Strategy Case Study - Diversification for the Bread Family

A terrific interview here in the Telegraph in which the CEO of bakers Warburtons explains the reasoning behind a change of strategy by the market-leading bread brand…

Warburtons is to extend its brand by broadening into the snacks segment of the grocery market for the first time. The move will be backed by a £1m marketing campaign to launch two new product ranges.

The new ranges will be called ChippidyDooDaa pitta chips and SnackaDoodle wholegrain snacks. Warburtons says it will treat the two new products as stand-alone brands with two dedicated websites showcasing the product range but will feature the Warbuton’s logo.

The interview with Jonathan Warburton is here.

The article is packed full with useful information for strategy students. I picked up some of the following points:

On the effect of being in a family business on strategic decision-making ““When your name is over the door you tend to look at things in a different way. It is very, very personal,”

Warburtons is the UK’s second largest grocery brand, behind only Coca-Cola

Warburtons has 25% of the UK bread market, but that market is mature and hardly growing.

On market share: “you can only have so much of the pie”

The importance of branding and advertising on a core product like bread - Hovis made very effective use of advertising to boost its market position

The new snacks range has a longer shelf-life, which provides opportunities for Warburtons to enter international markets

On the advantage of being a private company rather than a publicly-quoted firm: “The beauty for us is that I don’t really give a stuff whether it takes two years or 10 years because I’ll still be here in 10 years. If we have a couple of quiet years, that’s fine. What the City thinks is irrelevant to us because the company is owned by four families. We can afford to dance to a different tune,”