1. Lithuania Food Export Seminar
Embassy of the Republic of
Lithuania to the UK
• 8.30 – 9.00 Registration
• 9.00 – 9.20 Welcome and project introduction
• 9.20 – 10.00 UK food market overview
• 10.00 – 10.40 How the sectors and subsectors work and
purchase
• 10.40 – 11.30 Basic project entry requirements
• 11.30 – 12.00 Break (coffee)
• 12.00 – 13.20 Category analysis and product positioning
• 13.20 – 14.00 Summary: practical examples, Q & A

2. Embassy of the Republic of
Lithuania to the UK
Project Introduction

3. Embassy of the Republic of
Lithuania to the UK
UK Food Market Overview

4. UK food market overview
Embassy of the Republic of
Lithuania to the UK
Retail ‐ Supermarkets (Multiples)
‐ Independent retailers & Symbol groups
‐ Speciality food outlets
‐ On‐line retailers
Food Service ‐ Delivered Wholesalers
‐ Chain end users
‐ Independent end users
Food ingredients ‐ Food Manufacturers
‐ Further Processors (e.g. blenders, slicers)
‐ Category brokers and importers

5. Retail: Multiple market share
Embassy of the Republic of
Lithuania to the UK
Stores % share
• Tesco 2900+ 30.2
• Asda* 550+ 17.9
• Sainsbury’s 1000+ 16.7
• Morrisons 500+ 12.2
• Co‐op 3000+ 6.4
• Waitrose 300+ 4.5
• Aldi UK 500+ 3.5
• Lidl UK 600+ 2.5
• Iceland 900+ 2.1
*Netto UK purchased by Asda in 2011
• Sources: Kantar Worldpanel total sales 12 weeks ending 27/3/12

6. Embassy of the Republic of
Lithuania to the UK
UK Retail Market Split
Multiples:
Tesco, Sainsbury Etc
95%
5% Independents &
Symbol Stores

7. Retail : Independents
Embassy of the Republic of
Lithuania to the UK
• Department stores: Selfridges, Harrods, Harvey Nic
• Symbol groups : Spar, Musgrave (Budgens & Londis), Mace, Premier,
Cost cutters
• Small Independent chains: Booths, Whole Foods Market, Neals Yard
• Health Food Stores: Holland & Barrett
• Deli’s: La Fromagerie,
• Farm shops: Windsor, Laverstoke,
• Garage forecourts
• Cash & Carry: Booker, Makro, Costco
• Garden Centres: Wyevale, Dobbies,
• Farmers markets
• On‐line / home delivery retailers: Ocado, Amazon, Goodness Direct

8. Retail trends & market drivers
Embassy of the Republic of
Lithuania to the UK
• Trends
Organic, Fair Trade
Food miles / local / Fresh / Seasonal
Provenance (stories behind the products)
Free From: Gluten free but also wheat, dairy, refined sugar
Cafes and food stations in stores
Store recipes endorsed by celebrity chefs
New forms of packaging; pouches, recyclability, less is more
No artificial colourings, flavours and preservatives
Cup cakes, raw food, superfoods
Ready meals & scratch cooking
• Key Market drivers
Private / own label (KVI’s)
Price comparisons with other retailers, money back off shopping incentives
Promotions: BOGOF, Multi buys, Meal deals
Efficient retail operations: merchandising, fulfilment planning

9. Tesco – Fresh Produce
Embassy of the Republic of
Lithuania to the UK

10. Whole Foods Market – fresh produce
Embassy of the Republic of
Lithuania to the UK

11. Whole Foods Market
Embassy of the Republic of
Lithuania to the UK

12. Partridges ‐ charcuterie
Embassy of the Republic of
Lithuania to the UK

13. Embassy of the Republic of
Whole Foods Market Lithuania to the UK

14. Embassy of the Republic of
Tesco Baby Lithuania to the UK

15. Embassy of the Republic of
Whole Foods Market Lithuania to the UK

16. The Food Service Sector
Embassy of the Republic of
Lithuania to the UK
The Foodservice sector is:
• About 30% of UK food market by value and 10% by volume
• Extremely diverse
• Cosmopolitan
• Not developing uniformly
• Sophisticated and professional
• About 260,000 outlets

