Greencore currently accounts for about 20% of the chilled food supplies sold through 7-Eleven and Starbucks outlets on the US east coast. “So, there is significant room for improvement,” Williams told FoodManufacture.co.uk in an exclusive interview.
The chilled food manufacturer’s US sales would be driven both by the US retailers’ ambition to boost food sales and the exclusive nature of supply deals in the country.
“7-Eleven has said it wants to increase the number of stores in the US to around 15,000 over the next two to five years from a start point of something like 9,000 currently,” said Williams. “So that’s a massive increase. They are focusing heavily on their fresh food offer within stores.”
Fresh chilled food
Traditionally, 7-Eleven had based is sales on petrol, newspapers such as USA Today, groceries such as milk and tobacco. “But with margins collapsing on US petrol prices and tobacco in heavy decline, they are trying to grow that into a much broader seller of food and in particular fresh chilled food. So we are seeing good growth come from that,” said Williams.
Starbucks also offered strong growth potential for the chilled food products Greencore supplies. “They do OK on food between 7am and 10am – Danish pastries and muffins – and then for the rest of the day they see themselves as significantly under trading their competitive set on food. Their US businesses are taking up the food revenues and we are helping them do that to form a food to go lunch time occasion.”
Meanwhile, the exclusive nature of supply deals with US outlets was benefiting the chilled food manufacturer. “The difference between the UK and US model is that where we operate with Starbucks or 7-Eleven in a region we are an exclusive provider within that region. So if we are doing the mid-Atlantic region for 7-Eleven no one else is calling on those 7-Eleven stores.”
Williams pointed out it was early days for Greencore’s US business – with the manufacturer supplying Starbucks only since April – but the potential to improve sales was exciting.
7-Eleven and Starbucks
“If 7-Eleven and Starbucks are going to win in the market place, they need to out innovate their competitive set and we need to help them on that innovation,” he said.“If you put together the service, the quality and the innovation, we are confident we can win a greater share of their business.”
Group revenues climbed by 3% to £1,197M for the year to September 27. Operating profit was up by 8.1% to £76.5M, while adjusted profit before tax increased by nearly 12% to £61.6M.
In a statement accompanying the firm’s full-year results released yesterday (November26), Greencore ceo Patrick Coveney confirmed that revenue from its US business had soared by 60%.
“We consolidated our portfolio after the extensive deal activity of the three preceding years, increased revenue at our US business by over 60% and realigned our resources behind a food to go led strategy,” said Coveney.