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- In this section
Our strategy helps define the direction of the Group. In FY19 we reset our strategy to refocus on the attractive and growing UK convenience food market.
We have a clear strategy to drive sustainable growth, cash and returns from our industry leading UK business.
Growth
Drive growth in an expanding food to go market
Our ambition to drive growth in an expanding food to go market rests on two core elements: broadening our product proposition and enabling consumers to buy more.
We broaden our product proposition firstly through product innovation in our core portfolio. First and foremost this is about Great Food – exciting, tasty, safe, and inspired by the trends that consumers want. We must ensure that we invest in diverse product development capability and bespoke research so that we can work jointly with customers to adapt to changing consumer trends, formats, meal occasions and channels. Underpinned by this product development capability, we are also building scale in expanding food to go categories – in particular in meal salads, a broader sushi offering, chilled snacking, and hot food.
Enabling consumers to buy more is about supporting existing and new customers’ formats and channel plans. We work with customers to make current space work harder. This includes bespoke ranging by format, region and store. It also includes improved availability, underpinned by a joint approach to order management, food waste and supply chain analytics. We also enable customers to expand consumer reach by bringing our products to new points of distribution and ensuring that we are relevant to wherever consumers go when accessing food to go products.
Outlook
We will continue to broaden our product range and extend our channel reach by utilising our investment in consumer insight and our additional capacity to develop new business opportunities with, and for, customers. We will also supplement these initiatives with disciplined strategic and tactical M&A activity.
Relevance
Deepen customer relevance
Our strategy is to further deepen the relevance we have with our customers by driving returns through a shared value chain, by increasing value through our portfolio and by doing more for our customers.
We have an embedded customer partnership model. We create a compelling commercial offer, we work together to deliver this model and we partner with customers for the longer term.
Our strategy is to further deepen the relevance we have with our customers by driving returns through a shared value chain, by increasing value through our portfolio and by doing more for our customers.
We drive shared returns throughout the value chain by constantly enhancing our buying and manufacturing choices to optimise mix and efficiency, improving our joint supply chain, and driving retail growth.
We build multi-level, multi-functional relationships that can increase the relevance and value of our whole convenience food product portfolio with our customers and leverage our scale.
We also do more with customers across the value chain to bring expertise and drive value from activities beyond traditional manufacturing. These include activities such as order management, distribution to individual stores, joint capacity planning and category management.
Outlook
We will continue to expand our capability set throughout the supply chain, underpinned by excellent customer service and a relentless focus on food safety and the highest technical standards. In addition, we will engage openly with customers as they seek to grow in new formats, occasions and channels or to consolidate via acquisition.
Differentiation
Adopt a distinctive and repeatable Greencore Way of working
Achieving our strategic objective is centred on four key capabilities: Great Food, People at the Core, Greencore Excellence and a Sustainable Business.
Great Food means many things for Greencore. We invest in our team and processes to ensure that we lead the industry in food integrity, delivering effective food safety and technical capabilities. We also invest in product and technical innovation to deliver the taste, nutrition, health and cost goals that our customers need.
People are at the core of Greencore’s success – delivering food safety, ensuring health and safety in factories, responding to customer requests and directly impacting our economic performance. As the labour market becomes increasingly competitive we are enhancing our employee engagement and retention policies to continue to differentiate ourselves through our people.
Greencore Excellence involves step-changing our approach across three key functions: purchasing, manufacturing and commercial. In Greencore Purchasing Excellence we invest in analytical capability and combine this with a supplier partnership approach to reduce supply chain costs. Greencore Manufacturing Excellence is set up to deliver efficiencies in performance and to sustain these over time – underpinned by technology. We have also launched Greencore Commercial Excellence with an initial focus on enhancing our insight capability.
We aim to have a focused sustainability agenda, including making specific commitments around the way we run our business and the contributions we make to industry sustainability. This strengthens our business model and reinforces our partnerships with customers.
Outlook
We will continue to develop and invest in our capabilities to ensure that we exploit the growth opportunities available to us. Data technology and automation will remain very important elements of this.
We will continue to drive operational improvement, focusing on all areas of the supply chain through our Greencore Excellence programmes.
We will continue to enhance our engagement and retention strategy and maintain pay structures and employment conditions to ensure labour availability.
MEDIUM TERM FINANCIAL AMBITIONS
- Mid single digit organic revenue growth
- High single digit Adjusted EPS growth
- Half of Adjusted EBITDA converting to Free Cash Flow
- Mid teen ROIC
FY19 Performance
Growth
The Group made good progress in broadening its product and channel proposition in FY19, particularly in food to go categories. We launched multiple commercial projects with key customers during the year including product launches in salads, sushi, chilled snacking as well as bespoke cafe channel initiatives. 47% of our products in the UK were new to market as the Group worked with customers on product or packaging development initiatives. This result was driven particularly by increased demand from customers for meat alternative products. In September 2019 the Group acquired Freshtime which has extended our presence in meal salads and chilled snacking. We also initiated exploratory work in other areas to enable consumers to buy more, such as hot food and event specific vending. There are multiple ongoing initiatives with customers to improve availability and merchandising in store.
FY19 revenue in the Group’s activities in food to go categories totalled £962.5m and accounted for approximately 66% of revenue. Pro forma revenues grew by 3.3% in FY19 in these categories.
FY19 Performance
Relevance
The Group deepened its relevance with customers throughout FY19. We extended a number of contracts with core customers in the period. We also increased the proportion of our net sandwich sales that were sold under long term customer contracts.
We delivered multiple initiatives to drive shared returns across the value chain during FY19, including bespoke ranging and optimising recipe designs. From a portfolio perspective, we completed the reset of our ready meals product and facility footprint, providing a platform to drive growth and returns in that category.
We continued to invest in our range of services to increase our relevance across the value chain – including our Direct to Store distribution model and our inventory management system. More customers also worked with us during the year on ‘earned recognition, a shared technical governance process.
FY19 Performance
Differentiation
We made further progress in developing and executing against our group of Greencore Excellence efficiency programmes. In our Greencore Purchasing Excellence and Greencore Manufacturing Excellence programmes, we deployed analytical and data technology solutions to enhance our operations. We also invested further in our consumer insight teams and capabilities as part of the newer Greencore Commercial Excellence programme.
We further developed our Line Manager Framework to enable front line colleagues to effectively use performance data to enhance efficiencies. We also began to step up work on our automation programme in the period, exploring how this can drive efficiencies and returns across the business.
Furthermore, we upweighted our sustainability agenda. In FY19, we reduced our food waste (measured as a percentage of total food production) to 9.2% from 10.5% in FY18.