17. Food Service
Embassy of the Republic of
Lithuania to the UK
The Foodservice sector is made up of large subsectors:
Cost Sector – food purchased to feed at lowest cost e.g.
Hospitals
Schools & Universities
Ministry of Defence
Prisons
Profit Sector – service provided to consumers at a profit e.g.
Hotels
Pubs
Restaurants
Travel and Leisure

18. Food Service
Embassy of the Republic of
Lithuania to the UK
The Profit Sector is yet more diversified:
• Independents about 40%
• Chains about 60%
Chains then breakdown between
• Disciplined (e.g. Mcdonald’s, TRG, Tragus, JD Wetherspoon) 20%
• Undisciplined (e.g. Best Western, consortia) 40%

19. Embassy of the Republic of
Lithuania to the UK
UK Foodservice Market
Disciplined Chains e.g. Mcdonalds Central distribution
TRG, Tragus, JD Wetherspoon 20%
Disciplined and Undisciplined chains Wholesale Distribution
e.g. Greene King, Best Western 40%
Independents
40% Wholesale Distribution

20. Foodservice trends & market drivers
Embassy of the Republic of
Lithuania to the UK
• Trends
QSR’s performing strongly
Branded casual dining continue solidly
Budget Hotels growing well
Ethnic diversity commonplace e.g. Mexican, Thai, Italian, Indian
Authenticity and Experience
Pubs with little food rapidly declining
Workplace and school feeding under pressure
Deskilling in the kitchen
Emphasis on retail skills in front of house operations
Cost Sector under pressure from government austerity
Cost Sector increasingly outsourced to Profit Sector
Increased use of promotions (2 for 1) and digital marketing
Follow USA trends e.g. ‘fast casual’
• Key Market drivers
Macro economic conditions mean spend stagnating
Sophisticated operators at Chain and Wholesale buying points
Only 2 national delivered Wholesalers
Food price inflation and government taxation policies have greater impact in foodservice
Concerns growing about obesity and alcohol abuse

21. Ingredients
Embassy of the Republic of
Lithuania to the UK
There is a significant market supplying product manufacturers in the UK.
The UK Food processing industry is comprehensive.
Ingredients can be for further processing (e.g. a functional ingredient) or a
component in a finished product (e.g. cooked meat in ready meal).
Sales can be direct to producers or via specialist wholesalers/brokers
The key aspects are that your ingredient must have a unique attribute:
Functionality – process or product
Health claim – e.g. sucrolose
Price
Availability

22. Embassy of the Republic of
Lithuania to the UK
How the Sectors Work

23. How Retailers purchase
Embassy of the Republic of
Lithuania to the UK
• Multiples
– Direct producer relationships
– Category buyers, stock controllers and logistic teams
– Buyers change very regularly from category to category
– Very difficult to get face to face meetings and price changes through
– Expected financial product support (promotions, adverts, tastings)
– Brand bank listings
– Retail ready packaging increasingly a key requirement by all multiples
– Starting to specify case sizes: 2 per shelf
– Forms, forms and more forms!
– Fines for OOS, late delivery, slow ROS
– Minimum deliveries: pallets, layers. Some require one product per pallet
– Delivery into Central / Regional Distribution Centres
– Only direct delivery into store of local / regional lines
– Consolidation hubs
– Fresh Produce retailer specific plastic re‐usable crates
– Chep pallet requirement

24. How Retailers purchase
Embassy of the Republic of
Lithuania to the UK
• Independents
– Fewer staff so buyers often responsible for whole departments
– Purchase through delivered wholesalers (saves time & resources)
– Or purchase from Cash & Carry outlets
– Local / regional products may be purchased direct from manufacturer
– New product forms, invoicing and delivery all done through wholesaler
– Suppliers may be asked to get their product listed by the preferred wholesaler
– May have direct producer relationships with key suppliers
– Promotions usually through the trade promotion & price books
– Catalogues usually are updated every 2 months (6 per annum)
– Crates & packaging often at the suppliers discretion (often not used in store)
– Manual re‐ordering procedures (stock replenishment)
– Minimum case orders although some wholesalers will sell in singles

