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Alara - The Interview - First for Organic muesli and more

Alara, the UK's largest manufacturer of organic muesli, was founded by Alex Smith in 1975, with 2 he found in the street in Camden, London. Alara now manufactures 60% of all gluten-free and 100% of FairTrade muesli sold in the UK, and the Soil Association has licensed the company's organic production since 1988. As the business grows, Alex Smith and his wife Katrina remain committed to running an ethical business with minimal impact on the environment. Alex Smith spoke to The Grocery Trader.

The Grocery Trader - First question, Alex - How big is the total UK muesli market and what is your share?
The UK muesli market is worth approximately 110m at retail, and Alara's share is approximately 8m. We are now the largest producer of organic muesli in the UK, with 50% of the 5m organic Market.

GT - What different muesli products does Alara produce?
We produce 190 different muesli products, 65% of which are organic and include FairTrade, gluten-free and wheat-free varieties. None of our products contain added sugar, salt or fat, and we use only the finest ingredients to create nutritionally specific and naturally tasty breakfasts. One of our recent successes has been the Lifestage Nutrition Range - three mueslis individually formulated to meet the nutritional needs of three demographic age groups. The range comprises Growing Years for children from two years, Blooming Years for women aged 18 - 40 and Prime Years for consumers aged 40+.

GT - Who are your main consumers overall?
Our products have always been popular with health-conscious consumers because we offer genuinely healthy breakfast cereals. Organic muesli has a wider appeal now than ever before, due to growing interest in healthy eating and traceability.

GT - Which is your single biggest selling product overall?
That would be Organic Rich Muesli, which we started making in 1999. This was also Alara's first branded product. It has performed particularly well because consumers find it accessible and appreciate its competitive price.

GT - I understand you've launched a 'Sustainable' range of organic mueslis, packed in waste saving brown paper bags. When did you introduce that?
We launched the Sustainable Range in the New Year, and the response has been very encouraging so far. We decided to introduce the waste saving packaging as part of our wider sustainability strategy. The new bags reduce packaging by over 50%, and enhance shelf standout. The high visibility window allows consumers to see the unique blend of ingredients and the bags help to communicate our sustainable philosophy.

GT - Which products does it comprise?
The new range brings together six organic mueslis - Goji & Yacon, Active, Very Berry, Crispy Coconut Crunch, Date & Cocoa and Fruit, Seed & Spice. During the NPD process, the important thing for us is perfecting the muesli mix by matching the optimum flavours and nutritional profiles of different ingredients. With the Sustainable Range, we aimed to create six superfood mixes.

GT - Do any of your products combine all three benefits - organic, gluten-free and FairTrade?
Yes, Active muesli does. And we're proud to say it's the first such product in the world!

GT - Have your products won any awards over the years for quality and innovation?
Last year, Prime Years took gold in the Great Taste Awards, showing that nutritional value and tastiness really do work together. Then our newly formulated Goji & Yacon muesli was awarded Best New Food & Drink product at the Natural Trade Show in Harrogate.

GT - Do you also produce own-label?
Yes, own label accounts for around 90% of our business. We manufacture own-label for over 30 companies including Asda, Co-Op, Holland & Barrett, Fresh & Wild, Julian Graves, Traidcraft, Pertwood, Infinity, Suma and Nature's Table.

GT - Your beginnings were pretty unconventional. Where did Alara start out?
In 1975, I was an architectural student and was squatting in a beautiful Victorian building in Camden, to protest against its planned demolition. I had been looking for ways to finance my campaign when I found two 1 notes in the road. This was the cost of entry into Covent Garden market, so I borrowed a truck and filled it with discarded fruit and veg. After a few days, I had enough money to buy ingredients from the local wholefood warehouse and started mixing muesli, which wholesale customers bought from us in bulk. Alara grew to include two retail outlets, a wholesale operation and a manufacturing base. We then decided to change direction and focus entirely on manufacturing.

GT - How big is Alara's turnover now? How fast is it growing? How many people do you currently employ?
Our turnover this year will be around 4.5 million, up from 1.6 million in 2001. We currently employ 52 members of staff.

GT - Where is your factory located? How do you get round the transport problems of being based in London?
We are based in Camley Street, just North of King's Cross Station. Overall, being in London has been a positive benefit for the company. Our staff can get into work easily and we're only 20 minutes from the M1. I can also get everywhere in London by bike.

GT - I understand your factory runs on renewable energy. How does that work?
Good Energy has supplied us with 100% renewable energy since 2005. Most energy companies have a "green" tariff, but Good Energy buys all its electricity from renewable sources like wind turbines, small scale wave and hydro power plants. We are now working with South Bank University on a new windmill design to produce our own electricity.

