Weetabix keeping an eye on China's slowdown
Despite its Royal Warrant and very British image, Weetabix has been a Chinese owned business since Bright Food bought a 60%&nbsp;controlling stake&nbsp;in 2012, and Baring Asia bought the other 40% this year. &nbsp;Part of Weetabix's CEO, Giles Turrell reason for selling the stakes was to help the company tap into the growing Chinese middle classes "hungry for new tastes and Western brands", however, he now admits in a report over the weekend that he is nervous, due to the ongoing slowdown in China, and is relying on it being short-term. &nbsp;
Weetabix boss Giles Turrell admits he could easily feel a little queasy, but it’s not his breakfast he is talking about. It’s the slowdown in China.

The giant Far Eastern economy may be thousands of miles from the Northampton headquarters of the cereal-maker. But despite its Royal Warrant and its very British image Weetabix these days is a Chinese-owned business.

What is more, it has set its sights on the vast Chinese market as a key to its growth. The evidence of a Chinese slowdown is unnerving business leaders everywhere.

Tasty prospect: Boss Giles Turrell is hoping the Chinese go for Weetabix

Turrell admits he is not entirely comfortable, but in the long term he is still hugely optimistic.

‘It is easy to feel queasy at the figures coming out of China, but lifting your head to look at the horizon shows the market fundamentals are still strong. China’s growth target is 7 per cent and while local shoppers may have cut back on handbags and luxury cars, they’re developing a taste for quality foreign brands. Look at the performance of Starbucks or Budweiser,’ he declares.

Chinese conglomerate Bright Foods took a 60 per cent stake in Weetabix six months ago. Last month Baring Asia bought the other 40 per cent, sealing Weetabix’s status as a Far Eastern-owned group.

Turrell has been chief executive at Weetabix since 2011 and the new proprietors kept him on after their takeover. He won’t be drawn too far on what it has been like to work for a Chinese group.

‘Our experience proves British businesses stand to gain from working with established Chinese players. While it has been a steep learning curve for myself and my management team, we’ve enjoyed the opportunity to develop our strategy hand in hand with market leaders in China,’ he says.

Any cultural hurdles are however trumped by the business opportunity offered by an entry into China.

‘Our Chinese owner is helping us to enter the Chinese market. We’re now in 3,000 stores in Shanghai. You’ll see Weetabix and Alpen brands there,’ he says. Alpen is another major brand owned by Weetabix, along with Ready brek and Weetos.

Turrell continues: ‘The emergence of a Chinese middle-class hungry for new tastes and Western brands is a long-term trend. The pace may slow in the near-term, but it is a vast untapped market for brands such as ours.

Crunch time:The favourite breakfast among China’s 1.3 billion people is currently a type of rice porridge called congee

‘Today we’re exporting to over 2,500 stores in Shanghai, and that’s only a single region of the wider Chinese market.’

The turn to China has also meant change for some existing staff at Weetabix.

‘In China we have gone from no team to eight people on the ground. The lady who runs our business in China joined Weetabix as a graduate about 15 years ago. She’s come up through commercial roles, then ran our export business and now I have sent her to Shanghai.’

Selling British breakfast cereal in China will be quite a task. The favourite breakfast among China’s 1.3 billion people is currently a type of rice porridge called congee – ‘they would probably add fish or pork’, Turrell says. But despite this huge difference in traditional tastes Turrell is confident. ‘Ten years ago coffee didn’t really exist in China and look now. It’s huge.’

The Royal Warrant will certainly help. Weetabix and Alpen may be almost unknown to Chinese consumers, but the British Royal Family is very familiar. The long history of the brand also adds credibility in a market where an emerging middle-class is looking for pedigree and quality. Ironically, Weetabix was first developed rather closer to China than Northampton with a product called Weet-Bix launched in Australia in the 1920s by Bennison Osborne.

The Royal Warrant will certainly help. Weetabix and Alpen may be almost unknown to Chinese consumers, but the British Royal Family is very familiar

It proved to be a massive success and Osborne later travelled to Britain with the idea of launching a similar product here. He formed a company in London in 1932 and re-named the refined cereal Weetabix.

‘Weet-Bix is still in Australia, so we are not there,’ says Turrell. ‘But we export to 80 markets around the world, so you can find Weetabix on your travels almost everywhere.

‘We have a joint venture with Kenya and one with South Africa. In Kenya we have a 70 per cent share of the market. We’ve got a business in Canada and we’ve got another very different brand that we operate in the US.

‘We’re always talking about the next three to five years and the opportunity to grow internationally – in India, South Africa and China.’

The company made £69 million pre-tax profit on annual revenues of £457 million. Weetabix is by far the biggest seller in Turrell’s stable.

Turrell previously worked for SmithKline Beecham – now GlaxoSmithKline – and Kimberly-Clark with brands including Aquafresh and Macleans toothpaste, Beechams cough remedies and Kleenex.

‘When I was in my early 30s I ran my first business in South Africa for Kimberly-Clark,’ he says. ‘Running a business is all about people. You can have a great strategy, a great plan, but if you don’t have the right people you won’t succeed.’

Turrell, a rugby coach in his spare time, says: ‘I think there are a lot of analogies between sport and business – creating a winning team.’

But for all the talk of China and other markets Turrell is clear: ‘The UK is still the biggest and the most important market. It’s the one we need to nurture.’

The challenge here is that more and more people are skipping breakfast. In response to this, Weetabix has launched Weetabix On The Go drinks. Turrell says: ‘This is designed to have all the protein, energy and fibre you need.

‘We think this could retail to about a £160 million business in the next five years because some people skip breakfast. Here’s an alternative to going without.’