25. How Food Service purchases
Embassy of the Republic of
Lithuania to the UK
Cost Sector
Often by public tender
Wholesalers
Buying Groups (consortia)
Profit Sector
Disciplined Chains directly from manufacturer
Undisciplined Chains from wholesalers
Independents from wholesalers and Cash & Carries
Specialist wholesalers (e.g. ethnic, meat, fish,)
Buying Groups (consortia)

26. How Food Service purchases
Embassy of the Republic of
Lithuania to the UK
Cost Sector
Centralised purchasing in some form.
Price is king
Brands irrelevant
Profit Sector
Chains have centralised purchasing
Independents can only be reached by wholesalers
Brands relevant only if ‘Front of House’
Consumers do not welcome Retail brands at restaurant prices
Dedicated recipes or products common
Concept food solutions including equipment can be interesting

27. Embassy of the Republic of
Lithuania to the UK
Marketing

28. Cost of Retail Marketing
Embassy of the Republic of
Lithuania to the UK
Multiple trade Listings fees (can be up to £500 per product, although there may be scope
for negotiation)
Compulsory promotional programme (starting cost £3000 per annum)
Advertising spend in their in‐house magazines (once again starts at £1,500)
All product images must be on brand bank ‐ £80 per item
Independent trade New listing advert costs for trade catalogues (10 main trade wholesalers, each
one will charge £200 – 500 depending on size of the range)
Advertising a promotion in the trade catalogues will cost another £200 ‐ £500
per wholesaler (plus the loss in margin!)
If you don’t have in‐house design option will need to pay £50 for ad design
costs per wholesaler
Each wholesalers will want samples £50
Retailers will often request for sampling events in‐store. Wholefoods for
example will charge £100 for a 2 hour sampling session plus the cost of
products. You will get a very useful sampling report as part of this cost.
Some stores will ask for free fills for the stocking of a new store (1‐2 cases)

29. Embassy of the Republic of
Types of promotions Lithuania to the UK
• BOGOF ; Buy One Get One Free
• 3 for 2 multi‐buys
• 2 for £X
• % off (normally a minimum of 10%)
• Buy one get X half price
• Line promos – Natural remedies or baby food
• Vouchers ‐ redemption

30. Embassy of the Republic of
Waitrose – half price Lithuania to the UK

31. Embassy of the Republic of
Tesco – Line promo Lithuania to the UK

32. Embassy of the Republic of
Waitrose – Buy 2 for £5 Lithuania to the UK

33. Embassy of the Republic of
Tesco – Line promo Lithuania to the UK

34. Embassy of the Republic of
Promo communication Lithuania to the UK
• Shelf talkers
• Banners
• Flyers (bag stuffing)
• Till receipts
• Shop window displays
• Product tastings in store
• Staff training & involvement (tastings)
• Newspaper ads and inserts
• Store magazine
• A‐frame boards outside the store
• Merchandising outside of the store if there is space (on wheels)

35. Embassy of the Republic of
Outside store Lithuania to the UK

36. Embassy of the Republic of
Shop window Lithuania to the UK

37. Consumer Product Marketing
Embassy of the Republic of
Lithuania to the UK
• Industry Awards Entry cost for Great Taste Awards & industry awards. Roughly
£100 per product per competition.
• Competitions Run competitions & offer your product in hampers as prizes (£100)
• Sample mail outs Especially to the Grocery teams of those retailers your have listings
in they will act as your brand ambassadors (£50 per store)
• Attend Trade Shows Natural product show (April) for organic / natural products
International Food Exhibition, London (£4000) for a stand
BBC Good Food Birmingham
• Consumer advertising; Food magazines ( starting from £500 up to £8,000 for an article in
Jamie Oliver magazine)
• Social Media Sample mail out for foodies to review
• PR

38. Foodservice Marketing
Embassy of the Republic of
Lithuania to the UK
Unbranded products straight forward:
• Wholesaler catalogue advertising
• Wholesaler support in the field for demonstrations
• Promotional support for launch e.g. price discount or value offers
• Wholesaler Depot telesales team incentives
• Samples
• Wholesaler exhibition support