GT - You're set on becoming carbon neutral and zero waste by 2010. How are you going about achieving that?
Last year, we became the first SME food manufacturer to appoint a full-time Sustainable Development Manager. With Joanna Southernwood's help, we're now implementing a four-year-plan to make all necessary changes in the factory. We have a zero waste policy, and have already reduced waste by 70%. On the basis of our work so far, we have just gained Green Mark accreditation from the London Environment Centre, a huge achievement for any company.

GT - Who is in the Alara management team besides you?
My wife Katrina has overall responsibility for NPD and our IT systems. We then have an in-house team of seven looking after production, quality assurance, sales, buying, logistics and accounts. Our most recent appointment was to the position of Sustainable Development Manager.

GT - Where are your ingredients sourced?
We source as locally as possible, and have set up an innovative scheme with the Organic Arable Marketing Group and a local mill to supply us with locally grown organic oats, wheat and barley. The OAMG is a farmer's co-operative and we buy our grain from them, guaranteeing them a fair and sustainable price. This year we are purchasing two thousand tons of grain, and the scheme is proving very popular. We are just concluding our purchases of oat groats for the 2007/8 crop year, and prices are up almost 100%. We also import ingredients directly from Europe, China, Peru and Turkey.

GT - What about your FairTrade ingredients?
Sourcing FairTrade ingredients can be a challenge, as suppliers are smaller and there is often only one source. However, relationships tend to be much more reliable and we work together more closely, which benefits everyone involved. We continue an important relationship with Traidcraft, Twin Trading and Tropical Wholefoods to make this work. Alara Fair Trade Muesli contains apricots from North Western Pakistan, sultanas and raisins from South Africa, banana slices from Uganda, pineapple from Uganda and brazil nuts from Peru.

GT - Who regulates your products' quality and authenticity as Organic, FairTrade and gluten free?
The Soil Association has certified our organic products since 1988. We were among the first companies to pioneer the FairTrade movement, and we are still the only company licensed to manufacture FairTrade muesli in the UK. We were also first to be certified by the Coeliac Society for our Gluten-Free products.

GT - How much of your UK business goes through supermarkets? Which supermarkets are you in? Which of your products do they stock?
Approximately 10% - we have listings in Tesco for our Life Stage Nutrition range and Luxury Gluten Free muesli. In addition to this, we produce own-brand muesli for Asda and the Co-Op.

GT - What national account team do you have servicing the multiple grocery trade? Do you supply multiple grocers direct or through distributors?
We have just changed our relationship with the multiple grocery trade. We used to go through a broker, but from 1st February we will only use them for logistics when required. We will now handle sales directly. This will enable us to work more closely and more efficiently with retailers and provide a better service.

GT - Do you see your UK multiple grocery distribution growing further?
Since moving to direct sales, I have found the multiple grocery trade to be very accessible and clear with their requirements. This makes developing products much easier. Multiple grocers currently represent around 10% of our business, so we have a real opportunity to help fill gaps in the current offer.

GT - What other sales channels are significant?
The major ones are wholesale, own-brand production, catering and export.

GT - You clearly have a lot to say about alternative ways of doing business, including FairTrade, organic and sustainability. How important are these beliefs to you?
These principles are extremely important, both to me personally and to the company as a whole. Our growth over the years means that we can exert greater influence in the matters we care about and set an example of how to run a sustainable business.

GT - Are you involved in any industry associations?
I am Chair of the Food & Drink Federation's Organic Committee, and was Vice Chair of the Soil Association's Processor Group. In addition to this, I am a member of DEFRA's Organic Action Plan.

GT - What proportion of your sales are exports, and to which countries? Are the product ranges you sell outside the UK different from here?
About 20% of our sales are exports. In Europe, we supply Ireland, Greece, Spain, France, Belgium, Norway, Denmark and Finland. We also export to Canada, the US, the West Indies, Japan, Australia and Saudi Arabia, to name a few. We supply several export customers with specific products, but most of what we export mirrors our UK products. There are often a few differences, however. For instance, to comply with Australia's import regulations, we have to roast all the seeds and nuts.

GT - How are you promoting your products to UK consumers? Do you carry out any advertising, marketing or sponsorships?
We outsource our marketing requirements to a specialist PR agency, which has resulted in our products receiving maximum exposure in relevant publications. We are currently finalising a PR and marketing strategy for 2007, to include consumer media relations, sampling activities and advertising.

GT - What external factors do you see affecting demand for your mueslis?
Environmental concerns are fast ascending the political agenda, and the public is becoming increasingly engaged in the Green debate. A new generation of eco-conscious consumers is now emerging and we are confident they will recognise our point of difference as a brand. Sustainable living is the intelligent, modern and stylish choice, and Alara is ready to meet the demands of this exciting new market.

Alara
Tel: 020 7387 9303
www.alara.co.uk
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