Looking to see your bakery goods on supermarket shelves? Here are some tips on how to approach the multiples’ bakery buyers and the type of items that could spark their interest.
Bakery is core to a supermarket offer – and arguably more so today than ever before as retailers strive to differentiate themselves from their rivals.
The battle for market share, which has been exacerbated by the growth of discounters, means there are big opportunities for manufacturers that can offer innovative, quality products. But there is more to landing and keeping a listing than simply having the right product.
“As a supplier to the supermarket bakeries, it is vital to be supportive, responsive, innovative and think long term,” says Stuart New, head of bakery at Rich Products, which supplies sweet bakery goods to supermarkets and coffee shops.
“Suppliers who are proactive in planning, open to bespoke development opportunities, and look to work in partnership over the long term to drive profitable growth, are the most likely to succeed.”
Before that partnership can begin, a business needs to get its products in front of the buyer.
“If you are cold calling or wish to approach a retailer, I have found sending samples marked for the specific department works and will generally get a response,” suggests Brian Clarke, director at European Food Consultants, adding it is important to identify the specific buyer for the category you are targeting.
The straightforward approach works best, advises Hamish Renton, managing director of HRA Global, and a former supermarket buyer. “Have a think about what the buyer is looking for and frame your pitch based on your perception of their needs, not how wonderful you feel your product is.”
Things to consider are whether the category lacks depth, if there are gaps in a range, and what volume and value you can offer the buyer. “Distill that into an email, followed up with calls. Persevere, then persevere some more. If the proposition is right you will get openings,” he says.
Luck can play a role, as was the case for free-from brand The White Rabbit Pizza.
“A member of the Sainsbury’s buying team was from Oxford, where we began, and heard about us through The White Rabbit Pub – where the founders worked prior to launching,” explains co-founder Nick Croft-Simon. “She grabbed one of our pizzas from Planet Organic, and we were approached by the free-from buyer regarding a potential listing.”
‘Meet the buyer’ sessions at conferences and events are also great as they enable a supplier to stand out versus other potential suppliers, advices Claire Nuttall, founder of The Brand Incubator. “You have an ideal opportunity to shine and give yourself the best chance at getting noticed,” she adds.
For The White Rabbit Pizza Co, tapping trends such as free-from and vegan diets will have made the business attractive to buyers. And understanding a market – and potential growth areas – can be key.
New at Rich Products says that, although innovation is often towards the top of a retailer’s priority list, this must be underpinned by insight. Rich Products uses consumer testing tools to gather feedback on new concepts before submitting to buyers, alongside the use of up-to-date trend reports.
“It is critical to have the relationships in place to ensure consumer needs and gaps in the market are totally aligned before you embark on product development,” New adds. “Having that clarity allows both parties to be fully invested in bringing solutions to market quickly and effectively.”
For Rich Products, this led to the development of Galaxy Caramel-filled cookies last year to meet demand for premium, indulgent treats in new formats.
“Supermarket bakery cookies are growing well ahead of the market, with Sainsbury’s and Tesco gaining considerable share through innovation in branded and filled cookies,” adds New. “Asda has also invested in re-introducing its premium tier, resulting in significant sales growth as consumers choose to spend their money on trading up.”
The product is only part of the partnership equation, and retailers will also expect strict criteria when it comes to hygiene and health & safety. Businesses should be audit-ready at all times and have a contingency plan in case something does go wrong.
In the case of a problem with manufac-turing, consider whether you have spare capacity, spare plant or an additional site. Alternatively, perhaps another business would be able to help short term if a disaster happens – bakers are often willing to help out other bakers, even those that could be seen as competition.
Whatever the problem, it is essential to keep your customer aware of what is happening.
“Go to your key contact and explain exactly what has happened and, more importantly, exactly what you’re doing to sort it,” says Croft-Simon. “Everyone on both sides knows things will go wrong and mistakes will happen from time to time, but dealing with them proactively will foster an important sense of mutual respect moving forward.”
That mutual respect should extend to pricing, and ensuring you maintain margin.
“Never under-sell your product, assuming you will get a price increase in the future,” says Clarke at European Food Consultants, adding: “I have worked on the basis of never allowing a single retailer to have more than 40% of your output, as this will put you in the squeeze category and possible dilution of margin over time.”
Bearing in mind such considerations, there are opportunities to be had in the supermarkets. As New at Rich Products says: “This isn’t a time to play it safe. With a growing consumer appetite for innovative, indulgent bakery products, investment in new product development and innovation will be the key to long-term success.”
Changes in the UK retail scene
To describe 2018 as a dramatic year for grocery retail would be an understatement... to put it mildly.
In January came news of the merger between Tesco and wholesaler Booker Group, followed less than four months later by the jaw-dropping announcement that Sainsbury’s would merge with Asda.
This could, of course, have major implications for bakers who supply these retailers, with some understandably concerned about the impact consolidation will have on listings and prices.
Yet for all the shock around the announcements, the activity has been driven by trends that have been shaping the market for years.
“Although it has been a turbulent time in the grocery market, the underlying features haven’t really changed,” explains Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
Aldi and Lidl are still gaining market share, but their growth has slowed from 15% year on year to around 10%. The majority of this growth has come from new stores opening and this is expected to continue as the chains have plenty of room to expand.
“You can’t have two retailers growing market share hand over fist and not have the squeeze come out somewhere,” explains McKevitt. “Although mainstream grocers have returned to modest growth and profitability, it is nowhere near where they were before.”
Asda, for example, has been impacted as shoppers shift away from large shopping trips in favour of top-up shopping, and because its position as the cheapest place to shop has been eroded.
“Ask the man on the street which the cheapest retailer is and they won’t say Asda any more,” says McKevitt.
Less significant has been continued growth in online grocery shopping, although this has slowed.
“The apocalyptic stories that 15% of grocery sales will move online are – and always have been – ridiculous,” says McKevitt.
Meanwhile, lurking in the wings is Amazon, although its impact is arguably more a result of people worrying about the online giant rather than anything tangible. But, adds McKevitt: “You wouldn’t want to bet against them – they have deep pockets – but for the moment they are a peripheral player.”
One underlying trend that baked goods suppliers are well placed to continue tapping is the rise in snacking and out-of-home consumption, which is growing faster than the supermarkets’ take-home business, according to Kantar.
It’s a market Booker already serves as a wholesaler and is one of the reasons – alongside logistical and purchasing benefits – for Tesco’s merger with the business.
Another reason may have been the rumoured launch of a discounter retailer, although it remains to be seen whether Tesco really fancies playing the discounters Aldi and Lidl at their own game.