomerate that goes in and changes the whole method of doing it. At the very heart of what we do is keeping the artisan method and really being able to deliver the best quality products.”
In this way, Cranswick has focused its innovation drive on the premium end of the market. This, Couch says, has provided the group with a significant competitive advantage because it has been able to develop new products that “others wouldn’t necessarily be into” and, more importantly, “deliver to the consumer an eating experience that is not replicated elsewhere”.
Through its focus on quality, Cranswick has been able to differentiate its offering and maintain its consumer appeal, even at a time when shoppers are cutting back their spending in other areas.
As consumption out of the home drops, consumers are seeking comfort and a touch of luxury. By meeting this need, Couch says Cranswick has been able to turn the current tough trading conditions on their head, creating an opportunity for growth without catering to the low-end of the market.
“Quality will out at the end of the day and even in difficult times people want to eat quality food. Whilst we have seen a reduction in expenditure outside of the home, when they are eating at home people may spend more money there and treat themselves. If we can be part of that meal solution at the premium end of the market place then all the better for us.”
By selling into the high end of the market, Cranswick has also been able to shore-up its margins, Couch suggests. “The higher up the value chain you work the more scope there is for margin recovery,” he says.
However, Couch concedes the group has been very conscious of getting its price positioning right. “In these times it is very difficult for the wider consumer. We have to make sure that the products are suitably priced to make sure that we get some traction.”
Another important plank in Cranswick’s strategy to maintain margins in the face of rising input costs has been to drive efficiencies at its plants, Couch says.
“We have spent well over GBP100m in the last five years in our facilities, growing what we believe to be innovative products as well as improving our efficiencies… We have some of the most state-of-the-art facilities in the industry.”
According to Couch, the group’s well-invested infrastructure has paid off, as Cranswick owns one of the two UK manufacturing sites certified by the US Department of Agriculture to ship product into the US.
“All our ribs now are sold to America. That is a very strong market for us. We have only been able to achieve that by the investment we have put into improving the facilities. We will look over a period of time to gain our other sites to be USDA approved as well.”
Cranswick plans to grow its export presence, aiming to increase exports to China and beyond.
Cranswick sells fifth-quarter materials direct to China but Couch says changing consumption trends within this huge market offers significant growth potential and the company hopes to migrate exports up the value chain.
“China is a big buyer of what we call fifth-quarter materials – items of the carcass that aren’t palatable to the Western diet. What we have seen in China is a growth up the value chain into more mainstay products that would be consumed in the west. As their growing affluence and urbanisation continues they are looking to consume a more western diet. The outdoor reared aspect, the premium aspect and the trust in the health status and quality of the products is very prominent. So we are looking to develop that certainly into the Far East and even as far as Australia and the Americas.”
Cranswick is also looking to develop its business through bolt on and “targeted” acquisitions, the new CEO says.
“There are a number of [bolt-on] acquisitions that may come about,” Couch reveals. “There are a number of targeted acquisitions that we would look at, that would develop our capabilities in area of the market that we wouldn’t necessarily have the expertise in – that we wouldn’t feel comfortable in growing from a standing start.”
Couch says Cranswick is well-positioned to take advantage of acquisition opportunities as and when they arise thanks to its “good balance sheet” and the support it enjoys from its stakeholders.
However, he adds: “We are not reckless with it either. It would not be an acquisition for the sake of pure growth. It would have to be targeted.”
As Couch looks his the future as the new CEO of Cransick, it seems he can do so with a degree of confidence. Cranswich is well positioned to continue to deliver sustained growth, supported by a legacy of investment in product development, quality and infrastructure.
“We are in difficult times. We will focus on our core competencies… We have built a very good business here over the last 30 years or so and we intend to continue that over the next 30 years.”
