How Merchant Gourmet Doubled Sales from £15M to £30M in just 4 years

0:00I mean, so many times in my career, I've sort of gone into a new space and people have been like, oh no, that's really crowded, it's going to be a problem. But the answer is if you go in and you do a good job of it and open up the category and create healthy competition, it's just a positive thing.

0:21Fiona Fitz:Welcome to Brand Growth Heroes, the leading podcast for the founders of Challenger grocery brands. I'm your host Fiona Fitz. My 25 years at global giants such as Nestle and Challenger brands such as Goo Chocolate Pugs, Chobani and Strong Roots, as well as coached over 400 scaling brands, means I have the experience to ask the questions that truly matter and get you the insight that will inspire you to think differently and drive serious growth for your brand.

0:52Fiona Fitz:Today, I'm joined by Richard Peake, Managing Director of Merchant Gourmet, and one of the rare non-founder guests we have on the show. As many of you listeners well know, senior teams often do a lot of the work behind driving brands growth in the second phase. So it really is just as important to shine a spotlight on people like Richard as it is on founders. So when Richard took the helm, Merchant Gourmet was turning over around£15 million worth of business. Four years later, it has doubled revenue to£30 million by revolutionising its product range and entering into new markets. And even though he isn't the founder, Richard's leadership and strategy have been absolutely pivotal in transforming Merchant Gourmet into this modern, growth-driven powerhouse.

1:35Fiona Fitz:We talk about innovation, consumer trends, lessons in NPD, different types of leadership and team culture, and how export can be the next frontier in a brand's growth trajectory.

1:54Fiona Fitz:Richard Peake of Merchant Gourmet, welcome to Brand Growth Heroes. How are you today? I'm very well, very well, thank you. And thanks so much for having me on. I'm humbled to be here because I listen a lot to the pods. I think it's a really good source of information for people in our industry. So yeah, great to be on. Very good. Thank you so much. And we're really surprised that we haven't crossed paths over the years because we have really similar backgrounds. Me on the graduate scheme in Nestle many years ago and you on the graduate scheme in Mars and then both went on to do different things.

2:27Fiona Fitz:But the reason we thought it would be fascinating to have a chat today is because you joined Merchant Gourmet, a heritage brand that we all know and love in the UK. and we've seen loads and loads of innovation coming out of Merchant Grimming in the last year, two years in particular. And you joined them four years ago and at that point they were at 15 million in sales. Correct, yeah. And since then you and the team have doubled the business to 30 million. And we thought it would be brilliant to kind of deconstruct that and ask the question, what does it take when it's time for founders to potentially stand back and let somebody else take over and do things differently?

3:04Fiona Fitz:What are the things that somebody has to look at in order to drive that next stage of growth? You're probably one of the very first non-founder guests we've had on the show. So thanks for coming on. No, I'm very conscious of that. I love listening to the founder stories. So I feel like I've got a bit of imposter syndrome already. No, I think it's really important, don't, because I think it's really important. And I know there's a few podcasts coming out recently which focus on the people who are not the founder. And I think Mitch Lee has got one. And that's really worth doing because, you know, it's often the senior teams who are doing a lot of the work.

3:41Fiona Fitz:So I think we need much more of a spotlight on people like you. So, look, take us back a little bit to where your career started and what kind of roles you were in so that we can appreciate a little bit what your experiences and capabilities and skill sets were that you're bringing to the party when Merchant Gourmet was at 15 million. After, what was it, 20 years it took them to get there, yeah? Yeah, 25. Yeah. Good question. So I mean, I've always been in consumer goods. So I started my career at Mars Chocolate, was on the graduate scheme there, which was great, really, really enjoyed it. And I kind of just worked my way through Mars for years, actually, I think I was there eight, eight and a half years in various roles, all on the demand side of the business.

