The purchase of premium cracker manufacturers, Gourmet Food, by global snacking company Mondelez, is an indicator of the current growth in the sector. Adam McCleery reports.
Healthy snacking products have experienced strong growth in recent years as consumers move towards more balanced diets, which has had a knock-on effect of seeing strong investment in the sector.
Gourmet Food, manufacturers of Olina’s Bakehouse gourmet and artisan crackers, is an example of the current and future potential the healthy snacking space has after being bought by multi-national food giants, Mondelez, in May of 2021.
“Gourmet Food is a cracker that has done a great job being ranged in both Coles and Woolworths,” said vice president of sales, Toby Smith.
“The business identified that growth in the entertaining space was a trend that would continue to grow into the future. Working with the retailers gave us that insight and aligned very much with the retailers, that premium entertaining space was something to be further unlocked, and therefore we went out and sourced the manufacturing assets that we have today.”
It was in 2015 when Gourmet Food made the decision to step up its manufacturing of premium-style crackers with the intention of helping to reinvigorate the category, while aiming to set benchmarks around quality and flavour.
“We have been really successful with, and something we check in the marketplace, is strong relationships with customers, Coles and Woolworths in particular,” said Smith.
While now under the Mondelez banner, it was a calculated decision to not upset a winning business model and instead Gourmet Food will continue to run how it always has and will remain autonomous in many ways.
“The agility of Gourmet Food, the innovation pipeline for example, has been phenomenal,” said Smith. “The company has stepped into some new places very quickly and probably more nimbly than a big multinational would.”
That was another key selling point for the company and one of its market offerings, Smith said, the ability to adapt quickly and continually innovate products to match ever-changing consumer trends.
To create the capability for continued innovation required a manufacturing plant that was fit for the purpose. Smart investment while building the factory also helped to ensure the correct capital purchases were made with one eye toward future growth.
“The asset is state-of-the-art because the quality of product, ingredients and so forth, require a specific type of asset, which the company invested in,” he said. “It’s also built to grow significantly, you can clearly see the road map to doubling, if not more, the size of the business. The assets have ensured we can do that.
“The baking line is state of the art and there is still room to invest, and we currently are. Gourmet Food invested in doubling the size of the business and it was bought for growth; it was never a synergy play for Mondelez.
“My involvement has helped keep the business separate so it can fulfil its growth goals. We didn’t want to bring it into Mondelez and create different levels of process because the assets, and ways of working them, have been all about aggressive growth and being flexible.”
Meanwhile, the COVID-19 global pandemic forced the company to demonstrate just how flexible and agile the business model was, and according to Smith, the company came through with flying colours.
“They hit the sweet spot,” said Smith. “Premium entertaining is a money space globally and Gourmet has built relevance in the space by adapting to trends, and depending on seasonality, being able to pivot to new flavours to ensure the product is feeling fresh and contemporary.”
Smith said the company had done so well it was ‘stretching the evolution’ of the product space through its approach.
“A lot of organisations may look at an annual refresh of flavours and portfolio offerings but the way we treat gourmet food is as a constant evolution; it isn’t defined by calendar years, it’s defined by where the consumer wants us to be,” added Smith.
Smith gave a real-world example of how Gourmet Food built the capability to shift process methods nimbly when required.
“Our latest Olina’s Bakehouse snackers launch went with a solid proposition but we got some feedback that the cracker was a little too big and we were able to turn that around within 14-15 weeks and it is back in market exceeding all our forecasts,” said Smith.
“I think it is a great demonstration on how the business is set up to be agile. It’s a testament to just how great the asset is that you can pivot and get a product right where you want to be
“A lot of factories wouldn’t be able to make those adjustment to manufacturing, or product footprint, without the agility and investment being done up front.”
The Australian market also provides opportunities for growth because of the country’s affinity with outdoor entertaining. This is why the nation has one of the highest concentrations of indoor and outdoor entertaining products in the world, according to Smith.
“I think as outdoor entertaining in Australia evolves beyond the barbecue and the sausage in bread – this space will continue to grow,” said Smith.
“People are now wanting to entertain at a different level, so the premium entertaining sector is just such a sweet spot here in Australia and you can see it in a supermarket today – products that are high in quality are in high demand.”
While Australia is a lucrative market for the entertaining and snacking space, so is much of the rest of the world and Smith said one of the first key benefits to come from the sale to Mondelez was the ability to have that global powerhouse’s resources behind it when it moved into new foreign markets.
“We’ve got a train of work to get our product into Japan and we’ve got a good base in New Zealand, and we are reaching out to the United Kingdom and the United States,” said Smith.
“We already do a little work with COSTCO, but we will leverage the Mondelez muscle to see if we can get gourmet into more retailers like Wall Mart. But that is in its infancy.”
Gourmet Food was experiencing growth in the lead up to its purchase by Mondelez.
The company’s first notable recognition came in 2018 when it was named Top Ranked Supplier in the Australian Grocery Deli Category of the Advantage Report.
The report was survey based and asked decision makers from the retail sector, including Coles and Woolworths, to measure companies like Gourmet Food against key performance indicators, such as innovation and growth.
“Also, we will be continuing with new propositions, catering packs for example, into 2022 also,” said Smith
“The catering, or what we call the away-from-home space, is also another area of growth we have identified as a huge opportunity for the business and is a part of the expansion plan that we have for the immediate future.”
Smith said Mondelez only recently approved capital for Gourmet Food to help speed up the company’s growth.
“It’s also about continuing to modernise the business where we need to and so that we are running an effective factory, but it is also about growth,” said Smith.
“We have some new and exciting platforms next year that will take our brands beyond the existing proposition and again the leadership team has been very agile in approving that capital requirement because we know we are in a momentum phase.”
As with any major company in the food and beverage industry, the impact of new sustainability targets remain at the forefront of Gourmet Food’s growth plans.
“For us as an organisation it’s an absolutely priority that we need to continue to improve our environmental footprint so packaging and creating the most sustainable packaging that we can has gone from a ‘nice to do’ to a ‘must do’. As a lead team it is one of our critical KPIs,” said Smith.
“Even as we are thinking about our footprint in general, we’ve now got a team looking at how to reduce any forms of waste and how we are sourcing and using materials.”
Smith said the importance of sustainability was also present in the consumer’s mind and companies seen to be ignoring the message would likely see the impact at the checkout.
“We’ve gone through trend changes on fat and sugar and now we are going through a sustainability phase, that has become more tangible to the consumer. Products that aren’t seen to be doing those things won’t be appealing because that’s what they consumer is expecting,” said Smith.
Smith said Gourmet Food would continue to put strong emphasis on knowing what the consumer wants and continue to use global market trends to help achieve that goal.
“The business truly does live in the space of ‘how is the consumer seeing the world’ and looking at other innovation pipelines overseas to understand what is going on in those markets, then bringing that knowledge back and using it to inform where we want the company to be in the Australian marketplace,” said Smith.