39. Foodservice Marketing
Embassy of the Republic of
Lithuania to the UK
‘Front of House’ brands materially more difficult and expensive:
• Wholesaler catalogue advertising
• Menu cards or table talkers
• Trade magazine advertising
• PR
• Trade exhibition presence
• Wholesaler support in the field for demonstrations
• Promotional support for launch e.g. price discount or value offers
• Wholesaler Depot telesales team incentives
• Wholesaler Field sales teams incentives
• Samples

40. Embassy of the Republic of
Lithuania to the UK
Business Relationships

41. Retail relationships
Embassy of the Republic of
Lithuania to the UK
Direct retail relationships
• Commercial meetings; Supply issues
Annual promo calendar
Sales trends / category
Sales targets & rebates
Gap Analysis / NPD
• Store Marketing In‐store tastings; free stock & person
Magazine/ leaflets features,
Supplier story boards,
Shelf edge labels
Window displays
• Training; DM meetings
Product Fayres
Supplier visits

42. Embassy of the Republic of
WFM Supplier Board Lithuania to the UK

43. Retail relationships
Embassy of the Republic of
Lithuania to the UK
Wholesaler relationships
• Commercial meetings; Supply issues
Annual promo calendar
Sales trends / category / retailer
Placement of products in the catalogue
Sales targets & rebates
New products listings / delists
• Marketing Sampling to their top customers
Leaflets in with invoices
Catalogue front / back cover advertising
Product displays at trade / consumer shows
Note: Most independent wholesalers do not have telesales teams

44. Foodservice relationships
Embassy of the Republic of
Lithuania to the UK
The manufacturer must sell to the Chain end users and the Wholesaler
The wholesaler must sell to the independent
The manufacturer must develop simultaneous relationships with Chains and
Wholesalers.
With Wholesalers relationships are with:
Category Buyer
Field Sales Managers (independents)
Business Development Managers (Chains)
Depot Telesales team (Both)
Technical and Marketing teams
With Chains relationships are with:
Category Buyer
Executive Chef
Technical and Marketing teams

45. Supply Chain Links
Embassy of the Republic of
Lithuania to the UK
The UK Food industry has well established efficient logistics systems to
get products to consumers.
There are differences by sub sector.

46. Supply Chain Links
Embassy of the Republic of
Lithuania to the UK
Retail
Multiple Retail
Manufacturer delivers in multiple pallet/container quantities to up to 6
RDC’s. Retailer buys at RDC and delivers to shops
Independent/Speciality Retail
Manufacturer delivers in pallet quantities to wholesaler/cash & carry
depots. Wholesaler buys at depot and delivers to shops
Supply will usually require:
• Stock in the UK for deliveries of less than 1 container
• Automated link to customer’s ordering system

47. Supply Chain Links
Embassy of the Republic of
Lithuania to the UK
Foodservice
Central Distribution
Manufacturer delivers in multiple pallet/container quantities to up to 2
RDC’s. Logistics company buys at RDC and delivers to restaurants
Chains and Independents
Manufacturer delivers in pallet quantities to wholesaler depots (up to
35) or to a consolidation centre (1). Wholesaler buys at depot (or
delivery from consolidation centre) and delivers to restaurants
Supply will usually require:
• Stock in the UK for deliveries of less than 1 container
• Payment of consolidation costs by manufacturer
• Underwriting of stock at wholesaler until sold

48. Embassy of the Republic of
Lithuania to the UK
Margin Expectations

49. Embassy of the Republic of
Pricing; Multiples margin aspirations Lithuania to the UK
• It is now illegal to speak to buyers about the setting of
recommended retail prices.
• Most supermarkets price according to ‘price match’ programmes
(www.mysupermarket.com)
• Very difficult to get price increases through – often only
possible to have these discussion once a year (in fact
sometimes negotiation can last for 8 months!)
• Grocery margin expectation is between 35 – 45% (category
depending)

50. Embassy of the Republic of
Trade margins; Wholesaler margin aspirations Lithuania to the UK
• Wholesalers print Bi‐monthly price catalogues
• In these product trade prices are listed as well as recommended
retail prices
• A wholesaler is given 25% off trade for grocery and 33% for Natural
Remedies
• Wholesaler may then give their customers discounts and over‐
riders based on agreed target sales volumes (can be up to 20%) &
will negotiate similar discount with manufacturer