4:25So I was in category management, as we call it, or as it was called, then sales, marketing, So various different roles with a kind of bias, I guess, towards sales. But I mean, I remember sort of probably five, six years into it, starting to kind of question what like what I was doing to the point where I felt like I wanted to do something where I could make more of a difference. so again love to the business they had you know they were fantastic at people development kind of bringing you through the business but I just remember thinking actually I feel like I would like to be in a place where I can make more of a difference both in the type of product I'm selling and the difference that's making on a kind of wider level but also in the difference I can make in just like such a massive machine so I moved from Mars to Method Ecova it was just just at the time when Ecova had acquired Method, actually.

5:20So you've hopefully heard of them, the kind of non-toxic household cleaning company, which was a massive move for me. I remember like everybody, my friends and everyone in the business going, what, what are you doing? But I could swear it was the most fun I've had. It was so good. We had to kind of launch Method in the UK, basically, and kind of rebrand Ecova a bit. And I ran our UK business there. um so I did that for sort of four or five years and we went on this kind of wild growth journey I think we started I remember so well in a a small porter cabin in an air base in in Newbury um and then we kind of worked our way up to really nice offices in Richmond um and kind of grew out the team there but that was really really good fun and it was very purposeful a boring you know sort of slightly begrudged category but something that we were able to turn on its head into something really exciting.

6:15So yeah, I did that. And then eventually that sort of sold to SC Johnson. And I went to Lily's Kitchen, the posh pet food business, which again, was really great, a kind of purpose led business working kind of closely with the founder there, Henrietta, to help grow that business. And then on to Merchant Gourmet after that. So yeah, I kind of always in consumer goods, and more recently kind of working in slightly smaller, and more purposeful businesses, but helping them really accelerate growth.

6:46Fiona Fitz:I'm thrilled to introduce Brand Growth Hero's newest partner, Jolson. Jolson is a leading B Corp certified commercial law firm that specializes in guiding the founders of scaling CPG brands. With long-term relationships with clients like Little Moons, Trip, Eat Natural, Bear, Graze and Pulsin, Jolson is also famous for advising the innocent founders in their landmark sale to Coca-Cola. And believe it or not, they still work with the Innocent founders at Jamjar Investments today. I'm especially impressed by how Jolson sets founders up for long-term success and by their commitment to championing female founders.

7:23Fiona Fitz:Recently, I asked Jolson managing partners, Phil Hale-Smith and Paul Chappie, why it's important that founders consider engaging with a commercial law firm that really understands consumer packaged goods. Ultimately, we're here to provide legal advice, but actually that legal advice is sort of irrelevant if you're not putting it into context. Thinking about how you make a consumer business, co-packing arrangements, understanding the supply chain, thinking about your sort of cost of goods, all of that is essential to ensure that we're delivering how do you actually make a business work in the consumer space from a legal point of view, but understanding the marketplace fully and having worked with consumer brands for the last 25 years.

8:06We have a great understanding of the whole space, whether that's manufacturing, the customer, the supply chain, the branding part of it. And all of that requires some legal input as well as understanding how the parts fit together. At the end of the day, if you don't have someone that's been in the trenches day in, day out for a couple of decades, you're going to be disadvantaged.

8:29Fiona Fitz:Huge thanks to Brand Growth Heroes podcast sponsors Jolson. Now let's get back to the show. So tell us about Merchant Gourmet at the point at which you were considering joining. Where was the business in terms of, you know, channel customers, product line? And what made you want to join that business? Yeah, it's a good question. It was in a good place. It's never a business in distress. And actually, it had been really well looked after and well cared for in the years beforehand. but it had never been run like an FMCG business. So kind of very quickly, the story behind Merchant Gourmet is that it was launched, as I say, about 30 years ago now by Mark and Oliver Leatham, who had a business which was essentially bringing really good quality ingredients from around the world and selling it into high-end food service.

9:26So they eventually got to a point where they said, actually, we should put some of these products into retail. It makes perfect sense. So they kind of sold dry ingredients into retail. And the business gently grew from that point onwards, as we said, to about kind of 15 million when I came in. And the remit for me was very much, OK, we want to really now kind of turbocharge growth and get this business really moving because we see the opportunity in it. So, you know, it was in a good place. I think it was a small team and it was also run as part of a bigger organisation.

