“Biscuits are trivial, right? We could all live without them – life just wouldn’t be so much fun.” So says Jeff Van der Eems, the departing chief executive officer at United Biscuits, who is leaving the business after 11 years following its sale to the Turkish family-owned food group Yildiz Holding.
Interviewee: Jeff Van der Eems, former Chief Executive Officer, United Biscuits
Van der Eems joined the company, which counts McVitie’s Jaffa Cakes and Jacob’s Cream Crackers among its brands, as chief operating officer in 2005, after moving from PepsiCo, where he had been chief financial officer.
He has learned the importance of a good biscuit: “The product has to be the right quality, every single time. In the UK alone, there are 13 million transactions every day. When someone buys a United Biscuits product, every single one has to be the same quality.”
The expectation for consistently high quality products makes the supply chain critical. “We are talking about everything from exceptionally high quality raw materials, to factories that convert it the same regardless of whether it’s snowing outside or it’s 25⁰C, to the logistics of transporting it correctly,” says Van der Eems. “The packaging has to be right every time too, so the importance of the supply chain is absolutely vital to making sure the consumer gets the best product. You can only travel as far as your supply chain will carry you.”
"The importance of the supply chain is absolutely vital to making sure the consumer gets the best product. You can only travel as far as your supply chain will carry you.”
Under his leadership United Biscuits has travelled a fair distance, transforming from a UK company to a genuinely global one. When he took over as CEO in 2013, 5% of the group’s business came from outside Europe, and when he left, this increased to over 25%. The expansion required building local supply chain capabilities, and so having started with factories in the UK, France, Belgium and the Netherlands when he arrived, there are now sites in Africa, the Middle East and India.
“One of the key challenges was getting supply chain people that were willing to travel,” he says. “I bought a company in Saudi Arabia, and another one in Nigeria, and I can remember my procurement people saying ‘Can’t you buy something in Tahiti?’. Getting people to relocate wasn’t easy. The other challenge was bringing in the right local talent. India has an abundance of supply chain talent; but it was more difficult in Saudi Arabia, for example.”
His preference was always to start by sending in United Biscuits staff from other offices, to build up networks, and then to find local expertise to run operations.
In addition to hiring the right people, getting the raw materials right is absolutely critical in the biscuit world, he says. “You think of a biscuit as very simple,” says Van der Eems, “But actually it’s mostly cereal, and the closer a product is to natural agriculture, the harder it is to replicate it in different markets. Wheat is very different in different parts of the world.”
That requires a huge time commitment and a relentless focus on quality assurance. Dealing with different local regulations also takes a lot of time. “It’s about knowing your business and what you actually need to spend time on to get it right,” he says. “Things that are hard are good for businesses, because you need expertise, perseverance and resilience to solve the problems, and that creates a barrier to entry for your competitors. If your consumers can go into Lagos and get the same quality biscuits as they can buy in the UK, that’s fantastic.”
During his time at United Biscuits, Van der Eems also learnt a great deal about mergers and acquisitions (M&A).
United Biscuits had been acquired by private equity firms Blackstone and PAI Partners in 2006, shortly after he had arrived at the business. The owners had explored several exit opportunities, including a listing and subsequent sale to Bright Food, the Chinese company, which fell through in 2010.
Meanwhile, United Biscuits has itself made several acquisitions under Van der Eems’ leadership, including acquiring Nigerian biscuit maker A&P Foods in 2014, and before that buying assets from Rana Confectionery Products in Saudi Arabia.
Van der Eems says: “The best part of M&A is when it’s consistent with the strategy of the business. With our Saudi and Nigerian acquisitions we bought companies that allowed us to go international faster, and which gave us local networks, factories and permits. But M&A is more of an art than a science, and doing the right deal is very hard.”
He says it can take as long as 18 months to know if a transaction was the correct one, but shares two secrets to a successful deal: “First, make sure the target is absolutely consistent with your strategy, and make sure the people are right. Make sure you understand the culture, the management team, how they run the business, and how it will fit with your own,” he says. “You have to understand the culture, but not try to change it.”
Secondly, “It’s better to overpay a bit for the right target,” he says. “If you spend a bit more, it’s a one-time cost, and if you get it right, that adds up to better returns every year from then on.”
“The supply chain is now completely integrated into the business decision-making. And it’s also increasingly competitive, so the need for supply chain executives to get out there and learn best practices, benchmark what they do, and bring that back to the business is huge. It’s not enough to just learn internally anymore.”
He says supply chain executives of today need to have much broader business experience than they ever needed in the past: “The supply chain is now completely integrated into the business decision-making. And it’s also increasingly competitive, so the need for supply chain executives to get out there and learn best practices, benchmark what they do, and bring that back to the business is huge. It’s not enough to just learn internally anymore.”
Van der Eems adds: “Supply chain is just as important as marketing, as sales, and as finance in this day and age. You are only as strong as your weakest link, and you need all those functions to be working as a team.”
For him personally, he says taking United Biscuits global, and shaping it up for a successful sale to Yildiz, has been the highlight of his career, even if he is now job-hunting. “I knew the score,” he says, “because when you join a private equity business you know that the plan is to build it up and then sell it. But it is emotional, because I’m so involved with the brand, the history, and also the team.”
He adds, “You know when you sell it that things are going to change. But it’s not really until you actually leave that you realise how connected to the place you are.”
It seems those biscuits aren’t so trivial after all.