10 Feb Unilever’s Profitability plans after buying Graze Snacks
After buying dollar shave club in 2016, Unilever Plc has made another big step into the direct-to-consumer market. Through their latest purchase of Graze Snacks a.k.a Nature Delivered Ltd.
Who are Graze Snacks?
If you follow food industry news, chances are you’ve heard of Graze. So, let’s look at a couple of intricate details, as to who they are and how they’ve grown.
Graze started out as an internet business, offering snack box delivery to health-conscious consumers.
They created some amazing food marketing strategies…
Becoming a thought leader in generating customer, word-of-mouth referral systems. And their marketing strategies included customer rewards for purchasing more snack boxes.
Then, their new-customer-acquisition techniques were second-to-none.
After hitting the market with a boom, Graze snacks made their way into retail stores.
Particularly in high monopoly areas such as Boots airport stores and WH Smith train station locations.
It’s thought this was a big contributor to maintaining margins and selling at higher prices.
We’ve seen Graze grow a lot since their beginnings in 2008. Below is a snapshot of their growth spurt.
Blue = Net Assets
Green = Total Assets
Grey = Total Liabilities
As of 2018 their turnover was £53 million and net assets at £56 million.
Why has Graze grown so much?
One reason is how easy they made it for consumers to find and buy their snacks. They’ve always used lots of different marketing channels. And their ability to understand food digital marketing so quickly was essential to their success.
Customer Research & New Product Development (NPD) Strategies
Graze have used their website as a core driver for creating new products. Their NPD team are highly active in seeking feedback from their website visitors.
Here’s a perfect example of how they are asking for input from customers on their blog.
Then providing the results after you vote. A great lock-then-load enticement to make you give feedback.
So, that’s Graze, now let’s find out a bit more about their new owner.
A quick dive into Unilever Plc
Unilever PLC is the brand behind the brands. They own over 400 brands. Primarily they have been a direct to retail supplier. But their desire to enter the direct-to-consumer has not gone unnoticed in the last few years.
To name just a few of their food brands…
They acquired dollar shave club for a mammoth amount of $1 billion dollars in 2016 – entering the men’s grooming market with a bang.
Creating a head-to-head battle with Procter & Gamble who owns Gillette and their on-demand razor service.
Why did Unilever buy Graze Snacks?
The benefits to Graze?
Graze is at a point of transformation in terms of its growth requirements. And Unilever has the experience to see it through.
Here’s what Anthony Fletcher, founder of Graze said about the acquisition:
“The sale to Unilever marks a transformational moment in Graze’s growth journey. We look forward to working closely with the team to keep on inventing new healthy snacks, as well as continuing to work to understand the role technology can play in improving the food industry.”
So, it’s clear – they will use Unilever to carry on being innovative and promoting the health benefits of their products.
What are the benefits for Unilever?
Unilever have just added a significant brand to their huge portfolio of 400 + brands.
That’s not all. They will benefit of the inside knowledge that Graze employees have in selling direct-to-consumer markets.
Longer-term, this could be transferred to their other brands if they want to increase margins by selling directly to the market.
It could even benefit the end-customer, as they continuously review and change their own buying habits.,
Unilever are accelerating their presence in the healthy foods industry. And that’s another opportunity, for them, to prove how well they can purchase and nurture smaller brands.
But only time will tell.
So, What’s their plans?
Unilever Short term plans
It’s been reported that Unilever will ‘leave Graze alone’, to begin with. Denoting they are happy with how the company is currently performing.
On the flip side? Unilever are looking to maximise their intellectual property returns by getting a better understanding of selling direct-to-consumers.
Continuing to innovate and acquiring customer feedback before inventions are released will be of the utmost importance.
Especially if Graze want to bring innovative products to market that their customers love – at a super-fast pace.
Unilever mid-term plans
However, in the mid-term, there’s no doubt Unilever will look to utilise their own global distribution channels. Allowing to get their products in front of more consumers even quicker.
You might see Graze popping up, right in front of your eyes, across supermarkets, convenience stores and other retail outlets.
Reducing costs will no doubt be a main driver in maximising profitability for their new subsidiary. This can be done by consolidating production, sharing logistics and accessing stock from key distribution centres across the world.
Having a Long-term vision
As consumer buying habits and purchasing journeys continue to change,
Unilever may need to maximise returns from online channels such as Amazon Fresh and Graze’s own website.
It spreads the risk and increases profits by cutting out the “middle man”. BUt they mustn’t forget how important retailers are to their distribution too.
Selling direct also allows them to collect insane amounts of data from their ideal customers. Such as when, where and what they buy.
What’s your thoughts on why Unilever bought Graze and how they will endure growth in the coming years?
Leave a comment below.