9:59Fiona Fitz:Can I ask just so that I can visualise it, what SKUs were available to us as like, you know, everyday consumers at that point in time? Because I always think that's a really good way of seeing what it looked like then versus now. Yeah, not, I mean, not a million miles from what's there now. I think it was probably much more, there was a lot more dried ingredients. So it kind of focused a lot on speciality ingredients. And also there were a number of ready to eat products, but they were probably kind of plainer, more simply cooked ones. So a little bit less versatile versus kind of what we've got now and probably operating in a much more singular, sort of slightly niched category.

10:41So the job, which we can come on to, but the job's been very much trying to expand that out.

10:46Fiona Fitz:And actually, I think it's worthwhile calling out what it looks like today, because this is why it's so interesting. So in terms of the range that you have available and the products that have driven the most growth in recent months or the last year, what is happening out there on which shelves are you guys on? What product formats are you on? What are you focusing on? So then, you know, people can really understand what the change, the from and the to was. yeah i mean i guess probably what we've done is we've expanded out into areas where we think we've got a kind of a right to play and a right to win because we've you know i think you described as a heritage brand which is a really good description we've actually kind of earned the right to be able to go into other categories so you can now find us for example in microwavable rice more recently you can find us in beans we've got a range of kind of meals in minutes so within the supermarket it, we actually play across six or seven different subcategories.

11:44Fiona Fitz:And for me, as a woman of a certain age who has particular shopping habits and would have had merchant gourmet lentils in the back of her cupboard, right, the interesting thing for me is, is now all of a sudden, instead of just having merchant gourmet lentils in the back of my cupboard that I might use the odd time when I'm stuck, someone's coming over for lunch and I'm going to do two poached eggs and some merchant gourmet lentils. now all of a sudden I can have a quick and healthy plant-based lunch there's so many different more sides that you offer or you know everyday convenient meals so you're really moving into different occasions and need states and out of that back of cupboard distress moment right yeah I'm I mean I'm just so pleased you've said that I I feel like I want to high-five you but I can't go on a virtual yeah that I mean that is precisely what we've been trying to do is that a bad thing that your strategy is really obvious, Richard?

12:37I'm joking, I'm totally teasing you. It probably is. I'm totally teasing you.

12:40Fiona Fitz:No, I'm totally taking the mick. It is so good. It is so obvious because it is the right thing to do. It's like plant-based is on the rise, you know, plant-based moments are on the rise. Even to the extent that, you know, my kids last night were having pulled pork, barbecued pulled pork and I was like, oh God, I'll have the rice, but I want another form of protein with it. So I had some tempeh with it, better nature, of course. Yes. All of those normal people making decisions where they're trying to do swaps, Merchant Grommet is perfectly positioned to do that. And just before we go any further, I just I really want people to know which shelves you're on because our listeners are thinking, you know, where if I was in a big supermarket where you have the most listings, which shelves can I find you on?

13:23yeah so um we're in sort of like packaged grocery i think is the way that the supermarkets define it um and then often in the kind of global foods aisles so it varies by supermarket but basically um where all the micro-able rice is will be roughly where you'll find us um so you'll find our rice sitting directly within micro-able rice and then usually where you've then got sort of canned veg, we will sit around that area as well with most of our range, which are the kind of ready to eat pulses and grains. So they'll be the key shelves we're on.

13:58Fiona Fitz:Okay. And is that where you want to sit? Oh, we're getting deep into category strategy now. I like this. Is it where we want to sit? I think our view is that because this area is growing so much and people are more and more wanting this kind of food i think the way the shopper need states work and the way people think when they walk down the aisle is slightly different um so we are sort of working a lot with the supermarkets on actually how can we segment things a little bit differently for example there's much more of a kind of meals in minutes occasion now exactly the point that you've talked about where someone just wants a really quick lunch because loads of people are now working from home and they just want to microwave something really quickly that's actually a very different need state and occasion to wanting something that sits on the side of your plate for a really nice dinner, whereas actually they all sit in the same place.

14:50So the answer to your question is, we don't think we're perfectly positioned where we'd want to be. And there's quite a lot of work to be done in that area, which actually the supermarkets are really jumping on at the moment and doing a really good job of. And I think we'll see a lot, you know, over the course of the next sort of six months, I think we'll see a lot more of those changes happening.

