Weetabix Limited

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Weetabix Limited

Weetabix Mills
Burton Latimer
Northamptonshire NN15 5JR
United Kingdom
Telephone: (+44) 1536-722-181
Fax: (+44) 1536-726-148
Web site: http://www.weetabix.co.uk

Private Company
Incorporated: 1932
Employees: 2,755
Sales: £361 million ($498.3 million) (2002)
Stock Exchanges: OFEX (non-voting shares)
NAIC: 311230 Breakfast Cereal Manufacturing; 322213 Setup Paperboard Box Manufacturing; 551112 Offices of Other Holding Companies

Privately held, family-controlled (and some say ultrasecretive) Weetabix Limited is one of the United Kingdom's leading makers of branded and private-label cereals. The company also has strong manufacturing operations in the United States and Canada and exports products to a variety of countries, including much of Europe. While slugging it out for market share against such cereal behemoths as Kellogg's and Nestlé, Weetabix has managed to thrive by establishing clear leadership in a limited number of cereal segments. Weetabix's flagship product is, of course, its renowned Weetabix branded cereal, a pressed wheat biscuit designed to turn to mush in milkmaking it a favorite food choice across generations. Weetabix has also been a pioneer of the muesli market, under its popular Alpen brand, originally launched in 1971. With its Ready Brek brand, Weetabix is the market leader in the instant hot cereal category as well. Other brands in the Weetabix portfolio include Weetos and Nature's Choice granola bars. In addition to its small branded range, Weetabix has built a strong private-label operation, through subsidiaries Ryecroft Foods in the United Kingdom and Northern Golden Foods in Canada, as well as at its U.S. production facility in Clinton, Massachusetts. Weetabix also operates its own packaging subsidiary, Vibixa Limited, supporting its own products as well as its private-label production. Weetabix is led by Richard George, a member of the family that has controlled Weetabix since the 1940s. Nonvoting shares of the private company are nonetheless listed on the tiny OFEX exchange, designed to provide liquidity for small companies.

Australian Origins in the Early 20th Century

The pressed wheat product that later became worldrenowned as Weetabix stemmed from recipes originally developed in Australia at the turn of the 20th century. An early version was created by a Melbourne baker, Edward Halsey, who founded the Sanitarium Health Food Company in 1898. Halsey dubbed his recipe, a biscuit made of unsweetened, pressed flaked wheat, Granose, and it became one of the first ready-to-eat breakfast cereals available in Australia.

In 1926, a new rival appeared on the market, launched by the Grain Products Company (said to be part of the Seventh Day Adventist Church). Called Weet-Bix, this cereal essentially added malt and sugar to the basic Granose formula to produce a new and quickly popular sweetened flaked biscuit. Sanitarium responded by buying up Grain Products and the Weet-Bix brand and recipe in 1928.

Weet-Bix remained one of Australia's most popular cereals into the next century, and Sanitarium also added separate operations in New Zealand. Yet the flaked wheat recipe was to find its greatest success in the United Kingdom, after a trio of Seventh Day Adventists from South Africa immigrated to England in 1932, bringing with them the Weet-Bix recipe and adding an "a" to set up a new company, Weetabix Limited, in Northamptonshire.

The format of the cereal changed somewhat for the new marketpresenting rounded edges as opposed to Weet-Bix's square edges. Yet the product's appealamong other features, that it dissolved almost instantly into milkquickly enabled it to establish itself as the most-loved cereal in the United Kingdom. Indeed, Weetabix became a highly popular "first food" for babiesallowing the cereal to establish itself as a fixture across generations. Weetabix also was able to boast of its strong nutritional contentand during World War II was even touted as a viable alternative for meat, then in short supply.

Soon after its founding, Weetabix began seeking export markets, turning to the United States by the end of the decade and licensing Clinton, Massachusetts-based American Cereal Company to produce Weetabix for the U.S. market. That company changed its name to Van Brode Cereals after it was acquired by David Brody in 1941.

