Flahavan’s key to exporting success

For a sixth-generation family business, Flahavan’s is particularly outward looking and the word ‘progress’ is more than just an element of its traditional porridge oatlets’ brand name.

At a time when food and drink exports are declining – according to a recent report from Bord Bia they fell by 12pc in 2009 to €7bn – Flahavan’s has managed to bring exports up to 20pc of its total sales volume, and chairman John Flahavan (pictured) hopes to double export volumes in the next five years.

Flahavan’s is very much a traditional food company. There has been a mill at Kilmacthomas where the business is still located since the late 1700s. John Flahavan has been involved in the company since 1972 and says one of his sons is currently working on the packing line.

Exporting journey begins
The firm’s exporting journey started with sales of the ingredient product. “For a number of years we exported a bit of the ingredient product to France, the Middle East and Spain for use in muesli, biscuits and baby foods. We developed from there, putting our toe in the Northern Ireland market in 1995 with the retail porridge product and went further into mainland UK in 2003,” says Flahavan.

“From an Irish point of view we had quite a high market share then [around 60pc of the hot oats market] and hadn’t reached saturation. However, we decided that rather than trying to get a larger percentage of a finite market, we could achieve similar growth with the same amount of effort in a new market. This splits your risks as well as you’re not so dependent on what happens with the competition in one market – you always have somewhere else to fall back on.”

Flahavan’s won the Exporter of the Year title in 2009. At the ceremony, Liam Shanahan, president of the Irish Exporters Association, said the judging panel was particularly impressed with Flahavan’s “continued strong focus on research and its ability to identify customer trends in its markets”.

He also praised the company’s successful product development strategy to grow the overall business despite the recession and the very difficult trading conditions in the UK, now its main export market.

While it doesn’t release detailed financial information, Flahavan says the company currently holds about 65pc of the hot oats market in Ireland, which was estimated to be worth around €20m. In the year to August 2009, the hot oats category grew by 12.5pc in volume and 6.3pc in value, according to TNS.

Repositioning

Over the past 10 years or so Flahavan’s has repositioned itself with a strong brand focus, market segmentation and the introduction of 18 new products in drums, sachets and pots, 16 of which are still available. The broader Flahavan’s range includes a real fruit porridge range and a selection of oat biscuit snacks.

“One of the things we noticed back in the Nineties was a movement away from traditional cereals into ready-to-eat formats. Porridge was regarded in some quarters as being old-fashioned. With all the new products we have brought out, combined with a lot of public relations work, we have attracted a new generation of porridge consumers – young people interested in convenience and health benefits. There are very few porridge products that lose health benefits once you take them into the convenient format,” says Flahavan

Flahavan’s entry into the UK market in 2003 gave it a headstart in terms of its overall approach to product development. “When we researched the UK we found it was more convenience-focused than the domestic market and felt this trend would be coming down the road to us in Ireland at some stage. The UK market helped us to be an early experimenter in understanding how the convenience cereal market works,” Flahavan notes.

“We brought some existing products to the UK but actually started selling a couple of smaller products in the UK first and then introduced them into Ireland – the spiral-bound drum and microwave pot. We were the first in the UK to introduce these formats, although there were other products available in single sachets.

“After spending a lot of time visiting European markets and the US, when we came to launching in the UK we decided on driving our own innovation rather than duplicating any other offerings. We thought about selling a boxed product, but saw that others had introduced this, such as Quaker, and left the market just as quickly. People expect regular porridge oats in a bag. By going with the drum, people started to look at it differently.”

One of the main lessons Flahavan says he’s learnt from exporting to date is that before you start looking to launch a product, you should choose some existing networks and support structures.

“In the early days we worked closely with Bord Bia’s London office. This saved a lot of time and unnecessary effort and helped us to identify where the best gap for our product was and the best format of the product to suit that opportunity. We did a lot of gap analysis ourselves, but Bord Bia put us in touch with non-competing companies that could give us good advice, suppliers to Tesco or Wholefoods in a non-competing food category. This process allows you to learn from their experience of what’s important, which can be everything from the supply chain to promotional activity.”

Research at heart of company strategy
As observed by the Exporter of the Year judging panel, research is at the heart of everything Flahavan’s does and appears to be one of the secrets of its success.

“We spent a lot of time up-front researching the market thoroughly before selling anything. We invested in quantitative desk research as well as heavily in packaging research for new concepts. We see research as an investment rather than a cost. Our attitude is that once you put a new product out there, it’s very difficult to pull it back and this can be costly. Thorough research takes some of the risk out up-front,” says Flahavan.

“We used to always say internally we needed to ‘prove the market first’, rather than making an up-front investment on the capital side. This meant that we would rather spend money on research and do things quite manually to begin with in production. We were prepared to take a lesser margin to get the product launched and see it succeed. Once it did we could go back to the capital investment with more confidence.”

So, what about the future? Flahavan sees most potential in English-speaking countries. “Porridge is generally recognised as a breakfast option in the English-speaking world, whereas in continental Europe people use oatmeal for muesli and fresh breads, rather than boiling it for breakfast. There could be an opportunity for us in the US as we would be the only truly authentic Irish oatmeal brand available. We’re looking closely at this and I’m going to a food fair in San Francisco to explore it further.”

Pictured: Flahavan’s chairman, John Flahavan

This article first appeared in Owner Manager magazine