15:09Fiona Fitz:So you mentioned there that supermarkets are starting to merchandise products in a new way that represents changing shopper need states and kind of consumption occasions. Is that because of the move towards more plant based options during the week or what is that? And how do you see that changing over time? yeah good question I think it's less plant-based I think it's more what the the insight's been and it's a kind of obvious comment but both post-covid people are working at home on average two days a week which is way more and people want quick healthy lunches so that's been quite an interesting insight but when I say quick it kind of needs to be quick as in a couple of minutes to prepare because as we all know you end up on back-to-back zooms and then you end up rushing to the fridge and you haven't got time etc etc so trying to find something that is inverted commas healthy and that could be plant-based because that is healthy but also kind of you know simple ingredients minimally processed okay so you guys aren't necessarily growing or riding the wave of plant-based you guys are riding the wave of convenient healthier lunch choices yes so this is a really good question yes we're plant-based and we're sort of proud to be plant-based but that isn't sort of the cornerstone of who we are as a brand.

16:32I think it's a by the way. So who we are as a brand are exactly, as you say, convenient, plant-based, healthy, minimally processed food. That is also plant-based. And there's a health element to plant-based. Really, like our massive cornerstone is taste and convenience. They're the things that we really focus on.

16:52Fiona Fitz:OK, this is amazing. So can I ask a question? Did you have a moment in time in the last four years where you had to do like a deep dive into, should we focus on being plant based and vegan? And should that be part of our loud and proud positioning? And you decided, no, we're not going to. That's going to be a by the way. Oh, we went all the way down that line, Fiona. So when I started, we were like, well, I was sort of like, well, hold on, wait. Everything we do is basically plant based. So, you know, that should be our thing. we should just be a plant-based and as you then start to kind of understand why people really really why do people buy the product it's not because it's plant-based it's because it tastes really good it's convenient all the stuff that we know and so we did not I wouldn't say a u-turn I'd say a pivot towards actually really doubling down our messaging and talking about what consumers really buy it for and what they want but when I say we went in on it I mean we you know we changed the packaging at the beginning to say plant-based simplicity um so we really did sort of push that quite hard as it was a trend and as it was a thing to be honest and it's just been one of the many many learnings that i've kind of had as i've gone through which is try not to ride the waves of the fads but just actually understand why your consumer is buying you and also what's the kind of unmet consumer need right because the unmet consumer needs that there's an enduring trend, yes, behind people eating less meat, but actually at the moment, everyone's just extremely busy and has a huge amount of choice.

18:29So creating something that's hyper convenient and tastes incredible, it is actually solving the need much more than a plethora of sort of plant-based stuff. Yeah, absolutely.

18:40Fiona Fitz:I think it's great. The only reason I'm asking the question with a smile is because I've been working with so many brands, particularly as well, you know, I'm NED of better nature. And we all go through this and we all wonder, you know, how far, how much should you centre on that and how big is the market versus a mass market approach where it's just about healthiness and plant-based kind of underpins that healthiness or is one of the elements that underpins the healthiness. It is such a head wreck. And I think it's really nice for listeners out there who might be, who are probably going through the same thing, you know, what do we focus our positioning on?

19:12Fiona Fitz:Because we've got so many benefits, so many advantages to our product then what do we knuckle down on and you know what's the heart of our brand and it's okay even Richard Peake who's been in this business and was brought up in Mars and all of these big businesses you still have a head wrangle over it for 18 months or whatever you know and then you do an evolution pivot and that's okay right it's okay and I think yeah you know because it isn't it isn't bloody easy is it brand positioning is one of the most difficult things to do. And often in my career anyway, it has only been the moment where I've said to myself, hang on a second, although that all makes perfect sense, what size is that market?