Weetabix too changed hands, however, in 1947, when the George family took over the business. The company then withdrew from the U.S. market. Van Brode continued to make cereals, while expanding into plastics in the 1960sand ultimately gaining lasting notoriety as the inventor of the "spork." The cereals operation later became known as Van Brode Milling Company.

Weetabix took to the airwaves in 1959, launching the first of a long and acclaimed series of television commercials. In the 1960s, the company once again eyed the North American market, which by then had become firmly dominated by the giant American cereal makers such as Kellogg's and Quaker Oats. At the same time, Weetabix appeared an unlikely candidate to win over American taste buds. Nonetheless, Weetabix's market research suggested that the Canadian market presented strong potential, and Weetabix began importing to the Canadian market in 1967.

Expanding in the 1980s

William George took over leadership of the company from his father in 1970, accompanied by son Richard, who had joined the company in 1968. The new generation of Georges led Weetabix on a slow but steady diversification drive.

In 1971 the company launched a new brandand an entire new cereal category in the United KingdomAlpen, based on the Swiss cereal standard, muesli. In the meantime, the strong sales of Weetabix in Canada led the company to form a dedicated Canadian subsidiary in 1975, and to open a manufacturing facility in Cobourg, Ontario, in 1978.

In 1981, the company returned to the United States, this time to acquire Van Brode Milling Company in a bid to enter the North American private label market, as well as to re-launch its branded products in the United States. Focusing on the fast-growing private label market had enabled Van Brode to survive against the marketing might of its larger, brand-name competitors; yet its parent company's primary focus had been on its plastics products. Under Weetabix, Van Broderenamed as The Weetabix Company, Inc.received the capital it needed to expand production and meet the rising demand for its range of cereals.

William George retired in 1982 and Richard George took over as company chairman. Weetabix by then had grown into a profitable company with sales of some £55 million per year. Under Richard George, however, Weetabix entered a new era, boosting its sales past £360 million just 20 years later. Yet the company came under increasing pressure from its larger competitors, particularly from industry leader Kellogg's, which made steady gains in the U.K. market during the 1980s, chipping off some 2 percent of Weetabix's market share.

Weetabix had long held a rather conservative new product development schedulefor the most part, the company continued to extend its product range through introduction variations of its core products, such as fruit-flavored versions of Weetabix. In the mid-1980s, however, Weetabix began adding new products through acquisitions. Such was the case in 1986 when the company acquired California-based Barbara's Bakery. Founded in 1971 by Barbara Jaffe, then just 17 years old, that company had developed a thriving range of natural products, including its strong Nature's Choice brand of cereals, crackers, snack bars, and other baked items.

In 1990, Weetabix acquired a new and prominent cereal brand, Ready Brek, which had launchedand remained the leader ofthe instant hot breakfast cereal category some decades before. At the same time, the company acquired another brand, and product category, in the form of the Applefords Cluster cereal brand. Both brands were purchased from Lyons Tetley. These moves helped the company boost its market share rating, to 20 percent in the United Kingdom, giving it a solid place in the industry's number two spot.

Yet the crushing competition among the top cereal makers continued to batter Weetabix during the 1990s. The company was particularly hurt by the entrance of Cereal Partners, a joint venture between Nestlé and General Mills, into the U.K. market. Weetabix's market share eroded steadily into mid-decade, hurt in addition by the company's somewhat phlegmatic new product development. Into the mid-1990s, Weetabix found only one new product success, a variant of the Alpen brand.

Nonetheless, the company's flagship brand remained a British institutionand even enjoyed a warrant as the official cereal of the Queen Motherwhile battling with Kellogg's Corn Flakes for the position as the top-selling cereal brand in the United Kingdom. In the meantime, the company's sales topped £200 million by 1995. By then the company had placed its nonvoting shares on the OFEX board of the London Stock Exchange's new AIM market.