51. Embassy of the Republic of
Pricing; Independent retailer margin aspirations Lithuania to the UK
• Nat Rem 50% +,
• Ambient 35 – 45%,
• Chilled 30 – 35%,
• Frozen 35 ‐ 40%,
• Food service 50% +
• KVI’s pricing; competitor analysis
• Value added products; juices, guacamole 85% GM

52. Supply Chain Margin Expectations
Embassy of the Republic of
Lithuania to the UK
Multiple Retail
Retail Selling Price £2.00
Retail Margin (30% to 45%) £0.75
Manufacturer Selling Price at RDC £1.25
Note: there can be listing fees and overriding discounts and
promotional pricing separate to standard pricing.

53. Supply Chain Margin Expectations
Embassy of the Republic of
Lithuania to the UK
Independent/ Speciality Retail
Manufacturer Selling Price £1.25
Wholesaler/cash & carry Margin (25% ‐ 35%) £0.54
Wholesaler Price £1.79
Retailer Margin (30%) £0.77
Retail Selling Price £2.56
Note: there can be listing fees and overriding discounts and
promotional pricing separate to standard pricing.

54. Supply Chain Margin Expectations
Embassy of the Republic of
Lithuania to the UK
Foodservice Independent Chain Central Distribution
£ £ £
Manufacturer Selling Price 1.00 1.00 1.00
Wholesaler/Margin 0.54 0.33
Logistics Company cost 0.15
Restaurant Buying Price 1.54 1.33 1.15

55. Supply Chain Margin Expectations
Embassy of the Republic of
Lithuania to the UK
UK Stock holding logistics costs vary depending on stock rotation but are in the
region of:
Ambient 7%
Frozen 12%
(this covers receipt, storage, picking and delivery to RDC/Wholesaler)
UK Consolidation costs can be very high 5% ‐ 8%

56. Embassy of the Republic of
Lithuania to the UK
Basic Project Entry Requirements

57. There are minimum operating standards
Embassy of the Republic of
Lithuania to the UK
All products need to be correctly labelled.
This includes ingredients and nutritional information
All products need 2 barcodes: 1 for the outer and 1 for the retail pack.
In Foodservice the outer will need a bar code. For some retailers high
volume lines may need a code on the pallet.
All products must name the producer or have a UK contact address
All products must have BBE or Sell by Date on both the outer and inner
pack.
All products must enter the UK supply chain on UK Chep pallets. This
can be done at source or converted in UK
Product packaging must be tamper proof
Accurate declarations on weight and protein, fat content
Labels on outers and inner cartons must be in English
There are detailed requirements on product descriptions that must be
accurate (e.g. Ham, added water, natural, organic meat content)

58. There are minimum operating standards
Embassy of the Republic of
Lithuania to the UK
All major buyers in Retail and Foodservice will insist that:
Your factory has BRC/EFSIS approval
You accept and pay for factory visits and technical audits
You provide detailed product specifications – even if you consider this
commercially sensitive
You sell in GBP sterling
You adhere to their demanding timetables on supply of samples,
pricing, technical questions and attending taste panel dates at short
notice

59. There are minimum operating standards
Embassy of the Republic of
Lithuania to the UK
The UK consumer has specific tastes and concerns both in Retail and Foodservice.
Each category has specific issues and your category audit must incorporate these.
Here are some examples likely to be unacceptable:
• Mechanically Recovered Meat
• Cross species meat products
• Excess added water
• Excess salt (legal limits for schools)
• Excess fat
• Artificial colourings
• Artificial flavourings
• Excessive added sugar
• Most Offal products
• Products to be deep fat fried
• Previously frozen product sold as chilled

60. Brand v Own Label
Embassy of the Republic of
Lithuania to the UK
The UK market has a proportion of own label in both Retail (30%) and
Foodservice.
It may be preferable to develop have control of your own brand but as a new
entrant there are risks:
• Launch costs will be higher
• The retailer might copy your idea and produce an own label
• All stocks of product and packaging are your risk
• The burden of communicating to the consumer is all yours
The biggest risks with own label are:
• The product is not yours – they own the recipe
• Costs are more transparent
• Margins are lower
• The customer will become very resource demanding