19:53Fiona Fitz:If we position in that way, what size is the market? What size is the proportion of the market we're playing in? And if it's the purely plant-based or purely vegan, you know, it's going to be 8 % of people who are vegetarian or 5 % of people who are vegan. And then whereas if it's, no, you can eat us as a side with meat or eukinitis as your plant-based option during the week, well, it's up towards the 50 % of the UK adults. Yeah, 100 % agree. I think in summary, I think the journey we sort of went through is like what you sort of start off with what's the enduring trend, you know, and basically our ancestors, ancestors, ancestors wanted to eat good quality food that's grown from the ground and minimally processed.

20:36So that like big tick there. But then it's kind of like back to what I said, which is well what problem are we actually solving because there's lots of people that can do that better than we can so uniquely what problem are we solving well probably convenience and taste actually that's what we can do a really really good job of and then to the point that you made how do we then make that culturally relevant for people so so it is it becomes kind of less of a to your point a heritage brand but also actually something that's really super relevant you know it's the 6th of January. January is a lovely example of that where people are eating out way less, but they still want really good food moments.

21:16People probably are cutting back on their meat consumption. They want affordable treats that like there's this kind of perfect culturally relevant thing where it's like, actually, we can bring you everyday gourmet, as we call it, which is kind of our big strap line. And it's you get to that one strap line through, as you say, months slash years of kind of a bit of scar tissue and a bit of learning.

21:37Fiona Fitz:That's brilliant because earlier when I was describing the kind of lunch moment that I was trying to create for a friend calling in for lunch midweek, it was that everyday gourmet moment. That's exactly what it was. Now I wouldn't use that if I'm thinking to myself, I'm looking in my cupboard and I need something everyday gourmet. But I would have said, it's Caroline, you know, she's a little bit older than me. She's kind of my adopted mum here on the Isle of Man. I don't want to just serve her, I don't know, what I'd have on my own. I want to make a little bit of an effort and I think she'd like, you know, the merchant gourmet lentils with some poached eggs.

22:10Fiona Fitz:And that's exactly it, Everyday Gourmet. Okay, so I know we're digressing loads into positioning and, but that's really important because it's about where can you play better and win than any alternatives.

22:26Fiona Fitz:If this episode is inspiring you to think about new ways that you can drive growth for your business, don't forget to click follow or subscribe on your favourite podcast app and even leave a review. Your small gesture has a big impact on me and my business and will be truly appreciated. So one of the things, when I was looking at Merchant Gourmet earlier today, I was really interested that your core pillars in terms of products are lentils, rice, chestnuts and mushrooms. Is that right? Yeah. I got all of them except for the chestnuts bit. Tell me why chestnuts are still in there or are in there.

23:03yeah well i mean chestnuts will sort of going all the way back i think the two big signature products for merchant gourmet were chestnuts and puy lentils and chestnuts have always been a staple part of what merchant gourmet's done it's sort of very simple ready-to-eat product and as you can imagine it's heavily centered towards christmas so it's like super seasonal the reason i particularly like chestnuts as opposed to I think they taste amazing and they always remind me of Christmas. From a brand point of view is that they're also a good, we call it like recruiter into the brand. So a lot of people who don't necessarily eat our products will eat chestnuts over Christmas.

23:44So how can we then kind of use that to recruit and drive more people into the brand throughout the rest of the season?

23:49Fiona Fitz:Okay, so it has a role in terms of recruitment. That's really interesting. I wasn't expecting that. I just thought you were keeping it because it's part of the brand's DNA and heritage and which I understand of course you're not going to get rid of something that's part of the brand DNA but it actually works in terms of recruitment and do you have data that says that? Yeah yeah because we see them I mean we see who buys it and then we see the pet like the penetrate like the household penetration of it which is which is actually really high because although it's bought with a very low frequency like once or twice a year max it's quite deep when people do do it because most people have chestnuts over Christmas like with their sprouts or whatever but they don't really you know not that many people could be like oh can you just get the merchant gourmet chestnuts out of it you know they don't know it's merchant gourmet they just know they're buying that kind of pouch of chestnuts so we've tried to use it a bit within our marketing to kind of roll into the rest of the range not spectacularly well to be honest but it definitely does have a role all of that said to your point you are right we're not sort of planning a huge pipeline of 10 new chestnut products because that's not necessarily what where we see all the growth coming from.