Weetabix expanded again in 1997, acquiring private-label supplier Ryecroft Foods, which added three manufacturing plants, in Ashton-upon-Lyne, Manchester, and Hastings. Two years later, Weetabix completed construction of a new production and warehouse facility at its home base in Burton Latimer, at a cost of some £12 million. By then, the company had added a new production line in its U.S. facility, enabling it to roll out a line of private-label "gun-puffed" cereals.

Company Perspectives:

Today, Weetabix manufactures and markets a range of different cereals which are wholesome and energy-giving, to suit the tastes of all the family.

Weetabix hit a new high in the 2000s with the launch of its often-hilarious "Withabix/Withoutabix" advertising campaign. The success of the campaign, particularly in winning over young consumers, enabled Weetabix to claimif only temporarilythe top spot among the United Kingdom's leading breakfast cereal brands. The ad campaign also helped the company boost its sales, which topped £300 million in 2000 and climbed past £360 million in 2002.

Yet Weetabix remained vulnerable in the highly competitive cereals market, particularly as a number of private label rivals had begun to encroach on the company's business in the early 2000s. Changing consumer trends also placed pressure on the company, particularly as the traditionally breakfastoriented British began to skip cereals in favor of more conveniently packaged alternatives, such as cereal bars. In response the company rolled out a number of new products in 2002 and 2003, including Mini-bix and Weetabix Crrrunch. The company also launched the successful Alpen cereal bar. These moves helped the company rebound into 2003, with rising profits. All the while, Weetabix itself remained a venerable breakfast institution.

Key Dates:

Edward Halsey founds Sanitarium Health Food Company in Melbourne, Australia, and begins producing cereals, including flaked wheat brand Granose.
The Grain Company, linked to the Seventh Day Adventist church, launches a new sweetened wheat cereal, Weet-Bix, in Australia.
Sanitarium acquires Grain Company and the Weet-Bix brand.
Three Seventh Day Adventists from South Africa arrive in England and form Weetabix Limited to produce and sell a U.K. version of Weet-Bix, and later enter production agreement with American Cereals Company in the United States.
David Brody acquires American Cereals and changes its name to Van Brode Cereals.
The George family acquires control of Weetabix Limited, and ends agreement with Van Brode.
The first Weetabix television campaign is launched.
Weetabix begins importing to Canada.
The company launches Alpen-branded muesli cereal.
A Canadian subsidiary is formed.
The Canadian subsidiary builds a production facility.
The company acquires the Van Brode Milling Company to enter the U.S. private label business and extend branded sales into the United States.
The company acquires Barbara's Bakery in California and its Nature's Choice brand.
The company acquires Ready Brek instant hot breakfast cereal.
The company acquires Ryecroft Foods in England to boost private-label production.
After the launch of its new advertising campaign, Weetabix becomes the top-selling cereal brand in the United Kingdom.
The company launches new products including Weetabix Crrrunch, Alpen cereal bars, and Mini-Bix.

Principal Subsidiaries

Ryecroft Foods Limited; BL Marketing Limited; Vibixa Limited; Weetabix of Canada Ltd.; Northern Golden Foods (Canada); The Weetabix Company Inc. (U.S.A.); Barbara's Bakery Inc. (U.S.A.); The Cereal Manufacturing Company (Pty) Ltd. (South Africa).

Principal Competitors

Kellogg's Inc.; Nestlé S.A.; General Mills Inc.

Further Reading

Benady, Alex, "Unlocking the Secrets of Weetabix," Marketing, May 6, 1999, p. 20.

Bowen, David, "Square Up to the Wonderful World of Weetabix," Independent, June 25, 1995, p. 20.

Dignam, Conor, "Weetabix Crunched Underfoot," Marketing, July 13, 1995, p. 10.

"Great British Brands: Weetabix," Marketing, August 1, 2002, p. 46.

Newland, Francesca, "Weetabix TV Ads Aim to Reinvigorate Brand," Campaign, March 10, 2000, p. 4.

"Tasty Results for Weetabix," Evening News, April 25, 2003, p. 7.

M.L. Cohen