61. Embassy of the Republic of
Lithuania to the UK
Category Analysis and Product Positioning

62. Category analysis Embassy of the Republic of
Lithuania to the UK
“You do not get a second chance to make a first impression!”
Market research / Gap analysis: why is it important?
• Product differentiation
• Resource allocation: time & £
• Clarity regarding business strategy & direction
What should you look for ‐ competition
‐ flavour profiles
‐ price points (lowest to highest)
‐ size
‐ packaging type
‐ USP’s
Don’t reinvent the wheel – learn from others

63. e.g. Product Packaging analysis
Embassy of the Republic of
Lithuania to the UK
• Packaging that stands out on shelf (Why?)
• Strong brand to encourage customer loyalty; instant recognition
(font, colour, image etc)
• Communication of USP’s (does not mean every logo under the sun
should be displayed)
• Language on pack to reflect target customer
• Packaging to suit & protect the product
• Packaging; loose, re‐use, recycled or recyclable
• Shelf space requirements (units & case size to fit fixtures)
• Legal compliance of packaging – meeting EU & local EHO

64. Product Positioning Embassy of the Republic of
Lithuania to the UK
Using detailed category analysis results decide on your brand
positioning:
Value low margins V high volume
Mid range
Luxury / Premium high margins V low volumes
‘Product based pricing’ versus ‘Market based pricing’

65. So you want to come to the UK?
Embassy of the Republic of
Lithuania to the UK
1. Retail, foodservice, industrial
2. Category audit
3. Will I adapt products to the UK market?
4. Do I understand:
1. Logistics
2. Customer base
3. The consumer
5. Do I have financial and technical capacity?
6. What UK resources will I have?
7. Can I rely on agents/ importers/ distributers?

66. Embassy of the Republic of
Lithuania to the UK
Real Life Examples

67. Retail Summary
Embassy of the Republic of
Lithuania to the UK
• An example of a grocery product concept to launch in the
independent retail sector (through a wholesaler)
– Product sample tastings in‐house and in focus groups
– Category analysis: taste/flavour, size, price, packaging options, USP’s
– Packaging design concepts
– Drafting of concise but impactful product presenters
– Website design to assist with USP communication
– Buyer meeting with wholesaler (timings)
– Buyer meetings with key retailers (push & pull approach)
– Form filling: new line forms, packaging details (weights, size, recyclability)
– Launch plan: promotions, tasting events, trade / consumer shows, PR, awards
– Staff training in key retailers
– Get feedback
– Revise strategy if there are major issues highlighted (learn from your mistakes)
– Work on line extensions & NPD
Above takes an average of 9 months.

68. Real Life Example ‐ Ingredient
Embassy of the Republic of
Lithuania to the UK
January 2006
US snack ingredient technology shared in JV with Danish producer
Produces a pork snack not currently available in EU
New technology utilises existing snack manufacturing equipment
2006 UK Launch to snack producers
2007 Launch into Spain
2009 Launch into Eastern Europe and Nordic countries
Now a multi £m product with limited price sensitivity

69. Real Life Example ‐ Foodservice
Embassy of the Republic of
Lithuania to the UK
June 2010
UK Launch pre cooked frozen pasta
1. Product review to establish key features and benefits
2. Category audit to identify competitive position, pricing and range
3. Build of sales materials
4. Appointments with large end users to demonstrate product and
establish key competitive advantages
5. Listings gained with end users forcing wholesalers to stock
6. UK logistics platform in place
7. Product launched late 2010
8. Subsequent associated product launches of frozen pre cooked rice

70. Real Life Example ‐ Foodservice
Embassy of the Republic of
Lithuania to the UK
Key aspects to pre cooked frozen pasta:
Product had little direct competition – mainly ambient
Clear differentiators –
no waste, less labour, higher quality consistency, easier menu variation,
higher food safety
Main Objections –
Price, storage

71. Embassy of the Republic of
Lithuania to the UK
Questions